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It’s all about Energy Retun On Energy Invested (EROEI)

Dr. Charles Hall may not be a name you instantly recognize, but it should be.

Now a Professor Emeritus of the College of Environmental Science and Forestry, Dr. Hall is a rigorous researcher of energy, oil, biophysical economics — and was a critical early pioneer in developing the key resource metric of Energy Returned On Energy Invested (EROEI).

Here’s how Hall describes EROEI in layman’s terms:

These energy investment ideas are everywhere in nature.

Certainly business people know about investments, but you’ve got to realize that anytime that you’re investing, you investing not only money, you’re investing energy. And, in fact, we consider money to be a lien on energy, a promissory note on energy.

So, if, for example, you buy in New York City a bagel for $1, that bagel cannot possibly get there without the use of a considerable amount of energy. And that energy is, for example, energy used in Louisiana to take natural gas and turn it into nitrogen fertilizer. And then it’s put in a barge and barged up the Mississippi River to Nebraska. And then a tractor spreads in on a field. And then it plows up the field and plants wheat seeds. And then later comes along and tills the soil and maybe takes care of the weeds or whatever and certainly harvests it. And then more energy is used to take the harvested wheat and grind it up and turn it into flour. And then they put it in a sack and put it on a railroad train and ship it to New York City. And there somebody boils a pot of water to cook the bagel. Oh, and they use electricity to mix the batter. And then you have a bagel.

…click on the above link to read the rest of the article…

Macron’s pledge to wipe out coal is just as meaningless as Trump’s plan to revive it

January 27, 2018

Macron’s pledge to wipe out coal is just as meaningless as Trump’s plan to revive it

In a speech at the 2018 World Economic Forum held in Davos, Switzerland, French President Emmanuel Macron said he wanted to “make France a model in the fight against climate change” and promised to shut all coal-fired power plants by 2021 – two years earlier than the timetable put forward by his predecessor.

While Macron’s move is mainly symbolic since France only generates about 2.2 percent of its power from coal, it signals his government is actively trying to wean itself off fossil fuels in sharp contrast to the current policy of his U.S. counterpart. “We have finally ended the war on coal,” pretty much sums up American policy these days, as President Donald Trump declared in a recent speech.

Behind the headlines and clear policy contrasts, however, lies an important point: The U.S. is likely to become coal plant free anyway, with or without presidential support. The reason is economics, which, as always, trumps the words of a politician – even if it can take longer.

The US and coal

In the U.S., the Energy Information Administration has been charged, since the energy crises of the 1970s, with providing an unbiased view of the types of energy used to power the U.S. economy.

Its data show that in 2006 about 10 percent of all electric power plants – 616 – ran on coal. By 2016, the latest year for which data are available, that figure dropped to just 4 percent, or 381 coal-fired power plants. That compares with 1,801 natural gas plants and 3,624 “other renewables” such as wind, up from 1,659 and 843 in 2006, respectively.

In other words, slightly more than 20 coal plants are shutting down each year on average. If the trend continues at the same rate, then most coal-fired power plants will be closed in the U.S. within 18 years, or around 2035. A few will likely remain, since utilities close the oldest, least efficient plants first, but the trend is clear.

…click on the above link to read the rest of the article…

New NASA Study Solves Climate Mystery, Confirms Methane Spike Tied to Oil and Gas

January 17, 2018

New NASA Study Solves Climate Mystery, Confirms Methane Spike Tied to Oil and Gas

Global map of percent changes in acres burning

Over the past few years, natural gas has become the primary fuel that America uses to generate electricity, displacing the long-time king of fossil fuels, coal. In 2019, more than a third of America’s electrical supply will come from natural gas, with coal falling to a second-ranked 28 percent, the Energy Information Administration predicted this month, marking the growing ascendency of gas in the American power market.

But new peer-reviewed research adds to the growing evidence that the shift from coal to gas isn’t necessarily good news for the climate.

A team led by scientists at NASA‘s Jet Propulsion Laboratory confirmed that the oil and gas industry is responsible for the largest share of the world’s rising methane emissions, which are a major factor in climate change — and in the process the researchers resolved one of the mysteries that has plagued climate scientists over the past several years.

Missing Methane

That mystery? Since 2006, methane emissions have been rising by about 25 teragrams (a unit of weight so large that NASAnotes you’d need over 200,000 elephants to equal one teragram) every year. But when different researchers sought to pinpoint the sources of that methane, they ran into a problem.

If you added the growing amounts of methane pollution from oil and gas to the rising amount of methane measured from other sources, like microbes in wetlands and marshes, the totals came out too high — exceeding the levels actually measured in the atmosphere. The numbers didn’t add up.

It turns out, there was a third factor at play, one whose role was underestimated, NASA‘s new paper concludes, after reviewing satellite data, ground-level measurements, and chemical analyses of the emissions from different sources.

…click on the above link to read the rest of the article…

Gail Tverberg: The Coming Energy Depression

January 8, 2018

Gail Tverberg: The Coming Energy Depression

The math is straightforward, but cruel

As most PeakProsperity.com readers know, we fully agree with the statement: Energy is THE master resource.

Without it, nothing can get done.

Energy analyst and professional actuary Gail Tverberg returns to the podcast this week to revisit the global energy outlook. And fair warning, Gail warns it’s quite grim.

To her, it’s a simple math problem. We have too many people placing too much demand on the world’s depleting energy resources. The cost of energy is rising, which we are compensating for in the short term by using financial gimmicks to make “affordable” — when all we’re really doing is creating future promises that cannot possibly be repaid.

The increasing cost of energy is manifesting in higher prices (for everything, not just fuels) and lower real wages, a divergence she sees only worsening from here. This path leads to another Great Depression-style crisis from which she does not see a clear path out of:

What we really live on is what we pull out of the ground each year, in terms of oil or coal or natural gas or whatever. So what we have is just what we pull out.

Now, you accurately point out that we’re making too many claims on the future using debt. We’re actually doing this via a couple of different ways, which are pretty much equivalent. One of them is by issuing equity. This has the equivalent effect as using debt because what you’re saying is I’ll pay you dividends, and you’re going to get a higher price in the future. This is simply different kind of claim on the future. Another way to borrow from the future is through government promises.

…click on the above link to read the rest of the article…

Here is what’s holding back China’s plans for world domination

January 7, 2018

Here is what’s holding back China’s plans for world domination

Australia may be the worlds largest exporter of coal, sending out 388 million tons in 2015, but China’s production of coal the same year was 3,747 million tons — nearly ten times as much, and nearly half of global coal production. But the Chinese coal boom is turning. David Archibald describes the geopolitical ramifications. For me, the next question is what stops China doing nukes? — Jo

PS: There is a rumor that Australia has only 4-5 days of fuel stocks today, and is especially low on aviation fuel. Anyone with info, please comment or email joanne AT this site.

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Here is what’s holding back China’s plans for world domination

One of the reasons that China produces the world’s cheapest solar panels, for example, is because it has some of the world’s cheapest coal-fired power

There is no doubt that China wants to subjugate Asia, echoing Japan’s role during World War II. For those who think China’s economy might overtake the United States economy, and thus make China a more formidable adversary, this article aims to provide detail on China’s main constraint in that ambition: that its domestic coal production is near its peak and will then go into long-term decline.

Even if China can keep its energy supply constant with an accelerated expansion of its nuclear power sector, the cost of producing coal from deeper mines will mean that the costs of industrial production will rise due to higher feedstock costs. One of the reasons that China produces the world’s cheapest solar panels, for example, is because it has some of the world’s cheapest coal-fired power. German solar panel-producers are hobbled by that country’s energiewende, which, translated from the German, means the miracle required to replace coal and nuclear power with sunbeams and breezes and still have a functioning economy.

…click on the above link to read the rest of the article…

Everyone cutting coal use except for most of the world and most of the banks

December 18, 2017

Everyone cutting coal use except for most of the world and most of the banks

The situation with our most hated energy asset

Australia’s big four banks are fighting over themselves to turn down the chance to profit from coal loans and tell the world. Months ago, Westpac went on a low-coal diet, declaring like a kind of vegan-keto-banker that they won’t consider a loan unless the coal mined has at least 6,300 kilocalories per kilogram. Presumably they will lose weight, or at least lighten up by a few shareholders. Last week our National Australia Bank announced they are waiting for the carbon capture fairy to conquer some laws of chemistry and economics before they finance coal mines again. (Though they limit themselves to spurning only new customers and “thermal coal” in a kind of have-cake-eat-half-the-cake policy.)

But while the small-fish Australian banks advertise their doogooder star status, financial institutions in Canada are putting $2.9 billion towards building new coal plants overseas. And in the last three years, Chinese banks have casually smashed $630 billion dollars into coal. (Notably, even the Chinese don’t want to put money into Adani coal in Australia, the political environment here is that bad.)

The rest of the world is definitely not watching the Australian Banks. Global coal consumption has been flat for a few years, but in a new report, the IEA predicts coal use will grow again ’til 2022, at least in a subdued way. This appears to be singlehandedly due to Narenda Modi, who announced in August that the rest of India should get electricity and by next year, so 40 million households are to be connected at a cost of $2.5 billion USD.

Soak in those IEA Key Energy Statistics 2017:

IEA Key Energy Statistics 2017

…click on the above link to read the rest of the article…

“Super Critical” Coal Shortage Sends India Scrambling For NatGas

September 14, 2017

“Super Critical” Coal Shortage Sends India Scrambling For NatGas

Big disappointment in the global natural gas industry this week, with majors Total and Eni coming up largely dry in a much-anticipated well offshore Cyprus.

But elsewhere things are turning extremely bullish for natgas. With one of the world’s fastest-emerging energy consumers scrambling to get all the supply it can.

India.

Local media reported this week that India’s power generators are seeing a sudden surge in natgas buying because of an “acute” shortage in the country’s go-to energy fuel: coal.

After enjoying years of ample coal supply, India’s power sector has seen inventories slip drastically into the red in recent months. With ten major power plants classified as “critical”, with less than seven days of coal stocks — and five of those being “super critical” with less than four days of coal supply.
And that drastic shortage has reportedly turned these generators to natural gas in a major way.

Sources said India’s generators have purchased 10 million cubic meters (350 million cubic feet) during “the last couple days”. Indicating energy producers are getting desperate in keeping their operations in business amid the coal shortage.

This potentially has long-term implications for global natural gas. Because of a peculiar feature of India’s energy landscape: a fleet of unused gas-fired plants.

India in fact has over 25 GW of installed gas-driven generating capacity. But here’s the thing: 55 percent of that capacity usually never runs. Because it’s “technically stranded” — having no access to natgas feed at commercially-competitive prices.

But the coal crisis is changing the economics here. Power operators are so desperate to keep the lights on, they’re willing to pay the higher prices required to deliver gas to the stranded power plants — causing this week’s major surge in natgas buying.

If the coal shortage persists, that demand could become permanent. Watch for weekly data on coal stocks at India’s power plants, and stats on natural gas usage across India — which could have knock-on effects on imports.

Here’s to un-stranding,

China: Is peak coal part of its problem?

June 21, 2016

China: Is peak coal part of its problem?

The world’s coal resources are clearly huge. How could China, or the world in total, reach peak coal in a timeframe that makes a difference?

If we look at China’s coal production and consumption in BP’s 2016 Statistical Review of World Energy (SRWE), this is what we see:

Figure 1. China’s production and consumption of coal based on BP 2016 SRWE.

Figure 2 shows that the quantities of other fuels are increasing in a pattern similar to past patterns. None of them is large enough to make a real difference in offsetting the loss of coal consumption. Renewables (really “other renewables”) include wind, solar, geothermal, and wood burned to produce electricity. This category is still tiny in comparison to coal.

Figure 2. China’s energy consumption by fuel, based on BP 2016 SRWE.

Why would a country selectively decide to slow down the growth of the fuel that has made its current “boom” possible? Coal is generally cheaper than other fuels. The fact that China has a lot of low-cost coal, and can use it together with its cheap labor, has allowed China to manufacture goods very inexpensively, and thus be very competitive in world markets.

In my view, China really had no choice regarding the cutback in coal production–market forces were pushing for less production of goods, and this was playing out as lower commodity prices of many types, including coal, oil, and natural gas, plus many types of metals.

China is mostly self-sufficient in coal production, but it is a major importer of natural gas and oil. Lower oil and natural gas prices made imported fuels of these types more affordable, and thus encouraged more importing of these products.

…click on the above link to read the rest of the article…

Can the world go all-electric?

June 18, 2016

Can the world go all-electric?

Recently, word leaked out that Norway may ban the sale of diesel- and gasoline-powered vehicles by 2025. The move toward electric vehicles is part of a dream shared by those concerned about climate change and about fossil fuel depletion (especially oil depletion), namely, to turn the world into one big all-electric paradise by running everything we can on electricity.

Theoretically, this is possible, but getting there won’t be easy. First, such a transition will take time. In the Norwegian example cited above, the transition to an all-electric private car fleet would take about 15 years based on Norwegian new private car registrations in 2015 and the current total number of registered private cars.

But the ban wouldn’t take effect until 2025. While Norwegian electric car registrations are rising, so are total car registrations. Even if we generously assume that the rise in electric car registrations between now and 2025 will shave five years off the transition, that still means Norway won’t achieve an all-electric private automobile fleet until 2035. And, Norway is already a leader in the move toward all-electric transportation. Other countries lag far behind.

The Norwegian example points out a second difficulty in the transition to an all-electric world. Norway gets 95.9 percent of its electricity from hydroelectric dams. It gets another 1.6 percent from wind turbines. Only 2.5 percent of its electricity comes from thermal power plants, the kind that burn fossil fuels such as coal and natural gas and that provide 66 percent of the world’s electricity.

Transitioning to electric transportation in places that primarily burn coal, natural gas and/or diesel fuel to produce electricity would undermine the goal of lowering greenhouse gas emissions. In thermal power plants, the ones that burn fossil fuels, two-thirds of the energy produced is lost in the form of heat. Only one-third is turned into electricity.

…click on the above link to read the rest of the article…

As Drought Grips South Africa, A Conflict Over Water and Coal

May 16, 2016

As Drought Grips South Africa, A Conflict Over Water and Coal

Facing one of the worst droughts in memory, South Africa’s leaders have doubled down on their support of the water-intensive coal industry. But clean energy advocates say the smartest move would be to back the country’s burgeoning wind and solar power sectors.

Until a ferocious drought withered crops, turned rivers to trickles, and dried up municipal drinking water supplies, one of Limpopo province’s distinctions was the ample sun and good soil that made it South Africa’s premier producer of fruits and vegetables.

Another distinction was that the province’s farmers made an informal agreement to share scarce water with coal companies developing the Waterberg Coalfield that lies beneath dry central Limpopo.

Keith Schneider

Residents of KwaZulu-Natal wait in line daily to get water from a government-supplied tank.

The drought, the most extreme in South Africa since the start of the 20th century, shattered the fragile equilibrium between the agricultural and coal sectors. Pitched street clashes between farmers and police, who back the coal interests, have broken out south of Musina, where Coal Africa proposes to build a $406 million mine in an area where some of the country’s most productive vegetable farms operate. The mine would consume 1 million gallons of water a day, according to company disclosures. Both the mine and neighboring irrigated farms are dependent on the Nzhelele River, which has dwindled to a shallow stream.

Higher temperatures and diminished rainfall, which many scientists attribute to climate change are wreaking havoc in two of South Africa’s largest economic sectors — agriculture and energy. Yet in the face of this growing crisis, South Africa’s leaders continue to display unyielding allegiance to the nation’s water-guzzling coal sector, whose 50-plus billion tons of coal reserves fuel 90 percent of the country’s electrical generating capacity and provide a third of its liquid fuels.

…click on the above link to read the rest of the article…

End Of An Era: Peabody Declares Bankruptcy

April 13, 2016

End Of An Era: Peabody Declares Bankruptcy

The St. Louis-based Peabody Energy Corp. warned a month ago that it was considering filing for Chapter 11 bankruptcy, and on Wednesday they made it official. Peabody’s mines will continue to operate uninterrupted through the bankruptcy process. According to Peabody’s court filing, it has obtained $800 million in debtor-in-possession financing facilities.

“Through today’s action, we will seek an in-court solution to Peabody’s substantial debt burden amid a historically challenged industry backdrop. This process enables us to strengthen liquidity and reduce debt, build upon the significant operational achievements we’ve made in recent years and lay the foundation for long-term stability and success in the future,” the company said in a press release.

Peabody has suffered a dramatic fall from grace, after paying $5.1 billion to acquire major coal-producing assets in Australia in 2011. Since then, coal prices have collapsed, coal demand has ground to a halt, and Peabody’s debt has piled up. In the U.S., cheap natural gas and environmental regulation has led to coal’s downfall in the electric power sector. Abroad, a slowdown in China has hurt both thermal and metallurgical coal demand. China’s demand for steel has slowed and it is undertaking a shift away from coal because of air pollution, leaving the world’s top coal producers with a vastly smaller market than they had expected just a few years ago.

U.S. coal exports have declined in recent years, leaving Peabody – who oversees large mining operations in Wyoming – with too much coal and not enough demand. U.S. coal exports fell by 23 percent in 2015 compared to a year earlier.

Peabody’s bankruptcy is the latest in a string of bankruptcies from major coal producers, including Arch Coal, Alpha Natural Resources, Patriot Coal, and Walter Energy.

Oregon says yes to coal-free electricity

March 21, 2016

Oregon says yes to coal-free electricity

The Oregon legislature has adopted a first-in-the-nation plan to phase out electricity from coal, a major source of climate-changing greenhouse gases.

The state’s environmental community had been gearing up for a ballot initiative this year that would have forced the state’s utilities to abandon coal as a fuel for electricity. But negotiations between the two groups resulted in a legislative compromise–dubbed the Clean Electricity and Coal Transition Plan–that will wean the state off coal-fired electricity no later than 2030 except for one out-of-state power plant that is partly owned by an Oregon-based utility. That plant will be retired no later than 2035.

The plan also calls for an increase in the percentage of energy that electric utilities must get from renewable sources such as wind and solar from 25 percent by 2025 to 50 percent by 2040.

Coal currently provides almost 34 percent of the state’s electricity. Hydroelectric generation provides almost 43 percent. Natural gas and wind account for 13.5 percent and 5.6 percent, respectively. Regarding Oregon’s renewable energy targets, for contextCalifornia and New York have mandated the same percentage as Oregon but by 2030. Vermont has targeted 75 percent by 2032, and Hawaii has mandated 100 percent renewable energy for electricity by 2045.

The Clean Electricity and Coal Transition Plan targets the state’s two large investor-owned utilities, Pacific Power and Portland General Electric, which together provided 65 percent of all electricity to the state as of 2014 according to the Oregon Department of Energy.

Municipal utilities, cooperatives and public utility districts are not covered by the plan. These entities currently get a large portion of their electricity from the Bonneville Power Administration (BPA). BPA derives 83 percent of its power from federally-owned hydroelectric dams dotting the Northwest and 10 percent from nuclear power stations. BPA does not generate coal-fired electricity though a small portion of its purchased electricity may come from coal-fired plants.

…click on the above link to read the rest of the article…

On Burning Ground: The Human Cost Of India’s Push to Produce More Coal

March 15, 2016

On Burning Ground: The Human Cost Of India’s Push to Produce More Coal

Girls scavenge coal at a dump site of an open-cast mine in the Jharia coalfield. View gallery. Daniel Berehulak/Getty Images

As part of India’s modernization program, Prime Minister Narenda Modi has called for doubling the nation’s coal production by 2020. For the villages in the Jharia coalfield, which is frequently shrouded in smoke from underground fires, the government’s plans have only increased the pressures and dangers of living alongside huge, burning open-pit mines.

“Come,” says Raju. “Let me show you my house.” His clean white shirt, well-brushed hair, and calm demeanor belie the almost apocalyptic landscape in which he and his family lived.

We are standing on the edge of a 650-foot unfenced drop into an open-pit coal mine that is shrouded in dust. As we gingerly approach his home, a two-room brick hut just 30 feet from the precipice, we have to clamber over the rubble of collapsed houses and avoid deep fissures and spots of hot earth from which smoke is erupting. What remains of the once-rural village of Lantenganj — now deep inside India’s largest coalfield in the mining state of Jharkhand — is being consumed by underground fires that burn the coal beneath. The government-owned company Bharat Coking Coal, whose mines are responsible for the fires, wants the villagers to leave — for their own safety, the company says, and so the mine can be expanded.

But Raju’s family and the 50 others that cling on here say they will not go without proper compensation and new homes near to their jobs in these mines. “We’ve got nothing from the government,” Raju tells me, as we inspect a crack that has opened up in his living room floor. “We want a better deal or we will not move.” Until, presumably, their houses fall into the abyss below.

…click on the above link to read the rest of the article…

Coal Shock Model

March 13, 2016

Coal Shock Model

blog1603/

The eventual peak in World fossil fuel output is a potentially serious problem for human civilization. Many people have studied this problem, including Jean Laherrere, Steve Mohr, Paul Pukite (aka Webhubbletelescope), and David Rutledge.

I have found Steve Mohr’s work the most comprehensive as he covered coal, oil, and natural gas from both the supply and demand perspective in his PhD Thesis. Jean Laherrere has studied the problem extensively with his focus primarily on oil and natural gas, but with some exploration of the coal resource as well. David Rutledge has studied the coal resource using linearization techniques on the production data (which he calls logit and probit).

Paul Pukite introduced the Shock Model with dispersive discovery which he has used primarily to look at how oil and natural gas resources are developed and extracted over time. In the past I have attempted to apply Paul Pukite’s Shock Model (in a simplified form) to the discovery data found in Jean Laherrere’s work for both oil and natural gas, using the analysis of Steve Mohr as a guide for the URR of my low and high scenarios along with the insight gleaned from Hubbert Linearization.

In the current post I will apply the Shock model to the coal resource, again trying to build on the work of Mohr, Rutledge, Laherrere, and Pukite.

A summary of URR estimates for World coal are below:

blog1603/

The “Laherrere+Rutledge” estimate uses the Rutledge best estimate for the low case and Laherrere’s low and medium cases for the medium and high cases. Laherrere also has a high case of 750 Gtoe for the World coal URR, which seems too optimistic in my opinion. The “high” estimate of Steve Mohr has been reduced from his “Case 3” estimate of 670 Gtoe by 40 Gtoe because I have assumed lignite and black coal resources are lower than his high estimate.

…click on the above link to read the rest of the article…

America’s Top Shale Gas Basin in Decline

December 23, 2015

America’s Top Shale Gas Basin in Decline

The natural gas drilling frenzy is grinding to a halt, as the industry struggles with excess supply.

Natural gas prices have plunged to their lowest levels in more than a decade this month, dipping below $1.80 per million Btu (MMBtu).

The shale gas revolution is an old story at this point, one that everyone is familiar with. But the revolution never really ended, even though the media moved on to focus on the tight oil boom. Natural gas production continued to rise over the past decade, reaching record heights in 2015.

However, demand has not kept up, despite the rise in the natural gas power burn. Gas-fired power plants are replacing coal for electricity generation, but not quickly enough to soak up all of the extra supply coming out of U.S. shale.

Natural gas storage levels, meanwhile, are overflowing due to the unseasonably warm weather across much of the United States. For natural gas producers, this is a nightmare situation with Henry Hub prices falling to levels that are extremely difficult to turn a profit. The low prices forced the iconic Chesapeake Energy, the U.S.’ second largest natural gas producer, into a debt swap to push out maturity dates for its debt. Chesapeake’s stock price has plunged 80 percent over the past year, and has dropped by 20 percent since the beginning of December.

There is a bit of hope for the market, as natural gas prices surged by 8 percent on December 21 because colder weather is starting to appear over the horizon, pointing to higher demand. But that will only nip around the edges of the nation’s glut in supply.

…click on the above link to read the rest of the article…

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