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It’s all connected: The natural gas market and its casualties

It’s all connected: The natural gas market and its casualties

Natural gas was supposed to be the so-called bridge fuel to the low-carbon renewable energy economy. It was abundant, cleaner to burn than oil and coal, and more and more available to anyone who wanted it as a global market in liquefied natural gas (LNG) blossomed and boomed.

But this season it is looking increasingly like that metaphorical natural gas bridge is going to come up short. And, the effects are starting to ripple throughout the economy, not only in the natural gas markets themselves, but also in the electricity and agricultural markets.

First, there are the obvious signs in the natural gas market. In both North America and Europe natural gas prices have bounded upward. In Europe gas import prices have zoomed up more than 400 percent in the last year from $2.86 per million BTUs (MMBtu) to $15.49 per MMBtu. (A million BTUs is roughly equivalent to the U.S. measure of a thousand cubic feet or mcf.)In the United States the levitation is not as dramatic, but that may change once the cold weather sets in. U.S. natural gas futures prices were around $2.90 per mcf a year ago and closed Friday at $5.10 per mcf for the October contract. But the U.S. natural gas price was only about $3.90 per mcf just before Hurricane Ida knocked half of the natural gas production from the U.S. portion of the Gulf of Mexico offline.

The other cause for rising natural gas prices is the surge in demand worldwide as economies boom in the wake of record fiscal stimulus and low interest rates in response to the pandemic.

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

Whatever happened to China’s revolutionary molten salt nuclear reactor program?

Whatever happened to China’s revolutionary molten salt nuclear reactor program?

Several years ago during a radio interview, the host told me that the Chinese were planning on deploying a commercial modular molten salt reactor (MSR) by 2020. For context, these nuclear reactors are based on existing technology demonstrated by previous operating prototypes, can use fuel that is hundreds of times more abundant than the only naturally occurring fissile isotope (uranium-235), are resistant to making bomb-grade material, and cannot suffer meltdowns. Modular design could allow them to be built in factories and shipped ready to install to any suitable location.

The host was confident about his prediction because it had come from one of the many books circulating at the time telling us how great the human future would be and that new technology would solve all the world’s major problems including hunger, climate change, environmental pollution and resource scarcity. This would happen in part due to abundant energy produced by MSRs even as human populations continued to grow.

Sticking to the narrow question of MSRs, I opined that development of complex technologies takes far longer than anticipated and that there are unique challenges in the utility industry. I guessed it would be 20 years before a viable commercial Chinese MSR would appear.

While the Chinese did recently begin construction of a demonstration modular nuclear reactor, this reactor is of the light-water variety—the kind that is already widely in use, that is subject to the catastrophic meltdowns that haunt the nuclear industry, that uses uranium as its fuel, and that can foster proliferation of nuclear weapons.

The pressurized water reactor mentioned in the news release linked above is a type of light-water reactor (LWR). The design is undoubtedly safer than previous LWRs. But it still suffers from the many drawbacks of LWRs and seems unlikely to be widely adopted.

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

All of a sudden: Climate change tipping points appear with a vengeance

All of a sudden: Climate change tipping points appear with a vengeance

Across the world climate change seems to have arrived earlier than expected. There are world-class athletes with bodies trained for endurance and strength breaking down from the extreme heat visited on the Tokyo Olympics by mother nature. There are the continuing wildfires in the American West that take out entire towns. The drought there is so bad that states are thinking about paying farmers NOT to irrigate their crops as a conservation strategy.

One of the other effects of climate change is heavier rains and devastating floods. Recent floods in Germany were caused by rains characterized as once-in-a-millennium, rains which, for example, killed more than 200 people and caused $1.5 billion in damage to the German railway network. But, of course, statements about once-in-a-fill-in-the-blank rains or droughts seem less and less relevant in the age of climate change as what we call extraordinarily destructive weather just morphs into “the weather.”

Once-in-a-millennium rains also visited parts of China recently dumping in just three days an entire year’s rainfall on one town of 12 million.

The infrastructure we have built and the way we work and live are simply not designed for these extremes. Our systems are breaking down under the pressure of climate-change-induced extreme weather.

But the scariest thing is that all of the incidents I cited above could happen all over again next year and the next year and the next after that in the same places as extreme weather worsens and becomes just “weather.” In California, 2020 marked the worst fire season ever in the state. But 2021 is now on pace to be even worse.

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

Huge carbon capture pipeline network proposed: Industry’s ‘delay-and-fail strategy’ rises again

Huge carbon capture pipeline network proposed: Industry’s ‘delay-and-fail strategy’ rises again

An astute journalist I know once described carbon capture and storage (CCS) as a “delay-and-fail strategy” devised by the fossil fuel industry. The industry’s ploy was utterly obvious to him: Promise to perfect and deploy CCS at some vague point in the future. By the time people catch on that CCS won’t work, the fossil fuel industry will have successfully extended the time it has operated without onerous regulation for another couple of decades.

And because huge financial resources (mostly government resources) will have gone to CCS projects instead of low-carbon energy production, society will continue to be wildly dependent on carbon-based fuels (giving the industry further running room).

The trouble is that the cynical CCS strategy has already been under way and failing for more than two decades already. And yet, it is seeking a renewed lease on life with a proposal for a vast network of carbon dioxide pipelines “twice the size of the current U.S. oil pipeline network by volume.” The public face of the effort is a former Obama administration secretary of energy with a perennially bad haircut, Ernest Moniz.

Moniz has a partnership with the AFL-CIO to push the idea. No doubt unions like the project because it would create a lot of jobs regardless of whether it actually addresses climate change.

Just for the record, here’s a list of reasons that CCS doesn’t work and likely will not work in any time frame that matters for addressing climate change:

  1. It’s very costly. Many of the pilot projects have been shut down because they are uneconomical.

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

Has OPEC finally won the war against shale oil?

Has OPEC finally won the war against shale oil?

I have maintained for the past six years that a key goal of OPEC has been to so demoralize investors in shale oil that they stop sending money to the companies that drill for it. As I’ve written previously, I believe that OPEC’s contest with the shale oil industry is “part of a broader strategy meant to maximize Saudi revenues as production in the kingdom hovers at an all-time high over the next decade before beginning a decline.” It now appears that OPEC may have finally won its war against shale.

Investment in shale oil companies has finally collapsed—even as oil prices levitate. It has been a long time coming. The industry would like you to believe that it is now showing “restraint” in its capital spending. But, to use a dieting analogy, there is a big difference between watching what you eat and having your jaw wired shut—involuntarily in this case. The industry has experienced the equivalent of the latter in the capital markets.

What has amazed all of us who watched this battle play out is that OPEC didn’t win sooner. The relentless tolerance for losses among investors was beyond belief. And, when those investors returned in force after a brief vacation during the oil price bust in 2015, we skeptics grew concerned that rational thought had been eliminated from the universe.

Why did we think that? Because by that time the industry had already burned through hundreds of billions of investors’ dollars, dollars that merely subsidized petroleum consumers while enriching industry insiders. I am reminded of the joke about the business owner who explained that while he loses 5 cents on every sale, he makes it up in volume. Free cash flow numbers for the industry as a whole made it absolutely obvious that shale oil had been a money-loser for years. Why couldn’t investors see something that obvious?

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

Climate change consequences: Too hot, too wet and out of time

Climate change consequences: Too hot, too wet and out of time

The last few weeks have demonstrated that we have arrived at the climate change catastrophe long prophesied by climate scientists—a catastrophe that many thought we still had decades to avert.

In the Pacific Northwest high temperatures broke records day after day. In my former home of Portland, Oregon the temperature reached 116 degrees F (47 degrees C). If you look at the average high temperatures in Portland in summer, you’ll see why air-conditioning is not a feature of the average Portland home or apartment. I lived comfortably without it during the four years I was there. Last week Portland seemed as if it had moved to the desert Southwest.

North and south of Portland, the extreme drought in the West continues as wildfires swirl toward another terrible seasonWildfires now dot British Columbia as well as Western Canada suffers from extreme heat. And, drought exacerbated by climate change is occurring on other continents including in the Brazilian Amazon rainforest and in Thailand.

We must not forget that one of the other predictions of climate scientists was more frequent and more severe floods resulting from a speeding up of the hydraulic cycle. In my home state of Michigan, seven inches of rain fell in just a few days recently leading to a declaration of a state of emergency as many areas experienced severe flooding.

When I watched renowned climate scientist James Hansen’s (now prophetic) 1988 testimony before the U.S. Senate, I was at the time uncharacteristically hopeful that the world’s governments would do something to prevent what I perceived as a very, very dangerous threat to human civilization. Surely, the world’s elite would now act with haste before it was too late, I thought. (For a brief review of Hansen’s eerily accurate forecasts 30 years after his testimony, check out this video.)

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

Climate change consequences: Too hot, too wet and out of time

Climate change consequences: Too hot, too wet and out of time

The last few weeks have demonstrated that we have arrived at the climate change catastrophe long prophesied by climate scientists—a catastrophe that many thought we still had decades to avert.

In the Pacific Northwest high temperatures broke records day after day. In my former home of Portland, Oregon the temperature reached 116 degrees F (47 degrees C). If you look at the average high temperatures in Portland in summer, you’ll see why air-conditioning is not a feature of the average Portland home or apartment. I lived comfortably without it during the four years I was there. Last week Portland seemed as if it had moved to the desert Southwest.

North and south of Portland, the extreme drought in the West continues as wildfires swirl toward another terrible seasonWildfires now dot British Columbia as well as Western Canada suffers from extreme heat. And, drought exacerbated by climate change is occurring on other continents including in the Brazilian Amazon rainforest and in Thailand.

We must not forget that one of the other predictions of climate scientists was more frequent and more severe floods resulting from a speeding up of the hydraulic cycle. In my home state of Michigan, seven inches of rain fell in just a few days recently leading to a declaration of a state of emergency as many areas experienced severe flooding.

When I watched renowned climate scientist James Hansen’s (now prophetic) 1988 testimony before the U.S. Senate, I was at the time uncharacteristically hopeful that the world’s governments would do something to prevent what I perceived as a very, very dangerous threat to human civilization. Surely, the world’s elite would now act with haste before it was too late, I thought. (For a brief review of Hansen’s eerily accurate forecasts 30 years after his testimony, check out this video.)

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

Shale oil and gas fraud: A sign of a peak in oil supplies?

Shale oil and gas fraud: A sign of a peak in oil supplies?

Those of us who watched incredulously as investors shovelled more and more money into what we were sure were money-losing shale oil and gas drillers do not find the current spate of fraud lawsuits against these drillers surprising.

The gargantuan claims about shale hydrocarbon reserves—which were compared more than once to those in Saudi Arabia—were clearly designed to woo investors into bidding up the stock price and/or hoovering up the constant stream of junk bonds emitted by the shale oil and gas drillers. The hype succeeded for a long time, even during the crash in oil prices in 2015 and beyond when investors convinced themselves that they were picking up “bargains.”

It wasn’t until the pandemic-induced plunge in oil prices that the reality of those outlandish claims was revealed, and many companies disappeared.

But this story of fraud and exaggerated claims is much more than a legal story. The large production gains that did take place in American oil fields had people believing America would be or already was “energy-independent,” a phrase that meant the country would not be a net importer of energy resources. Though U.S. dependence on imported energy resources did decline, it didn’t reach zero until the pandemic dramatically crashed U.S. oil demand below U.S. production. But as the world and U.S. economies rebound, that dependence is almost certain to return as the so-called “shale miracle” turns out to be something less than miraculous, bankruptcies continue and reserve estimates come back into line with reality.

But the fallout extends even further. The U.S. oil boom was the principal source of increased world production for most of the last 15 years. Without that boom and the boom in the Canadian tar sands, world oil production would have grown little or even declined.

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

Who pays for the care of “orphaned” oil and gas wells? You do

Who pays for the care of “orphaned” oil and gas wells? You do

When oil and gas wells end their useful life, one of two things happens: 1) They are plugged and capped to prevent further flows or 2) they are simply abandoned.

When they fall into the second category, they are called “orphaned” wells and they become the responsibility of the government to secure. But that’s if the government actually knows about them. Records of well placements are not always so carefully maintained and can get lost during bankruptcies and changes in ownership or due to sheer carelessness. As a result, there appear to be far more abandoned wells than the orphaned ones that governments know about.

Since I last wrote about this problem in 2012, there has been a huge wave of drilling in Texas, North Dakota, New Mexico and Colorado as the so-called shale revolution unleashed billions of barrels of previously inaccessible oil and trillions of cubic feet of natural gas on the world. Now that drillers in the shale fields have fallen on hard times, many wells are idle and at risk of being abandoned.

Companies are required to post bonds to pay for the plugging and capping of wells by the state if the companies fail to plug and cap them. However, these bonds are entirely inadequate. According to Grist, in Texas the bonds covered just 16 percent of the costs incurred by the state in 2015. In New Mexico the number was 18 percent.

The pattern here is a familiar one. The profits of oil and gas production get privatized and the costs—in this case, environmental and health costs—get socialized, that is, members of the public get saddled with the costs either through clean-up or damage to health and property

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

 

Not just another drought: The American West moves from dry to bone dry

Not just another drought: The American West moves from dry to bone dry

The American West is having a drought. So, what else is new? And, that’s just the point. The American West has been in an extended drought since 2000, so far the second worst in the last 1200 years. Here is the key quote from the National Geographic article cited above:

In the face of continued climate change, some scientists and others have suggested that using the word “drought” for what’s happening now might no longer be appropriate, because it implies that the water shortages may end. Instead, we might be seeing a fundamental, long-term shift in water availability all over the West.

That is what climate scientists have been warning about all along. The problems we are now experiencing are not just cycles or fluctuations—although those continue to be important—but rather, permanent changes in the climate (that is, on any timeline that matters to humans).

I wrote about this drought when it was only 10 years old. (For a sense of how bad it is now, see the U.S. Drought Monitor.) Back then it did not seem that residents and businesses were taking it seriously, even if some water officials were. There have been ups and downs in the intervening years, but mostly downs.

There is a reason that most major cities are located near water and not in arid regions. Water is heavy, fluid and not easily transported—though vast and expensive water projects do just that. Water cannot be easily created from its constituents elements, oxygen and hydrogen. Oxygen is abundant everywhere on Earth. But hydrogen in its elemental state is not readily available and must be extracted from other sources such as natural gas. The cost of manufacturing water is prohibative or we’d likely be doing it already.

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

The American infrastructure, ancient Rome and ‘Limits to Growth’

The American infrastructure, ancient Rome and ‘Limits to Growth’

Infrastructure is the talk of the town in Washington, D.C. where I now live and with good reason. The infrastructure upon which the livelihoods and lives of all Americans depends is in sorry shape. The American Society of Civil Engineers 2021 infrastructure report card gives the United States an overall grade of C minus.

Everyone in Washington, yes, everyone, believes some sort of major investment needs to be made in our transportation, water, and sewer systems which have been sorely neglected. There are other concerns as well about our energy infrastructure and our communications infrastructure—both of which are largely in private hands. The wrangling over how much will be spent and on what is likely to go on for months.

What won’t be talked about is that the cost of maintaining our infrastructure is rising for one key reason: There’s more it every day. We keep expanding all these systems so that when they degrade and require maintenance and replacement, the cost keeps growing.

There is a lesson on this from ancient Rome. Few modern people understand that the Romans financed their expansion and government operations using the booty taken from vanquished territories. That worked until it didn’t. When Rome reached its maximum expanse, when it no longer conquered new territories, the booty stopped coming. With the borders of Rome the longest the empire had ever had to defend, it now relied primarily on taxes to finance a large army and administrative presence across the empire in order to maintain control.
Our modern-day version of booty has been cheap energy, much of it supplied by the oil, natural gas and coal fields of America and later its uranium mines…

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

The American infrastructure, ancient Rome and ‘Limits to Growth’

The American infrastructure, ancient Rome and ‘Limits to Growth’

Infrastructure is the talk of the town in Washington, D.C. where I now live and with good reason. The infrastructure upon which the livelihoods and lives of all Americans depends is in sorry shape. The American Society of Civil Engineers 2021 infrastructure report card gives the United States an overall grade of C minus.

Everyone in Washington, yes, everyone, believes some sort of major investment needs to be made in our transportation, water, and sewer systems which have been sorely neglected. There are other concerns as well about our energy infrastructure and our communications infrastructure—both of which are largely in private hands. The wrangling over how much will be spent and on what is likely to go on for months.

What won’t be talked about is that the cost of maintaining our infrastructure is rising for one key reason: There’s more it every day. We keep expanding all these systems so that when they degrade and require maintenance and replacement, the cost keeps growing.

There is a lesson on this from ancient Rome. Few modern people understand that the Romans financed their expansion and government operations using the booty taken from vanquished territories. That worked until it didn’t. When Rome reached its maximum expanse, when it no longer conquered new territories, the booty stopped coming. With the borders of Rome the longest the empire had ever had to defend, it now relied primarily on taxes to finance a large army and administrative presence across the empire in order to maintain control.

Our modern-day version of booty has been cheap energy, much of it supplied by the oil, natural gas and coal fields of America and later its uranium mines…

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

Clean energy minerals shortage: Who knew it could happen?

Clean energy minerals shortage: Who knew it could happen?

The race for so-called green energy has spawned another race, one for the minerals needed to make the devices such as solar panels and batteries that produce, store and transmit that energy. A hitherto largely unchallenged economic idea—that we will always have supplies of everything we need at the time we need it at prices we can afford—is in the process of being tested.

According to the International Energy Agency (IEA), the world will need to produce six times more of these critical metals than we are producing now to reach net zero carbon emissions by 2050, a target widely held out as an essential goal for avoiding catastrophic effects from climate change. The need for lithium—the key component in lithium batteries that are prized for light weight and the ability to charge quickly—will grow 70 times over the next 20 years, the IEA predicts.

One wonders what the price trajectories of the minerals IEA mentions will look like in the coming years. The long-term charts are concerning for nickellithiumcobalt and others since this appears to be just the beginning of the run-up.

The world is experiencing shortages already of many key commodities and manufactured items (such as computer chips). This is, in part, due to lack of investment over the last decade after a general slump in commodity prices following the Great Financial Crisis of 2008 and a broad moderation in worldwide economic growth. Certainly, we can expect increased investment in these critical metals. But will it be sufficient to match our dreams for a green technology future?

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

Clean energy minerals shortage: Who knew it could happen?

Clean energy minerals shortage: Who knew it could happen?

The race for so-called green energy has spawned another race, one for the minerals needed to make the devices such as solar panels and batteries that produce, store and transmit that energy. A hitherto largely unchallenged economic idea—that we will always have supplies of everything we need at the time we need it at prices we can afford—is in the process of being tested.

According to the International Energy Agency (IEA), the world will need to produce six times more of these critical metals than we are producing now to reach net zero carbon emissions by 2050, a target widely held out as an essential goal for avoiding catastrophic effects from climate change. The need for lithium—the key component in lithium batteries that are prized for light weight and the ability to charge quickly—will grow 70 times over the next 20 years, the IEA predicts.

One wonders what the price trajectories of the minerals IEA mentions will look like in the coming years. The long-term charts are concerning for nickellithiumcobalt and others since this appears to be just the beginning of the run-up.

The world is experiencing shortages already of many key commodities and manufactured items (such as computer chips). This is, in part, due to lack of investment over the last decade after a general slump in commodity prices following the Great Financial Crisis of 2008 and a broad moderation in worldwide economic growth. Certainly, we can expect increased investment in these critical metals. But will it be sufficient to match our dreams for a green technology future?

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

Geoengineering the climate: The zombie idea that just won’t die

Geoengineering the climate: The zombie idea that just won’t die

Just when you think the last boomlet for geoengineering the climate has expended itself and we might be rid of any serious consideration of it as a strategy for addressing climate change, it rises zombie-like from the dead and starts roaming the Earth again.

The National Academy of Sciences (NAS) has recommended spending $100 to $200 million over the next five years to study the idea—its feasibility, possible unintended consequences, and an ethical framework for governing it.

The most important thing you need to know about geoengineering the climate is that we humans have probably been doing it since at least the dawn of agriculture. What we need now it seems is an intervention from TV talk show psychologist Dr. Phil to ask us his favorite question, “How’s that working for you?”

We have certainly been doing geoengineering since the dawn of the industrial age which we know has stoked climate change through carbon emissions caused by the burning of fossil fuels; changes in land use (deforestation, primarily); modern agricultural practices (methane released by livestock fed on grains, for example); and industrial chemical releases, the most egregious of which is currently sulfur hexaflouride used in the utility industry as “a hugely effective insulating material for medium and high-voltage electrical installations.” Sulfur hexaflouride is 16,300 times more potent than carbon dioxide over a 20-year time horizon and 23,900 times more potent over a 100-year horizon.

Now that’s a feat of real geoengineering and the people who discovered sulfur hexaflouride in 1901 weren’t even trying to affect the climate!

What I’m getting at is even more important than the unintended consequences mentioned in the NAS report above. “Unintended” in that case means we are actively looking for and evaluating such consequences…

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

resource insights, geoengineering, climate change, kurt cobb,

Olduvai IV: Courage
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Olduvai II: Exodus
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