P34. Pick Points

Half-a-dozen or so stories of interest.

Beginning by perusing the snippets that dribble into the Houston Chronicle blog from CERAweek, Representative Markey admitted there would be some role for coal in the future; while IHS looked to see the recession last through this year, bottom out next and rebound in 2011, in the process demand for oil will fall another 1 mbd this year. In the same session company assets were foreseen as dropping further below real value, according to an IHS analyst; and the imbalance between operating costs and commodity prices would continue to feed increasing supply volatility. The BP Chairman felt that with enough investment (a trillion dollars a year) enough energy will be found to meet global demand. If we can overcome the human problems, the geological problems will be insignificant. He called for a confident relationship between government and companies, since without it investment would not be forthcoming; an open energy market; a heavy investment in conservation and energy efficiency; a program to address global warming, through increasing the price paid for carbon fuels (cap and trade); opening up the reserve areas now off limits including the continental shelf; incentives to encourage CCS and low carbon technology; and more investment in energy research – he bragged about the model program he set up with Dr Chu. In questions he said that the industry must get costs in line so that $40 becomes a good price again; that corn ethanol is not an answer (but cane ethanol is); and before we decide on electric cars we have to decide where the power is coming from.

The Schlumberger Chair reminded the audience that before the economic collapse we were having a hard time meeting supply, and his job is to keep a viable company until those times come back, and that includes keeping R&D going. The Director General of Pemex, said that they plan on producing 2.9 mbd this year, but needs more money for investment in new resources and a refinery. The Vice Chairman of CNPC said that China had a remarkable year and were concentrating on technology, including EOR for mature fields. In questions they saw a role for gas from shale, and a need for a better image for the industry .

The lunch speaker was the Shell CEO and he also pointed out that as the recession ends so the demand for oil will return, and fast. This will require use of all resources and will raise carbon dioxide levels. But it also will require investment, even through these hard times. They are now living on past investments, but fears that in 3-4 years the cost of insufficient investment will be hurting production. They plan on continued investment in R&D, he bragged about the unmanned offshore monotowers that produce gas. He also supported cap and trade, and many of the items listed by the BP head. In questions he said that Europe, having higher taxes was equivalent to a carbon tax, and had led to more efficient cars. In other talks, they admitted Texas was in recession with the country economy expected to continue to contract all year. And then Exxon spoke out against cap-and-trade, preferring a straight tax. Finally the IEA Chair said that they expected to revise this years demand down another notch, before starting to grow next year. But he also said that energy professionals were more optimistic than financiers at this point.

The struggle between water and energy from hydroelectric projects continues to divide Tajikistan Kyrgyzstan and Uzbekistan as the situation turns bad enough that growers are burning their orchards for fuel.

In the United Kingdom the National Grid is planning on sequestering its carbon from 5 coal-fired power plants near the Humber in rock layers under the North Sea which once held natural gas. They feel they can do this within 3 years. On the other hand Brazil’s Energia hopes to trap 1- 15% of the gas from a power plant in algae that can then generate oil. Another UK Power company Centrica has upset shareholders who would rather it invested in natural gas rather than nuclear power. And in the gas business Gazprom which is anticipating a 5% cut in Western European demand is also now expecting a 15% drop in demand from Eastern Europe. But that has no stopped them denying the rumors and pledging to move forward on development of the Shtockman field, starting next year, yielding natural gas in 2013, and LNG the following year. Gazprom is also investing in LUKoil to help it repay some loans. And speaking of LNG the anticipated shipment of LNG from Sakhalin has been postponed until April In the meantime they are making up the contracted amounts by using gas from Abu Dhabi. (Unrelated but they also have a wakening volcano – just like Alaska). Gazprom are also making another move at the UK market, this time trying to sell electrical power.

Russia is considering a tidal power plant near Murmansk. And half-way around the world similar plans are being considered for the Columbia river in the Northwest USA. Rolls Royce, meanwhile are testing turbines in the UK that can generate up to 1 MW, with a sea trial for a 0.5 MW unit scheduled for this summer , they foresee up to 300 MW of tidal power being possible around the UK by 2020.

The power crisis in Bangladesh is likely to continue until at least mid-May when the Monsoon starts, since the current drought has dropped the water levels needed for hydropower and at present they are drawing down the existing gas fields so fast that they risk damaging the rock structure, and still don’t have enough. Chittagong, a major city, now only has power for half the demand.

For more stories see The Energy Bulletin or Drumbeat at The Oil Drum