Bugs to the Rescue in the Gulf
September 1, 2010 § Leave a comment
Source: Geograph
This piece was energized by the August RTEC Breakfast Forum
At the RTEC Breakfast Forum, Offshore Drilling: a Risk Worth Taking?, special guest, Dr. Jennie Hunter-Cevera from RTI International, kicked off a stimulating discussion on the possible role of microbes in eradicating the Gulf of Mexico of oil spilled from Deepwater Horizon. She informed us that in the Exxon Valdez spill, bacteria had been imported due to insufficient naturally occurring species in those waters. This specific strain had a special “suicide gene” to ensure death after the job was done.
The Gulf of Mexico on the other hand is known to have a thriving population of these critters, in part due to natural seeps and continual small spills. These latter were described in a recent paper in Nature. (See our July 8, 2010 post of Interesting Reads)
Earlier in August, federal government scientists set off considerable debate when they opined that the majority of oil had been consumed in some fashion. Certainly, visible oil is not very much in evidence. Dueling scientists have been debating the fate of the oil and no doubt will continue to do so.
Shortly after the blowout, BP commenced the massive use of the dispersant, COREXIT, which manufacturer, Nalco, claims to be biodegradable. At that time they, and the EPA officials who permitted it, came in for a lot of criticism.
Critics, such as Dr. Terry Hazen of UC Berkeley, contended that the dispersants would do more harm than good. Dr. Hazen, a microbial ecologist who acted as an advisor to BP on behalf of the DOE reported this.
That was in June. In August, Dr. Hazen and coauthors published a paper in the journal, Science, which decidedly reversed course in that dispersants were now shown as beneficial. Here is a report on the findings.
Dispersants were intended to break the oil into smaller droplets. Critics believed that the smaller size would make them more amenable for fish to consume. BP has been silent on their reasons, but one can assume they believed that the bacterial action would be enhanced by the smaller drops. Nobody disputes these three premises concerning the bacteria: they do in fact consume oil, they multiply in the presence of food and die off when the food supply goes way. Critics felt that the dispersant laden oil would sink below the surface and not be available for bacterial action due to colder waters below with less oxygen.
Undoubtedly, the suspicion prevailed that getting rid of a visible sheen was a BP priority. Recent congressional testimony has scientists reporting that the dispersed oil was now in plumes that concentrated at depths around 3,000 feet. Concern arose for marine organisms at those depths. Out of sight, but not out of danger was the refrain.
Enter the aforementioned Dr. Hazen stage left. He led an expedition on May 25 to sample the plumes. They used a relatively new chip that conducts a rapid DNA based microarray without the need for culturing. Thus, bacteria could be identified precisely and quickly. What they found was a new species of psychrophilic (cold loving) bacteria that thrived at the 5 degrees Centigrade temperatures at those depths. These were close relatives of known oil consuming bacteria.
Further, scientists were concerned that even if bacteria existed, they would deplete available oxygen. This would then lead to “dead zones,” a phenomenon already known to exist as a body of water where life cannot be supported. Dr. Hazen and colleagues discovered that these wondrous new creatures did their job with minimum oxygen consumption. They measured the oxygen saturation to be 59% within the plume, compared to 67% outside it. All this falls neatly in the “Isn’t Nature Wonderful” category. Needless to say, Dr. Hazen is now a believer in the use of dispersants.
Dr. Hazen’s team observed that the oil is being consumed at a fast rate, due to the relatively light crude, with a high proportion of low molecular weight species. The only report I could find places the API gravity of the spill at 33 degrees, which is pretty light, considering how the API must exceed 34 to be classified light.
Also, the very heavy molecules generally will not be consumed by the bacteria and will be left with balls of “tar.” (This is why beaches close to natural seeps have tar balls.) Some of the beaches in Barbados have bottles of solvent placed by the adjacent hotels. Based on the reported character of the oil, the tar balls from the blowout should be minor in quantity, if the bacteria do their job.
A final footnote of interest: Dr. Hazen’s work was funded by the Energy Biosciences Institute at Berkeley (EBI). The EBI is comprised of The University of California-Berkeley and The University of Illinois. Coincidentally, they are funded by BP to the tune of $500 million over 10 years. At the time of the award, it was the largest grant of its kind, dwarfing a similar ExxonMobil award of about $200 million to Stanford.
In addition, the principal executive on the giving side was Steve Koonin, then Chief Scientist at BP. The principal recipient was Steve Chu. These two are respectively co-number two and number one at the DOE today. One does wonder whether Dr. Hazen was given a bit of a nudge by DOE high ups.
LNG, Shale Gas and Politics in India
July 24, 2010 § 4 Comments
Basking in a Bangalore breeze, with a mango tree swaying outside the window, I am reminded of a fairly recent article concerning liquefied natural gas (LNG) imports into India. This story discussed a plan to import LNG from Qatar. There were a couple of points of note that are grist for this particular posting mill. First was the contemplated price of about $13 per mmBTU and the second was the mechanism for arriving at that price.
But first some background relative to Qatari motivation for long term deals such as this. The abundance of shale gas in the US has essentially taken that country out of the running as a Qatari LNG destination. Europe continues to be a valid target, but shale gas will likely be a factor there as well. Russia could well react to domestic shale gas in Poland and elsewhere with price drops. LNG may face lower prices but unlikely to see a US type debacle. Relatively close markets such as India shave 50 cents or more off a US delivered price. So, India could be important.
The truly curious aspect to the story cited is that the landed price is tagged to a Japanese crude oil basket price. For a few years now there has been a disconnect between oil and gas prices based on calorific value. Curiously, the more environmentally challenged one, oil, is currently priced at roughly three times gas price. That is commodity pricing. The disparity is even greater when one factors in refining costs. Transportation is something of a wash, although gas is cheaper to move than crude oil or refined products, at least on land. All of this is singularly premised upon the internal combustion engine being the workhorse of transportation.
Natural gas pricing is regional, largely due to the high cost of ocean transport. If local gas price is low, it is difficult for LNG to compete, which is why the US will be off limits unless demand takes a huge jump. Even then the abundance of the shale gas will likely keep the status quo. Local gas price in India was under $3 per mmBTU until recently. It is now $4.20, close to current prices in the US. That is the controlled price paid to domestic producers of gas. So, to contemplate imported gas at three times the price is the sort of action possible only in settings such as these: government control on commodity pricing. But pegging the price to an oil market basket, a Japanese one no less, is where logic takes flight.
Oil prices in coming years are likely to see sustained increases. Natural gas, on the other hand, will see a moderation in the US due to shale gas. If shale gas resources are found in other countries, one could expect similar pricing behavior. So, pegging any natural gas price, LNG or otherwise, to oil prices will result in a windfall for the producer and one that is not justified by supply and demand arguments.
Consequently, the main problem with the contemplated Qatari deal is not even the current high price. It is the possibility of up to a doubling in ten years. At anything close to that the incentive to use natural gas evaporates. Entire industries will shift offshore. It will be cheaper to make fertilizer, polypropylene and the like abroad and import the finished product. This will have a lasting negative impact on domestic jobs and the balance of trade.
An interesting subplot in the Qatari deal is the statement by them that they supplied cheap gas in India’s hour of need a few years ago. It was landed at $2.53 and has crept up to around $7 more recently based on whatever oil linked formula was used. The implication is that they should be rewarded now with a better deal. A fairly high fixed price would fit that scenario while still being unfair to domestic production. Pegging to oil defies logic and is simply bad business. The story is now four months old. Perhaps sanity prevailed. It nevertheless gave us an opportunity to discuss the underlying fallacies.
Electric Cars Need More Speed
July 14, 2010 § Leave a comment
This is going to surprise some of you- especially those of you who are aware that the Tesla is faster 0 to 60 than a Ferrari. This is not about actual vehicular speed. The electric motors provide instant torque. But they also need a battery system that is both inexpensive and capable of delivering the boost of energy without compromising life. So,
A screenshot of a youtube video of the Tesla racing the McClaren, Corvette, and Ferrari
the speed in question is the rate of discharge of the battery. Acceleration needs a lot of power quickly. Batteries are inclined not to last long if treated this way.
The Lithium ion battery is the front runner and likely to remain there. All batteries need ions, lithium in this case, to move from one electrode to the other. The two media they have to traverse are the electrolyte and the separator. Additionally they need to move swiftly in and out of each electrode. Over the years all these have been tackled well except for one- the ionic movement in and out of the cathode. This is the rate limiting step for both charging and discharging.
Fast discharge ability can be achieved by using a companion component known as a super capacitor aka ultra capacitor. Capacitors ordinarily are parallel plates holding charge. The charging and discharging is blindingly fast. The catch is that they hold very little charge. Batteries on the other hand hold a lot of charge, but have the aforementioned shortcoming. Supercapacitors hold a modest charge and are fast. In combination they can be very effective. The system would simply use the super capacitors for acceleration and the batteries for sustained speeds.
Neither of the first mass produced electric vehicles, the Nissan Leaf or the Chevy Volt, will have this feature. The reason is cost and timing. At the time they froze the designs for production supercapacitors were too expensive. But their time will come and the solution will be elegant.
Last year a team from MIT reported in Nature that they had succeeded in synthesizing a cathode with high charge and discharge capability. The characterization “Holy Grail” is vastly over used, and yet would apply to this discovery, if shown to be practical and repeatable. In essence they are claiming a battery that combines the attributes of a super capacitor. Predictably the naysayers were out in force. Professor Goodenough (I am not making up that name) at The University of Texas at Austin stated that the discharge rates were there but not the charge rates. He has credentials. He is the holder of the seminal patent on Lithium Iron Phosphate cathodes. This patent is the centerpiece of a plot that would give a soap opera a run for its money.
Current cathodes use cobalt and consequently are expensive. They are also subject to fire and explosion in certain situations. A manganese based cathode is now in use, as in the Leaf. But most agree that the Iron based one noted above is the front runner. It was picked by GM. The prime purveyor of it is A123, an MIT spin off. This latest MIT finding (different folks than the A123 founders) builds on that chemistry. It very cleverly starts with a composition that is slightly off stoichiometric. This means that the proportions of the elements are such that when you synthesize it you get something more than the compound in question. The way they do it, this something more is another material which coats the basic compound. This coating has the unique property that it acts as a sponge for the Lithium ions. The ions are held long enough to transport normally into the body of the cathode material. The net effect is fast movement of ions into the body. Ultimately, the ideal battery will discharge fast (without penalty of curtailed lifetime) for performance. But for reasons of convenience and practicality it must charge fast as well. The investigators claim this as well, although this was disputed by Prof. Goodenough. It’s been a year with no update.
In a recent story Toshiba is reported to have a fast charge system. This appears to have a different yet chemistry. Lithium titanate nano crystals on the surface of the electrode provide the fast charging capability.
The most important attribute required to make electric cars go is the battery cost. Recently reported numbers are in the vicinity of $900 per kilowatt hour (kWh). The new entry cars at the end of the year are expected to come in with batteries costing around $500 per kWh. This figure needs to drop to around $200 for full viability. This is because all-electrics such as the Nissan Leaf will have battery capacities of 22 to 25 kWh. At the higher numbers the battery will be too great a fraction of the cost of the car.
In the longer term we can expect the costs and performance to fall into the realm of acceptability. Electric vehicles are definitely in our future.
MIT Natural Gas Report Glosses Over Environmental Issues
July 1, 2010 § 1 Comment
MIT’s most recent report on energy is on the Future of Natural Gas, following similar reports on coal and nuclear energy. It is co-edited by Ernest Moniz and Tony Meggs. The latter recently left BP as CTO. As reported in Forbes recently, the report emphasizes the role of shale gas in enabling natural gas substitution of coal. The authors see this as a transitional strategy for a low carbon future. We agree with that and have expressed similar ideas in the Directors Blog.
However, the report is surprisingly shy about discussing the environmental issues seen as facing shale gas exploitation. While we believe these are indeed tractable, they merit much more discussion than they were given. Accordingly we repair some of that omission here.
The most significant issues center on three matters: fresh water withdrawals, flow back water and collateral issues, and produced water handling and disposal.
Fresh Water Withdrawals and Flow Back Water: Typical wells use between 3 and 5 million gallons per well. Industry practice has been to use fresh water as the base for fracturing fluid. The water that returns to the surface after the fracturing step is known as flow back water. Shale operations are unique in that only about a quarter to a third of the water returns, the rest staying in the formation. Also, the flow back water is usually more saline than the injected water. So, in principle it cannot be re-used.
Handling salinity is the first step to water conservation. The key is ability of the fracture water to tolerate some level of chlorides. Recent research has shown that not only is this possible, but that it can be beneficial. The chlorides actually stabilize the clay constituents of the shale and improve production, although companion chemicals such as friction reducers need to be modified. This has two possible implications to water withdrawals. One is that after some measure of treatment, the flow back water should be usable. But because all of it does not return, withdrawals for make-up water will be necessary. This is where the second implication comes in. Moderately saline water from another source could be used since salinity is tolerable. The most important implication of the foregoing is that flow back water could over time be completely re-used and this then ceases to be an issue with respect to discharge.
So, now let us discuss numbers. In current practice the tolerance for chlorides is likely about 40,000 ppm. Flow back water with higher salinity will need to be desalinated to some degree, or diluted by fresh water. In some parts of the country this may be viable. Another option could well be to use sea water, if that were to be the water of convenience. Sea water tends to contain around 30,000 ppm chlorides. That is already in the range of acceptability with the possible removal of some minor constituents. Finally saline aquifers are a potential source. These are in great abundance, with variable salinities. Saline water wells drilled as companion to the gas wells are very likely in areas where fresh water withdrawals compete with agriculture or other endeavors. In general, if the shale gas industry can utilize water unsuited to agriculture and human consumption, then it will be seen in a completely different light.
Produced Water
Water associated with the gas is produced at some stage of the recovery, usually towards the end of hydrocarbon production. In some cases early production occurs due to infiltration of the fractures into the underlying saline water body often present. Whether from connate water or the water layers below, produced water will be very saline, in part because of the age of the rock. Disposal of this water is a major issue, especially in New York and Pennsylvania and can cost upwards of $10 per barrel, when even possible. Concern regarding illegal discharge is high among the residents.
The treatment of produced water represents a significant business opportunity. Several outfits are developing forward and reverse osmosis schemes for desalination. Others are working on bacteria eradication, heavy metal removal and the like, using methods such as membrane filtration and ion exchange. Some of these are already in service on a limited basis.
Produced water offers the promise of being usable for make-up water after some modest treatment. The salinity may be directly tolerable but the bacteria would need to be removed prior to re-use. This is because many of these cause the production of hydrogen sulfide downhole, which makes the gas less valuable and causes corrosion in the equipment.
Contamination of Drinking Water
There have been anecdotal reports of well water contamination by gas, most recently sensationalized by a documentary. The popular literature ascribes two hypotheses to this phenomenon. One is the migration of fracturing operation cracks from the reservoir up to the water body. The other is gas leakage from the well.
Hydraulic fracture cracks will not propagate the significant distances to the aquifers. Were they inclined to do so, they would heal due to the earth closure stresses. In terms of distance, the closest fresh water aquifers are about 5000 ft. and 3000 ft. away, respectively, for the Barnett and the Marcellus. So this really is not likely.
Gas leakage from the well is preventable if the well is drilled and completed correctly. A fundamental feature of regulation has always been to design for isolation of fresh water in all petroleum exploitation, not just in the shale. Between the produced fluids and the aquifer lie two layers of steel encased in cement. The cementing operation is designed for preventing fluid migration. Tests are run to ensure competence of the cement job and remedies are available for shortcomings. At these shallow depths the operation is extremely straightforward and amenable to regulatory oversight.
See Also: New York Times’ response to the study
What Really Happened Out There in the Gulf
June 23, 2010 § Leave a comment
On June 21, 2010, coincident with the longest day of the year was the longest page 1 investigative report I have ever seen in the New York Times or any other prominent newspaper for that matter. I refer to the story entitled Regulators Failed to Address Risks in Oil Rig Fail-Safe Device, nearly three pages long and entirely devoted to the esoterica surrounding blow-out preventers. This is good because prior to this I would not have dared post a piece discussing blow-out preventers, not to mention blind rams. It is quite well written relative to the operational detail. But there are minutiae that would leave most fatigued. So, here is the short explanation together with some commentary.
The last line of defense against blow-outs is a system of machinery aptly known as blow-out preventers or BOP’s. Multiple other lines need to be breached prior to these being in play. In keeping with the Times authors, we will not discuss these except to point out that nobody really wants to resort to the last line. Some of the reporting has attributed sentiments to personnel to the effect that “that’s why we have the BOP’s” as an explanation for risk taking. If true this is not usual. To use a soccer World Cup analogy (it is the season), full backs who espouse such a belief with respect to their goalkeepers have short careers.
photo from NYTimes
There are three types of BOP’s. The most benign, and this one is used for pressure testing as well, is the Annular Preventer. This is composed of elastomeric elements that can seal off the pipe on the outside or seal the hole when no pipe is present. This is a fully reversible action and the Preventer with the least deleterious consequences of use. According to the Times, there were two of these on this rig. A 60 Minutes segment had reported a worker observing chunks of “rubber” several days prior to the accident, which he conjectured to imply failure of the Annular Preventer sealing elements. Congressional testimony indicates reports of pressure integrity tests which showed anomalies that appear to have been discounted by the decision makers. These test the competence of the completion. These could not have been conducted if the Annular Preventer was not sealing. So, one of them was likely functioning at least at the time of the tests, which was not long before the event. So, it is plausible that this line of defense was functional close to the time.
The next line is the Casing Shear Ram. These are essentially irreversible if there is pipe in the hole. They are shear devices that can cut through the casing but they are not designed to seal the flow. They are primarily used to permit emergency disconnect of the vessel. No real data are reported on whether the Casing Rams were functional.
Then we have the centerpiece of the Times story, the final line of defense, the Blind Shear Rams (is it not odd that all the words could apply to sightless sheep; memo to animal activists: the rams are not being killed, they are doing the killing). These are the most sophisticated of the three types and are designed to cut through the pipe and seal firmly in place. The well pressure is designed to help augment the closure mechanism and hold it in place. The reporters make much of there being a single point of possible failure of the hydraulic system and the reports of unreliability. I assume they did their homework here, but have no other insight. But very interesting is their observation that this rig had only one of these. This is surprising for a deep water rig. Here’s why. The pipe it is designed to cut through is not a continuous cylinder. At intervals of 40 feet, sometimes 30 feet, there are joints. The blind shear rams cannot penetrate the joints. So if by bad luck a joint is in its path, the mechanism will not succeed. This is why a second one is important to have, and at a distance no less than 4 feet from the first, but not much further such that there is no likelihood of another joint being encountered.
The story also noted that gamma ray testing had shown that at least one side of the blind shear ram had deployed (the other side could not be imaged) but stopped short of cutting. The evidence shows that at least one of the Annular Preventers was functional at the start. We know nothing conclusive about the Casing Shear Rams. Somehow, these lines of defense crumbled. Unfortunately, the key data indicating hydraulic and other health of these devices did not survive the explosion. Apparently these data are not shipped to shore. Virtually all data related to drilling and completions are streamed to shore. So, where do we go from here?
In keeping with past disasters, such as that of the Space Shuttle Challenger, one can expect a careful examination of each failure point and the production of engineered solutions and associated management of human behavior to minimize the probability of each of the events. The list of suggested remedies should include certain legislation and increased enforcement authority. Certainly on that list ought to be:
- Requirement for two or more Blind Shear Rams on every deepwater rig
- Requirement for an expert level of shore support for all key well control decisions, including involvement of the appropriate federal agency, which should be staffed at an expert level. Through the use of real time support centers covering a number of wells each, the federal agency cost need not be high.
- All key data upon which well control decisions are made should be stored in a Black Box. Ideally, they are already on shore and stored as part of the expert review process mentioned above.
Finally, taking measures such as those above will achieve important results such as avoiding costly near misses, but in the end likely will not avoid the occasional blow-out, in part because other factors may come into play. But, we can be in a state of readiness to dramatically reduce the collateral damage to the environment by minimizing the size of the spill. We urge a joint industry action to study the best form of defense beyond BOP’s. This should be clean page look at all alternatives and should be led by a non-aligned person. Then the industry should agree collectively to have such a system built and ready for deployment at the shortest possible notice.
The Energy/Water Nexus
June 23, 2010 § Leave a comment
This piece is loosely based upon the RTEC Breakfast Forum on June 15, 2010
Sustainable energy can fall in two buckets. One comprises all the means to lower the carbon footprint of current energy sources. This would include clean coal, using natural gas in place of coal to produce electricity, combined cycle approaches to energy production, and the like. The second bucket is that of renewable energy. The outstanding examples of that are biofuels, wind energy and solar energy.
Each of the foregoing has very different water utilization. One billion persons do not have access to drinking water. Should efficiency of water utilization be a factor in our choice of alternatives, and not just carbon footprint? Going further, should water usage be a litmus test in areas in which the citizenry suffer a high level of privation? This was the subject of the RTEC Breakfast Forum on June 15, 2010.
We tend to use fresh water for everything when something less could do the job. This is likely an artifact of water being relatively cheap. If some of the major users were able to tolerate less than fresh water, water would be freed up for human consumption. An extremely topical area for this thought is shale gas drilling in the US. Each well uses up to 5 million gallons per well as the main component of fracturing fluid. Only about a third of the fluid used returns to the surface. Currently it cannot be re-used because of contaminants, salt in particular. Even if this were to be cleaned up for re-use, the other two thirds would need to be made up from fresh water sources.
Fortunately, industry is taking a hard look at the problem and is moving to modify formulations to be able to tolerate significant salinity. So, not only would the flow-back water be re-usable, but other saline waters of convenience, such as sea water, come into play. In an odd twist, it turns out that salinity is actually good for the operation (it stabilizes the clays). Lemonade from lemons, as it were.
While not particularly applicable to the shale gas play in the eastern United States, a lot of “tight gas” exploitation occurs in the middle of the country, in areas that are severely drought prone. Here, water for energy competes with that for agriculture. The ability to tolerate salinity would be huge. This is because saline aquifers are plentiful. Supporting technology would be required in areas such as benign biocides. Bacteria in these waters are often pernicious, some being sulfate reducing, and thus producing hydrogen sulfide in situ when used for fracturing fluid. But these are all tractable if the major issue of some level of salinity is traversed and if innovations in cost effective water treatment are forthcoming.
The key to water treatment is to have a fit-for-purpose output. Potable water is the most expensive. An intermediate product could be adequate and meet the economic hurdles. Today almost all desalination approaches have fresh water as the output.
Agriculture tolerant of brackish water is a new area without significant currency today. The most obvious example is algae for bio fuel production. Algae, of course, thrive on salt water (and consume carbon dioxide as another plus). A class of plants known as halophytes make themselves saltier than the salt water, thus causing fresh water to flow into them by osmosis. Most such would likely be for biomass for energy production, not food.
Water used in conventional energy production is also highly variable. The paper by Mulder et al describes water efficiency of different energy production methods. Any eye-opener is the significant difference between closed and open loop cycles. An interesting nuance is also the difference between water withdrawal and water use. For example, if a facility such as a nuclear plant, withdraws water from a river, and then returns hotter water, the subsequent evaporation downstream is not counted in some measures. The withdrawal number remains low, even though the net usage was higher.
Using less water is not always productive. Apparently in some areas drip irrigation leads to salt build up around the plant. Also, drip irrigation returns no water to the aquifer. But on balance that must still be more effective than spraying, where evaporative losses may not necessarily be returned as convective rainfall.
Drought tolerant biomass is highly touted these days. Jatropha in India and elsewhere is seen as an important crop for biodiesel production. However, an interesting twist on this is that these plants can tolerate drought, but they grow much faster with more water. A farmer with water access will draw on it. So, what is needed is clever business models and associated policy drivers to encourage water conservation in the face of a compelling economic driver to use more. An interesting problem for a behavioral economist.
Afghani Lithium: Much Ado About Perhaps Little
June 15, 2010 § Leave a comment
Afghanis should rejoice that people are discussing Afghani lithium, not opium. But, based solely on the popularly reported data, initially by the NY Times, there is little reason for celebration.
The original Times story was largely about the mineral finds in general. An Afghani economy strongly dependent on opium should welcome diversification into minerals. But the subsequent stories underlined the lithium, including quoting the Pentagon as referring to Afghanistan as the Saudi Arabia of Lithium. Hyperbole has an honored place in selling copy, and often has a basis in fact. We went looking for it. Here is what we found.
The bulk of the underlying data are at least three years old. The current release by the Pentagon, including General Petraeus’ use of the word “stunning”, is clearly tactical. The lithium is found as an ore (mixture of oxides) as well as in salt or brine deposits. We were unable to find the relative distribution of these. The importance of this is that the cost of extraction from the ore is two to three times more than from brine. This despite the fact that the ore has more of the stuff, up to 7.5%, compared to a fraction of a percent in brine. The economic fact renders most ores impractical at this time, even if easily accessible, which this one might not be. For example, the US imports the vast majority of lithium it uses, despite substantial domestic ore deposits, most of which are in my home state of North Carolina. The domestic production, such as there is, is from brines. Lithium from ore is commercially attractive only if there is collateral production of other values, such as potash. A breakthrough in smelting technology could change all that. None is known to be in the offing.
Lithium salt deposits are either brine (salty solutions) in lakes, or associated crystalline salt formed from natural evaporation. These chlorides are relatively easily reacted with soda ash to make lithium carbonate. This then is the marketed commodity from which all else is made, including metallic lithium. The reported values of lithium content of Afghani brine is roughly .028%. This is at the lower end of commercial concentrations. In other words good, but not great.
Why, then, was lithium singled out from the mineral mix in the story? It is the key ingredient in batteries for electronic devices today, and for electric vehicle batteries for at least the next twenty years. All electric vehicles such as the Nissan Leaf will use over 30 Kg of lithium carbonate per vehicle (Hybrids such as the Prius use a tenth of that). The vast majority of lithium brine deposits are in South America, with nearly half of that in Bolivia. There is concern about trading oil dependency for lithium dependency. The questionable stability of the sources is a factor. This is why a vast new source is seen as news.
Based on the data revealed to date this is much ado about possibly very little.
The Oil Plateau and the Precipice Beyond
June 1, 2010 § Leave a comment
I’m certainly not the first to raise the specter of an oil plateau. This is not the same as Peak Oil, although there are similarities.
The first intimation of the concept was by Christophe de Margerie, the CEO of Total S.A., based in France, who first described this issue back in the fall of 2007. Subsequently PFC Energy went public with their research.
de Margerie’s statement made quite a splash. Here was one of the top five oil companies in the world, and the CEO was saying there’s a plateau coming. He put the plateau at 100m barrels a day. At that time the world was producing about 85m.
After that I personally, publicly asked a CEO of a major oil company to comment on de Margerie’s prediction. He acknowledged the plateau was real. He said, “I’m not sure I’m going to subscribe to the 100 number, but there’s a plateau coming.”
Shortly before that I spoke to the head of the the French Petroleum Institute (IFP), and they confirmed that their modeling showed the same thing. They pegged it at a somewhat lower number.
So here we have substantial people saying there’s a plateau coming and yet nobody acknowledges it publicly. Nobody wants to discuss it. Nobody really wants to act on it.
Causes
Now you’ll ask the reasons for the plateau. First of all there is a technical model that
predicts a plateau, courtesy of PFC Energy in DC, but if you want to speak conversationally, the reasons are multifarious.
For example, national oil companies have realized they have a resource they need to husband. International oil companies used to move in and extract oil via Production Sharing Contracts, which made the incentive to get the most oil out as quickly as possible.
There’s a truism in oil and gas production: if you extract the petroleum quickly, then the net recovery, that is the fraction of fluid in the reservoir that is ever recovered, reduces. When the international oil companies went into these nations, they were drawing as quickly as they could because their contracts ended in X years. That was not in the best interest of the national resource.
Increasingly, the nations have figured that out. Now they are forcing the issue, telling the international oil companies, “We’ll do it ourselves. We don’t need you.” The key point is they want to bleed the oil out in a more measured fashion. Guess what that does to production rates?
Most of the major oil companies like Exxon are therefore forced to seek unconventional sources of oil — for example, Canada’s Tar Sands — which are largely heavy oil. Additionally, now the Tar Sands may get a carbon tax.
Then you’ve got Matt Simmons, a highly respected figure in oil and gas investment circles, who says Saudi Arabia will not be able to open the spigots: that they don’t have the oil.
The fact of the matter probably is that the Saudis have the oil, but they’ve got a different view of it now and how to release it. They have been the leaders in the application of technologies to maximize recoveries. They’re not going to get bullied into releasing it faster just because the world wants a lower price on oil. People thought of Saudi as the buffer, that they’d just open the dams, but it just doesn’t seem like they will. Matt Simmons takes the position that they can’t. It’s irrelevant: they won’t. Whether they can’t or won’t compensate shortfalls elsewhere in the world, it comes to the same thing: they won’t.
Consumption versus Production
The estimated plateau of 95 million barrels a day — I think PFC at this point is talking about 90-92 million barrels a day — comes dangerously close to the 87 million barrels we’re supposedly consuming. I say supposedly because I think current consumption has dropped. In this country we decreased consumption from 21 to 16 million barrels a day from one year to the next. The decreased consumption is not going to last: we’ll become profligate again.
Consumption is the key to determining the impact of the plateau. Where is the point where consumption and production cross? If in fact the plateau is there, and in fact economic recovery is coming (which it is), and you base your models on consumption and PFC Energy estimates of 1.5% annual growth in oil usage, the crossover comes in 2020.
The key factor is the speed of the recovery with respect to automotive use. In the United States at least, oil is about transportation. Gas is about power and petrochemicals. The plateau is real and the recovery is real. It’s very real in China and India, which never really saw much of a recession. In China and India what do you think a newly prosperous person does? They buy a vehicle. They go from a bicycle to a motorcycle to a car. Everything consumes fuel except the bicycle.
There are statistics on per capita automotive usage in these countries versus the so-called advanced countries and it is staggeringly different. All of this says that transport fuel usage is likely to keep increasing, and that if it does, the crossover point between consumption and production is probably sooner than later (I’m not talking electricity — that’s a completely different argument).
If you want to reduce consumption of oil, you’ve got to switch transport fuels. People say very silly things about oil prices and imported oil juxtaposed to wind and solar. There’s no meaning there. The only meaning will come years from now when electric vehicles are a significant fraction of active automobiles.
The plateau is coming and if consumption continues at the current rate, there is a crossover coming. And at the point of the crossover, we’re not talking a spike in prices. We’re talking a sustained price increase. A spike is driven by a shortage at some point. This is not a shortage at some point. This is a plateau.
But let me end on a very simple point: do you really want to test the plateau theory? The alternative to testing it is doing something smart, like replacing oil with something that is more environmentally responsible. Are you going to argue with me about models, or are you going to do something that’s right to do anyway? Let’s just do the right thing, especially if it also happens to ameliorate, and in the limit, nullify, the plateau problem.
A case for decision science research in energy
March 16, 2010 § Leave a comment
A sustainable low carbon future is seen by most to center around breakthroughs in technology and the associated economics. Most of the attention has been on carbon sequestration, biofuels, renewable sources of electricity and the like. A number of states and countries have instituted policies to make some of these happen. Many also see electrification of transportation as an avenue to zero emission vehicles and energy security of net oil importing nations. All of these cause people to make choices, in many cases requiring changes in behavior. Introducers of technology know that the barrier to wide scale adoption is particularly high when it involves substitution of something familiar. The science of why people make the decisions they do, especially those involving green alternatives, merits further investigation, if for no other reason than that it may guide product and process development into areas with higher success rates of adoption. It will undoubtedly be effective in informing on policy. An example is in the area of solar energy. If the primary driver for adoption is “seen as being green”, then hiding photo voltaic devices inside shingles would be counterproductive, as also the policy of many neighborhoods to disallow visible displays of solar panels on homes.
The International Energy Agency (IEA) has posited that for any reasonable 2050 targets for atmospheric carbon dioxide nearly 40% of the mitigation has to be from energy efficiency. Their most recent forecast calls for 57% of carbon mitigation by 2030 as being from energy efficiency (and interestingly only 10% from carbon sequestration). Undoubtedly this will in large measure be accomplished with engineering designs that provide the same utility for less energy. This has been the case with up to 90% reduction in standby power of household appliances through the simple expedient of low energy power supplies and modified circuitry. Since standby power constitutes 10% or so of all electricity usage in IEA countries, this is a huge gain. The Energy Star and similar efforts have produced further results, although some of these fall in a different bucket, that of the same utility at a somewhat greater price. In the case of compact fluorescent bulbs, the initial price is higher but the life cycle cost is lower. Now this begins to get into the realm of decision science because the consumer is required to understand and appreciate life cycle costing. We are firmly in it for cases where the costs are substantially higher, as in the case of hybrid vehicles. Electric cars will get squarely into the behavioral arena from the standpoint of range anxiety, which is roughly defined as the fear of running out of charge.
Electrification of transportation is an RTEC priority because we see it as the fastest route to energy security through making electricity fungible with oil. Furthermore, well to wheel efficiency of electric cars is about 45% better than that of conventional cars and the tail pipe emissions are zero, although the burden is shifted to the power producer, where it is more tractable. Consequently, enabling the public’s acceptance of electric cars is an RTEC priority.
Addressing range anxiety and other behaviors falls at least in part in the area of decision science. Some of it can be addressed with technology. For example, Nissan’s introduction of the Leaf later this year will be accompanied by features such as remote monitoring of the state of charge of the battery and driver notification, including identification of the nearest charging station. But in most instances, technical advances only take us so far. When smart electricity meters are installed in homes, there is high variability in the manner in which the data are used by the homeowner. Behavioral studies are needed to guide the programs to achieve the best results. Non price interventions that rely on behavioral proclivities, such as conformance to societal norms, can likely be used to advantage.
In their matrix of program thrusts, DOE’s newly formed unit ARPAe has a matrix element that intersects social science efforts with transportation. RTEC believes that this could be a fruitful area of pursuit for RTI/Duke/UNC collaboration. One possible project would combine conventional survey based approaches with behavioral economics ones in addressing the electric car range problem. At this time this is based on guesswork premised upon beliefs regarding consumer preferences when driving conventional cars. Statements such as “the consumer expects a range of 300 miles” are rife. A definitive study of driving distances in metropolitan areas that are initial target of electric vehicle entry could then be used to devise behavioral studies, the results of which could be expected to drive out interventions, both price based and not. To aid this, the original study would be broken out by age, income and other relevant demographics. Finally, the interventions themselves could be tested on a population.
The foregoing notwithstanding, RTEC believes that the greatest gains for society in the realm of sustainable energy are going to come from simply using less. Consequently, a major focus will be to encourage and assist members in devising social science based research with this goal in mind.
Natural Gas as a transition fuel for Carbon Mitigation
February 11, 2010 § Leave a comment
Synopsis:
Natural gas is increasingly being proposed as a transitional fuel for carbon mitigation; even by NGO’s that in the past were firmly opposed to all fossil fuels. RTEC has examined the underlying premise and concludes that it is well placed as an organization to play a significant role in informing on the policies that will drive the energy sector in this area. This is in keeping with a key RTEC goal for this year: to be a more visible player in energy.
Why Natural Gas?
The most popular carbon mitigation strategies center on renewable energy sources. The foremost among these are wind, solar and biofuels, with just the last addressing oil replacement. This discussion will focus solely on power production. The majority of power is produced from combustion of coal, especially so in China and India. Despite strong support for coal in Washington, and the technical viability of clean coal, a confluence of events suggests a slow down in coal combustion is likely. These are discussed below.
- California has already taken the lead to require coal plants to reduce emissions to the levels of natural gas plants, which is a fifty percent reduction, as opposed to ninety percent that previously was seen as a target. Federal legislation is likely to emulate this in some manner. This means that gas burning plants require no CO2 sequestration.
- The lower requirement reduces the cost for sequestration at coal plants. For post combustion capture, depending on the technology, the cost is likely to be in the general vicinity of 3 to 3.5 cents per KWh. The current cost is about 6 to 6.5 cents per KWh. So the fully loaded cost will be close to 10 cents.
- The cost of electricity from natural gas can, as a rough rule of thumb, be estimated to be one cent per KWh for every $ per MMBTU. So, at today’s natural gas price of about $4 per MMBTU, the cost is roughly 4.5 cents per KWh. At $10 per MMBTU the cost would be about 9.5 cents per KWh. In the last two decades, gas spot price has been above $12 for only four months, non contiguous. If domestic supply holds up from the new shale gas reserves, few expect the price to go beyond $8, certainly not $10. $10 is the effective breakeven with cleaned up coal, and with much lower capital investment. Consequently, purely on economics and environmental compliance, gas plants make a lot of sense.
- Gas plants are an effective complement to renewable sources, which have diurnal and other variability.
Why Not Natural Gas?
- A shift away from coal to natural gas has to meet the critical hurdles of affordable gas and supply assurance. The UK took this step in the belief that North Sea natural gas would be plentiful. This forecast did not hold up, and now the UK is forced to import, often at high cost. For the US, reliance on foreign sources of Liquefied Natural Gas (LNG) would present issues, not the least being the high carbon footprint of LNG. Alaskan gas, while plentiful, has
deliverability issues. So the future of such a shift relies upon the ability to exploit the massive shale gas reserves. As noted above, if available, the price of gas is likely to be competitive with that of cleaned up coal. Also, unlike oil, gas will not have any hidden military costs associated with assurance of foreign supply, since it would be entirely domestic. - The bulk of the shale gas potential is in New York and Pennsylvania, states that are substantially unused to petroleum production (despite Pennsylvania being essentially the birthplace of oil in the US). Public push back has been substantial, on the grounds of pollution believed to be caused by the fracturing operations essential to the production. Drilling in parts of New York has ceased on account of this. When ExxonMobil purchased XTO for over $30 billion, they considered the threat material enough to make closing of the deal conditional on freedom to operate. Resolving the looming impasse could be critical to any strategy to replace coal with natural gas for electricity production.
Role for RTEC
- There does not appear to be any entity that has knowledge in the areas of the issues mentioned above and yet is non-aligned. This is the opinion of executives at two petroleum related companies and two NGO’s with whom we have spoken. A stated goal for RTEC is to identify compelling energy issues and play a key role in matters pertaining to a select few of these issues. RTEC members have in depth understanding of the technology and economics associated with clean coal and natural gas production.
- In the critical area of economic viability of producing shale gas in an environmentally acceptable manner, RTEC will enter the debate with insights regarding the validity of public angst and the ability of industry to be responsive to the issues with merit. In particular, we have been approached by the Sierra Club to work with them and others to craft legislation in Pennsylvania. The Sierra Club, World Watch and EDF have all realized that their absolute objection to new coal derived electricity is not reasonable without support for an alternative. Consequently, they are backing natural gas as a transitional fuel. However, they want this to happen against the backdrop of environmentally secure production of shale gas. Hence their need for a respected third party to weigh in on the issues. RTEC expects to source one or two other non-aligned experts to augment its expertise, provided the costs are borne by the Sierra Club or another entity. The Sierra Club is clear on the point that RTEC does not support their opposition to clean coal and is merely acting as a resource to resolve shale gas issues.
- If we feel we are making a real difference, we will consider measures to have a cadre of experts on call for consults from NGO’s and government bodies. This may require seed funding, especially if a relational data base is part of the solution. Ultimately, this could be a free standing unit whose span of influence could expand into other areas.
Potential Impact on US Energy
If natural gas fired plants are employed for new capacity, either for demand growth or replacement of ageing coal facilities (Progress Energy just closed thirteen coal fired plants in North Carolina), it provides breathing room for alternatives. In particular, it gives time to resolve the issues surrounding clean coal, whether real or perceived. RTEC continues to hold the view that clean coal is a viable part of the energy mix, especially when one considers the world at large. Specifically, we expect post combustion capture and storage to be strongly in play for existing coal fired plants, especially those with many years depreciation remaining.
Eventually new base load capacity could go to Integrated Gasification Combined Cycle (IGCC), the long term clean coal solution. We would expect also, that in the next ten years or so the nuclear option will be selected for new base load capacity and natural gas will begin to be phased out. Price and availability of gas will determine the rapidity of this decline. This is where the shale gas comes in. If the known reserves can be accessed, there is reason to expect availability to be high. Unlike offshore reservoirs, the time horizon between decision to drill and actual production is relatively short. This is likely an effective antidote to rising demand driving up prices to double digits per million BTU. Much of the new shale gas is profitable at $5 per MMBTU. All of this leads to the hypothesis that natural gas prices will stay in single digits. If they do, gas will remain competitive with clean coal and with lower up front investment, and so a shift away from it may not happen until nuclear power build up is significant.
In conclusion, if shale gas can be recovered in a fashion acceptable to the public, the reserves could be sufficient to support natural gas as a transitional fuel until cleaner alternatives become viable. RTEC is positioned to play a key role, possibly a deterministic role, in the outcome.
Research Triangle Energy Consortium 