February 27, 2018
“Very very scary” - the shale oil technique to end all oil scarcity?
February 27, 2018
A new shale oil drilling method, called cube development, could take the U.S. shale oil revolution even further than it already has. It could “make the global supply glut even worse” and put an end, for a long long time to come, to any kind of oil scarcity, reports Bloomberg news agency.
“In the scrublands of West Texas there’s an oil-drilling operation like few that have come before”, is how the story starts.
The company responsible for this operation is Encana. The well pad is called RAB Davidson. It is “so mammoth, the explorer speaks of it in military terms, describing its efforts here as an occupation. More than 1 million pounds of drilling rigs, bulldozers, tanker trucks and other equipment spread out over a dusty 16-acre expanse. As of November, the 19 wells here collectively pumped almost 20,000 barrels of crude per day, according to company reports. Encana calls this “cube development,” and it may be the supersized future of U.S. fracking, says Gabriel Daoud, a JPMorgan Chase & Co. analyst who visited Davidson last year.”
Cube development is “designed to tap the multiple layers of petroleum-soaked rock here in Texas’ Permian shale basin all at once, rather than the one-or-two-well, one-layer-at-a-time approach of the past.”
See this graph:
After a years-long land grab by explorers, “the Permian is graduating,” according to Daoud. “Now it’s all about entering manufacturing mode.”
“With the new technique”, writes Bloomberg, “Encana and other companies are pushing beyond the drilling patterns that dominated during the early, exploratory phases of the shale revolution. Now, operators are assembling projects with a dozen or more well bores that touch multiple underground layers of the Permian and other shale plays simultaneously, tapping the entire 3-D “cube” beneath a producer’s acreage.”
Bloomberg notes that “the shift has been controversial, with some of the biggest names in oil shying away from the approach as too aggressive and expensive. But if proponents are right, the cube could accelerate a drilling boom that’s already helped push U.S. production past an historic 10 million barrels a day, rewriting the rules of global energy markets along the way.”
Not everyone’s convinced, notes Bloomberg. “Major Permian operators including Pioneer Natural Resources and EOG Resources., while expanding their well pads, have nonetheless taken a more conservative approach. Along with the initial cost, skeptics cite the potential for logistical nightmares in going too big. Some worry about undercutting innovation and note it’s hard to diagnose problems on individual wells when a dozen or more are running all at once.”
“It’s all a question of return,” said Kimberly Ehmer, a spokeswoman for EOG Resources. “The impact to returns is not clear-cut until you understand the impact to well productivity and other operations costs.”
The Houston-based explorer has limited itself to six- to eight-well pads thus far, she said in an email.
According to Bloomberg, “It’s too early to say which side, if either, is right, although that may change this year as more results become available from large-scale production. For now, there’s no sign cube wells are any less productive, said Sarp Ozkan, a director at Houston-based researcher DrillingInfo.
A move toward cube development could spur more consolidation, he said, as companies without the financial or administrative might to pull off industrial-size operations get snapped up or pushed out.”
It also could have a big influence on oil and gas markets, notes the article: “If the industry takes a more cautious approach, U.S. output could fall below forecasts in the coming years, easing some of the downward pressure on prices. If Permian producers master manufacturing mode, on the other hand, the global supply glut may only get worse.”
“You add all the numbers up and what you start to come up with is very, very scary,” Ozkan said in a telephone interview. “The production potential is only as high as the demand will allow it to go.”
“EU can get to one-third renewable energy in 2030” – if it chooses
February 27, 2018
The EU “can double the share of renewable energy in its total energy mix to 34% by 2030 with a net positive impact”, according to a report by the International Renewable Energy Agency (IRENA), commissioned by the European Commission, published on 20 February.
Currently, the EU’s renewable energy target for 2030 is 27%. According to the report:
- Reaching a 34% renewable share by 2030 would require an estimated average investment in renewable energy of around €62 billion per year.
- The renewable energy potential identified would result in 327 GW of installed wind capacity an additional 97 GW compared to business as usual, and 270 GW of solar, an 86 GW increase on business as usual.
- Accelerated adoption of heat pumps and electric vehicles would increase electricity to 27 per cent of total final energy consumption, up from 24 per cent in a business as usual scenario.
- The share of renewable energy in the power sector would rise to 50 per cent by 2030, compared to 29 per cent in 2015.
- In end-use sectors, renewable energy would account for 42 per cent of energy in buildings, 36 per cent in industry and 17 per cent in transport.
- All renewable transport options are needed, including electric vehicles and – both advanced and conventional – biofuels to realise long-term EU decarbonisation objectives.
The main conclusions are presented in these graphs:
The question is how credible a report from IRENA is in this regard. IRENA’s mission is to promote renewable energy after all.
How did IRENA arrive at their conclusions? It describes the methodology as follows:
“REmap [the method that was used] analyses two forward-looking scenarios. The first one, called the Reference Case, is a baseline featuring current national energy plans and goals to 2030; the second, called REmap, is an accelerated renewable energy scenario to 2030. Based on the energy mix projected by a country in the Reference Case, the REmap analysis focuses on identifying cost-effective alternatives to supply energy with renewables instead of conventional technologies/resources. These alternatives are named REmap Options, and are based on the realistic renewable energy potential at the sector and technology levels, realisable to 2030.”
Several factors are considered in identifying and analysing REmap Options, notes the report, “including resource availability, access to finance, human resource needs and supply, manufacturing capacity, policy environment, available infrastructure, annual capacity additions, the age of existing capital stock as well as the costs of technologies by 2030.”
Each REmap Option “is characterised by its renewable energy potential in terms of final energy and its ‘substitution cost’, which is expressed in USD per energy unit (typically in gigajoules, GJ) of final renewable energy. The substitution cost is the difference between the annualised costs of the REmap Option and a non-renewable energy technology used to produce the same amount of energy (e.g., electricity, heat)… It is based on the capital, operation and maintenance and fuel costs in 2030, and considers technological learning as well as energy price changes between now and 2030.”
The report notes that “No further assumptions are made with regard to infrastructure needs (e.g., transmission grids, charging infrastructure for electric mobility, etc.) beyond what countries plan, and the assessment of any related costs is also excluded from the study. The calculation of benefits of renewable energy in REmap includes the estimation of avoided externalities of CO₂ emissions and emissions of air pollutants, as well as their impact on human health and agricultural crops. A range of $17 to $80 per tonne of CO₂ is assumed for carbon prices and a wide range of unit external costs is assumed for air pollutants.”
In other words, the cost comparisons do NOT include additional infrastructure costs, but they do include external costs of fossil fuels. A discount rate of 4% is used in the energy cost calculations.
Nuclear energy challenged by Austria, supported by Trump, questioned in France
February 27, 2018
Austria has officially launched a lawsuit against the European Commission for its approval of Hungarian state subsidies for the construction of two new reactors at the Paks nuclear power plant.
The Austrian government had announced on 22 January that it intended to file the suitAustrian Sustainability Minister Elisabeth Köstinger has confirmed that the government has now filed the suit with the European Court of Justice.
The Paks plant, which is 100 km south of Budapest, currently comprises four Russian-supplied VVER-440 pressurised water reactors, which started up between 1982 and 1987, reports World Nuclear News. An inter-governmental agreement signed in early 2014 would see Russian enterprises and their international sub-contractors supply two new units at Paks – VVER-1200 reactors – as well as a Russian state loan of up to €10.0 billion ($11.2 billion) to finance 80% of the project.
“Hungary received the go-ahead to start construction of new nuclear power units at Paks this year as planned, following the Commission’s approval last March of commitments the country had made to limit distortions in competition. The Commission concluded that Hungary’s financial support for the Paks II project involves state aid, but it could approve this support under EU state aid rules on the basis of these commitments.”
Köstinger said that Austria is convinced that nuclear power must not have a place in Europe.
In France, the European home of nuclear power, the sector is increasingly under pressure.
Environment Minister Nicolas Hulot has said that “France has no need to build new nuclear reactors in addition to the one currently being assembled in Flamanville”, reports Reuters.
President Emmanuel Macron had earlier said “he would not rule out France building new nuclear reactors to replace state-controlled utility EDF’s ageing reactors.”
But Hulot said, “For the moment, frankly, there is no need to consider building other nuclear reactors in addition to Flamanville.”
Hulot said in November last year that reducing the share of nuclear energy in France’s power mix to 50 percent from 75 percent would probably take until 2030-35, dropping an initial 2025 target date.
Journalist Craig Morris, writing for the website Energy Transition of the Heinrich Böll Foundation, recently speculated that France may be about to close five nuclear reactors “without any official announcement”.
He bases this mainly on announcements on the website of French nuclear operator EDF, which say that four plants currently closed “will be reassessed and … will be restarted if economically justified”. According to Morris, such as a sentence is “highly unusual”. EDF, he adds, would not comment.
France’s nuclear reactors suffered from unusually long downtimes last year.
In the meantime in the U.S. the U.S. Energy Department “is throwing its support behind a request by utilities to extend the life of some nuclear power reactors”, reports Bloomberg, “keeping them in operation for as long as 80 years.”
Already, the utilities Exelon, Dominion Energy and NextEra Energy have said they plan to ask regulators to extend 60-year licenses by 20 years for eight reactors in Virginia, Pennsylvania, and Florida. Requests for as many as 20 more are expected to follow, according to the nuclear industry.
South Korea goes green, Japan hesitates
February 27, 2018
South Korea has embarked on a transition to renewables and gas, writes Jason Deign at Greentech Media.
“South Korea took action this month to strengthen its grid in preparation for a major boost in renewable energy generation”, notes Deign.
State-owned Korea Electric Power Corporation (Kepco) “picked U.S. infrastructure provider GE Power to build a 4-gigawatt high-voltage DC (HVDC) transmission link from the east of the country to the capital, Seoul, in the northwest.”
The $320 million contract “will increase the stability and reliability of the Korean electrical transmission grid by adding new routes for power supply,” said GE Power.
The project is due to be completed at the end of 2019.
“The latest HVDC project follows the December publication of a power supply plan that will see gas and renewables gradually replacing coal and nuclear in South Korea’s generation mix between 2017 and 2031”, notes Deign.
Coal and nuclear currently account for more than 70 percent of the country’s electricity supply, with renewables making up just 6 percent. Wind and solar each contribute about 1 percent to the power mix today.
Under the new plan, South Korea aims to meet 20 percent of its total electricity consumption with renewable energy resources by 2030.
The transition will see the coal total falling to deliver 36.1 percent of electricity supply by 2030, and nuclear covering a further 23.9 percent.
Japan is not as far ahead as South Korea in its energy transition. Nevertheless, an energy task force “advising Japan’s foreign minister” has urged the government to shift away from nuclear and coal, reports Reuters, “arguing the country’s energy policies are outdated and undermine its global competitiveness”.
The advice comes in a report commissioned by minister Taro Kono, “a maverick lawmaker with prime ministerial ambitions, and echoes his own convictions,”, writes Reuters, “pitting him against Japan’s powerful Ministry of Economy, Trade and Industry (METI). METI urges using coal at home and financing coal-powered projects abroad.”
“If Japan focuses on renewable energy rooted in its abundant natural resources and reduces dependence on imported fossil fuels and uranium, this will contribute to its energy security and make possible a new domestic economy,” the task force said in the report. “It is obvious that Japan is lagging.”
In its current official targets Japan, one of the world’s biggest importers of thermal coal and natural gas, aims for renewables to make up 22 to 24 percent of its energy mix in 2030, up from about 14 percent now.
“Kono, in a speech in Abu Dhabi last month, called that target ‘lamentable’ since 24 percent is the global average now. The U.S.-educated son of a former foreign minister, Kono has made no secret of his ambition to lead the country at some point and has long been critical of Japan’s nuclear power industry.
Japan is the world’s biggest importer of liquefied natural gas (LNG) and the third-biggest importer of coal used for power generation.”
“Thermal coal imports rose to a record last year”, notes Reuters, “while those of LNG were near record highs, as the fuels filled the gap in power generation left by the country’s slow restart of nuclear power plants closed after the 2011 Fukushima disaster. Japanese companies are planning to build more than 40 new coal plants.”