The Energy Thread

ZS I hope you understand that anything I say in this thread is not meant as pro oil. It's just that I have a different perspective on this coming from a family that works largely as blue collar in oil. Welders, labors, teamsters, people who work very hard for what they have. I entered the work as just an experiment and didn't think I would last. I started out as a labor and worked hard and somehow I came to enjoy the challenge. but It's still a foreign world to me. Also the media keeps referring to these jobs as being temporary, which again shows a lack of understanding. The people who build pipelines do not think of their jobs as being temporary. They travel from pipeline job to pipeline job. They might work on one for 6 months, sometimes 3 years, but it's insulting to them to refer to their work as temporary. I'm not insulted just saying.

Would you prefer that keystone sell the oil to a country like China or Russia if the pipeline isn't built? Who both have much lower processing regulations? The idea of that happening is much scarier environmentally. The oil will be sold and used by somebody. Not to mention the fact that when the pipeline was stalled, the new refineries that were being built in Port Arthur were also put on hold which led to the law off of thousand of people in the area. I can image that the same happened in other areas that were getting ready for transmission and production.

I definitely don't think that you're a oil industry shill or anything like that! :) and even if you were, i wouldn't want to stifle conversation on the topic just because i disagree (which is what i rudely did to sanpaku on the BP spill thread, i'm ashamed to say)

One more quick note on the jobs created from Keystone, and also the pipeline construction industry in general:

The figure for the estimated number of jobs created from the Keystone XL pipeline was continually revised down by TransCanada until it landed at 6,000, a number that's in line with an estimate from the State Dept and a Cornell University study which was the only independent analysis of the issue.

those 6,000 jobs have to be placed in the context of the overall growth employment in the oil and gas industry under the Obama administration (an increase of 75,000, from 573K to 648K). even if you look at the pipeline construction sector by itself, employment has risen from 101K to 111K from 2009 to 2011. (those figures come from an analysis of BLS statistics) again, i don't want to discount the value of the Keystone XL jobs to those that need them, but i don't think anyone can accuse Obama of being anything but a great friend to the oil and gas industry.

Would you prefer that keystone sell the oil to a country like China or Russia if the pipeline isn't built? Who both have much lower processing regulations? The idea of that happening is much scarier environmentally. The oil will be sold and used by somebody.

wellll....i have some annoying views on that, probably! :) one rarely acknowledged factor in the debate over keystone xl is that the pipeline is/was intended to export oil to other countries, not to the united states. the NRDC has a really good, succinct article on the issue, but to summarize:

• the portion of the keystone pipeline that's already built terminates in the u.s. midwest, and the only possible buyer is the united states.
• extending the pipeline to the gulf would make the available on the world market, which is precisely the point, because
• canada wants to diversify energy exports since 97% of it currently goes to the united states. extending keystone to the gulf would allow them to sell it on the world market, and would also gain them access to refineries on the gulf that are classified as foreign trade zones (no taxes)

The oil will be sold and used by somebody.

but it's this that really gets to the heart of the matter, and where i'm forced to bust our my wishywashy enviro crap that no one likes to hear. under the status quo, it's true that the oil would be sold and used by somebody. i'm actually optimistic that canada won't be able to route the tar sands oil west to the pacific ocean due to the wave of lawsuits they're currently facing from indigenous people who have been completely fucked by tar sands production. but in general, since fossil fuels were discovered the status quo has been that as long as it's profitable to do so, they will be extracted ad infinitum. but we can't keep doing that. *insert Inconvenient Truth.avi* at some point, the addict has to decide to stop, even though every force in the world is telling him to keep going. if we keep extracting every last bit of fossil fuels, we will cause immense human suffering. my instincts tell me that we will probably do that, but i am also an incredibly cynical and borderline misanthropic person (although i'm trying to get better, i really am!). but i honestly can barely go on living if i don't have a glimmer of hope, and for me that glimmer is that it's possible to steer the ship away from the iceberg before its too late.

i don't think that obama rejected the pipeline because he wants to be a leader on climate change, far from it. he made a calculated political decision and i doubt that he gives a shit about science or the future. but by making the decision, he opens up the possibility of a future where the tar sands production is kept to a minimum and we actually have a chance of mitigating the worst impacts of climate change (it's too late to mitigate many of the impacts, unfortunately).

We actually agree on a lot of things. But I thought one of the problems with the oil from the tar was the refining of it into a usable product? Wouldn't it be worse to sell the oil in crude form to be processed to a country without the strict guidelines we currently have?

(i stayed late at work to type up that tl;dr and i need to run some errands on the way home! i'll respond when i get home because it's a good question!)

Tarsands, like oil spills, are an attractive target for environmental interest groups because unlike, say, radioactive emissions from the normal operation of coal plants (which arguably have much greater impact), they provide visuals that can be photographed.

I'd hope every scientifically literate person agrees the pressing issue isn't incidental spills or temporary removal of overburden, which have impacts lasting decades, but the emissions of greenhouse gasses, which will have substantial impacts for between 100,000 and 500,000 years after the fossil fuel era. Diatoms etc. in the oceans normally sequester carbon in the normal geochemical carbon cycle, but current studies indicate this pathway will become saturated in a century or two and substantial amounts of of carbon will linger in the atmosphere for millenia. These figures are from paleoclimatologist Curt Stager's excellent Deep Future (2011), which is even handed enough to offend all parties in the global warming debate.

There are good figures that tar sands require between the equivalent of a third to two-thirds a barrel of oil energy equivalent just for extraction, mostly to liquify and hydrogenate(if upconverting) the bitumen (basically oil from which all the volatile small molecules have evaporated or been consumed by bacteria, with similar viscosity to vasoline). Most of this additional energy is sourced from cheap Alberta-stranded natural gas, so it has about half the greenhouse emissions compared to using coal-generated electricity for production. I suspect that the all-in carbon emissions for most frontier oil projects (like deep sea or tight shale in undeveloped areas) would be very similar when one considers exploration, transport, and infrastructure, so I'm dubious that tar sands are particularly "dirty" compared to other petroleum with respect to greenhouse gases.

Tar sands don't necessarily require mining and overburden removal. The area in which the Athabasca tar sands are shallow enough to permit this is pretty limited, and is already exploited, so most new/incremental projects are using steam assisted gravity drainage. In SAGD, parallel horizontal wells are drilled one above the other, with steam injected into the upper wellbore and heated bitumen & water pumped from the lower. On the surface, this has a much smaller impact, with a well pad of few acres extracting resources from the surrounding 10+ square miles.

On the other hand, there are some tar sands projects that are potentially worse in emissions than the mining and SAGD developments. Toe-to-Heel Air Injection (THAI), developed when natural gas was getting scarce, injects air and starts combustion of the bitumen itself to produce heat underground. Whereas most SAGD projects can extract roughly 30% of the original bitumen in place, THAI projects burn a lot of it to get at that 30%. The exhaust adds up.

In my opinion, it really doesn't matter a whit whether the tar sands are exploited over 50 years or 100, which is all limiting pipeline capacity would do. Given atmospheric residence times in the hundreds of millenia, the critical issue is limiting the total amount of emissions humanity permits itself during the industrial/carbon age. A vow of chastity on the remaining easy coal, for example.

We'll have to wean ourselves, and I'm with the economists and James Hansen that the most efficient way to price the externality of GH emissions is with revenue neutral carbon taxes applied at the point of extraction or import. Goldman Sachs etc. won't get their cut from permit shuffling as in the Kyoto model, but fuck em.

As for Keystone XL, global politics dictate that it will be built, if only so that the U.S. can utilize the tar sands rather than China. The U.S. government definitely doesn't want the alternative pipeline over the Rockies to the Pacific port of Kitimat (Northern Gateway) to be built, as this would reduce U.S. energy security and leverage over Canadian resources. The State Department's permit denial looks a lot like a political gesture for one of Obama's core constituencies, but I'd expect that calculation to be forgotten on November 7th.

ok, i'm back. Jacob, in reference to your question about international regulations refining tar sands, i guess i'm not sure how rejecting the keystone expansion really affects things. if canada wants to sell the tar sands oil on the international market - and Stephen Harper in the past few hours has made it clear that he intends to push for that - then i would imagine that canada's existing refineries that are equipped to refine tar sands would be quite busy, and they'd probably build more to handle increased quantities? honestly, i don't much about canada's refineries, other than that facilities already exist that can refine tar sands, and given the $$ involved i'm sure they'd find it profitable to build more if needed. but that's a guess.

The State Department's permit denial looks a lot like a political gesture for one of Obama's core constituencies, but I'd expect that calculation to be forgotten on November 7th.

sadly otm

xp Tar sands will refine like any other heavy oil. Its an oil field whose structural trap has eroded away, which allowed volatile components (like gasoline ideal octane) to evaporate or be digested by oxygen requiring bacteria, and leaving behind only the larger waxy molecules (of the sort refined into Vaseline). To crack this wax into smaller liquid hydrocarbons requires a source of hydrogen like natural gas, as in the hydrocrackers of every refinery adapted to heavy oil. Most North American refineries that aren't associated with local light sweet fields are pretty advanced, as Venezuelan and Mexican export blends are on the heavy side.

One can either do a portion of the refining on-site (upgrading the oil to ultra-premium light sweet as Syncrude and Suncor do) or buy diluent like locally produced natural gas liquids/condensates to liquify the bitumen enough for pipeline transport to distant refineries.

Tar is a bit of misnomer, by the way. Bitumen is deficient in the lighter constituents, but tar is the "bottoms" of refining (after all the useful petrochemical feed stocks and liquid fuels have evaporated away in the distillation columns)

Thanks for the science Sanpaku.

think obama just supported fracking

that was some pretty strong language

he definitely did

the writing has been on the wall for a long time

did he really just stick it to the oil industry so openly?

for example

he didn't stick it to the oil industry - domestic exploration has spiked under the Obama administration, and as I walked in late and turned on the tv, he was talking about expanding domestic drilling even more in the coming year

demanding that companies be frank about the chemicals used in fracking doesn't actually prevent the environmental damage that fracking causes

xpost
i guess he was talking about ending the subsidies to the oil industry, but he's been saying that for a while. it doesn't work because republicans oppose it en masse.

xpost again, yeah, and the sad part is that fracking would have been much better regulated (under the Safe Water Drinking Act), except that in 2005, as part of the Energy Policy that Dick Cheney created behind closed doors with the fossil fuel industry (and excluded all environmental groups from), he specifically added a paragraph now called "the Cheney rule" that excludes hydraulic fracturing from being covered under SWDA. so "demanding that companies be frank about the chemicals used in fracking" isn't so much a big advance as finally gaining back ground that never should have been lost in the first place.

Serious question, which clean energy is Obama talking about?

great question. because a lot of people lump in nuclear with clean energy. some really diabolical people also try to include "clean coal" as clean energy, which is preposterous.

looks like he's diabolical. here's what the white house website says:

In his State of the Union address, President Obama proposed an ambitious but achievable goal of generating 80 percent of the Nation’s electricity from clean energy sources by 2035. All clean sources – including renewables, nuclear power, efficient natural gas, and coal with carbon capture and sequestration – would count toward the goal.

what a load of shit.

personally, I'm fine with nuclear power but I don't want it near (in?) fault zones like some of the plants in California

i'm fine with nuclear power as long as we have a solid plan on dealing with storage, disposal, and related security concerns for the next several hundred years

i'm not optimistic

I read a pretty good plan in esquire a couple years ago. It had cool graphs and mentioned a good recycling method for minimizing waste

But I can't be too optimistic either

those are "Generation IV", or closed-cycle reactors. they sound nice but won't be ready until 2030 at best, more likely 2045+. also, the economics of Generation IV are likely to be terrible.

oh boy new deep water drilling leases for the Gulf!

rmde

carbon capture and sequestration

This makes me furious - just another path for shifting the burden and the waste to third-world countries that won't benefit from the power generation.

The Press and the Pipeline

A Media Matters analysis shows that as a whole, news coverage of the Keystone XL pipeline between August 1 and December 31 favored pipeline proponents. Although the project would create few long-term employment opportunities, the pipeline was primarily portrayed as a jobs issue. Pro-pipeline voices were quoted more frequently than those opposed, and dubious industry estimates of job creation were uncritically repeated 5 times more often than they were questioned. Meanwhile, concerns about the State Department's review process and potential environmental consequences were often overlooked, particularly by television outlets.

http://cloudfront.mediamatters.org/static/images/item/chart-20120125-keystonexl-1.png
http://cloudfront.mediamatters.org/static/images/item/chart-20120125-keystonexl-3.png

more of a geopolitical thing, but this Iran/EU oil embargo thing is getting really, really interesting.

Besieged by international sanctions over the Iranian nuclear program including a planned oil embargo by Europe, Iran warned its six largest European buyers on Wednesday that it might strike first by immediately cutting them off from Iranian oil.

China and Iran have been working on a bilateral barter system (oil for goods/services) for 6+ months now. The EU sanction related devaluation of the Iranian rial has been beneficial to Iranian non-oil exports and employment.

Ultimately, these sorts of sanctions have largely just accellerated the shift of Iran from the western to the Chinese sphere of influence.

Charts for Z S:

http://3.bp.blogspot.com/-mdRYVeLh9Co/T0YwKW8olhI/AAAAAAAAA-8/l3qKVSnYXDs/s640/figure57.gif

http://3.bp.blogspot.com/-vNN4NJuC0Ss/T0YwFO4cd9I/AAAAAAAAA-0/sSZGrVemxG4/s640/figure58.gif

From Dr. Yardeni's Oil Market Intelligence

Thanks for those, Sanpaku! I knew that oil consumption in the developed world had curtailed, but I don't think I realized the extent to which it's dropped off in the past 5 years.

on a somewhat related note,

In the face of an "absolutely unprecedented emergency", say the 18 past winners of the Blue Planet prize – the unofficial Nobel for the environment – society has "no choice but to take dramatic action to avert a collapse of civilisation. Either we will change our ways and build an entirely new kind of global society, or they will be changed for us".

...The paper urges governments to:

• Replace GDP as a measure of wealth with metrics for natural, built, human and social capital – and how they intersect.

• Eliminate subsidies in sectors such as energy, transport and agriculture that create environmental and social costs, which currently go unpaid.

• Tackle overconsumption in the rich world, and address population pressure by empowering women, improving education and making contraception accessible to all.

• Transform decision-making processes to empower marginalised groups, and integrate economic, social and environmental policies instead of having them compete.

• Conserve and value biodiversity and ecosystem services, and create markets for them that can form the basis of green economies.

• Invest in knowledge through research and training.

"The current system is broken," said Watson. "It is driving humanity to a future that is 3-5C warmer than our species has ever known, and is eliminating the ecology that we depend on for our health, wealth and senses of self."

http://www.scribd.com/doc/82268857/Bob-Watson-Synthesis-Paper-for-UNEP

and now for something completely different

http://www.chinasmack.com/2012/pictures/shandong-villagers-inflate-plastic-bags-with-natural-gas-to-carry-home.html

I was listening to the local radio news, and a reporter was aghast at how keystone was using eminent domain to build the pipeline where landowners didn't want to sell. For me the way the media has starting covering this is laughable. For the 7 years that I have worked on pipelines, they all use eminent domain, and have been since pipelines started being build. # years ago when I was working for exxon we had 2 landowners who refused to sell, one who meet us with a shotgun. Exxon took both of their land rights. Where was the media then? When highways are built, powerlines, etc. It's just common practice. I don't mean to make light of people losing their land, but I thought most people know to take the money offered or they will take your land and you'll have nothing. I don't understand why everyone is so upset about This pipeline?

And as far as the media focusing on the loss of jobs and keystone. When the pipeline is built from Cushing, OK to the Gulf, it would employ all of my labor union, as well as the Operator union Welders, and Teamsters. Labors alone would bring home at least 80,000 a year and that's just a basic labor. Operators would gross around 120.000 and teamsters a little less, and these figures are without a base amount of overtime. My union hall only has around 400 hands and they probably would either have to hire new hands or dispatch from Louisiana's labor hall. That means a lot for Texas and my union.

One facet of the high gasoline prices on the coasts has been the current and imminent shutdowns of a number of refineries, representing in aggregate 5% of U.S. capacity. For the past decade, imports of heavy, sour crude grades have increased while light sweet crude grades are scarce. The bottom of the barrel effect. The Libyan revolution greatly exacerbated this. Its cost prohibitive to retrofit older, smaller, less capital intensive refineries to handle heavy sour grades, so Sunoco and some others are exiting the business.

Marcus Hook, Pa. (Sunoco), 175,000 bbl/d (idled)
Philadelphia, Pa. (Sunoco), 335,000 bbl/d (still searching for buyers)
Trainer, Pa. (ConocoPhillips), 185,000 bbl/d (idled)
St. Croix (Hovensa) 350,000 bbl/d (shutdown)

At the moment, it seems the local California price spike is mostly due to annual maintenance shutdowns for the switch-over to its California-only summer formulation, but the East coast is going to see shockingly high heating oil bills next winter, particularly if Sunoco can't find a buyer for its Phladelphia refinery.

And if your gasoline arives via the "stranded" pipeline network serving the Cushing, Ok. hub, international tension hasn't effected your wallet much. That will change once the ca. July reversal of the Seaway pipeline provides a initally 150,000 bbl/d (400,000 bbl/d by 2013) outlet to the Gulf coast.

http://i43.tinypic.com/hs3qf5.jpg

Oh, 1000 words:

http://i43.tinypic.com/hs3qf5.jpg

this may be the worst Friedman article of all time. even by Friedman standards this is
singularly awful:

AN e-mail came in the other day with a subject line that I couldn’t ignore. It was from the oil economist Phil Verleger, and it read: “Should the United States join OPEC?” That I had to open.

Verleger’s basic message was that the knee-jerk debate we’re again having over who is responsible for higher oil prices fundamentally misses huge changes that have taken place in America’s energy output, making us again a major oil and gas producer — and potential exporter — with an interest in reasonably high but stable oil prices.

From one direction, he says, we’re seeing the impact of the ethanol mandate put in place by President George W. Bush, which established fixed quantities of biofuels to be used in gasoline. When this is combined with improved vehicle fuel economy — in July, the auto industry agreed to achieve fleet averages of more than 50 miles per gallon by 2025 — it will inevitably drive down demand for gasoline and create more surplus crude to export. Add to that, says Verleger, “the increase in oil production from offshore fields and unconventional sources in America,” and that exportable U.S. surplus could grow even bigger.

Then, add the recent discoveries of natural gas deposits all over America, which will allow us to substitute gas for coal at power plants and become a natural gas exporter as well. Put it all together, says Verleger, and you can see why America “will want to consider joining with other energy-exporting countries, like those in OPEC, to sustain high oil prices. Such an effort would support domestic oil and gas production and give the U.S. a real competitive advantage over countries forced to pay high prices for imported energy — nations such as China, European Union members, and Japan.”

aaaaaaahahahahahahahahahahahahahahahahahahahaha

unbelievable

oh, it gets worse

Every time the NYT has asked me to consider subscribing in the past decade, their continued support of Thomas Friedman has been an effective deterrent.

There's no question the Bakken and Eagle Ford shale oil plays are important for some independent drillers. But their total output is 400 kbpd and 100 kbpd. Lets assume for a moment that the trends established by the 2007-present demand recession and the production growth through exploitation of shale oil can continue. In that rosy scenario that ignores economic and geologic realities, it looks like the U.S. might become liquid fuel independent in 2035:

http://www.instituteforenergyresearch.org/wp-content/uploads/2012/02/Crude-Imports.jpg

I'm sure it makes for great coctail party conversation, but that is all that Friedman has offered for decades.

Eh, eyeballing it again, 2025 or so. The export growth is largely diesel to Europe, which offers tax advantages for diesel-fueled transport. The import demand has declined primarily due to the general recession. Conservation, efficiency, and shale oil development have contributed, but by far the major factor is lower employment.

In that rosy scenario that ignores economic and geologic realities

and scientific and atmospheric realities. if by some miracle the U.S. is in a position to become a net fossil fuel exporter in the next 20 years, it would be so unfortunate if we decided to take those fossil fuels and sell them off to be burned, rather than leaving them in the ground and saving millions of lives.

Oil refineries likely to close across UK and Europe, Essar Energy boss warns

"There is some sort of structural change in the refining industry globally," said Nayyar. "Refineries that were small-sized or low-complexity are being replaced by large, complex refineries mostly built in the Asia-Pacific region … Those refineries that are not economically sustainable or of low complexity will find it much harder to survive in this market."

https://www.youtube.com/watch?v=BctwQCzpsW4

we are so fucked

https://www.youtube.com/watch?v=-5QDnP4lyGs

gross