Tuesday, April 28, 2015
US to launch blitz of gas exports, eyes global energy dominance
The US Energy Department prepares a wave of LNG gas permits in the latest move to redraw the world's oil and gas landscape. Obama perhaps thinks natural gas has become too cheap in America so wants to drive the price up by opening export demand for it. It could also be an attempt to shaft Putin by taking away his markets. I think that might be the main motive
The United States is poised to flood world markets with once-unthinkable quantities of liquefied natural gas as soon as this year, profoundly changing the geo-politics of global energy and posing a major threat to Russian gas dominance in Europe.
"We anticipate becoming big players, and I think we'll have a big impact," said the Ernest Moniz, the US Energy Secretary. "We're going to influence the whole global LNG market."
Mr Moniz said four LNG export terminals are under construction and the first wave of shipments may begin before the end of this year or in early 2016 at the latest.
“Certainly in this decade, there’s a good chance that we will be LNG exporters on the scale of Qatar, which is today’s largest LNG exporter,” he said, speaking on the margins of the IHS CERAWeek energy summit in Texas.
Qatar exports just over 100 billion cubic meters (BCM), though Australia is catching up fast as the offshore Gorgon field comes on stream. It may pull ahead of Qatar later this decade.
Mr Moniz said the surge in US output from shale fracking has already transformed the global market. "We would have been importing a lot of LNG by now. Those cargoes would have gone elsewhere and have in fact had a significant impact in the European market,” he said.
Gas frackers assembled at the world's "energy Davos" in Houston said exports could ultimately be much higher, potentially overtaking Russia as the world's biggest supplier of natural gas of all kinds.
"We're just fifteen years into a 150-year process," said Steve Mueller, head of Southwestern Energy, the fourth biggest producer of gas in the US .
The mile-deep Marcellus basin stretching from West Virginia through Pennsylvania to New York state is driving the explosive growth. Interlocking fractures in the rock make it possible for a single well with advanced technology to extract much more gas than thought possible just five years ago.
Once thought to be in decline, the Marcellus alone produces 113 BCM a year. This is roughly equivalent to Russia's exports to Europe through the Nord Stream, Yamal, and Brotherhood pipelines.
Mr Mueller defiantly sweeps aside those who claim that the US fracking industry is in serious trouble, insisting that drilling costs are coming down so fast that his company - and others - are staying a step ahead of falling prices.
"Rig efficiency was flat for thirty years but since then we've cut by five times. We have set in motion something that you can't deny and is irresistible," he said.
Mr Mueller said it had taken his company 17 days to drill a 2,600 ft well as recently as 2007. It has just drilled a 5,400 ft well in six days. "The new technology is amazing. We have a drill-bit with a chip inside that makes its own changes," he said.
He is continuing to invest heavily and hopes to boost output by up to 10pc annually for the next three years, despite a drop in gas prices to around $2.60 per million British thermal units (BTU). "If it stays around $3, we'll be fine," he said.
The US Energy Information Administration (EIA) expects gas prices to rise to $4.88 in real terms by 2020, and $7.85 by 2040.
What is remarkable is that US drillers can produce a third more natural gas today with 280 rigs than they did in 2009 with 1,200 rigs. Total shale output has soared to over 350 BCM from almost nothing a decade ago. It now makes up half of US gas production.
The Obama administration has so far been slow to approve new export terminals for LNG, partly because of concerns that the US would lose its massive advantage in energy and feedstock costs for industry.
Gas sells at for $7 in Europe, and over $10 in North-East Asia, four times more expensive. This cost-gap has been a key driver behind America's so-called "manufacturing renaissance", stoking an investment boom in chemicals, plastics, and glass, and saving the country's steel mills from slow death.
A corridor from Houston to New Orleans has attracted 33 petrochemical plants worth over $1bn each since 2011. The American Chemistry Council expects over $130 billion of industrial projects along this stretch by 2023.
The administration has concluded that the US lead is now so entrenched that there is little to lose from a partial levelling of the global playing field. The expense of freezing gas for liquefaction to minus 260 degrees Fahrenheit and shipping it across the Atlantic or Pacific in molybdenum-hulled vessels is enough to maintain a big cost advantage for US manufacturers.
Four LNG terminals with a combined export capacity of 70 BCM are likely to be approved soon by the Energy Department. The front-runner is Cherniere's $18bn terminal at Sabine Pass in Louisiana.
Experts are split over whether North America really can become the world's dominant LNG player. Moody's warned earlier this month that most of the 30 gas liquefaction projects planned in the US and Canada will never get off the ground, chiefly due to the linkage between LNG contracts and the price of crude. "The drop in international oil prices has wiped out the price advantage US LNG projects," it said.
Michael Smith, head of Freeport LNG, said his company will press ahead regardless with plans for a $13bn plant near Houston, and predicted that the US could soon leap-frog all rivals to become the new gas hegemon. "Our projects are very competitive and we will continue to have an advantage over the rest of the world," he said.
Russian president Vladimir Putin warned at the St Petersburg economic summit last year that US shale gas was abruptly changing the international order, with serious implications for his country. The early effects have forced down global LNG prices, creating a rival source of gas supply in Europe.
Any future American cargoes would further erode Gazprom's pricing power in Europe, and erode the Kremlin's political leverage. The EU already has a large network of import terminals for LNG.
Lithuania has just finished its "Independence" terminal, opening up the Baltic states to LNG. Poland's new terminal should be ready this year.
America's parallel drive for shale oil is equally breath-taking. Scott Sheffield, head of Pioneer Natural Resources, said his company has discovered huge reserves in the vast Permian Basin of West Texas.
"We think the Permian could produce 5-6m barrels a day (b/d) in the long-term," he said. It is a staggering claim. This would be more than Saudi Arabia's giant Ghawar field, the biggest in the world.
Ryan Lance, head of ConocoPhillips, said North American oil output could reach 15m b/d by 2020 and 25m b/d over the next quarter century, three times Saudi Arabia's current exports.
A vault forward on this scale would establish the US as the leading energy superpower in both oil and gas, a revival that almost nobody could have imagined seven years ago when the United States was in near panic over its exorbitant dependency of imported fuel. It would restore the US to its mid-20th Century position as a surplus trading nation, and perhaps ultimately as world's biggest external creditor once again.
Fracking is still an almost exclusive preserve of North America, and is likely to remain so into the early 2020s. China has large ambitions but the volumes are still tiny, and there is a shortage of water in key areas. Fracking remains mere talk in most other regions of the world.
Lukoil analysts say Russian extraction costs for shale are four times higher that those of US wildcat drillers. Sanctions currently prevent the Russians importing the know-how and technology to tap its vast Bazhenov basin at a viable cost.
John Hess, the founder of Hess Corporation, said it takes a unique confluence of circumstances to pull off a fracking revolution: landowner rights over sub-soil minerals, a pipeline infrastructure, the right taxes and regulations, and good rock. “We haven’t seen those stars align yet,” he said.
Above all it requires the acquiescence of the people. "It takes a thousand trucks going in and out to launch a (drilling) spud. Not every neighbourhood wants that," he said. Certainly not in Sussex, Burgundy, or Bavaria.
Top scientists start to examine fiddled global warming figures
The Global Warming Policy Foundation has enlisted an international team of five distinguished scientists to carry out a full inquiry
Last month, we are told, the world enjoyed “its hottest March since records began in 1880”. This year, according to “US government scientists”, already bids to outrank 2014 as “the hottest ever”. The figures from the US National Oceanic and Atmospheric Administration (NOAA) were based, like all the other three official surface temperature records on which the world’s scientists and politicians rely, on data compiled from a network of weather stations by NOAA’s Global Historical Climate Network (GHCN).
But here there is a puzzle. These temperature records are not the only ones with official status. The other two, Remote Sensing Systems (RSS) and the University of Alabama (UAH), are based on a quite different method of measuring temperature data, by satellites. And these, as they have increasingly done in recent years, give a strikingly different picture. Neither shows last month as anything like the hottest March on record, any more than they showed 2014 as “the hottest year ever”.
Back in January and February, two items in this column attracted more than 42,000 comments to the Telegraph website from all over the world. The provocative headings given to them were “Climategate the sequel: how we are still being tricked by flawed data on global warming” and “The fiddling with temperature data is the biggest scientific scandal”.
My cue for those pieces was the evidence multiplying from across the world that something very odd has been going on with those official surface temperature records, all of which ultimately rely on data compiled by NOAA’s GHCN. Careful analysts have come up with hundreds of examples of how the original data recorded by 3,000-odd weather stations has been “adjusted”, to exaggerate the degree to which the Earth has actually been warming. Figures from earlier decades have repeatedly been adjusted downwards and more recent data adjusted upwards, to show the Earth having warmed much more dramatically than the original data justified.
So strong is the evidence that all this calls for proper investigation that my articles have now brought a heavyweight response. The Global Warming Policy Foundation (GWPF) has enlisted an international team of five distinguished scientists to carry out a full inquiry into just how far these manipulations of the data may have distorted our picture of what is really happening to global temperatures.
The panel is chaired by Terence Kealey, until recently vice-chancellor of the University of Buckingham. His team, all respected experts in their field with many peer-reviewed papers to their name, includes Dr Peter Chylek, a physicist from the National Los Alamos Laboratory; Richard McNider, an emeritus professor who founded the Atmospheric Sciences Programme at the University of Alabama; Professor Roman Mureika from Canada, an expert in identifying errors in statistical methodology; Professor Roger Pielke Sr, a noted climatologist from the University of Colorado, and Professor William van Wijngaarden, a physicist whose many papers on climatology have included studies in the use of “homogenisation” in data records.
Their inquiry’s central aim will be to establish a comprehensive view of just how far the original data has been “adjusted” by the three main surface records: those published by the Goddard Institute for Space Studies (Giss), the US National Climate Data Center and Hadcrut, that compiled by the East Anglia Climatic Research Unit (Cru), in conjunction with the UK Met Office’s Hadley Centre for Climate Prediction. All of them are run by committed believers in man-made global warming.
For this the GWPF panel is initially inviting input from all those analysts across the world who have already shown their expertise in comparing the originally recorded data with that finally published. In particular, they will be wanting to establish a full and accurate picture of just how much of the published record has been adjusted in a way which gives the impression that temperatures have been rising faster and further than was indicated by the raw measured data.
Already studies based on the US, Australia, New Zealand, the Arctic and South America have suggested that this is far too often the case.
But only when the full picture is in will it be possible to see just how far the scare over global warming has been driven by manipulation of figures accepted as reliable by the politicians who shape our energy policy, and much else besides. If the panel’s findings eventually confirm what we have seen so far, this really will be the “smoking gun”, in a scandal the scale and significance of which for all of us can scarcely be exaggerated
Amazon rainforest losses impact on climate change, study shows
This was just a modelling exercise
Widespread removal of trees has contributed to a rise in the amount of carbon dioxide in the atmosphere, increasing the potential impact of climate change, researchers say.
Deforestation of the Amazon accounted for 1.5 per cent of the increase in carbon dioxide levels seen since the mid-nineteenth century, the team says.
However, this increased the total amount of carbon found in the atmosphere only very slightly compared with fossil fuel emissions, which account for the vast majority of the increase.
Had this deforestation not taken place, the rainforest would store 12 per cent more carbon in its vegetation, and cover a much larger area than at present, the team adds.
The study is the first to show the extent of Amazon deforestation by determining the impact humans have had on the ability of the rainforest to store carbon.
Trees absorb carbon dioxide from the atmosphere in order to grow. This can help offset fossil fuel emissions of carbon dioxide, reducing the rate of climate change, the team says.
The team made maps to show what size the Amazon would be today if humans had not deforested large areas of it.
High-resolution satellite images have been available only since 2000, so the team made virtual models to work out how the rainforest changed in earlier decades. Researchers used these to study how the loss of trees reduced the rainforest's ability to store carbon.
Destruction of large areas of the Amazon also impacts on the biodiversity of the rainforest and could lead to the loss of many animal and plant species, researchers say.
The study, published in the journal Geophysical Research Letters, was funded by the Natural Environment Research Council.
Dr Jean-Fran‡ois Exbrayat, of the University of Edinburgh's School of GeoSciences, who led the research, said: "Our study indicates that the impact of large-scale deforestation on the Amazon carbon balance has been partially offset by ongoing regrowth of vegetation, despite sustained human activity. Overall, our results provide a baseline to better understand the global carbon cycle."
The shonky cost of carbon
I am not sure that Americans will know what a shonk is. Its origin is unclear but in Australian/British usage it means a fraud or a con-man. So something shonky is of dubious integrity or worth
A new paper has appeared in Nature Climate Change which puts a social cost of global warming at $200 per ton of carbon dioxide. The authors are Frances Moore and Delavane Diaz of Stanford.
The SCC is of course is a figure that greens can manipulate pretty much to their hearts' content - witness Frank Ackerman's hilarious $1000 figure of a few years back. The entertainment comes in working out what particular dodges have been pulled to hike the figure upwards and the new paper explains that it is picking up on an earlier study by Dell et al, which sought to make revised estimates of the damage that climate change would cause by examining the effect of short-term fluctuations in the weather on economic output.
Everyone involved is admirably open about the fact that this is what they are doing, and the fact that weather damage is something completely different to climate effects. You read that they have taken steps to estimate the difference, but I'm not sure that they are going to convince anyone that what they are doing is anything other than sticking a finger in the air. But then you also read that they are working with warming in 2100 of over 4.5°C; in other words they are using the IPCC's absurdly overegged RCP8.5 scenario. Needless to say, this is described as "business as usual". They are also using the IPCC's GCM-based estimates of climate sensitivity.
At this point you realise that you are being had, and you read no further.
Record Numbers Of Drivers Trading In Electric Cars For SUVs
President Barack Obama promised to put a million more hybrid and electric cars on the road during his tenure, but new research shows drivers are trading them in to buy sports utility vehicles (SUVs).
The auto-research group Edmunds.com found that “22 percent of people who have traded in their hybrids and [electric vehicles] in 2015 bought a new SUV.”
This number is higher than the 18.8 percent that did the same last year, but it’s double the number that traded in their electric car for an SUV just three years ago. Edmunds.com reports that only “45 percent of this year’s hybrid and EV trade-ins have gone toward the purchase of another alternative fuel vehicle, down from just over 60 percent in 2012.”
“Never before have loyalty rates for alt-fuel vehicles fallen below 50 percent,” Edmunds notes.
In recent years, celebrities and politicians have been hyping electric car companies, like Teslas, as a hip way to help the environment and save money on gasoline. The Obama administration and some states even hand out generous tax credits to encourage people to buy EVs.
Buying an electric car can get you a $7,500 federal tax credit. It’s all part of Obama’s plan to get a million electric cars on the road by 2015. But electric cars were much more attractive when gas prices were high and customers could more easily rationalize paying more for an electric car. So far, Obama is still more than 800,000 electric cars short of meeting his 2015 goal.
“That’s the reality of the situation,” Jessica Caldwell, senior analyst at Edmunds.com, told Detroit News. “They have to push them out at those levels for people to be interested. It really seems like the cachet of EVs and hybrids has faded away.”
“EVs are just not selling; even hybrids and plug-ins are slow,” Caldwell said. “There’s some concern.”
Why are electric car sales faltering? One reason is that gas prices are far lower than they were in 2012. Edmunds notes that when gas prices were $4.67 per gallon in October 2012 it would take five5 years to make up the price difference between “a Toyota Camry LE Hybrid ($28,230) and a Toyota Camry LE ($24,460).”
With gas prices now at about $2.27 per gallon, Edmunds.com says it would take more than twice as long to save enough on gas to make up the price difference between a Camry LE and a Camry Hybrid.
Electric cars are also facing increased competition from more fuel-efficient vehicles. Aside from market forces, federal fuel efficiency standards have been forcing automakers to increase the miles per gallon of engines.
Electric cars also suffer from issues with battery life. Each hybrid or electric car battery can cost thousands, or even tens of thousands, of dollars, which only helps tip the economic scale in favor of traditional vehicles.
“It wouldn’t make sense to replace a 12-year old battery with a new battery that’s going to last 12 years, because chances are the car’s not going to last that long,” Eric Ibara with Kelley Blue Book told Detroit News.
Why The Fate Of The World's Climate Is Largely In Australia's Hands (?)
I fairly regularly read the Australian far-Left publication, "New Matilda". Not being a Leftist, I like to see the opposite point of view. The opposite point of view gives them the horrors, judging by the way they try to suppress it.
The rave excerpted below is one of their latest. Their argument is as usual very long-winded but is nonetheless a brilliant example of Leftist over-simplification. They seem to think that a torrent of words will disguise the shallowness of the thinking. Their argument could be condensed into just one sentence as follows:
"Australian mines supply a significant fraction of the world's coal so Australia should stop doing that to prevent global warming".
That there has been no statistically significant global warming for the last 18 years somehow goes unmentioned. I would be rather surprised if the writer knew what "statistically significant" meant. But you don't need knowledge to be a Warmist. You just have to have faith in your prophets
Be that as it may, what the article overlooks is that Australia is only the world's fourth-largest coal producer, after China, the United States, and India. And there are also in Africa and elsewhere mines from which production could easily be ramped up. And Britain almost floats on coal, though it is rarely mined there these days. And lignite ("brown coal") substitutes readily for thermal coal -- and Germany has masses of that, which it is already making extensive use of. The list of alternatives goes on .... Coal is superabundant. Even such unlikely places as Japan and New Zealand mine some coal. So if Australia impoverished itself by stopping coal exports, other countries would rapidly take up the slack -- meaning that coal usage would continue much as before.
One really does wonder what Thom Mitchell and his American friend use for brains. I suspect they just like sounding dramatic. Leftists are big on ill-founded drama. It seems to give them a desperately-needed feeling of importance
We're told Australia's contribution to global warning is minimal. A report out today proves that's a dangerous lie. Thom Mitchell explains. As American academic Bob Massey put it, “Australia now holds the fate of the world’s climate in its hands”.
In its pursuit of a solution to the ‘budget emergency’ Australia is using up the ‘carbon budget’ at a rate incompatible with the global goal of limiting temperature rises to below two degrees, a Climate Council report out today has demonstrated.
While Australia is under increasing pressure to announce an ambitious target to limit emissions at home, the report makes clear that it is our reliance on fossil fuel exports that is doing the real damage.
By actively seeking to prolong the dying revenue stream, which has buoyed the economy through the past decade, the Australian government is doing massive damage to the remaining ‘carbon budget’.
At a recent talk in Sydney, Massey was blunt. “If your government and mining companies decide to develop all of the coal and gas currently planned, already on the books, our children will be forced to endure a world very different from what we know,” he said.
To avoid such a world, scientists have developed the ‘carbon budget’ which, put simply, is the amount of carbon dioxide humans can emit into the atmosphere before temperature rises reach two degrees above pre-industrial levels.
On that basis, if all of Australia’s coal were burnt, it would use up two thirds of the ‘carbon budget’. Effectively, 90 per cent of the continent’s coal must stay in the ground.
Not all of that coal is technologically and economically viable now, but even if we burnt only the nation’s ‘reserves’, a 19 per cent bite would be taken out of the carbon budget.
If we burnt the total ‘resources’ - coal known to exist but not necessarily recoverable at this point - it would constitute a whopping 67.7 per cent of the carbon budget.
Yet despite the increasingly gloomy outlook for the commodity – the price of which has collapsed by around 60 per cent in the last five years - mining companies continue to explore for it and develop new mines. Australian governments are not only approving them, they’re promoting them.
For more postings from me, see DISSECTING LEFTISM, TONGUE-TIED, EDUCATION WATCH INTERNATIONAL, POLITICAL CORRECTNESS WATCH, FOOD & HEALTH SKEPTIC and AUSTRALIAN POLITICS. Home Pages are here or here or here. Email me (John Ray) here.
Preserving the graphics: Most graphics on this site are hotlinked from elsewhere. But hotlinked graphics sometimes have only a short life -- as little as a week in some cases. After that they no longer come up. From January 2011 on, therefore, I have posted a monthly copy of everything on this blog to a separate site where I can host text and graphics together -- which should make the graphics available even if they are no longer coming up on this site. See here or here
Posted by JR at 12:41 AM