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Energy Voices: Insights on the future of fuel and power

Monitor staff and guest contributors offer a mix of news, analysis, and commentary on energy and resource issues emerging across the globe.

Oil partly fills containers at the abandoned illegal refinery at creeks of Bayelsa, Nigeria. Sabotage and theft from oil producing regions in Nigeria has left a black mark on the nation's economy. (Sunday Alamba/AP/File)

Oil worries extend beyond Libya and Syria

By Daniel J. GraeberGuest blogger / 09.09.13

Sabotage and theft from oil producing regions in Nigeria has left a black mark on the nation's economy. Oil production is down more than 7 percent this year, bringing the economy along with it. Last week, Royal Dutch Shell announced it entered into talks with Nigerian villagers who said their lives were changed for the worse because of the company's pipeline spills. While that may offer some relief for the Niger Delta, the death of at least 20 people at the hands of Islamic militants suggests it's still no place to do business.

Conversations surrounding last week's oil markets centered on Libyan production issues and the possibility that U.S. military strikes on Syria may have broader implications for crude. Brent crude oil prices for last week hovered above the $115 per barrel mark.  In April, Libya was still producing around 1.4 million barrels of oil per day, long before there were any serious concerns about military action in Syria.  Nigeria's Bonny Light crude oil grade, however, has been under force majeure ever since. Though Libya's near-term oil prospects are dwindling, Nigerian production isn't exactly on the rebound. (Related article: Looking for the Next Mega Oil Play)

Last month, shipping information showed Nigeria was set to export 95,000 barrels of Bonny Light per day in October, down 24 percent from what's planned for September. Crude oil output for the second quarter, meanwhile, was down more than 7 percent from the first quarter to average 2.11 million bpd. That's left Nigeria with something of a black eye. OPEC said oil provides Nigeria with 20 percent of its gross domestic product, but 95 percent of its foreign exchange earnings and more than 60 percent of its budgetary revenues. Nigeria's oil wealth is in part the reason why it's Africa's second largest economy, but its economy is slowing down. The country's National Bureau of Statistics said last week the economy grew 6.18 percent during the second quarter when compared to the same time last year. That's nearly 5.8 percent slower than the first quarter. The decline is largely due to the drop in oil output because of theft and pipeline shutdowns.  ( Continue… )

The sun sets behind an drilling rig in Prudhoe Bay, Alaska. Advancements in technology designed to extract more oil, natural gas, coal and uranium from the ground are in a race with geological constraints, Cobb writes. (Lucas Jackson/Reuters/File)

Our energy future: 'They'll think of something'

By Kurt CobbGuest blogger / 09.09.13

With oil prices hovering near historic highs and coal, natural gas and uranium prices yo-yoing during the last several years, concerns about the future of fossil fuel and uranium supplies often elicit the response: "They'll think of something. They always do."

This kind of thinking is usually premised on the idea that the future will look like the past, only bigger and better. It does not even admit the possibility that we may need to reduce our energy use. We'll come back this issue later.

The pronoun "they" in the generic quote above is vague, and the speaker does not know that he or she is actually referring to two distinct technological approaches to our energy future. Each technology progresses amid a different and highly consequential backdrop.

Let me cut to the chase. Advancements in technology designed to extract more oil, natural gas, coal and uranium from the ground are in a race with geological constraints. The more of each type of fuel we extract, the more difficult it is to wrest each subsequent barrel, cubic foot, or ton from the Earth's crust. The deposits become leaner, that is, there are fewer units of what we want per ton of earth--and more refractory, that is, more challenging to process in order to separate the stuff want from the stuff that isn't oil, natural gas, coal and uranium. The empirically established principle is that we go after the easy deposits first and save the difficult ones for later.  ( Continue… )

A huge plume of gas burns at a fracking site run in a heavily wooded area between Kalkaska and Grayling, Mich. (Dale Young/Detroit News/AP/File)

How I learned to stop worrying and love fracking

By Daniel J. GraeberGuest blogger / 09.08.13

Critics of hydraulic fracturing say economic and energy security shouldn't come at the expense of the environment. The controversial practice, dubbed fracking, has become the cause du jour in advocacy circles. A report from Colorado-based IHS, however, finds the oil and natural gas boom in the United States is starting to bring benefits to American families. IHS said increased energy production in the United States could put more money in the pocketbooks of U.S. families and add strength to an already recovering job market. The Energy Department, meanwhile, says that, relatively speaking, natural gas is one of the best fuel options around because of its low carbon intensity. The economic and environmental attributes aren't enough to quiet fracking opponents, however.

The U.S. Energy Department's Energy Information Administration said in a monthly report for August the United States imported 1.4 million cubic feet of natural gas during the first six months of the year. That's down more than 20 percent compared to the same period in 2011. In terms of marketed production of natural gas, the EIA said the United States posted nearly 12.6 million cubic feet for the six months of the year, an 8.2 percent increase from the same period in 2011.

IHS said the steady increase in oil and natural gas production means economic gains are starting to trickle down to American families. Last year, energy companies added millions of barrels worth of production to their U.S. portfolios through hydraulic fracturing. IHS said the energy boom added more than 2.1 million direct and indirect jobs to the U.S. economy last year. That should reach the 3.3 million mark by the end of the decade. For actual monetary gains, increased wages and lower energy and manufacturing costs should add another $2,000 per year to American incomes by 2015, an increase of more than 60 percent from last year. (Related Article: Pessimism and Optimism over Utica Shale)

Supporters of hydraulic fracturing say the practice has been around for decades with few problems. The process employs huge quantities of water, sand and a trace amount of harmful chemicals used to coax oil and natural gas out of underground shale formations. Last week, the U.S. Geological Survey said hydraulic fracturing fluids spilled into a Kentucky creek killed off the federally threatened Blackside dace, a small species of minnow. Drilling was also blamed for small tremors in parts of the U.S. Midwest and the EPA is investigating groundwater wells to see if anything associated with fracking has contaminated drinking water supplies. Those threats have sparked concerns that fracking isn't worth the economic benefits.  ( Continue… )

An electric car charges at a charge point in Orlando, Fla. (John Raoux/AP/File)

Electric cars vs. plug-in hybrids: What's the difference?

By Neal DikemanGuest blogger / 09.07.13

I get this every time I discuss EVs.  Something along the lines of oh, you shouldn’t be including PHEVs in with EVs, they don’t count, or are not real EVs, just a stopgap etc.

I tend to think PHEVs may be better product.  At least for now.  And I follow the GM’s Chevy Volt vs the Nissan Leaf with interest.

The main arguments on each:  ( Continue… )

A sign is painted on a parking space for electric cars inside a car park in Hong Kong. The 2014 Smart ForTwo is the smallest, shortest, and cheapest electric car sold in the US. (Tyrone Siu/Reuters/File)

How to cool an electric car battery

By Russ FinleyGuest blogger / 09.05.13

Before the Chevy Volt (a plug-in hybrid) went on sale, Volt Chief Engineer Andrew Farah openly acknowledged that the extreme temperatures found in the Southwest have the potential to permanently reduce the battery pack’s capacity to store energy:

“The Volt may not be right for everyone. If you live in the Southwest, depending on how you use your car, the Volt might not be right for you.”

So what is a manufacturer to do if a given customer’s driving habits consistently exposes his or her battery pack to excessively high temperatures in a place like Tucson, or charges it five times a day, or maybe applies a blowtorch to it? As it turns out, the answer depends on what the warranty says, not so much on what the owner’s manual warns you not to do.

As the chief engineer for the Volt warned above, Nissan’s owner’s manual also warned that excessive exposure to ambient temperatures above 120 degrees F would degrade battery capacity. However, when a handful of Leaf owners in the Southwest realized that their batteries were losing capacity faster than batteries not repeatedly exposed to temperatures over 120 degrees F, they filed a class action lawsuit.  ( Continue… )

President Obama reacts during a press conference at Rosenbad, the seat of the Swedish government in Stockholm, Wednesday. A group of five Scandinavian nations agreed Wednesday to objectives that build upon goals outlined in the president's June speech on climate and energy. (Jessica Gow/Scanpix Sweden/AP)

Obama climate plan wins overseas support in run-up to G20

By Staff Writer / 09.05.13

President Obama’s climate plan got a Nordic boost in the run-up to the G20 summit.

A group of five Scandinavian nations agreed Wednesday to objectives that build upon goals outlined in the president's June speech on climate and energy.

The international push aims to cut carbon emissions domestically and curtail financial support for new coal plants abroad. But developing countries rely heavily on the carbon-heavy fuel, and critics of the plan say it will slow the spread of electricity to regions of the world without it.

"Climate change is one of the foremost challenges for our future economic growth and well-being," reads the joint statement by Denmark, Finland, Iceland, Norway, Sweden, and the US. "We underscore the importance of continuing to encourage innovative approaches to promoting energy efficiency and clean energy, including renewables, and of taking action on climate change, domestically and internationally."

While emissions are down in the US and other Western countries, they are ballooning elsewhere. Carbon-heavy coal is fueling the emerging economies of China, India, and other countries – sometimes with the US financing the construction of new plants.  ( Continue… )

Refinery workers walk inside the LyondellBasell oil refinery in Houston, Texas. (Donna Carson/Reuters/File)

US refineries capitalize on Latin American shortfall

By Alexis ArthurGuest blogger / 09.05.13

2013 has been a bumper year for United States’ refineries and it is in no small part thanks to its largest overseas market -- Latin America.  

Although Latin America’s oil production has grown steadily in recent years, the region’s refineries have been unable to keep pace with rising demand, particularly in the transport sector. The shortfall has prompted Victorio Oxilia, president of the Latin American Energy Organization (OLADE), to declare the increase in petroleum product imports one of the region’s most pressing energy concerns.

There are several reasons for this. One is simply insufficient investment in local refining capacity. This is changing, with several projects underway. Interestingly the Chinese, who have been significant financiers of upstream oil operations across Latin America, have begun investing in the downstream sector. The China National Petroleum Corporation’s (CNPC) investment in the $12 billion Pacific Refinery in Ecuador is just one example, and we are likely to see more in coming years.

Another reason for the region’s relative decline in refining capacity is tightening regulations, meaning that pre-exciting refineries are unable to produce the quality of gasoline or diesel that meets national standards. Constructing more complex refineries capable of producing various fuel grades requires enormous investment.  ( Continue… )

Smoke rises as seen from the Aleppo district of Salaheddine, Syria Wednesday. Oil has not been much of an issue in US deliberations over whether to launch a strike against Syria, Salhani writes. (Ammar Abdullah/Reuters)

Oil's dwindling role in Middle East affairs

By Claude SalhaniGuest blogger / 09.04.13

On his way back from the Yalta conference in February 1945 where US President Franklin D. Roosevelt met with Great Britain’s Winston Churchill and the Soviet Union’s Stalin, the American president made an unscheduled stop in Egypt where he met with Saudi Arabia’s King Abdel Aziz ibn Saud aboard the USS Quincy, in the Suez Canal’s Great Bitter Lake. The basis of the meeting was to ensure that Americans would have an uninterrupted supply of oil.

Oil in fact was the only thing that these two very different men had in common. Oil was the common thread binding Arabs and Americans. The Arabs produced it in large quantities and the Americans consumed it in large quantities.

Over the past several decades US presidents and Western European leaders had to worry about how any policy decision taken by them would affect the cost of gas at the pump, and thus ultimately, affect their own careers.  As one can easily imagine, no politician in the world would want to be blamed for having been the cause of raised prices at the pump. (Related article: Saudi Prince Bandar Schemes in Syria)

With that in mind, policy makers in the Western Hemisphere pussyfooted around the thorny issue of how to handle the Middle East, careful not to upset too much the Arabs and in the process trigger the alarm that would punish the West with higher oil prices. As has happened in 1973 during the October War between Israel and its Arab neighbors when the oil producing countries slapped an oil embargo on the West.  ( Continue… )

A man walks at a makeshift oil refinery site in al-Mansoura village in Raqqa's countryside in Syria. A strike on Syria wouldn't directly affect oil production, analysts say, but the concern is over the reaction across the broader region. (Hamid Khatib/Reuters/File)

Why oil prices will stay high – even without a Syria crisis

By Staff Writer / 09.04.13

Syria's relative lack of oil and the rest of the world's growing abundance of it means a US strike on the country is unlikely to immediately disrupt production of one of the world's most prized commodities.

But the oil market is on edge for reasons beyond Syria. And those threats are likely to keep oil prices elevated, with or without military action by the United States and its allies. 

The threat is that violence in Syria will spill over to other nations. Even a limited Western intervention there could ripple across the Middle East, analysts caution, aggravating sectarian violence that is already crimping production.

"It’s not that it’s the strike itself," said Mihaela Carstei, deputy director for the energy and environment program at the Atlantic Council, a global think tank based in Washington. "You have to think beyond the immediate ... It could have a longer lasting impact, because it’s about the perception of the US going in again."

That long-term impact could extend well beyond Syria, Ms. Carstei said in a telephone interview, destabilizing oil-rich neighbors in the Middle East and North Africa

"In a post-strike environment the most likely supply impact would be on Iraq," wrote Guy Caruso, a senior adviser in the energy and national security program at the Center for Strategic and International Studies, a Washington-based think tank. "Sunni-Shite tensions would be exacerbated, which could affect Iraqi exports most likely through pipeline damage." 

In North Africa, Libya's oil industry is already struggling to recover from the 2011 civil war that toppled Muammar Qaddafi. Strikes at ports and pipelines have cut exports to around 80,000 barrels per day (bpd). That's less than a tenth of the country's capacity.

Oil theft has plagued Nigeria. Production there is at a four-year low, down to 1.9 million barrels per day (bpd) from about 2.1 million bpd in 2012. 

All told, supply cuts in the Middle East and North Africa have risen above 3 million bpd. That's about 3.5 percent of global demand.

Oil prices are already creeping upward, with New York Mercantile Exchange futures hitting a high of more than $110 a barrel on Aug. 28. Prices fell $1.38 to $107.16 a barrel Wednesday after President Obama spoke in Stockholm.

The recent move is a "typical paper markets effect," according to Giacomo Luciani, adjunct professor of international affairs at The Graduate Institute, Geneva. Driven by a fear of a price increase, investors buy, thereby increasing prices.

"Such fundamentally irrational price movements are common and inevitable and the industry has learned to live with them, unless for some reason they persist over time and prices are driven in a direction not supported by fundamentals for an extended period of time (several months)," Mr. Luciani wrote in an e-mail.

Even a decade ago, these threats would have been enough to send the price of oil soaring on world markets. The response is less frenzied today because of the Middle East's waning influence on global oil markets. 

New drilling techniques have opened up vast reserves of previously inaccessible oil and natural gas in the US. That "shale boom" could well spread to Europe and Asia. Increased efficiency measures have driven demand down, and renewables offer even greater hope for energy independence

In the short term, the Obama administration could mitigate the effects of a potential strike by coordinating with allies in the region and elsewhere to increase oil output and plan for the possible drawdown of emergency supplies, Mr. Caruso wrote in an e-mail.

Still, the situation is far from stable, analysts said.

"Should the conflict in Syria continue to evolve as it has in recent months, compounded by the strike, neighboring countries (e.g., Iraq and possibly even Iran) could be dragged deeper into it, raising the risk of supply disruptions," wrote John Calabrese, a professor at American University and a scholar in residence at the Middle East Institute in Washington.

The Tesla Motors Model S electric car is shown in Boston. Tesla officially opened its first assembly plant in Europe last month. (Ann Hermes/The Christian Science Monitor/File)

Tesla Motors goes to Europe

By Joao PeixeGuest blogger / 09.04.13

On the 23rd of August Tesla officially opened its Tilburg Assembly Plant, their first assembly plant in Europe, allowing some of the very first European customers, from Holland, Belgium, France, and Germany, to receive their Model S cars.

The assembly plant is located in the Netherlands, where Tesla believes that it will be perfectly situated to deliver vehicles to all corners of the European market.

Clean Technica reports that the 18,900 square metre plant will receive nearly complete Model S vehicles from US manufacturing plants, before finally assembly and then shipment to customers around the continent. (Related article: Elon Musk Turns his Eye on Iron Man’s Technology)

Tilberg offers a central location for deliveries to anywhere in Europe within 12 hours. It is linked to the mainland continent via an excellent rail and motorway network, and is just 50 miles from the port of Rotterdam.  ( Continue… )

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