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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.

An oil derrick is seen at a fracking site for extracting oil outside of Williston, N.D. A surge in US oil production, the biggest in six decades, according to BP, is largely due to new drilling techniques that recover oil from shale rock formations across North Dakota, Pennsylvania, and other parts of the country. (Shannon Stapleton/Reuters/File)

BP: US oil production sees biggest rise in 62 years

By Correspondent / 06.13.13

Already booming, US oil has set a new record: the biggest single-year increase in oil production since BP started keeping track 62 years ago.

Oil also gained elsewhere in the world, pushing global production up 2.2 percent in 2012, according to BP's annual report on global energy, released Wednesday. Demand for energy, meanwhile, grew at a more moderate pace than it did in 2011. 

“The data show there is ample energy available," Bob Dudley, BP group chief executive, said in a statement. "Our challenge as an industry is to make the best choices about where to invest."

The surge in US production is largely due to new drilling techniques that recover oil from shale rock formations across North Dakota, Pennsylvania, and other parts of the country. The hydraulic fracturing and horizontal drilling of shale also unlocks previously trapped troves of natural gas. US production of natural gas jumped 4.9 percent in 2012, according to BP.   ( Continue… )

Smoke billows from a chimney of the cooling towers of a coal-fired power plant in Dadong, Shanxi province, China. Data provided by the US power industry and the transparency gained offers policymakers around the world important insights, Warren writes. (Andy Wong/AP/File)

How 'green' is your power?

By Jennifer WarrenGuest blogger / 06.13.13

U.S. Power Producers Offer Insight for Investors and Policymakers Worldwide

As the number two carbon emitter on the globe, behind only China, U.S. power generation’s impact on carbon emissions can shed light on our progress. U.S. data can also inform other countries as they make choices regarding their energy portfolio mixes, particularly in power generation fuel source decisions. It would seem easier to start cleaner than to become cleaner.

Carbon emissions, a chief culprit in the warming of the planet, crossed a new threshold with uncertain consequences in May to 400 parts per million (ppm). The last time concentrations were this high was 3 to 5 million years ago — featuring an earth with higher sea levels and forests extending to the Arctic Ocean, according to an atmospheric scientist. It was a reminder to those concerned about the effects of climate change and others supportive of a lower carbon economy that considerable heavylifting lies ahead. A goal of 450 ppm is considered a threshold to ward off temperature rises higher than 2 degrees Celsius, or 3.6 Fahrenheit.

The financial community and shareholders appear to be the influential tail stirring the wind around the emissions mega-dog. It is worth noting that publicly-traded firms are supposed to disclose “material” effects of climate-related risks on business operations. Ratings agencies such as Moody’s and Standard and Poor’s have looked at the credit impacts of climate change in the power sector. In ten year’s time, institutional investors of the Investor Network on Climate Risk, numbering 100 with $10 trillion in assets, are influencing firms to disclose risks and opportunities associated with climate change and the shift toward a lower carbon economy. In a study by the U.S. SIF Foundation, 11% of professionally-managed U.S. investments — $ 3.74 trillion — were selected based on environmental, social and governance (ESG) criteria.  ( Continue… )

A motorist puts fuel in his car's gas tank at a service station in Springfield, Ill. Retail fuel consumption may or may not recover to post 2008 levels, Gagliardi writes, but what is clear is that we are living in a world of multi headwinds for energy consumption, relatively high crude prices, and slow global economic growth. (Seth Perlman/AP/File)

What a bad economy means for gasoline demand

By Lou GagliardiGuest blogger / 06.12.13

As we have built more fuel efficient transportation vehicles over the years, we have been able to curtail our consumption of motor gasoline and distillates – diesel. However even with more fuel efficient vehicles, our gasoline consumption as measured by the U.S. Energy Information Administration (EIA) of total product supplied has been fairly stable since the 1980’s as more vehicles have come onto the road to offset greater fuel efficiency. Then in 2008, the Great Recession hit brought on by the financial crisis and the trend accelerated dramatically downward. By 2008 fuel consumption began to slide downward, by 2012 gasoline consumption literally fell off the cliff.

The primary catalyst for the dramatic decline in motor gasoline demand has been weak economic growth in the U.S. that has been exacerbated by stubbornly high retail fuel prices pegged to relatively high crude prices, despite a deepening global recession.

Not only has gasoline demand been weak since 2009, it has been successfully lower roughly each year to year the date in 2013. Within the last month gasoline retail sales have moved upward, whether we see this 2013 trend pass above 2012 remains to be seen. For now, clearly demand in 2013 remains below previous years.

Retail fuel consumption may or may not recover to post 2008 levels, but what is clear is that we are living in a world of multi headwinds for energy consumption, relatively high crude prices, and slow global economic growth.

Canadian Prime Minister Stephen Harper is seen through a television camera scope while speaking at the Council on Foreign Relations in New York, in May. Mr. Harper has campaigned in the US for the approval of TransCanada's Keystone XL pipeline. (Shannon Stapleton/Reuters/File)

Keystone XL: the 'Kim Kardashian of energy'?

By Correspondent / 06.12.13

If oil pipelines had personalities, the proposed Keystone XL would be a Hollywood starlet. It's always elbowing into the spotlight.

Never mind that the Canada-Texas line would create only about 35 permanent jobs. Or that the tar sands (or oil sands) bitumen flowing through the pipeline would create, by one estimate, a significant but not enormous 17 percent more greenhouse gases on a life-cycle basis than the average barrel of oil. As a political symbol, Keystone XL is hugely important for environmentalists and the energy industry.

“It’s the Kim Kardashian of energy,” Sen. Heidi Heitkamp (D) of N.D., reportedly said at a conference in Washington Wednesday, referring to the reality TV star. “I don’t know why we care.”

Those living in the path of the proposed pipeline certainly have reason to care about Keystone XL. For the energy industry, the proposed 1,179-mile oil pipeline represents an opportunity to create jobs and supply the United States with oil from a friendly neighbor. For environmentalists, it's a litmus test for the administration's and America's resolve to cut greenhouse gas emissions.

The furor is likely to persist well beyond the US State Department's release of its final environmental review of the project.  ( Continue… )

Workers tend to a well head during a hydraulic fracturing operation at a gas well outside Rifle, in western Colorado. (Brennan Linsley/AP/File)

In Amish country, trading fracking rights for a pittance

By James BurgessGuest blogger / 06.12.13

I don’t think it would come of a surprise to anyone if I were to state that fracking companies have been known to use underhand tactics to get access to shale formations, but an article written in New Republic, shows a new low for fracking companies.

Eastern Ohio, home to billions of dollars worth of oil and gas shale reserves, also boasts the largest Amish population in the world, and energy companies have been approaching Amish farmers to buy drilling rights to the land for a pittance. The problem is that once the farmers realise that they have signed away their land for a mere fraction of its real worth, they are unable to sue in court because their religion does not permit lawsuits. (Related article: Next on the US Shale Scene? Try Tuscaloosa)

New Republic mentioned the case of an Amish farmer called Loyd Miller, who was approached by an agent from Kenoil, who offered him $10 per acre for the drilling rights to his 158 acre farm, and assured him that these were the best rates around. Miller said that he spoke to his wife, and they agreed“hey, that’s $1,500 we didn’t have.”

Not long after they found out that other non-Amish landowners in the area were receiving as much as $1,000 per acre. After consulting with a lawyer he was told that the Kenoil agent had in fact committed fraud by promising that $10 an acre was the best price available, and that Miller had a strong case to sue. The problem is that due to his beliefs, that is something he could never do.  ( Continue… )

Un-harvested corn in a field near Council Bluffs, Iowa. (Nati Harnik/AP/File)

Gas stations on the front lines of an ethanol war

By Robert RapierGuest blogger / 06.12.13

(Robert Rapier's edit: Some of you need to turn on your sarcasm detectors)

I just finished reading a story that made my blood boil. It was about how the oil industry is using dirty tricks to keep the ethanol industry in check. I need to sit down, take a deep breath, and make sure everyone knows of the atrocity that has happened in Kansas.

The problem started when the ethanol lobby requested — and subsequently received — a waiver from the Environmental Protection Agency (EPA) that would allow up to 15% ethanol in gasoline blends. The current limit is 10%, which is a problem for the ethanol industry because the mandate in the Renewable Fuel Standard already has the country at the 10% limit. It would be a huge boost to the ethanol industry if that limit was moved up to 15%, because that would increase the potential size of their US market by 50%.

Since the EPA allowed 15% — but didn’t mandate it — and because some automobile manufacturers have stated that use of E15 would void car warranties, I predicted that E15 sales would be essentially nonexistent.

And that is exactly what has happened. E15 has failed to win over consumers. Few stations offer it. Head ethanol lobbyist Bob Dinneen says that it is the oil industry’s fault that E15 isn’t being sold. Now comes evidence from Kansas that Dinneen may be onto something.  ( Continue… )

A vessel containing oil is placed on core samples of oil-bearing rock from Russia's oil heartland in West Siberia at a warehouse of the Tyumen Oil Research Centre in Tyumen, Russia. Russia's estimated 75 billion barrels of shale oil tops the list of the world's shale oil reserves, according to a new report. (Maxim Shemetov/Reuters/File)

EIA: World has more shale oil and gas, but will it drill?

By Correspondent / 06.11.13

If the world seems suddenly awash with oil and natural gas, it's because of a stubborn rock called shale.

The amount of known technically recoverable oil from shale formations has jumped 10 times in the past two years, according to a new 41-nation survey by the US Energy Information Administration. The amount of technically recoverable shale gas is up 10 percent from the last time the EIA surveyed the world's shale formations.

How much of that fossil-fuel energy actually sees the light of day remains unknown. Although the number of known shale formations has doubled in the past two years, economics trumps geology in the energy. What's clear is that nations will spend the next several years trying to replicate the success of the United States and Canada in turning geologic obstacles into fossil-fuel windfalls.

"As shale oil and shale gas production has grown in the United States to become 30 percent of oil and 40 percent of natural gas total production, interest in the oil and natural gas resource potential of shale formations outside the United States has grown," EIA Administrator Adam Sieminski, said in a statement.

Technically recoverable shale gas now represents nearly a third of the world's total natural gas, according to the EIA report, released Monday. Shale oil makes up 10 percent of the world's crude oil.  ( Continue… )

A girl uses candlelight as she studies during a power outage in a slum in Islamabad Pakistan. Pakistan's national security is compounded by domestic frustration with an energy crisis that leaves most of the country without power for much of the day. (Faisal Mahmood/Reuters/File)

Sanctions won't stop Pakistan from Iran natural gas

By Daniel J. GraeberGuest blogger / 06.11.13

Pakistan says it can't let geopolitical concerns interfere with its quest to find ways to keep the lights on. A planning minister said last weekend that all options must be on the table to resolve ongoing energy woes and that could include actually moving on a long-discussed natural gas pipeline from Iran. A rival project from Turkmenistan has U.S. and Asian Development Bank support, though with U.S. priorities shifting, the new Pakistani government may have greater freedom in terms of its regional social circles.

The U.S. government last week tightened the screws on the Iranian energy sector on the heels of a damning report from the International Atomic Energy Agency.  U.S. sanctions are meant to starve Iran of the revenue it could use to finance its controversial nuclear program and, to some extent, the U.S. efforts are working better than ever. (Related article: Pakistan Faces Tough Choices with Energy Crisis)

Nawaz Sharif is in the dawn of his third stint as prime minister of Pakistan. His third non-consecutive term marks the first time that a civilian government ended a full five-year term and handed power over to another administration by a democratic vote. Last week, he told members of Parliament the day of U.S. drone strikes over Pakistani territory are over.

"We respect the sovereignty of other countries, but others should also respect our sovereignty," he said( Continue… )

President Barack Obama, right, walks with Chinese President Xi Jinping at the Annenberg Retreat at Sunnylands in Rancho Mirage, Calif., Saturday. President Jinping and President Obama agreed last week to cutting the use of hydrofluorocarbons – a heat-trapping product commonly used in refrigerators, air conditioners and other household and industrial products. (Evan Vucci/AP/File)

China: how to rev up a clean-energy laggard

By Correspondent / 06.10.13

If the world loses its war on climate change, you can blame China

The fast-growing, coal-reliant powerhouse is pumping out so much more carbon dioxide that reductions in other parts of the world can't compensate, according to a report issued Monday by the International Energy Agency (IEA)

But the solution to climate change may lie in dropping such finger-pointing and working instead on improvements, however incremental, that nations can agree on to cut heat-trapping emissions, such as last week's US-China agreement on between China and the US on hydrofluorocarbons (HFCs), a heavy greenhouse-gas emitter. And China is certainly deploying significant quantities of renewables, just not fast enough to keep pace with the country's tremendous growth.

"In climate negotiations, the underlying debate has been 'Who is the bad guy? Who should pay the most?'" said Durwood Zaelke, founder and president of the Institute for Governance & Sustainable Development, an advocacy organization based in Washington and Geneva. "We’re moving beyond that now – slowly – and we have to move beyond that because we’re never going to resolve that question."   ( Continue… )

Corn kernels peer out from the husk on an ear of corn in Kinston, N.C. (Janet S. Carter/The Free Press/AP/File)

EPA biofuel rule: why it needs reform

By Geoffrey StylesGuest blogger / 06.10.13

US Ethanol Policy Should Reflect Circumstances and Consequences

This April, two separate bills were introduced in the US House of Representatives to reform, or repeal, the federal Renewable Fuel Standard (RFS) that mandates how much ethanol and other biofuels must be blended into gasoline.

To understand why reform or repeal makes sense now, we should recall the factors that led Congress to enact this standard six years ago and consider how many of the basic assumptions underlying its design have changed since then. That requires a review of US fuel consumption and import trends, commodity prices, and the impact of the RFS on food prices. After summarizing the other points I want to focus on the last one, based on an interview I conducted with Dr. Yaneer Bar-Yam, an expert on complex systems who has developed a model that explains the behavior of food prices since the introduction of the first, less ambitious RFS in 2005.

Origins of the RFS

In the fall of 2007, when Congress was debating the Energy Independence and Security Act that included the current, enhanced RFS, the US energy situation looked dire. For four years oil prices had been rising more or less steadily from their historical level in the low-to-mid $20s per barrel (bbl) to around $90, on their way to an all-time nominal high of $145/bbl the following summer. US crude oil production was in its 22nd consecutive year of decline, while our crude oil imports had climbed to 10 million bbl/day, twice domestic production that year. 

Even more relevant to the thinking behind the RFS, US gasoline consumption stood at a record 142 billion gallons per year and had been growing at an average of 1.6% per year for the previous 10 years–another 2 billion gallons added to demand each year. In its annual long-term forecast for 2007, the Energy Information Administration (EIA) of the US Department of Energy had projected that gasoline demand would grow to 152 billion gal/yr in 2013 and 168 billion gal/yr by 2020. Meanwhile, US net imports of finished gasoline and blending components had reached a million barrels per day in 2006, equivalent to 15 billion gal/yr–equal to the corn ethanol target set by the 2007 RFS for gasoline blending in 2015. And by the way, US corn prices for the 2006-7 market year averaged $3.04 per bushel (bu). In this environment, policy makers regarded ethanol as a crucial supplement to dwindling hydrocarbon supplies, from a feedstock that was cheap and readily expandable.  ( Continue… )

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