The Holistic Energy Company
I had the opportunity to spend some quality time with Dick Williams, the President of Shell Wind, discussing a range of topics including the current state of the wind industry and how Shell is positioning itself to be the energy company of the future.
Dick has been a longtime employee of Shell, and has led the wind business for more than five years. He has also joined on as a member of the executive committee for Total Energy USA, which is a new conference being held next week (November 27-29, 2012) in Houston with a goal of nothing less than tying the whole of the energy industry together in a single event.
We started out by talking about the Total Energy USA conference, and my opening question was why get involved in a new energy conference (it’s not as though there aren’t countless other energy events to spend time with). Dick said that the draw to the event was the scope and location.
Houston is the oil and gas capital of the world but there is so much more here. And if you look at the future of the industry – we all believe that at some point fossil fuels wind down. The question is just when: Is it now, 50 years, 100 years 200 years. It is going to take this energy mix going forward and why can’t Houston become the capital of that energy world – not just oil and gas. ( Continue… )
Recently, I explained why Obama winning re-election is not necessarily an automatic savior for the wind power industry. Basically, an extension of the Production Tax Credit (PTC) is not a given (although I give it better than even odds), and the current extension being pushed by the American Wind Energy Association would act as little more than a band aid.
While an extension of the tax credits is vital to a robust wind industry in the U.S., developers must start to consider strategic options for financing projects in a world without the PTC. Even with financing innovations, successfully putting together wind deals will be very difficult, and without these financing strategies there will be a period of time where virtually no wind projects will be financed or built in the U.S. (Read More: 5 Reasons Why Good Energy Projects Don’t Get Financed)
Many projects simply won’t meet the fundamental hurdle of profitability without the PTC, especially in a market where natural gas fired electricity is so cheap. So what can the wind industry depend on, and what strategies can they employ in the event that the PTC expires?
The cost to use money is at historic lows. This low cost of capital means that for very good projects even a narrow spread between the cost of producing electricity and the price to sell electricity may create enough return to attract an investor. ( Continue… )
Renewable energy may one day offer consumers relief from the widespread blackouts that have become a predictable by-product of major storms. The flexibility of wind and solar, combined with the decentralization of a microgrid, offer a degree of resilience not found in the top-down, traditional generation system, clean energy experts say.
On the Rockaway Peninsula in Long Island, the Solar Sandy Project is supplying mobile solar generators to an area where the Long Island Power Authority has struggled to restore power. The generators do not need refueling and can be used to charge phones, heat food, and run other critical equipment, the organizers say.
Still, most solar and wind resources are reliant on the larger power grid, making them just as vulnerable to failure from extreme weather as traditional systems. And wind and solar, by their very nature, are directly exposed to the elements, unlike traditional power systems, which can be enclosed in buildings or buried underground. Tested by hurricane Sandy late last month, most renewable energy installations in New Jersey and New York seemed to escape major damage. ( Continue… )
On the face of it, the two disasters have little in common. One is wet; the other is dry. They're eight decades apart. The superstorm knocked out power for weeks; the Dust Bowl knocked out livelihoods over a decade and caused massive migrations.
The troubling link is that the Dust Bowl's dryness was made worse by human practices and Sandy's flooding was made worse by rising oceans, probably linked to human-induced climate change.
One can take that two ways. Pessimists can say it's a bad omen that more destructive coastal storms are on the way. Optimists can point to the eventual public response to the Dust Bowl: a dramatic change in agricultural practices and government programs that have mitigated soil erosion in the southern Great Plains.
With government encouragement, farmers began to diversify and rotate their crops to keep more moisture in the soil, use new tilling systems that leaves more crop residue on the surface, and stop overgrazing the land. Later, they installed irrigation systems. If farmers and politicians could come up with solutions to a great disaster like the Dust Bowl, can their descendants come up with reasonable solutions to warming?
"The Dust Bowl is the greatest man-made – man-made – ecological disaster in the history of the United States and perhaps the world," says Mr. Burns in an interview with James West of The Climate Desk, a collaboration between The Atlantic, Mother Jones, Slate, and other media outlets. "The horrible positive side of Sandy , if there could be the silver lining, is ... that people have come to understand that you can't have two 100-year storms in two years. You've got to suddenly wake up and say: 'My goodness, what can we do together?' And a lot of it goes back and hearkens to the lessons of the Dust Bowl about planning for the long term."
The progress in Great Plains agriculture comes with a caveat. Although farmers and ranchers have reduced erosion, they have become increasingly reliant on irrigation, which despite various improvements is drying out ground-water aquifers. So their future is not assured.
Still, 70 years after the last storms of the Dust Bowl fizzled away, the US has managed to repair what seemed an overwhelming environmental disaster at the time. Burns's new documentary is a reminder that the nation has the capacity to take action when disaster looms large.
UK greens seem to share with UKIP, of all people, an exaggerated vision of Britain's role in the world. I've noted before that lots of UK groups who profess to care about the earth don't realise that almost anything the UK does, or does not do, on CO2 is unimportant on a world scale. UK emissions, from all sources, are simply not important when facing the reality of China's coal use. Even replacing a fifth of China's coal with shale would effectively cancel out whatever we do, making the gesture meaningless on any damage or not it does the atmosphere. The green agenda is not facing up to facts, and they threaten to make themselves irrelevant. I think that would be disastrous for large parts of the progressive agenda. I know myself that when I return to New York, almost everyone I know sees opposition to shale is a litmus test for the progressive politics, such as they are in the US. That would be dangerous for the European left. Greenpeace et al are correct in seeing some right wingers behind gas here in the UK. But that's too simple. I half jokingly point out to the Global Warming Policy Foundation, who I consider right about shale and wrong on most else, that they only seriously concentrated on shale gas once Obama released his birth certificate. The GWPF at least has more of an open mind than much of their opposition, who continue to cling to a shale gas as dangerous fantasy narrative.
I've been looking at shale gas since 2008, but absolutely no one could have predicted what is happening to US oil production by leveraging the techniques first used in gas. It's only two years ago that the bounty of the Bakken Shale and now the Eagle Ford first became interesting. From that experience I'll roll out Grealy's First Law of Shale: Shale predictions move from the outrageous, through far fetched to conservative within two years. I've seen this happen in the Barnett, the Marcellus, LNG exports, US chemical use and of course shale oil. ( Continue… )
A coalition of scientists in the United States has released a report suggesting that as many as 353 coal-fired electricity plants in the country should be retired due to their extreme age and general inability to compete with cheaper alternatives like natural gas and wind power.
Issued by a group called the Union of Concerned Scientists, the report targets a total of 59 gigawatts of electric power generating capability across the country, representing more than 6 percent of the total amount of electricity used by American citizens and businesses. The plants in question, each well-aged and operating past their 30 year lifespan, generate the bulk of the nation’s pollutants and greenhouse gases; with the costs of keeping them up to official standards taken into account, the report suggests that none are worth maintaining in the long run. (Read More: The Death of American Coal Producers — and a Potential Lifeline)
The report comes on the heels of Barack Obama’s reelection, a sure sign in and of itself that regulations on coal-fired plants will only become more stringent given the president’s stance on environmental policy. Shares of major American coal producers such as Arch Coal Inc. and Peabody Energy Corp. have dropped sharply following the counting of votes last week, leading some industry lobbyists to complain of a perceived “war on coal” by the Obama administration.
Despite that view, the Cambridge, Massachusetts-based Union of Concerned Scientists, contends that trying to keep coal-fired plants up to standards is simply not economically feasible, promising that it will inevitably lead to higher costs for taxpayers even as energy returns drop in response to stricter regulations imposed on them.(Read More: In the American West, Coal Power Being Dropped in Favor of Natural Gas and Renewables) ( Continue… )
Eleven lives lost. The world's largest accidental offshore oil spill, which poured 4.9 million barrels into the Gulf of Mexico and contaminated 150 miles of shoreline Tens of billions of dollars in cleanup costs, with billions more in losses to fishing and tourist businesses.
How much should a company pay for that big of a crime?
On Thursday, BP and the US Department of Justice arrived at a figure for the 2010 Deepwater Horizon disaster. The British oil giant agreed to plead guilty to 14 criminal charges and pay a total $4.5 billion in criminal fines and penalties. That's a record amount.
Is it fair? ( Continue… )
In his first post-reelection press conference Wednesday, President Obama broached the topic of climate change head on.
"I am a firm believer that climate change is real, that it is impacted by human behavior and carbon emissions," Mr. Obama said in response to a reporter's question. "And as a consequence, I think we’ve got an obligation to future generations to do something about it."
It was a breath of fresh air for environmentalists frustrated with an election season largely devoid of substantial discussion of the topic – the notable exception being Obama's convention speech assertion that "climate change is not a hoax."
In Wednesday's press conference, the president touted his record so far, pointing to an increase in vehicle fuel-efficiency standards, clean-energy production, and carbon-reduction technology. ( Continue… )
Last year, the Department of Energy (DOE) granted Cheniere Energy a permit to export liquefied natural gas (LNG) from a terminal at Sabine Pass in Louisiana. The terminal is currently used as an LNG import terminal, but the company has plans to convert it into an export terminal, with exports beginning by 2015. The permit has been challenged by the Sierra Club, but is expected to be approved.
However, there are about 15 total other permit applications outstanding, with only the one permit accepted. After approving exports from the Sabine Pass terminal, the Obama administration put a hold on further approvals until a Department of Energy study on the economic implications of exports is completed. That study was originally due out in March, then the DOE said it would be released by the end of the summer, now the study is expected before the end of the year. (Read more: Investment Opportunities in Natural Gas)
Complicating the picture further, there have been 18 permit applications to export LNG to countries with which the US has a Free Trade Agreement, of which 13 have been approved and 5 are pending.
When looking through all this, it was not clear to me why the Department of Energy needs to approve the building of export terminals for LNG. After all, there is no federal permit necessary to export coal or, for that matter, almost any other good or service (note: crude oil exports require a permit too – I will cover that in a future post). ( Continue… )
The International Energy Agency (IEA) provides unrealistically high oil forecasts in its new 2012 World Energy Outlook (WEO). It claims, among other things, that the United States will become the world’s largest oil producer by 2020, and will become a net oil exporter by 2030.
Figure 1 (above) shows that this increase comes solely from the expected rise in tight oil production and natural gas liquids. The idea that we will become an exporter in later years occurs despite falling production, because “demand” will drop so much.
The oil price forecasts underlying these and other forecasts in the report are approximately as follows (see Figure 2, above left).
One reason the WEO 2012 estimates are unreasonable is because the oil prices shown are unrealistically low relative to the production amounts forecast in the report. This seems to occur because the IEA misses the problem of diminishing returns. As the easy-to-produce oil becomes more depleted, and we need to move to more difficult reservoirs, the cost of extraction increases. ( Continue… )