Arctic Exploration: Could a Really Cold War Begin Here, or Will the U.S. Shy Away

Arctic oil and natural gas resources, courtesy of the U.S. Energy Information Agency

Arctic oil and natural gas resources, courtesy of the U.S. Energy Information Agency

News that Russia has increased its interests and pursuits of an arctic foothold have been percolating for awhile but now comes an effort to gain a stronger purchase to begin hydrocarbon exploration

If there is place and way to start a new Really Cold War — by accident or by design — it would be a competition for energy resources in the Arctic.

Today comes a story from the English-language version of RT, a Russian viewpoint news channel and website, which said Russia is preparing to bring in the biggest bid to the UN to explore for hydrocarbons, while extending the country’s reach beyond its boundaries.

Ahead of Moscow preparing to file a 1.2 million square kilometer Arctic waters bid to the UN later this year, President Vladimir Putin commissioned Russian ministries to get ready to take the new territories in the Sea of Okhotsk under full control and protection.

The Russian president ordered maintenance of border patrols of the extended sea shelf be in place by July 1, 2014. 
Russia’s Defense Ministry has been instructed to ensure maritime authorities extend the Russian shelf in the Sea of Okhotsk beyond the generally recognized 200 nautical miles zone by December 1, 2015.

The Foreign Ministry is obliged to bring all the necessary documents, including new maps of the Sea of Okhotsk and scientific data serving as proof of Russia’s bid, to the UN by March 1, 2015. [...] Last year, Russian energy giants, Gazprom and Rosneft, were granted rights to develop large hydrocarbon deposits recently discovered in the Pechora and Kara seas. The find could be a pot of gold for Russia’s gas industry.

Russia’s move into the Arctic can be seen as multi-pronged. It moves Russia closer to Asia, helps establish its own hegemony, and gives the U.S. another geopolitical shove. Still, there are motives for all sides to work together to accomplish energy exploration in a dangerous climate. All the countries bordering the Arctic are members of the Arctic Council and are working under agreements signed in 1991 outlining environmental and emergency guidelines.

So far, Russian and U.S. authorities have been saying the right things, as Putin has said Russia is ready to work with the Arctic Council, and President Obama has said, “The Arctic region is peaceful, stable, and free of conflict,” according to Secretary of Defense Chuck Hagel. But underneath there seems to be a tension building and actions that could heighten them.

In May 2013, Obama unveiled a 13-page U.S. strategy for the Arctic, according to the Associated Press, and other news outlets. The strategy asserted that nations must protect the region’s fragile environment and keep it free from conflict. “At the same time, however, the U.S. wants to make sure it is not left behind as countries like Russia, China, Canada and Norway map out plans ranging from gas and oil exploration to research and military exercises,” the AP said.

Russia’s military resumed a “permanent Arctic presence” in Sept. 2013, RT said in a separate story, marked by the arrival of a task group of 10 warships and support vessels to the western coast of Kotelny Island in the Novosibirsk (New Siberian Islands) Archipelago. “The task group is headed by Russia’s most powerful battleship and the flagship of the Northern Fleet, cruiser Peter the Great (Pyotr Veliky). The group is accompanied by four nuclear icebreakers facilitating the passage through areas with particularly thick ice.”

The Obama Administration in November said energy exploration in the largely untapped Arctic region could heighten international tensions, but that countries must work together to avoid conflict, the AP reported Hagel saying with regard to the increased interest in the Arctic’s lucrative oil and gas deposits. Hagel’s comments came as the military finalized plans to expand operations in the vast waters of the Arctic

It’s unclear because of Obama’s cutbacks in defense budgeting (see here also) whether the U.S. has the willpower to fill the wide gaps in satellite and communications coverage, add deep-water ports and buy more ships that can withstand the frigid waters or break through the ice.

An EY study says, the region above the Arctic Circle accounts for only about 6 percent of the Earth’s surface area, but it could account for as much as 20 percent of the world’s undiscovered but recoverable oil and natural gas resources.

The existence of hydrocarbon resources in the Arctic has been known for decades, but only in recent years has the opening to full-scale resource development and navigation — such as the fabled Northwest Passage that would connect the Atlantic and Pacific Oceans, or the Northern Sea Route that will connect Europe and western Russia with eastern Russia and Asian markets — become technically and economically feasible. [...] In 2008, the United States Geological Survey (USGS) released the first-ever wide-ranging assessment of Arctic oil and gas resources, estimating the region’s undiscovered and technically recoverable conventional oil and natural gas resources. Of the 33 Arctic sedimentary “provinces” that the USGS evaluated, 25 were found to have a greater than 10% probability of having oil or gas deposits larger than 50 million barrels of oil equivalent. The USGS assessment concluded that approximately 90 billion barrels of oil, 1,669 trillion cubic feet of gas, and 44 billion barrels of natural gas liquids (NGLs) may remain to be found in the Arctic. Of the total 412 billion barrels of oil equivalent (boe), approximately 84% is expected to be found offshore, and about two-thirds (67%) of the total was natural gas.

The Arctic region contains portions of eight countries — Canada, Denmark/Greenland, Finland, Iceland, Norway, Russia, Sweden and the United States. Finland and Sweden do not border on the Arctic Ocean and are the only Arctic countries without jurisdictional claims in the Arctic Ocean and adjacent seas, according to EY, which is member firm of Ernst & Young Global Limited, an assurance, tax, transaction and advisory services provider. And most of the hydrocarbons are believed to be in relatively shallow water, about 500 meters or about 1,500 feet.

While the Obama Administration claims to be pivot toward Asia about as often as it pivots toward the U.S. economy, between its muddled Middle East policy and regulatory rules-making at home, it really hasn’t done much geopolitically in Asia, though in energy it has continued its tariff war on solar panels with China.

Russia, on the other hand, is reaching out to China and Japan in its Arcitc policy as well. A Feb. 1, article in The Diplomat notes that:

The Arctic region has moved to the center of world politics in 2014, siting high on the energy security agenda of most East Asian countries, including China and Japan. The latter has recently been stepping up its efforts to build a stronger foothold in the area. Those efforts have been given a boost recently by Tokyo’s discovery of a new friend with a prominent role on the Arctic chessboard: Russia. A successful Japan-Russia rapprochement has the potential to serve as a game changer for both countries.

An April 11 Reuters story said Russia’s pivot toward Asia and the East made strategic sense.

In Yamal – which in the local Nenets language means “the end of the earth” – a $27 billion liquefied natural gas (LNG) scheme is assuming major political as well as economic significance.

The project fits well with a more aggressive eastward push by Moscow since the United States and European Union imposed sanctions over its annexation of Crimea from Ukraine last month.

Instead of sending gas by pipeline to long-standing EU customers, Russia aims to ship LNG from the remote Yamal peninsula by sea largely to Asian buyers such as China, which has avoided confronting Moscow since Russian troops took control of Crimea. [...] With the EU and Ukraine discussing ways to cut their reliance on Russian gas, Moscow has courted its Asian partners more aggressively, hoping to capitalize on record prices for LNG in Japan, China and South Korea. [...] A deal between Gazprom and China has been in the works for at least 10 years. If one is finally struck, Putin could hold this up as proof that Western attempts to isolate Russia are destined to fail.

 

Offshore-Mag.com, an oil and gas publication sees reason for cooperation in the Arctic because of the inherent risks in drilling in such a harsh environment. It notes the petroleum industry has explored and produced oil and gas in Arctic areas for more than 50 years, onshore and offshore. Factors such as melting sea ice, high energy prices, unrest in the Middle East, demand growth in Asia and the Russia/Norway delimitation agreement have led to significant increases in industry interest across the Arctic region.

Despite the frozen and inaccessible nature of the bulk of Arctic land and sea, the Arctic is not an unchartered and unregulated region as implied in some requests for a new binding Arctic Ocean Treaty.

On the contrary, the binding rules of the Law of the Sea and an extensive set of governance institutions weave their Arctic web year by year – and the bulk of Arctic resources are clearly and unambiguously under national jurisdictions of the Arctic five: Russia, Norway, USA, Canada, and Denmark/Greenland.

The Cold War heritage of military saber-rattling, the presence of virgin strategic resources, and a number of unsettled territorial boundaries have fueled the notion of a potentially destabilizing race to the Arctic. However, the dominant interest of all major Arctic players is peace, stability, and the rule of law based on modern Law of the Sea principles.

Powers such as China, Japan, and Korea have legitimate interests in access to shipping and high-seas water-column resources, and have been accommodated as observers in the Arctic Council and position themselves on commercial terms in shipping, energy extraction, fisheries, research, and tourism. The main threat of military escalation lies in potential conflict overflow from other regions. This is not considered a realistic scenario at present.

The RT article at the top seems to think that the ultimate goal for the U.S. is to establish international order under U.S. leadership. But it’s hard to square that with the actions of the administration, particularly in foreign policy. The more likely reading from here is that the U.S. abdicates its military efforts there unless it needs to defend Alaska and allows Russia all the room it needs. This would mean U.S. companies would need to work with the remaining countries with interests in Arctic energy exploration. And it also probably means U.S. power will be diminished more.

 

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U.S. Energy Information Agency: Rough Winter Draws Down Natural Gas Reserves

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How futures prices are reacting, the capacity of upstream and midstream companies and Canadian interests all play a role on natural gas pricing

A report last week form the U.S. Energy Information Agency said the rough winter has left stores of natural gas at 11-year lows, at an estimated 826 Bcf for the season ending in March.

EIA now expects a large rebuild over the injection season, with inventories ending October at 3,422 Bcf. This represents a record stock build of nearly 2,600 Bcf. The EIA report said it expects lower electricity demands and record rebuild over the next six months. And it expects total natural gas consumption will average 72.1 Bcf per day (Bcf/d) in 2014, an increase of 0.7 Bcf/d from 2013.

Lower prices pull down natural gas reserves

Lower prices pull down natural gas reserves

As for production, the report said it expects natural gas production to grow by an average rate of 3.0 percent in 2014 and 1.5 percent in 2015.

Rapid natural gas production growth in the Marcellus formation is contributing to falling natural gas forward prices in the Northeast, which often fall even with or below Henry Hub prices outside of peak winter demand months. Consequently, some drilling activity may move away from the Marcellus back to Gulf Coast plays such as the Haynesville and Barnett, where prices are closer to the Henry Hub spot price.

Liquefied natural gas (LNG) imports have declined over the past several years because higher prices in Europe and Asia are more attractive to sellers than the relatively low prices in the United States. Several companies are planning to build liquefaction capacity to export LNG from the United States. Cheniere Energy’s Sabine Pass facility is planned to be the first to liquefy natural gas produced in the Lower 48 states for export. The facility has a total liquefaction capacity of 3 Bcf/d and is scheduled to come online in stages beginning in late 2015.

Growing domestic production over the past several years has displaced some pipeline imports from Canada, while exports to Mexico have increased. EIA projects net imports of 3.7 Bcf/d in 2014 and 3.0 Bcf/d in 2015, which would be the lowest level since 1987. Over the longer term, the EIA Annual Energy Outlook 2014 projects the United States will be a net exporter of natural gas beginning in 2018.

 

But what if the rebuild doesn’t materialize? A contrarians skepticism might be warranted, because rigs at work have moved from drilling for gas to exploring for oil. That in turn could lead to tighter supplies come October.

According to Baker Hughes, because gas prices had stayed low for the past several months, most of these rigs had been diverted to drill for oil instead of gas. “Whether a large number of rigs can be shifted to drill for gas in such a short duration is questionable. To sum up, all things are lined up in favor of a hike in natural gas prices towards the end of the year if the pumping season does not live up to expectations,” said Shrideep Murthy writing at Seeking Alpha.

Additionally, Natural gas working inventories fell by 74 Bcf to 822 Bcf during the week ending March 28, 2014, the EIA said, as colder-than-normal temperatures and a late-season winter storms during the month resulted in increased heating demand, prompting larger-than-normal withdrawals. “Stocks are now 878 Bcf less than last year at this time and 992 Bcf less than the five-year (2009-13) average for this time of year. Total stocks, as well as stocks in all three regions, are currently less than their five-year (2009-13) minimums,” the EIA report said.

This has pushed futures prices higher in the year-over average and could presage higher prices in the fall. Natural gas futures prices for July 2014 delivery (for the five-day period ending April 3, 2014) averaged $4.46/MMBtu.

Current options and futures prices imply that market participants place the lower and upper bounds for the 95 percent confidence interval for July 2014 contracts at $3.40/MMBtu and $5.87/MMBtu, respectively. At this time last year, the natural gas futures contract for July 2013 averaged $4.07/MMBtu and the corresponding lower and upper limits of the 95 [percent] confidence interval were $3.16/MMBtu and $5.23/MMBtu.

A separate report from EIA published on April 11, said lower natural gas prices drove down U.S. proved reserves in 2012, despite notable gains in the Marcellus and Eagle Ford shale gas plays. The decline stopped a 14-year trend of consecutive increases in natural gas reserves, according to newly published estimates in EIA’s U.S. Crude Oil and Natural Gas Proved Reserves 2012.

Charts courtesy of the U.S. Energy Information Agency

Charts courtesy of the U.S. Energy Information Agency

Proved reserves are volumes of natural gas that geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions.

At the state level, Pennsylvania and West Virginia reported the largest net increases (9.8 Tcf and 4.3 Tcf, respectively) in natural gas proved reserves in 2012, driven by the continued development of the Marcellus Shale play. The Marcellus Shale play became the largest shale play (ranked by proved reserves) in the United States in 2012. Proved reserves in shale gas plays accounted for 40% (129.4 Tcf) of U.S. wet natural gas proved reserves in 2012. However, gains in the Marcellus (10.9 Tcf) and Eagle Ford (7.8 Tcf) shale plays were more than offset by price-driven reductions in more mature shale plays (the Barnett and the Haynesville declined a combined 20.7 Tcf) in 2012.

Some upstream companies that could benefit from these findings are Chesapeake Energy (CHK), Southwestern Energy (SWN), and Range Resources (RRC), which are all part of the SPDR S&P Oil & Gas Exploration & Production ETF (XOP). Investors can also gain natural gas exposure through the U.S. Natural Gas Fund (UNG), according to Kshitija Bhandaru, the Market Realist, at YahooFinance.

She said one sector that really benefits from such production increase are the midstream companies (MLPs). These are not only the companies gathering and processing natural gas, but also are involved in transportation, storage, and marketing of hydrocarbons such as natural gas and oil.

Companies that will benefit from this continued increase in supply include midstream service providers in the right area. MarkWest Energy (MWE) and Williams Partners (WPZ) are major providers of gathering and processing in the Marcellus. Regency Partners (RGP) has major gathering and processing operations in the Eagle Ford. Exterran Partners (EXLP), which provides compression services, also stands to gain from increased natural gas production in the U.S. Many of these names are components of the Alerian MLP ETF (AMLP), the largest ETF with a focus on the energy MLP sector.

This U.S. activity is having an effect on Canada as well, according to the Globe & Mail, which said oil sands companies, which have benefited from years of low natural gas prices, are once again facing rising costs as the commodity they need to fuel much of their operations becomes more expensive.

If the price of natural gas climbs by one dollar, operating costs per barrel for such projects jumps by about the same amount, experts say. Companies without extensive natural gas operations of their own feel the most pain. MEG Energy Corp., for example, lacks natural gas operations, while Suncor Energy Inc.’s oil sands operations far outstrip its natural gas business.

On Friday, the May contract for natural gas traded at $4.62 (U.S.) per million British thermal units on the New York Mercantile Exchange, more than a dollar higher than levels reached last autumn and two dollars higher than lows hit in 2012. This comes as the U.S. Energy Information Administration last week said inventories of natural gas were at their lowest level in 11 years.

“It is something to keep an eye on,” said Justin Bouchard, an analyst at Desjardins Group in Calgary.

Increasing prices for natural gas hit hardest at projects that use steam to soften oil-rich bitumen deposits to the point where the bitumen can drain into wells from which it can be pumped to the surface. Natural gas is an unavoidable expense in these projects, because it is needed to heat water to create steam, the article said.


Kemper’s Coal-Powered Plant Shows All the Earmarks of a Vexing Energy Strategy

The Kemper County, MIss., coal gasification plant. Photo by XTUV0010, courtesy of WikimediaCommons

The Kemper County, MIss., coal gasification plant. Photo by XTUV0010, courtesy of WikimediaCommons

The Southern Co. plant has a chance to bring clean coal to the industry and reduce greenhouse gases through carbon capture and sequestration technology, but it’s not clear if it’s worth the cost and whether the EPA will regulate it away in the end

A coal-fired plant being built in Mississippi is coming in over budget, and many say it is the key to clean coal. it’s also emblematic of the weird way the United States government and the Obama Administration sets energy policy by doling out massive funding for projects that beg to be taken advantage of while undercutting these efforts with excessive rules making by government agencies.

Meet the 582-MW coal-fired Kemper power project, a subsidiary of the Southern Co., which is five months behind schedule and more than $2 billion over budget.

The facility that was originally scheduled to open this year will use treated wastewater in its power generation process. It will also remove 65 percent of its carbon dioxide by piping it to two companies that will inject it into the ground to force oil from old wells, according to the Los Angeles Times. In addition, the coal will be pulverized and turned into gas, which will then be burned to make steam that drives turbines.

The U.S. Energy Department has spent $270 million on the project — part of $3.4 billion in federal stimulus funds allocated to carbon-capture demonstration projects since 2009 — yet it remains unclear, according to some analysts familiar with the project, whether the Kemper plant will work as planned.

The carbon-capture plant and four others on the drawing boards, including one near Bakersfield, are cited by Obama administration officials as evidence that coal can remain part of the president’s “all of the above” energy strategy. But many power companies and environmentalists think the administration’s proposed standards for greenhouse gas emissions would all but eliminate coal power despite huge investments in the new technology.

Dalia Patino Echeverri, an assistant professor of energy systems and public policy at Duke University, said the new rules would “put coal at a huge disadvantage,” noting that the technology to capture and store carbon dioxide “is still an expensive, uncertain proposition.”

The project was budgeted for $2.4 billion but Kemper’s cost increased to more than $5 billion because of changes in design and miscalculations. Southern’s shareholders have already absorbed a loss of more than $1.1 billion on the project. The state Legislature passed a law that allows Southern Company to recoup costs from its customers, according to Power-Engineering.com.

But what progress that may be made with this project may ultimately come for naught because of the EPA, which is why this project and ultimately working with this Administration is so vexing. Kemper is the only major clean-coal power plant funded by the U.S. Department of Energy that has so far broken ground, according to Bloomberg Business Week: 

Even with the offer of billions of dollars of government subsidies, the other projects have been scrapped, delayed or are facing funding woes that may doom them — illustrating the troubled history of efforts to cut coal’s environmental impact. Coal generates twice the climate-warming carbon dioxide as natural gas when burned to generate electricity.

Since the 1950s it’s been the mainstay of electricity production. It accounted for 39 percent of total U.S. generation last year, down from almost half in 2007. It’s use bounced back early this year, as frigid weather and pipeline bottlenecks forced a temporary spike in gas prices.

But utilities are going ahead with plans to shut coal-fired plants. In 2011 and 2012, coal units capable of generating 14 gigawatts of electricity were shuttered. Another 63 gigawatts — more than a fifth of the coal fleet — may disappear by 2017 because of rules curbing mercury and other pollutants, according to projections by Bloomberg New Energy Finance.

And more rules, which aren’t part of that estimate, are coming: EPA’s proposed emission limits would effectively ban the construction of new coal plants, according to industry critics. Separate EPA rules for greenhouse gases from existing plants are coming in June.

The possibility of carbon capture, so-called clean coal, is one reason the project has generated interest. Carbon capture storage has both been hailed as potential savior and ridiculed as a distraction, said Robert Kunzig of National Geographic.

The battle to forestall climate change, President Barack Obama said in a speech last summer, requires us “to put an end to the limitless dumping of carbon pollution from our power plants.” But because coal is one of the cheapest ways to fuel electricity, with abundant stores all around the world, global carbon pollution is growing. [...] Over the next two decades, when science says aggressive steps must be taken to curb greenhouse gas emissions, several hundred million people in the world will be getting electricity for the first time—and a lot of it will be fueled by coal. Many believe the world won’t be able to stop drastic climate change without a technology for curbing emissions from the cheapest, most-carbon intensive fuel.

The Kemper plant would be on of the larger U.S. coal plants, is designed to provide power for 165,000 Mississippi homes and is designed to capture 65 percent of its CO2, which would make it as clean as the cleanest natural-gas-fired one, according to Kunzig. 

To get to the coal the red clay earth is stripped away exposing the lignite that will feed the plant, according to another Bloomberg article by Mark Drajem.

When the plant is operating, the coal will be ground up and dropped into a high pressure, low-oxygen chamber called a gasifier. The low-oxygen environment means the coal doesn’t burn, but is transformed into composite gases. Leftover coal ash is dumped out the bottom.

Ammonia, sulfuric acid and carbon dioxide then can be pulled off the gas stream. The carbon dioxide is absorbed by a solvent, which releases the compound when it flows to a lower-pressure chamber. It is then compressed into a liquid to be pumped into nearby oil fields to help squeeze out any remaining crude.

What’s left is mostly hydrogen and nitrogen, which is sent to a turbine to be burned and make electricity.

Because pairing carbon capture and new coal gasification technology and building on a large scale remains untested, there is still concern whether the plant will operate reliably, without frequent forced outages, and also manage to cut emissions at planned levels, said Edward S. Rubin, a professor of engineering and public policy at Carnegie Mellon University in Pittsburgh.

Kemper is the most expensive power plant ever built for the watts of electricity it will generate. The plant will end up costing more than $6,800 per kilowatt. By comparison, a modern natural-gas plant costs about $1,000 a kilowatt, according to the U.S. Energy Information Administration. A nuclear plant costs about $5,500. According to Drajem, Southern Co. has told state regulators that Kemper will open sometime in the last three months of the year. Its price tag has united in opposition an unlikely alliance of free-market advocates, Gulf Coast businessmen, environmentalists and at least one oil prospector.

But even if the Kemper project is a success the fate of the other four planned U.S. carbon-capture plants remains unclear. According to Howard J. Herzog, a senior research engineer with the MIT Energy Initiative, even the most efficient coal-powered plants may not meet the EPA’s ever-changing guidelines.

In a 2010 MIT paper, which is peer reviewed by Herzog among others, Gary Shu said carbon capture and sequestration technology could significantly reduce power sector greenhouse gas emissions from coal-fired power plants, but the technology requires higher construction and operating costs than is currently competitive in the private market. “However, for investment in CCS power plants to be economically competitive requires that the higher capital costs be recovered over the plant lifetime, which only occurs at much higher carbon prices.”

Additionally the Energy Department is financing between 10 percent and 50 percent of any potential new plant’s costs, but if construction does not begin by mid-2015, when the funding runs out, the projects would lose that money. “There’s a realistic chance that one or all may never get built,” Herzog said in the L.A. Times.

 

 


Friday Energy News Dump: Japan Hemorrhaging as Iran Grimly Reaps Profits, and Other Life-and-Death Headline Metaphors

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Trying to Stop a Death Spiral: Japan Approves Energy Plan Reinstating Nuclear Power

Reaping a Windfall: Iran’s Gas Exports Rise by 258 Percent

Vulnerable to a Fare-thee-well: Steps Underway to Protect Grid, Says Energy Regulator

I’m Not Dead Yet: Why The Utility ‘Death Spiral’ Is Dead Wrong

The Irony is Killing Me: The Energy ‘Trilemma’: How Did We Get Here? Energy Used to be One of the UK’s Success Stories

The Government’s Deadening Hand: Energy Firms to Fed: Hands Off Banks’ Commodity Trading

Oil & Gas, Showing a Lot of Life: Energy Exploration ETFs: A Bright Spot in The Choppy Market

Ohio’s Killer Policy: Energy Efficiency Timeout Debated

A Poplar New Life: Wisconsin Researchers Discover Poplars May Be Key to New Biofuel Technologies

Solar and Green’s Morbid Numbers: Yingli’s Warning Casts First-Quarter Shadow for Solar As Green Market Swoons

Picture courtesy of WikimediaCommons


Tragedy: Federally-funded Solar Plant Incinerating Birds at an Alarming Rate

The Ivabnpah Solar Power Facility in southeast California. Photo by Craig Dietrich, courtesy of WikimediaCommons

The Ivanpah Solar Power Facility in southeast California. Photo by Craig Dietrich, Courtesy of WIkimediaCommons

While only open two months Ivanpah solar plant acts more like Ivan the Terrible

Scrutiny continues to dog the Bright Source Energy solar project Ivanpah, as an alarming new report said the massive California-based thermal solar plant near the Nevada border is incinerating birds at a tragic rate.

From The Desert Sun:

A new report from the U.S. Fish and Wildlife Service has labeled BrightSource Energy’s Ivanpah project a “mega-trap” for insects and birds that may get singed or in some cases, burned alive flying through the intense solar radiation reflecting off the thousands of mirrors surrounding three solar towers at the plant in eastern San Bernardino County.

The Center for Biological Diversity posted the report to the California Energy Commission website on Monday as part of its testimony opposing Bright Source’s 500-megawatt Palen project, located east of the Coachella Valley, which would use similar technology — soaring solar towers surrounded by thousands of reflecting mirrors.

Particularly chilling is a section on the apparent incineration of birds and insects at the site, reported by staff from the Fish and Wildlife Service’s Office of Law Enforcement (OLE), who visited Ivanpah Oct. 21-24, 2013.

“Ivanpah employees and OLE staff noticed that close to the periphery of the tower and within the reflected solar field area, streams of smoke arise when an object crosses the solar flux fields aimed at the tower. Ivanpah employees use the term ‘streamers’ to characterize this occurrence.

“When OLE staff visited the Ivanpah Solar plant, we observed many streamer events. It is claimed that these events represent the combustion of loose debris, or insects. Although some of the events are likely that, there were instances in which the amount of smoke produced by the ignition could only be explained by a larger flammable biomass such as a bird. Indeed, OLE staff observed birds entering the solar flux and igniting, consequently becoming a streamer.”

Ivanpah is a joint effort between NRG, Google, and Bright Source Energy. Bechtel is the engineering, procurement, and construction contractor on the project. The project received a $1.6 billion loan guarantee from the US Department of Energy’s Loan Programs Office. The facility achieved commercial operation on December 31, 2013. NRG will be the plant’s operator.

“At full capacity, the facility’s trio of 450-foot high towers produces a gross total of 392 megawatts (MW) of solar power, enough electricity to provide 140,000 California homes with clean energy and avoid 400,000 metric tons of carbon dioxide per year, equal to removing 72,000 vehicles off the road,” according to the Bright Source website.

The project was heavily contested from outset. But with strong support of U.S. Senate Majority Leader Harry Reid (D-NV) and then Secretary of the Interior Ken Salazar the Federal Government fast-tracked large-scale soalr developments on Federal land, particularly in the West. The Ivanpah project is about 45 miles from Las Vegas. By July 2009 the Bureau of Land Management had received 166 applications for solar projects covering approximately 1.8 million acres, according to a BLM press release. The BLM lifted suspension of activities orders on June 10, 2011, which followed a U.S. Fish and Wildlife Service-issued Biological Opinion that found the project is not likely to jeopardize the endangered desert tortoise. Not mentioned in the opinion was the impact the solar plant would have on birds.

The Idaho-based conservation group Western Watersheds Project sued the federal government over its approval of the solar energy plant in 2011, “arguing that the facility was approved without an adequate environmental assessment,” according to a story today at FoxNews.com.

A California district court tossed the group’s lawsuit in November 2012. Western Watersheds recently restated its pleas to the U.S. Ninth Circuit Court of Appeals, the International Business Times reported.

“We know solar projects are an issue as far as birds are concerned,” Michael Connor, the group’s California director, told the publication. “But they say, well, it’s not significant, so we’ll monitor it. So what happens now? You find lots of dead birds. Then what happens? Nothing.” [...]

Western Watershed is continuing to push its lawsuit against federal agencies that reviewed the Ivanpah project. Connor said alternatives to the site were not considered and serious environmental impacts, including fragmenting the tortoise population, were ignored.

The Wall Street Journal reported on the opening of the plant in February, noting the entire cost was $2.2billion after the $1.6billion government loan, and “includes three towers as tall as 40-story buildings. Nearly 350,000 mirrors, each the size of a garage door, reflect sunlight onto boilers atop the towers, creating steam that drives power generators.

Ivanpah is among the biggest in a spate of power-plant-sized solar projects that have begun operating in the past two years, spurred in part by a hefty investment tax credit that expires at the end of 2016. Most of them are in California, where state law requires utilities to use renewable sources for a third of the electricity they sell by 2020.

Utilities owned by PG&E Corp. and Edison International have agreed to buy electricity generated from the Ivanpah plant under 25-year contracts, according to NRG.

Utility-scale solar plants have come under fire for their costs–Ivanpah costs about four times as much as a conventional natural gas-fired plant but will produce far less electricity—and also for the amount of land they require.

That makes for expensive power.

The intense heat surrounding the towers can reach 1,000 degrees Fahrenheit, the Wall Street Post said. The dead birds included a peregrine falcon, a grebe, two hawks, four nighthawks and a variety of warblers and sparrows. State and federal regulators are overseeing a two-year study of the facility’s effects on birds.

On top of that other concerns include the height of the height of the towers, which would be 750 feet tall, roughly the same as a 69-story building. Indian tribes have objected to the project, saying the tall towers and the light emitted from the facility’s mirrors would be visually obtrusive, according the Journal story. And there may be water issues as well as the Ivanpah plant draws water for the boilers atop its towers, and for washing its many thousands of mirrors, from underground wells at the site. 

Via Hot Air, where Erika Johnsen notes the cost of birds dying might be worth if it were in the service of a competitive and cost-effective alternative form of energy. “[B]ut the problem is that this Ivanpah solar farm is not serving as a competitive and cost-effective alternative form of energy. It was only built because it received a $1.6 billion loan guarantee from the Department of Energy, on top of the tax credits and renewable portfolio standards that are otherwise propping it up, and the concentrating solar power (CSP) technology it employs comes nowhere close to providing energy as affordable as the value we’re currently getting from natural-gas plants. Green energy’s rent-seeking power players are trying to decide if it’s even worth replicating the CSP tech with a new project, or if Ivanpah should remain the first and only large-scale project of its kind — and bird incineration is just the icing on the cake.”


MagneGas Engineers a New and Disruptive Path in Alternative Energy

An illustration of typical MagneGas power plant. Courtesy of the company's website.

An illustration of typical MagneGas power plant. Courtesy of the company’s website.

Combining technology with energy to develop a highly disruptive technology in the alternative energy sector

One of the more obscure technology companies surged up the NASDAQ today on the announcement of a new energy patent. MagneGas (MNGE) announced today that it filed a new patent protecting new methods of applying MagneGas to existing hydrocarbons and other materials, according to this article on YahooFinance, and many others. 

The stock was up 4 cents to trade at $1.59, a gain of 2.58 percent, according to NASDAQ.com.

The patent describes new methods of binding MagneGas, or hydrogen extracted from MagneGas, to hydrocarbon fuels and other material through a proprietary process.
The new patent is based on a provisional patent filed in April 2013 titled “Method and Apparatus for the Industrial Production of New Hydrogen-Rich Fuels.”

The company believes that binding MagneGas to hydrocarbon fuels will improve fuel combustion efficiency resulting in reduced emissions.

The company is based in Tarpon Springs, Fla. near Tampa and may be on the cusp of revolutionizing an industry. It has already developed its trademarked MagneGas, a natural gas alternative and metal working fuel that can be made from certain industrial, municipal, agricultural and military liquid wastes. This, the company says has become a popular alternative to acetylene. It is unique because it uses recycles liquid waste through another patented process called Plasma Arc Flow to turn it into a natural gas alternative, which the company says has lower greenhouse gas emissions. 

This new announcement pushes the company forward in the waste-to-energy market which is a $20 billion sector, according to this Seeking Alpha article.

Its CEO Ermanno Santilli says the company’s three main components are:

  • Industrial production and commercialization of an industrial fuel called MagneGas; a cheaper, safer, and cleaner alternative to acetylene, which I believe is arguably the most dangerous industrial gas in the world.
  • Sterilization; a technology that targets liquid wastes such as sewage and agricultural wastes and converts those into sterilized fertilizer and irrigation waters. This results in the production of MagneGas and the same quantity of sterilized liquid. In this mode the liquid is retained but completely sterilized. 
  • Co-combustion: A revolutionary technology of adding MagneGas in the process of combusting traditional energy sources like coal. This so called ‘co-combustion’ produces more energy, lowers costs and reduces CO2 emissions as well.

 

On March 31, it signed an expanded joint venture agreement with technology partner Future Energy Pty Ltd of Australia, according to its website. It also has a partnership with Nuova MagneGas Italia in Europe.

While MagneGas has a long way to go it seems poised to make a good market run, and is an interesting alternative energy company, and one that could prove an ecological boon, particularly for recycling wastewater. It’s worth keeping an eye, though as an investment it can’t be seen as anything other than risky, but with the potential for very high reward.

 


Of Free Markets, Regulations and Socialism: The Uncertain World of Biodiesel

Photo by Mariordo (Mario Roberto Durán Ortiz), Courtesy of WikimediaCommons

Photo by Mariordo (Mario Roberto Durán Ortiz), Courtesy of WikimediaCommons

Perhaps no up-and-coming energy source shows the tug of war conflict between free markets, government and outright socialist policy as the world of biodiesel

In biodiesel one can find a nascent and more environmentally friendly fuel, which forward-thinking energy companies like Renewable Energy Group (REGI), and entrepreneurs are embracing, which can be contrasted with protectionist big-petrol countries like Argentina whose use socialist price controls thwart the growth of this industry. At the same time, as here in the United States, Congress let’s tax incentives to advance biodiesel lapse, while the Environmental Protection Agency, in its picayune way of delaying in the interest of bureaucracy, stifles said incentives, retards growth, and wastes money.

It’s a wonder anything gets done.

And while the categories of what constitutes biodiesel can seem perhaps overly broad, it is really quite simple as explained by Biodiesel.org. It is made from a diverse mix of feedstocks including recycled cooking oil, soybean oil, and animal fats. It is designated by the EPA as an “advanced biofuel,” and is used in commercial-scale production across the country, and is produced at plants in nearly every state in the country, the website said.

It would seem that it is ripe as a growth industry, which is where REGI comes in. There a number of companies working in biodiesel, but REGI is worth looking at because of its strength in the sector, as it markets and distributes its biodiesel throughout the United States to all segments of petroleum-based distillate fuel supply chain. It produces biodiesel from wide variety of lower cost feedstocks, according to its write up on Seeking AlphaThe company currently has production capacity, through its 8 production facilities, of 257M gallons.

Indeed, it has great investment potential. In a separate and well-reasoned article published today value/contrarian Brian Grosso takes us through REGI. He notes, among other things, the company has been buying the plants of smaller competitors who have been hurt by undercapitalization and complete dependence on high-cost feedstocks like soybean oil.

The plants are acquired at deep discounts and REGI invests $15-25M to enable production using feedstocks other than soy. REGI has thrived because of its multi-feedstock strategy and conservative capital structure.

The company is a low-cost producer. Soybean oil is consistently one of the most expensive feedstocks for biodiesel. Most competitors rely on it for all of their production but REGI only used it for 17% of 2013 production, with the remainder coming from lower-cost feedstocks. Walk’s estimate of a $0.725/gallon cost advantage for REGI over the average competitor is truly impressive.

There is a lot more on REGI at the link, but this is where the regulation part comes in.

Yesterday, Reuters reported a U.S. Court is questioning the EPA on its biofuel mandate delays.

Federal judges on Monday pressed the Obama administration to explain delays that have plagued its implementation of the U.S. biofuel mandate, as the government attempted to fend off an oil industry challenge to renewable fuel use targets. 

 In a case before the U.S. Court of Appeals for Washington D.C., the American Petroleum Institute and the American Fuel and Petrochemical Manufacturers argued the 2013 biofuel use targets should be thrown out because the administration acted “arbitrarily and capriciously” when it issued the targets nearly nine months after its legislative deadline.

The Environmental Protection Agency, which administers the biofuel mandate, “exacerbated the negative effects of its tardiness” by basing the targets on a new estimate of total transportation use that increased compliance burdens for refiners, the industry groups said.

Judge Thomas Griffith called EPA’s delays “egregious.”

“At some point, don’t these deadlines mean something?” Judge Griffith asked at the hearing.

The ruling on the 2013 targets could have broad implications for the biofuel mandate going forward. The EPA’s final 2014 quotas are due out in June, about seven months behind schedule, the Reuters said.

The Renewable Fuel Standard requires increasing amounts of biofuels to be blended into U.S. gasoline and diesel supplies each year through 2022 and was designed at a time fuel demand was also expected to rise, according to Reuters.

WIth this as a backdrop,the National Journal reported a press release from the National Biodiesel Board asking Congress to act quickly on tax legislation following last Thursday’s Senate Finance Committee passage of a package of tax provisions including an extension of the biodiesel tax incentive. (Here is the NBB website link.)

The $1-per-gallon incentive for biodiesel expired on Dec. 31, 2013. Biodiesel is an EPA-designated Advanced Biofuel made from a variety of resources including soybean oil, recycled cooking oil and animal fats. Congress also allowed the biodiesel incentive to expire in 2010 and 2012.

This of course would put a company like REGI in a better position to grow. But it is hard to know which way to go when tax incentives are given with one hand and regulated with the other.

Perhaps this country will  muddle through.

By contrast, there is Argentina, the world’s No. 3 exporter of soybeans, from which biodiesel is made. It is also the No. 1 supplier of soyoil and soymeal livestock feed, as well as a major exporter of processed biodiesel. But it has put price controls, which is what socialist countries do when its politicians don’t like the outcomes or favor certain constituencies or try to hold on to power, and the result has been deleterious, according to Reuters.

The Argentine government has set the price of biodiesel so high that producers cannot afford to use the required amount of it in diesel fuel, the head of the country’s biofuels trade group told Reuters on Monday. [...] The official price of 4,533 pesos ($576.5) per tonne does not permit major producers to break even after paying basic costs, he added. As a result, he said less than 5 percent of Argentine diesel fuel sold at the pump along Argentina’s highways is made up of biodiesel. [...] Soyoil is fetching higher and higher prices, in part because of the devaluation of the local currency. Soyoil is priced in U.S. dollars, while biodiesel is priced in the Argentine peso, which has weakened 17.1 percent so far this year against the greenback. At home, the Argentine government regulates prices of biodiesel as it does those of other fuels and many basic foods.

This is what always happens when price controls are instituted, as seen most recently in Venezuela. And is the result of socialist economic ploicy. Always. It also goes to show that you can’t repeal the laws of supply and demand, but you know, sometimes you can regulate it to death.

 


Citing George W. Bush and Moving Ever Closer to Using Hydrocarbons to Power Us Along

Quentin Willson refuelling the Hyundai ix35 Fuel cell car with HFuel at Nottingham University. Photo by Bexi81, courtesy of WIkimediaCommons

Quentin Willson refuelling the Hyundai ix35 Fuel cell car with HFuel at Nottingham University. Photo by Bexi81, courtesy of WikimediaCommons

Baby steps, forward thinking and large investments are pushing hydrogen-powered vehicles forward

Just as a story pops up in the Denver Post about one of the hydrogen cars in the U.S., National Geographic posits on the future of hydrogen-based fuel.

Using hydrogen fuel cells, which produce nothing but heat and water as a byproduct, would help provide the energy the world needs, while slashing greenhouse gas emissions and curbing our dependence on oil, according to National Geographic’s Pete Danko.

If that notion seems too good to be true, that’s because it has been. Despite a flurry of investment in fuel cells over the past two decades, the vision articulated by former President George W. Bush of an America leading the world in producing “pollution-free” vehicles that run on hydrogen has seemingly evaporated into thin air. But the fuel cell is far from dead—indeed, it is gaining a commercial foothold in some niches, evidenced most recently by news that megaretailer Walmart is expanding its use of fuel cells to power forklifts at its stores.

Such implementations of fuel cells, which use hydrogen and oxygen to produce energy via an electrochemical reaction, are small but growing exponentially. According to a U.S. Department of Energy (DOE) reportreleased last October, annual global shipments of fuel cell systems increased sixfold between 2008 and 2012. And at least one major analyst forecasts that the market for some fuel cells will grow from $1.4 billion to $40 billion by 2022.

Still, industry players speak with an awareness of the gap between the lofty hopes that have been pinned to fuel cells and the market reality.

Danko notes a caveat that will probably not make using hydrogen all that more appealing to environmentalists despite the benefits. That’s because the abundance of hydrogen still must be harvested, and nearly all the produced in the United States comes from natural gas in a process called steam reforming.

Other potential feedstocks include coal or biomass. It is also possible to use emissions-free nuclear or renewable power to harvest hydrogen by electrolysis—running an electric current through water to break the bond between hydrogen and oxygen.

Even when fossil fuel is used as a feedstock to produce hydrogen, fuel cells can offer significant emissions benefits.

He notes three areas where hydrogen could see more immediate success. Forklifts: “In February, Plug Power announced a deal to supply 1,738 hydrogen-powered forklifts and associated infrastructure to Walmart;” Electricity for home and business, for example: “The world’s largest fuel cell plant, a 59-megawatt facility in South Korea that opened earlier this year, provides both power and heat to homes in Hwasung;” Backup power for telecom: “Fuel cells are also proving their worth as backup power, a key advantage in a world of more frequent extreme weather.”

Ultimately, it and he come back to cars.

Long after President Bush began a push to bring fuel cell cars to market, several automakers are advancing beyond the demonstration cars they began deploying a decade ago. Hyundai is now marketing a fuel cell version of its Tucson sedan, while Toyota and Honda will follow suit with their own fuel cell models next year. Meanwhile, NREL is evaluating a number of fuel cell bus demonstrations in the United States and Canada. In its most recent analysis, a 20-bus fleet operating in Whistler, Canada, over two years saved 4,400 tons in carbon dioxide emissions; on the downside, maintenance costs for the buses were 58 percent higher than for their diesel counterparts.

The Denver hydrogen-powered car is one of 100 like it being test driven throughout the United Sates. In Europe, a joint initiative between BMW, Daimler, Honda, Toyota, and Hyundai is being pushed to add 110 vehicles to the road. Hydrogen Fuel News said:

The European Union has become a strong advocate of clean transportation and has been investing in the development of a comprehensive fuel infrastructure that can support fuel cell vehicles. Several European countries have taken steps to build new fuel stations for these vehicles, but an expansive infrastructure is still lacking. Automakers have been aggressively pushing for infrastructure development, but building new fuel stations and acquiring the technology used to produce and deploy hydrogen fuel has been a costly endeavor.

The initiative is part of a $40 million project called HyFive that aims to promote the development of a working hydrogen fuel infrastructure in major cities throughout the region, the Hydrogen Fuel News story said. (Autobloggreen website said the investment price is $51 million, citing a press release.)

In a separate story at Autobloggreen, Toyota NA’s chairman sees rising excitement for its hydrogen-powered entry into the market. Coupled eventually with a reduced price tag for consumers, CEO Jim Lentz said, “After we’ve seen the product, understand its range, its driving dynamics, its refueling, we’re a lot more bullish than Japan – probably about fivefold more bullish. It’s just a question of how many can be produced now.”

Autobloggreen Sebastian Blanco said:

Well, we’ve driven this car, and we still feel that Toyota is placing a big bet on the technology. One important issue is cost, but Lentz would not say exactly how much the car costs to make or what it will be priced at. He did say, though, that the production cost has dropped by 95 percent from the $1 million price tag the car wore ten years ago. That hints at a production cost of around $50,000. Lentz also said he thinks it will take at least a decade for hydrogen vehicles to hit sales of 500,000 per year in the US.

The one common thread is that everything here needs more time, more infrastructure and more investment.

It’s worth giving Danko’s National Geographic article the last look here, as he balances the good and the bad.

“Even the most optimistic of fuel cell vehicle advocates will surely concede that, as U.S. Energy Secretary Ernest Moniz said in January, ‘there is still the need for substantial cost reduction’ in order for such cars to truly be viable on the market. Yet there’s also a firm belief that the cars will eventually make it. NREL’s Wipke said, ‘Even in the depths of the recession, the car companies, by and large, didn’t give up. That showed me that this wasn’t greenwashing. They really see this as the future.’”

 


Friday News Dump: Bulls Ride Energy, Solar Continues to Soar, Ukraine Looks to Coal

Bull_Tamer2

 

 Photo Courtesy of WikimediaCommons

 


Lucas Energy’s Cautionary Tale: Trying to Drill Texas Tea Out of Fiscal Hole and Make it Pay

 

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America is in the middle of an oil and gas boom, driven largely by robust emergence fracking and horizontal drilling, yet insolvency is but a bad deal away

With the opening up of previously unreachable deposits have been opened up, new fields have been discovered, and old played out plays have been reinvigorated. Indeed, it seems as though everyone and anyone working in the industry is making it rich. But are they?

Despite the boom not everyone is, it turns out. Meet Lucas Energy, Inc. (LEI) trading today at 85 cents per share. Jordan Blum of the Houston Business Journal reports the New York Stock Exchange has accepted Lucas Energy’s compliance offer and “extended the financially struggling company’s deadline to meet the exchange’s listing standards.”

The problem for some companies like Houston-based Lucas is that drilling is a hit or miss proposition. Not all wells come in. Perhaps most importantly, they are expensive. They also vary depending on the type. According to Rigzone, a drill ship going 4,000-plus feet costs $500,000 a day. A jack up rig going 300-plus feet in $166,000 per day. Add in the cost of getting the ball rolling — transporting, set up, paying crews, fuel, area geological surveying, and about three or four weeks in the field — it can easily go well north of $10 million, and that’s hoping there are no mechanical breakdowns, which, of course, is wishful thinking.

Lucas also appears to have made a bad decision to go all in on a single-well operation in the Austin Chalk lateral.

We’ve spent a lot of time around Texas oil men and their investment bankers and used to hear them talk about $1 million to $5 million rig operations in the 1990s. But with deeper drilling and higher demand curves that’s just talk of the good old days. Lucas said in February that its Eagle Ford Shale wells running around $7-8 million.

Moreover, not all companies are good oil well operators, which the company finally seems willing to accept. The new deal finds Lucas teaming up with “an unnamed private operator to farm out approximately 400 acres on its Eagle Ford assets in Karnes County. Lucas will receive $1 million in exchange for a 75 percent working interest in an initial horizontal well. In the remaining acreage, Lucas retains a 75 percent interest,” according to the Houston Business Journal.

Indeed, the company may have finally gotten to the nub of its problem, according to Seeking Alpha contributor Black Gold.

I have written many articles on Lucas, both positive and negative. Lucas is one of those companies where you must be willing to change your opinion when the facts change. This type of deal is what Lucas definitely needed to right the ship. My last article discussed the operational failures of Lucas to boost production.

The upfront money along with the additional money received for selling the 8% interest in the Madison County drilling unit should sustain LEI until the Eagle Ford well can be drilled in June. Last quarter’s cash burn was $345,000 which included elevated workover activity in an attempt to boost production. With the $250,000 a month from the operator, I think LEI can maintain a neutral cash position until the Eagle Ford well is drilled.

The question all along had been how was LEI going to be able to drill any of the Eagle Ford acreage. We received part of that answer [March 27]. Finally, a third party is putting up money to develop some of the Lucas Eagle Ford acreage. [...]

Another plus to this transaction is that Lucas is not operating. They don’t appear to be capable of effectively operating oil wells. A non-operated position is probably for the best. It is too bad the company did not initiate a transaction of this type sooner; however, better late than never.

Lucas sold $3.45 million worth of stock in September to right the ship. Today Lucas has a market capitalization of $25.48 million, has interests in 4,510 net acres in South Texas’ Eagle Ford, primarily in Gonzales, Wilson and Karnes counties.

So, there is a chance here for Lucas. By restructuring its drilling operation and working out a deal with the NYSE it has the potential to drill its way out of the hole its put itself in. Yet, Lucas Energy serves as a cautionary reminder how important is weighing risk, knowing your limitations, and that even in favorable conditions not every energy play works. There are oil and gas companies on the edge of sustainability.


Solar Being Snapped Up in China Points to Economic Revival, Asian Tensions Loom

Full view of Kowloon and Hong Kong

Full view of Kowloon and Hong Kong

But There Is an Uneasiness in Asia, Exacerbated by the Ukraine Situation and the U.S.’s Squishy Resolve

Chinese solar companies have had a tough time of it in the last two years. Massive over production saturated the market and a tariff war with the U.S. sent corporate valuations plummeting. So, what better time to buy?

According to Bloomberg, a mysterious Hong Kong business man has been snapping up failing solar companies, and has now amassed “what may become the biggest collection of photovoltaic factories in the world.”

Zheng Jianming, also known in Cantonese as Cheng Kin Ming, has spent or pledged about $533 million to buy assets that at their peak were worth almost $20 billion, according to regulatory filings in the U.S. and Hong Kong, where he has a home and office. The transactions, if completed, would transform Zheng, a newcomer to the solar industry, into one of its most powerful leaders. Another Zheng solar investment in 2012, a 30 percent stake in Shunfeng Photovoltaic International Ltd. (1165), has surged more than 2,900 percent and is now worth more than $745 million. [...]

Through various holding companies, Zheng owns 21.6 percent of LDK Solar Co. (LDK), the second-biggest supplier of PV wafers in 2012. He also owns 30 percent of the Hong Kong-based panel maker Shunfeng, which is seeking to buy Wuxi Suntech. That’s the main unit of what was the world’s biggest panel producer until it was surpassed by Yingli Green Energy Holdings Co. (YGE) in 2012. Suntech shareholders are scheduled to meet April 7 to vote on the deal. [...]

Zheng served as a researcher with the Development Research Center at China’s State Council early in his career, according to the Beijing News newspaper. He shifted into real estate in Shanghai in 1993, and gained attention in media reports at the time by buying up property in Hong Kong in 2003 during the SARS health crisis as prices plummeted.

Indeed, Chinese solar is in the midst of a dramatic bounce back. Today the South China Morning Post reports, “Mainland solar panel and parts makers are seeing a resurgence in profitability after a round of industry consolidation weeded out high-cost players, while soaring domestic demand helped offset lower exports to Europe due to trade barriers.”

It also helps that the industry has matured since 2012, increasing consolidation as the downturn shook out the uncompetitive players, though there is debate whether a reduction in overcapacity is playing a critical role.

Stefan de Haan, a solar sector analyst at consultancy IHS, also disagreed that industry oversupply has gone.

He forecasts global demand rising 22 per cent this year to 44 gigawatts (GW), the strongest growth in three years.

Overcapacity in upstream parts and materials is less of a concern, with demand for solar cells at 52GW, for wafers at 54GW and for polysilicon at 59GW.

He said makers are reacting to demand recovery and a new capital spending cycle is starting.

De Haan forecasts global spending on manufacturing equipment to make solar panels and parts will grow 42 per cent to US$3.37 billion this year, and another 25 per cent next year to US$4.22 billion.

“The industry has matured considerably from the shake-out in 2012,” he said. “Leading manufacturers will both acquire existing plants that were shut down and also invest in new capacity.”

According to consultancy NPD Solarbuzz, prices of solar panel parts and production costs, as well as the installation cost of solar systems, have fallen by at least half in the past three years.

 

As for U.S. relations with China in its still-going trade war, despite an escalation of anti-dumping tariffs by both countries in January, fatigue may bring a  mutually agreeable stalemate may be on the horizon, according to Doug Young at RenewableEnergyWorld.com.

However, one of the ways China has been circumventing U.S. tariffs is by using cells made in Taiwan. And while tensions between the bitter rivals have mellowed a bit 65 years after democracy-loving Taiwan split from mainland communist China, a massive protest on Sunday in Taipai over and pact signed between the two countries signals that all is not well. According to multiple reports, this one from the Chicago Tribune, “More than 100,000 protesters took to the streets of Taiwan’s capital on Sunday as a two-week-long campaign against a trade pact with China gathered steam, piling further pressure on the island’s leader.” 
The United States remains a strong supporter of Taiwan, according to this report. And, the U.S. State Department said in February the two countries maintain “a robust unofficial relationship.”
There is, no doubt, more to come, as history does not stand still, whether for good or ill. Indeed, the increased tensions between China and Japan coupled with Russia’s tentative outreaches to China in the face of the Ukraine situation, and the U.S.’s irresolute pivots to Asia may be in fact be laying the groundwork for something more explosive. Taking China’s resurgent solar sector at face value, then means coming to grips with a still-growing-stronger country that is finding ways to overcome economic hurdles.
(Read more on China’s solar industry rebound on the Daily Energy Dump here under the header, “Has China Overcome it’s Green Crisis?” Or here for cached articles on the tariff war.)

 Photo Courtesy of WikimediaCommons


Making Promises, Russia Tightens Energy Screws, Angers Ukraine As West Shuffles

Crimean War - image from atlas published in 1912.

Crimean War – image from atlas published in 1912.

With promises of economic plenty and bold energy planning Russia continues to assert itself

It’s difficult to know how far Russia is willing to go with its Crimea takeover. Is that it? Is Ukraine next? Are there even grander plans of conquest by Russian President Vladimir Putin? What all these moves have done is put Russia in the real-polotik drivers seat, where it seems very comfortable. Indeed, asserting massive influence and, frankly, scaring the daylights out of political observers has been a first-order byproduct of the moves.

Moreover, it’s difficult to see how the West can countenance more without a more cohesive plan, and, sadly, without a greater show of force. Today brings more of the same, Russian action and Western ersatz maneuvering.

Russia continues to move forward with confidence and intent in Ukraine, and today’s actions show them using perhaps its most strategic geopolitical weapon, energy, to up the ante. According to Reuters, Russian natural gas producer Gazprom announced a more than 40 percent increase in the price of gas for Ukraine on Tuesday. Showing that the stakes are rising, the move may be checked, however, by a new International Monetary Fund loan package.
Ukraine will now have to pay $385.5 per 1,000 cubic meters of gas in the second quarter, an increase from the $268.5 agreed in December and higher than the average price for clients in the European Union but around the level Kiev had expected. [...]

Gazprom’s chief executive officer, Alexei Miller, said an increase was justified because Ukraine’s debt for unpaid gas bills now stood at $1.7 billion. [...]

The new head of Ukraine’s state energy company Naftogaz, Andrei Kobolev, is expected to visit Moscow this week for talks on Russian gas supplies. Ukraine has been working on reducing its dependence on gas from Russia, which meets a half of its gas consumption.

The report said, “the IMF has agreed a $14-18 billion standby credit for Ukraine, in exchange for painful economic reforms, as part of a $27 billion international package.”

Russian business is also quickly moving into the recently claimed Crimea territory with a bold move to create energy supply infrastructure. A separate story from Reuters explains:

“Russia plans to build an undersea gas pipeline to Crimea and could construct three power stations on the Black Sea peninsula following its annexation from Ukraine, Energy Minister Alexander Novak was on Tuesday quoted as saying.

Novak told the Kommersant business newspaper the three power stations could have a total capacity of 1,320 megawatts, and the cost could be up to 100 billion roubles ($2.9 billion).

The natural gas pipeline, which could cost up to 6 billion roubles to build, would have a capacity of up to 2 billion cubic metres a year, he said.

An Energy Ministry spokeswoman confirmed Novak had made the comments to Kommersant.

Novak also said Russian state gas company Gazprom would cover all the costs for the construction of the pipeline to Crimea, which has been annexed by Russia although the United Nations General Assembly has adopted a resolution declaring invalid the referendum that backed union with Russia.

Since Russia the March 21 annexation of Crimea, formally a part of Ukraine — itself a former Soviet satellite state — tensions between Moscow and Kiev have heightened as the United States and the European Union cast about for diplomatic solutions. Crimea, a peninsula on the Black Sea voted on a union with Russia in a referendum which the United Nations General Assembly declared invalid.

According to the BBC, Russia continues to flaunt its grip on Crimea with a visit by Prime Minister Dmitry Medvedev, a move that increased Ukraine anger. Medvedev announced that he had created a special ministry to oversee the development of Crimea, where two million people live, the BBC said.

The Huffington Post reports “that Russian Foreign Minister Sergey Lavrov and U.S. Secretary of State John Kerry also discussed Ukraine by phone Monday, a day after holding talks in Paris, the Russian foreign ministry said.”

The talks have led to hopes that Russia would withdraw some of its troops from the Ukraine border. “Now there have been reports of possible drawdowns of Russian military forces from the border. We haven’t seen that yet, but if they turn out to be accurate, that would be a good thing,” White House spokesman Jay Carney said.

Image courtesy of WikimediaCommons

 

 


As Perception of Win Power Declines, Solar Flares Higher; Bio-fuels Industry Wants Subsidies; Betting on LNG; Tight Oil Up

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Global Wind Power Market Declined 20 Percent From 2012 to 2013According to a new report from Navigant Research/BTM Consult, “worldwide wind power installations reached 36.13 gigawatts (GW) in 2013 – a 20-percent decline from 2012. [...] “Installation of new wind capacity in the U.S. fell by 93 percent, a sizable market decline that dragged down global growth, according to the report. China regained the title of the world’s largest market in terms of capacity additions, with 16.1 GW of new wind power installed in 2013. The report forecasts that 250.1 GW of wind power capacity will be added worldwide in the next 5 years, of which 10.4 percent will be offshore,” said the Navigant Research website. The full report can be found here.

But … Confidence in Solar Power on the Rise: In a separate report released today the same research company Navigant, reports increasing consumer confidence in solar power. “Between 2009 and 2012, there were steady declines in favorability for some concepts, particularly the ones with most favorable rankings in the past, such as solar energy, wind energy, hybrid vehicles, and electric cars. [...] 8e3a99c9-d7cb-4543-9faa-4067e14ef6ee.imgAccording to the most recent consumer survey from Navigant Research, however, consumer favorability for a number of these concepts has rebounded. In particular, positive overall impressions of solar energy have now reached 79 percent of Americans – a level close to the results of 2009, when 81 percent of the respondents had a favorable view of solar energy.” The white paper “The Energy and Consumer Survey, Consumer Attitudes and Awareness toward 10 Clean Energy Concepts,” can be found here.

Bio-fuels Industry Cozies Up to Congress: According to The Hill, the bio-fuels industry is pushing for a renewal of tax credits that expired on Dec. 31, like the wind industry tax credits. “A coalition of biofuel advocacy organizations sent a letter Monday to the top tax lawmakers in the Senate urging them to renew expired tax credits that helped their industry. The credits, which incentivized advanced biofuel production and infrastructure, expired Dec. 31, along with a slew of popular tax breaks. ‘Advanced biofuel tax credits have allowed the biofuels industry to make great strides in reducing the cost of production and developing first-of-kind technologies to deploy the most innovative fuel in the world,’ the groups said in their letter to Senate Finance Committee Chairman Sen. Ron Wyden (D-Ore.) and Ranking Member Orrin Hatch (R-Utah).” Via Hot Air.

Sempra Energy Bets on Liquefied Natural Gas to Power Future Growth From the Los Angeles Times: “Sempra Energy is making a big investment in liquefied natural gas. It expects to spend $9 billion to $10 billion on a liquefaction facility in Hackberry, La. When the facility, named Cameron, becomes fully operational, it will be capable of exporting about 1.7 billion cubic feet a day of liquefied natural gas for export to gas-hungry markets in Asia and Europe. The facility could generate more than $10 billion in revenue a year.”

Tight Oil Production Pushes U.S. Crude Supply to Over 10% of World Total: The U.S. Energy Information Administration said in a report released on March 26, that estimated tight oil production in the United States is more than 10 percent of the world’s production, rising to an average of 3.22 million barrels per day in the fourth quarter of 2013. “This level was enough to push overall crude oil production in the United States to an average of 7.84 MMbbl/d, more than 10% of total world production, up from 9% in the fourth quarter of 2012. The United States and Canada are the only major producers of tight oil in the world. In recent years, North American producers have developed technologically advanced drilling and completion processes to produce oil from tight formations. [...] Tight oil production in the United States represents 91% of all North American tight oil production, with the remaining 9% coming from Canada.” Tight oil refers to oil found within reservoirs with very low permeability, including but not limited to shale. Permeability is the ability for fluid, such as oil and gas, to move through a rock formation. Via RealClearEnergy


Controversial Pick Confirmed in Party Line Vote; And, Other Friday Energy News

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Senate Democrats Set to Confirm Zealous Foe of Fossil Fuels: The 12-10 party line vote puts the Obama nominee in charge of two of the federal government’s most environmentally powerful and aggressive agencies, the Fish & Wildlife Service and the National Park Service, said the Washington Examiner in an editorial today.

Rhea Suh is living the sweetest dream of every radical environmental activist toiling in the trenches of Big Green’s war against fossil fuels. Suh has received a fat salary and extremely generous benefits since 2009 as assistant secretary for policy, management and budget for the Department of the Interior. In that position, she helped shape every major Interior Department policy, including the infamous Gulf of Mexico drilling moratorium that was twice rejected by the federal courts. Before that, she was a member of the Environmental Grantmakers Association, which represents 200 major environmental groups that are devoted to halting development of U.S. natural resources, especially in the western states. At the EGA, she absorbed the movements’ major ideological obsessions by helping fund them, which was the perfect preparation for the budget and policy job at Interior.

Suh’s dream is about to become even sweeter because she will soon step into a new job that will make her one of Big Green’s most powerful Washington players, thanks to her appointment by President Obama as assistant secretary of the Interior for fish, wildlife and parks. Her nomination was approved Thursday by the Senate Energy and Natural Resources Committee on a 12-10 party line vote. Senate Majority Leader Harry Reid will see to it that Suh is confirmed, even if it ultimately costs Democrats control of the Senate. The energy committee’s new chairman, Sen. Mary Landrieu, D-La., made Suh the first Obama appointee to be approved under her leadership. Louisiana’s pro-oil and -gas electorate may give her reason to regret that come November.

“Suh’s radical views are especially hostile to fossil fuels like oil, natural gas and coal, which are used to generate most of the electrical power on which the U.S. economy depends,” the Examiner said.

Centrica and 2 Investment Firms to Buy Irish Energy Assets: According to the New York Times, “The British energy company Centrica and two investment partners said on Tuesday that they had agreed to acquire the natural gas and electricity supply business and other assets from Bord Gais Eireann, which is owned by Ireland, for 1.1 billion euros, or about $1.5 billion. Under the deal, Centrica will acquire Bord Gais Energy unit, the largest supplier of gas and electricity in Ireland, with about 650,000 residential customers. Centrica also will acquire the 445-megawatt Whitegate gas-fired power station in County Cork.”

Wind Industry Invests $6 billion in Oklahoma in Last Decade, Study Shows From the Oklahoman: “The growth of wind farms in Oklahoma since 2003 led to more than $6 billion in investment, according to a study released Wednesday at the state Capitol. The wind industry opposes a proposed moratorium on new wind farms in the eastern part of the state.”

Energy Storage Hits the Rails Out West: Scientific America said, “In California and Nevada, projects store electricity in the form of heavy rail cars pulled up a hill.”

Ukraine Crisis Adds Uncertainty to Key German Project: Shifting Away From Nuclear Energy “The crisis in Ukraine has added an extra dose of uncertainty to German Chancellor Angela Merkel’s biggest domestic project: shifting the country from nuclear to renewable energy sources,” according to Fox News. “Merkel launched the drive to transition the country away from nuclear after Japan’s 2011 Fukushima disaster. Since then, the ‘Energiewende’ — roughly, ‘energy turnaround’ — has created increasing headaches. Now, the tensions with Russia could complicate the plans further.”

U.S. SEC Accuses Coal Company L&L Energy of Fraud: “The U.S. Securities and Exchange Commission accused L&L Energy Inc of committing fraud when the coal company and its founder made false disclosures about who was running the company, the agency said on Thursday. A criminal indictment against the founder, Dickson Lee, was also unsealed in federal court in Seattle, the SEC said in a statement. L&L Energy, which has all of its operations in China and Taiwan, ‘created the false appearance that the company had a professional management team in place when in reality Dickson Lee was single-handedly controlling the company’s operations,’ the SEC said.” Via Reuters

 


Rudderless West Bobs as Russia Charts New Course to the East

 

Map of overland route from India to Britain. 1819-1820 (published in 1822). From the book: "A journey from Merut in India, to London, through Arabia, Persia, Armenia, Georgia, Russia, Austria, Switzerland, and France, during the years 1819 and 1820," author Thomas Lumsden

Map of overland route from India to Britain. 1819-1820 (published in 1822). From the book: “A journey from Merut in India, to London, through Arabia, Persia, Armenia, Georgia, Russia, Austria, Switzerland, and France, during the years 1819 and 1820,”
author Thomas Lumsden

ONGC, Russia’s Rosneft may join forces on oil flows

While the West grapples with indecision and incoherence in its next-step policy toward Russia. Russia is moving to shore up its eastern borders by forming business alliances with India, China and, perhaps not so surprisingly, Afghanistan.

Reuters reports:

Rosneft (ROSN.MM), the world’s top listed oil producer by output, may join forces with Indian state-run Oil and Natural Gas Corp (ONGC.NS) to supply oil to India over the long term, the Russian state-controlled company said on Tuesday.

[...]

Rosneft said it had also agreed with ONGC they may join forces in Rosneft’s yet-to-be built liquefied natural gas plant in the far east of Russia to the benefit of Indian consumers.

Rosneft did not provide any additional details on its planned cooperation with ONGC.

The company said [Rosneft CEO Igor Sechin, an ally of President Vladimir Putin] and the head of Indian conglomerate Reliance Industries (RELI.NS) also met and discussed potential cooperation in developing Russia’s offshore resources, viewed by Moscow as a source of future oil production growth.

[...]

At the same time, Russia is trying to diversify its energy flows away from its core European markets, with Rosneft leading the race with plans to triple oil flows to China to over 1 million barrels per day in coming years.

Russia is the world’s top oil producer, pumping over 10 million barrels per day but mostly from west Siberian deposits, which are running out, Reuters said.

Last week Reuters reported on the first part of Sechin’s trip, and the solidifying of ties with China (Putin looks to Asia as West threatens to isolate Russia).

The underlying message from the head of Russia’s biggest oil company, Rosneft, was clear: If Europe and the United States isolate Russia, Moscow will look East for new business, energy deals, military contracts and political alliances.

The Holy Grail for Moscow is a natural gas supply deal with China that is apparently now close after years of negotiations. If it can be signed when Putin visits China in May, he will be able to hold it up to show that global power has shifted eastwards and he does not need the West.

“The worse Russia’s relations are with the West, the closer Russia will want to be to China. If China supports you, no one can say you’re isolated,” said Vasily Kashin, a China expert at the Analysis of Strategies and Technologies (CAST) think thank.

Indeed, Reuters speculates that the alliance will be a good counterbalance to the United States. That it precludes Europe from that calculus only shows how weak the European Union is in the face of aggression and, more importantly, large geopolitical maneuvering.

The deal with China is good business for Russia as well as good diplomacy, as Reuters reports, Gazprom, the state-owned Russian gas firm, “hopes to pump 38 billion cubic meters (bcm) of natural gas per year to China from 2018 via the first pipeline between the world’s largest producer of conventional gas to the largest consumer.”

And while Europe imports one third of the gas supplies from Russia, “China overtook Germany as Russia’s biggest buyer of crude oil this year thanks to Rosneft securing deals to boost eastward oil supplies via the East Siberia-Pacific Ocean pipeline and another crossing Kazakhstan,” Reuters said.

Via Tyler Durden at ZeroHedge, who said, “To summarize: while the biggest geopolitical tectonic shift since the cold war accelerates with the inevitable firming of the ‘Asian axis’, the west monetizes its debt, revels in the paper wealth created from an all time high manipulated stock market while at the same time trying to explain why 6.5% unemployment is really indicative of a weak economy, blames the weather for every disappointing economic data point, and every single person is transfixed with finding a missing airplane.”

We often find ZeroHedge to be a bit too cynical, but in this instance Durden captures the case well.

Picture via Wikimedia Commmons


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