The U.S. Fish and Wildlife Service is conducting an investigation after a golden eagle was killed in late February at the Spring Valley Wind Farm, about 300 miles north of Las Vegas.

San Francisco-based Pattern Energy, which owns the 152-megawatt wind energy project, reported the dead bird and turned it over to federal authorities within 36 hours of its discovery. [...]

Even so, the wind farm could face a fine of up to $200,000 because it does not hold a federal ‘take’ permit that would allow the incidental death of a golden or bald eagle. [...]

The $225 million facility went online in August as the first utility-scale wind farm in Nevada and the first to be built on federal land anywhere in the United States.

It features 66 turbines, each roughly 400 feet tall, scattered over 7,500 acres at the heart of the vast Spring Valley, which runs north-south for about 110 miles between the Schell Creek and Snake mountain ranges in eastern Nevada.

Shell oil axes exec for Alaska drilling fiasco

Forbes staffer Christophe Hellman reports Shell executive vice president David Lawrence has departed the company following a series of fiascoes in the company’s Alaska drilling operation. Part of the problem with Lawrence was his cavalier attitude toward the projects, which turned into a series of what Hellman calls a “series of delays, accidents and mishaps. The misadventure resulted in a couple of wells being started, then abandoned, and one of Shell’s rigs, the Kulluk, being damaged in a grounding near Kodiak Island.”

Since Shell acquired its Alaska leases in 2008 it has spent more than $5 billion on the program, with nothing yet to show for it.

But investors need to consider whether Alaska is just a distraction for the company, or a symptom of bigger, deeper problems that have yet to be addressed. Is Lawrence enough of a scapegoat for Shell’s lackluster performance, or does the axe need to fall again, higher up the foodchain?

In 2012 Shell earned a measly $512 million on its upstream exploration and production business in North and South America. In the second half of the year Upstream Americas actually lost money.

Alaska was just part of the problem.

Hellman notes the fluctuations, and general drop in natural gas prices have hurt the company severely since 2008, after a three year run with Upstream Americas division delivering 22 percent of Shell’s worldwide earnings. But the bigger culprit is more likely over investing.

It was when natural gas prices fell off a cliff in late 2008 that Shell’s American fortunes really deteriorated.

It’s no coincidence that 2008 was also the time when Shell decided to plunge after oil-focused exploration in Alaska. Since then it’s tried to diversify by adding more onshore oil and natural gas liquids to its offshore-heavy Americas portfolio.

– Going after the Eagle Ford shale of south Texas, Shell forked over a $1 billion bonus to lease the 100,000-acre ranch of Dan Harrison in south Texas.

– And last year it acquired oil-rich acreage in the Permian basin from Chesapeake Energy for $1.9 billion.

– It’s also spent $4.7 billion to grab acreage in the Marcellus shale, as well as the Niobrara and Mississippi Lime play of Kansas.

So where will the buck stop at Shell’s American division? Or is Lawrence’s departure enough to satisfy shareholders and the federal officials that monitor its actions? The answer could very well be to look higher up to ”Marvin Odum, president of the entire Americas division, and the man ultimately responsible not just for the Alaska fiasco, but for its lackluster performance overall[.]“

Images from Wikimedia Commons

(A couple minor edits for grammar, style, and, or punctuation followed initial publication.)

Continental divide: Looming divorce threatens oil empire
We heard about this on CNBC’s “Squawk Box,” and thought “Oh, my.” Now Reuters has the story of Continental Resources chief executive Harold Hamm’s impending divorce, which could lead to a record financial settlement and prove one of the costliest in history. Hamm is one of America’s wealthiest and most influential businessmen and his contentious divorce from Sue Ann Hamm could also threaten his control of America’s fastest-growing oil company.

Sue Ann Hamm is Harold Hamm’s second wife and a former executive at Continental, according to divorce records filed in Oklahoma City, on May 19, 2011, Reuters said. The divorce comes because of an alleged affair, according to the article.

The settlement would likely dwarf that of Rupert Murdoch and his then wife Anna, who settled for $1.2 billion in 1999. According to Reuters, wealth accrued through the efforts of either spouse during a marriage would typically be subject to “equitable distribution” between the parties under Oklahoma law.

Harold Hamm, 67, is a leading force behind the U.S. oil boom and served as the senior energy adviser to Republican presidential candidate Mitt Romney’s campaign. Time magazine named him one of the most influential people in the world, and Forbes listed him last year among the 50 richest Americans. Ranked No. 35, Hamm is worth $11.3 billion, the magazine estimated.

His estranged wife, Sue Ann Hamm, 56, has held key posts at Continental. She has led oil-industry trade groups in Oklahoma, testified to Congress on behalf of Continental and created Continental’s oil and gas marketing units. She is no longer with the company, her lawyer said. [...]

Whether the Hamms signed a prenuptial agreement is unclear. Legal analysts who reviewed court filings said that without one, the case could lead to a record-breaking financial settlement – one that could exceed the $1.7 billion paid by News Corp. founder and chairman Rupert Murdoch to ex-wife Anna in 1999. One outcome could be a split of “marital property” that may include dividing Harold Hamm’s controlling 68 percent stake in Continental, currently worth $11.2 billion.

Because of her high position in the company during it’s long, strong run over the last 25 years, a claim that she is a reason for the company’s success could entitle her to a huge settlement. Hamm, an up-from-the-bootstraps oil man, helped discover the Bakken field of North Dakota in the 1990s. At the time it was the largest new U.S. oil prospect since the 1960s, Reuters said. Continental’s role in the discovery of the huge Baaken field was made all the more important because of its use of hydraulic fracturing, or fracking, long before it became controversial.

Continental has said the entire Bakken field — being developed by several companies — may contain 24 billion barrels of oil. That would be enough to meet U.S. oil demand for more than three years. Drilling by Continental alone added 649 million barrels to the company’s proved oil reserves between 2008 and 2012. [...]

Hamm directly controls 126.3 million shares, or 68 percent, of Oklahoma City-based Continental and more through family trusts. Those shares alone are worth at least $11.2 billion.

But his stake in Continental could change significantly as a result of a divorce settlement. The firm’s massive growth occurred during the marriage. Its share price has surged nearly 500 percent in the five years since an initial public offering in 2007.

After the pending divorce was confirmed by Hamm on Thursday, Continental shares fell by 2.9 percent to $86.17 in afternoon trading.

Via Forbes, whose write up is a bit more gossipy.

Mascoma withdraws biofuel IPO, citing ‘market conditions‘

Bloomberg’s Andrew Herndon reported on March 22, that Mascoma Corp. withdrew its registration for a planned initial public offering to raise as much as $100 million. The closely held biofuel company backed by billionaire Vinod Khosla, according to Herndon.

Mascoma is the fourth biofuel company to cancel or delay indefinitely an initial share sale since last year. Enerkem Inc. canceled its planned IPO in April, followed by Fulcrum BioEnergy Inc. in November, and Coskata Inc. shelved its deal in July. [...]

Mascoma planned to use the proceeds from the offering to develop its production process and expand sales in the corn- based ethanol industry. It is also planning to build two manufacturing plants in Michigan and Alberta, Canada, to convert wood into ethanol. Valero Energy Corp. (VLO) is backing the Michigan project.

The Lebanon, N.H.-based company is developing genetically modified yeast and bacteria that produce enzymes to break down plant sugars and ferment them into ethanol, Herndon said.

Oil futures top $96, settle at five-week high

Oil futures topped $96 a barrel Tuesday to settle at the highest level in five weeks, as a strong showing for U.S. durable-goods orders fed optimism over energy demand ahead of this week’s updates on domestic petroleum supplies, according to MarketWatch.

Meanwhile, prices for natural gas rallied on expiration day for the April futures contract, rebounding from a four-session decline.

Light, sweet crude oil for May delivery CLK3 +1.48%  rose $1.53, or 1.6%, to settle at $96.34 a barrel on the New York Mercantile Exchange.

The settlement was the highest for a most-active contract since Feb. 19, according to FactSet data. Prices have climbed for three sessions in a row to tally a gain of 4.2% for the period.

Analysts polled by Platts expect to see crude-oil stockpiles up 1.6 million barrels for the week ended March 22, MarketWatch said. The analysts are also looking for a fall of 1.6 million barrels in gasoline inventories and a decline of 700,000 barrels in distillate supplies.

Image from Wikimedia Commons

The push to extend fracking to arid regions is drawing attention to water-free techniques

One of the contentious issues with hydraulic fracturing, and perhaps its most salient is the high use of water. The development of the technology that has transformed the oil and gas industry and been an economic boon to the states that approve of fracking has mostly only been possible where there has been ample water supplies.

Indeed, the high volumes of water being used and its potential impact on the environment has necessitated innovation in how to recycle used fracking water as in Pennsylvania and Ohio, the frontline of the Marcellus Shale gas play.

But what about areas where there is no water such as deserts? Kevin Bullis of MIT’s Technology Review writes that engineers are developing an app for that as well by using carbon dioxide. His salve to environmentalists, whom we imagine would think this is the worst of all choices, is a price on carbon emissions would be need to make it happen on a large scale.

It’s possible to fracture gas-rich rock formations without using any water at all. Indeed, gas and oil companies have been using carbon dioxide this way for decades, albeit on a limited basis. But if this approach is going to be used on a large scale, it will require a major investment in infrastructure for getting carbon dioxide to fracking sites. And in some cases a price on carbon emissions may be the only way to make the economics work. [...]

Fracking with carbon dioxide has a number of potential advantages. Not only would it eliminate the need for millions of gallons of water per well, it would also eliminate the large amounts of wastewater produced in the process (see “Studies Link Earthquakes to Wastewater from Fracking”).

Water-free fracking could also solve other problems. In conventional fracking, half the water pumped into a well flows back to the surface, but the other half stays in the rock formation. The water that’s left behind can block the path of the natural gas, slowing down production and possibly decreasing the total amount a well can produce over its lifetime, [Robert Dilmore, a research engineer at the U.S. National Energy Technology Laboratory] says.

When carbon dioxide is used instead of water, most of it comes back out of the well (where it can be captured and used again). This in turn allows natural gas to flow out more freely. Some recent research suggests that using carbon dioxide can also result in a better network of fractures, making it easier to extract the fuel.

Using carbon dioxide as a fracking agent is not new. Wyoming has been using it, according to Bullis. Gasfrac Energy Serivces Inc. of Calgary is using propane as a fracking agent, and Kittanning-Pa.-based MDS Energy Ltd. moved to nitrogen fracking, according to Timoty Puko of the Pittsburgh Post Tribune, whose article goes into greater detail on the role being played by non-water substances.

And, Bullis said in his to-be-sure paragraph that there are still many challenges to carbon dioxide fracking than infrastructure, such as carbon dioxide needing more pressure to condense because it’s a gas, unlike water, and thus fracture the rock. However, this will be an interesting development to watch as the shale gas revolution continues forward.

Via Instapundit

Ohio lawmakers take up wind, solar energy rule 

According to the Associated Press, Ohio lawmakers are considering whether to scrap its renewable energy standard. That standard requires power companies to generate a portion of their electricity from renewable sources such as solar and wind.

In hearings last week, Ohio Senate Public Utilities Chairman Bill Seitz, a Cincinnati Republican, reopened discussions on the 2008 state law, which said utilities must produce 12.5 percent of their electricity from renewables by 2025. The law also set energy efficiency targets to be met by the companies.

A surge in shale gas drilling that’s promising new domestic supplies of a traditional energy source has added a new twist to the debate.

Opponents of the mandates say they fatten electric bills in a state whose rates are already higher than some neighbors. Some also question global warming and those who use it to push for reduced use of coal-fired power plants.

There are similar thresholds in 29 other states and the District of Columbia, the article said. It is not clear whether the standards actually help or not.

Bosch to abandon solar business

There are more signs the solar industry is coming to heel because of market pressures. On Friday the AP reported that German engineering company Bosch is abandoning its solar energy business, because there is no way to make it economically viable amid overcapacity and huge price pressure in the industry. 

The solar power industry has been hit by falling subsidies, weaker sales and increasingly stiff price competition, especially by Chinese manufacturers. [...] The solar energy division, which employs about 3,000 people, lost around 1 billion euros ($1.3 billion) last year. The company said that, despite efforts to reduce manufacturing costs, it was unable to offset a drop in prices of as much as 40 percent.

Robert Bosch GmbH’s move came after German industrial conglomerate Siemens announced last October that it would give up its loss-making solar business, the article said.

Wind power peaks in the UK, Denmark and U.S.

James Montgomery of Renewable Energy World reports a different sort of peak on Monday, noting that wind energy generated more than 5 gigawatt-hours (GWh) of electricity consistently over a 48-hour period last week. What is notable is that is enough to power more than 10 percent of the country’s overall electricity needs, and the equivalent of nearly four out of every 10 homes, according to Montgomery.

More notably, The United Kingdom and Denmark are leading your Europe in the wind revolution.

The UK is far and away Europe’s leader in offshore wind, accounting for nearly 60 percent of the region’s total 5 GW offshore capacity in 2012 (Denmark is net with 18 percent). The UK now has 870 turbines running in 20 offshore wind farms (twice as much as Denmark), including 243 of Europe’s total 293 new offshore wind turbines that were grid-connected in 2012. Earlier this month (March 7) the London Array had 141 of its 175 wind turbines online (3.6 MW each), able to generate 507 MW of energy. The final turbine was installed in December and the project should be fully operational later this spring.

Speaking of Denmark, earlier this month Danish wind turbines sent nearly 4 GW into the electricity grid, only about 800 MW shy of meeting the nation’s entire energy needs. (Though in reality the energy is sold to other European countries.) The Danish government has targeted wind to produce half its electricity by 2020, double its current rate.

Go to the link. There’s also info on Xcel Energy’s Upper Midwest region, Puget Sound Energy, and Electric Reliability Council of Texas and its wind refining improvements. 

Renewed tax credits buoy wind industry

Yet it seems despite the advances the wind industry still cannot stand on its own feet yet. The New York Times Diane Cardwell reports an uptick in wind-related projects following a deep slump last year. The projects, however, are not new, but are merely picking up form whence they were abandoned, she said.

The rush to development is in large part because of Congress. Lawmakers had allowed a popular incentive, known as the production tax credit, to lapse at the end of last year, but then renewed it in January. They also changed the requirement so that projects only have to be under construction by the end of the year to qualify, rather than fully operational, as had traditionally been the case.

“We are now back on the treadmill trying to get as much of our portfolio qualified for the P.T.C. by the end of this year,” said Paul J. Gaynor, First Wind’s chief executive, referring to the credit. Without the renewal, he said, “I think we would have had zero megawatts to develop.”

Projects take such a long time to finish, industry executives and analysts say, that development and manufacturing will continue to pick up through this year and next, potentially spilling over into 2015.

Indeed, the flurry of activity may represent more of a shuffle than an expansion. Developers are mainly dusting off projects they already had in the works, rather than seeking out new business, while others are trying to sell off unfinished projects, experts and executives said.

Cardwell reports there may be other problems in bringing more wind projects on line, as “demand for new power plants is relatively low because of a sluggish economy; natural gas is cheaper and, especially in the West, many utilities are choosing to meet state renewable energy mandates with solar.”

Images from Wikimedia Commons

The technology is still in its infant stage, and at the moment, is far too expensive to be sustainable, though Japan hopes to have a commercially viable model in place by 2019. 

Perhaps the most interesting energy story of the week is the news out of Japan on the successful extraction of methane hydrate from underwater deposits. The method has the potential to change the face of the energy industry, just as hydraulic fracturing has done. Methane hydrate is a frozen gas sometimes referred to as “flammable ice.”

According to Ryu Spaeth writing for The Week:

The breakthrough could be a boon to the energy-poor nation, which imports almost all of its energy. And if the technology proves commercially viable, it could benefit other countries — including Canada, the U.S., Norway, and China — that are also seeking to exploit methane hydrate deposits.

Japan has reportedly spent hundreds of millions of dollars in pursuit of flammable ice, a Holy Grail that could satisfy the country’s future energy demands as Japan weans itself off nuclear power in the aftermath of the leak at the Fukushima Daichii plant. Japanese officials are virtually giddy at the prospect. ‘Japan could finally have an energy source to call its own,’proclaimed Takami Kawamoto, a spokesperson for the Japan Oil, Gas, & Metal National Corp. (Jogmec), the government-run company that is leading the effort.

According to Spaeth, flammable ice remains something of a mystery, which could result in technical glitches and setbacks in the future. Indeed, in The New York Times’s coverage of Tuesday’s breakthrough announcement reporter Hiroko Tabuchi cautioned the “exact properties of undersea hydrates and how they might affect the environment are still poorly understood, given that methane is a greenhouse gas.”

The Times story also goes into more detail about how the breakthrough occurred:

The Japanese Ministry of Economy, Trade and Industry said a team aboard the scientific drilling ship Chikyu had started a trial extraction of gas from a layer of methane hydrates about 300 meters, or 1,000 feet, below the seabed Tuesday morning. The ship has been drilling since January in an area of the Pacific about 1,000 meters deep and 80 kilometers, or 50 miles, south of the Atsumi Peninsula in central Japan.

With specialized equipment, the team drilled into and then lowered the pressure in the undersea methane hydrate reserve, causing the methane and ice to separate. It then piped the natural gas to the surface, the ministry said in a statement.

Hours later, a flare on the ship’s stern showed that gas was being produced, the ministry said.

The Japan Oil, Gas and Metals National Corporation estimates that the surrounding area in the Nankai submarine trough holds at least 1.1 trillion cubic meters, or 39 trillion cubic feet, of methane hydrate, enough to meet 11 years’ worth of gas imports to Japan, the article said.

But just what are methane hydrates? According to the National Energy Technology Laboratory, which is the research arm of the U.S. Department of Energy’s national laboratory system, methane hydrate is a naturally-occurring clathrate in which a host lattice of water-ice encloses guest molecules of methane. A clathrate is chemical compound in which molecules of one material — the host — form a solid lattice that encloses molecules of another material — the guest. (See the image above of a methane hydrate molecule.)

In methane hydrate, the gas molecules are not chemically bound to the water molecules but instead are trapped within their crystalline lattice. The resulting substance looks remarkably like white ice, but it does not behave like ice. When methane hydrate is “melted,” or exposed to pressure and temperature conditions outside those where it is stable, the solid crystalline lattice turns to liquid water, and the enclosed methane molecules are released as gas. This process, called dissociation, can be demonstrated by lighting a match next to a piece of methane hydrate; the heat from the match will cause the hydrate to dissociate, and the methane molecules will be ignited as they are released. This results in the curious spectacle of what appears to be burning ice.

Methane hydrate is a material very much tied to its environment— it requires very specific conditions to form and remain stable. Pressure, temperature, and availability of sufficient quantities of water and methane are the primary factors controlling methane hydrate formation and stability, although geochemistry and the type of sediment also play a part. If the pressure and temperature are just right, free methane gas and water will form solid methane hydrate.

The ability to harvest methane hydrates is threatening to environmentalists. Reuters market analyst John Kemp says the discovery will be irrelevant to everyone else but Japan, despite the discovery “guarantee[ing] the world will not run out of fossil energy for centuries.”

He seems to want to believe there would not be other countries, corporations and investors willing to tap methane hydrates, because “Japan is a special case.” But then goes on to note that methane hydrates are found in most offshore areas around the world, as well as across the Arctic, and contain enormous amounts of energy.

“Outside of Japan, where hydrates have the potential to provde energy security, flammable ice will remain an interesting curiosity — a last reserve of fossil fuels if humanity should ever need them in centuries to come when other, far easier hydrocarbon resources are nearing exhaustion,” Kemp said, in conclusion.

He may be right that for “most other countries and companies, developing hydrates comes at the bottom of the list of commercial priorities behind easier and proven forms of fossil energy including conventional and unconventional oil and gas, coal-bed methane, gas-to-liquids and coal-to-liquids technology.”

But the U.S. Geological Survey has been working with ConocoPhillips in Alaska to tap gas hydrates, and completed a field testing phase of the Ignik Sikumi gas hydrate production test well project on the North Slope of Alaska in May 2012.

A separate abstract by Thomas D. Lorenson and Timothy S. Colett published by the USGS said gas hydrate deposits are common on the North Slope of Alaska around Prudhoe Bay, though their extent is unknown.

On the Alaska North Slope, gas hydrates are now recognized as an element within a petroleum systems approach or ‘total petroleum system.’ Since 1979, 35 wells have been sampled from as far west as Wainwright to Prudhoe Bay in the east. Regionally, the USGS has assessed the gas hydrate resources of the North Slope and determined that there is about 85.4 trillion cubic feet of technically recoverable hydrate-bound gas within three assessment units.

The Woods Hole Science Center calls gas hydrates a “global” phenomenon (also via the USGS):

Globally, gas hydrate has been recovered or inferred in many continental margin settings and in onshore permafrost or offshore relict permafrost that was flooded by sea level rise over the past ~15,000 years. Gas hydrate has also been recovered from sediments beneath Lake Baikal, Earth’s largest freshwater lake.

It is estimated that 99% of the world’s gas hydrate occurs in marine sediments. This estimate was made before modern drilling of permafrost-associated gas hydrates, but scientists still believe that most of the global gas hydrate occurs in the uppermost hundreds of meters of sediments at ocean water depths greater than ~500 m and close to continental margins.

Except on upper continental slopes (300-700 m water depth), the seafloor of most of the world’s oceans lies within the hydrate stability zone. Apart from a few locations, though, persistent seafloor gas hydrate mounds are relatively rare and not volumetrically important compared to the size of the global reservoir. Gas hydrate is in theory also stable in the lower part of the ocean water column, and gas bubbles rising from the seafloor sometimes form a shell of gas hydrate that usually does not survive very long.

Kemp’s real goal may be trying to close the barn door after the horses have fled, because the issue will likely inflame environmentalists, he says.

Climate researchers worry that as global temperatures rise, the hydrates will become unstable, releasing thousands of billions of tonnes of methane into the atmosphere. Methane is 21 times more potent as a greenhouse gas than carbon dioxide.

Mass release of methane hydrates from the ocean floor “appears to have occurred in connection with rapid warming episodes in the Earth’s history”, according to the Intergovernmental Panel on Climate Change’s Third Assessment Report published in 2007.

IPCC estimated 4,000 billion tonnes of methane are locked away in ocean hydrates, with a global warming potential equivalent to 84,000 billion tonnes of carbon dioxide. Annual emissions from burning fossil fuels currently amount to 34 billion tonnes of CO2. Releasing all that methane, or burning it, would have substantial climate consequences.

Environmentalists want the hydrates to remain locked away forever, and they are likely to get their wish for now.

However, the horses have escaped the barn, and it will take more than a bucket of feed to get them back. Perhaps regulations will help corral the issue. As Walter Russell Mead notes, “[g]reens are already familiar with this compound, as it plays a key role in many global warming nightmare scenarios.”

In the worst-case, this is how it would work: greenhouse gasses warm the earth, raising the temperature of the oceans. As the temperature rises, the ‘ice cages’ trapping methane on our seabeds melts. The methane then makes its way into our atmosphere, further warming our earth, creating a positive feedback loop of destructive warming.

This is certainly enough to strike fear into the hearts of us all. Fortunately there’s a way around this problem. Methane is one of the world’s most powerful greenhouse gasses—about 20 times stronger than carbon dioxide—but when burned, it is cleaner than both coal and oil. By purposefully accessing these methane hydrates, we could potentially stave off this feedback loop and provide the world with a new energy source at the same time. Still, the stakes are high. Mistakes during drilling could leak methane into the atmosphere with potentially severe consequences.

Here at the Daily Energy Dump we agree with President Obama that an “all of the above” energy policy is the right course. However, if that policy is really about stifling oil and gas production, and ignoring the incredible scientific advances from the field it becomes harder to condone.

“In the end, Japan’s work in this field is good news. This is still a very new technology, and it is likely to become significantly safer the more we learn and study it,” Mead said. “More R&D needs to go into the technology supporting offshore drilling for methane hydrates before we can seriously consider doing this, but the potential is certainly there.”

The changes, innovations and successes in exploration and discovery, and the growth of green energy are some of the great stories of our time. This truly is an amazing era in energy.

(Images from Wikimedia Commons)

Obama calls for creation of $2 billion green energy fund

Put this under things unlikely to happen, especially considering how much money President Obama’s administration has squandered on green energy initatives. The Washington Examiner reports that the president will call for the creation of a $2 billion Energy Security Trust, which would take government royalties from offshore oil and gas leasing and use the money for research in green-energy technologies. The announcement is expected during his trip to Illinois today. Indeed, administration officials say the spending would not add to the deficit, pointing to an expected increase in revenue from oil-and-gas production.

“The $2 billion fund would require congressional approval, an unlikely prospect unless the White House agrees to expand offshore oil-and-gas drilling.”

Always beware of bureaucrats’ spending plans based on “expected increase[s] in revenue.”

More: Obama will use Nixon-era law to fight climate change

Mark Drajem at Bloomberg says Obama will flex his executive-order muscles and propose strengthening Nixon-era environmental laws to work around Republicans and slow down energy sector growth. The decision is likely to greatly increase lawsuits.

President Barack Obama is preparing to tell all federal agencies for the first time that they should consider the impact on global warming before approving major projects, from pipelines to highways.

The result could be significant delays for natural gas- export facilities, ports for coal sales to Asia, and even new forest roads, industry lobbyists warn. [...]

While some U.S. agencies already take climate change into account when assessing projects, the new guidelines would apply across-the-board to all federal reviews. Industry lobbyists say they worry that projects could be tied up in lawsuits or administrative delays.

For example, Ambre Energy Ltd. is seeking a permit from the Army Corps of Engineers to build a coal-export facility at the Port of Morrow in Oregon. Under existing rules, officials weighing approval would consider whether ships in the port would foul the water or generate air pollution locally. The Environmental Protection Agency and activist groups say that review should be broadened to account for the greenhouse gases emitted when exported coal is burned in power plants in Asia. [...]

Similar analyses could be made for the oil sands that would be transported in TransCanada Corp. (TRP)’s Keystone XL pipeline, and leases to drill for oil, gas and coal on federal lands, such as those for Arch Coal Inc. (ACI) and Peabody Energy Corp. (BTU) [...]

Lawyers and lobbyists are now waiting for the White House’s Council on Environmental Qualityto issue the long bottled-up standards for how agencies should address climate change under the National Environmental Policy Act, signed into law by President Richard Nixon in 1970.

Via Drudge

Solar group reports surge in U.S. installations 

Diane Cardwell at The New York Times says the solar industry is reporting a surge in “the domestic solar market had its best year in 2012, with the growth in installations outpacing that of the global market.” She says the surge is driven in part by an abundance of cheap solar panels from China.

The report, from the Solar Energy Industries Association, the industry’s main trade group, and GTM Research, a renewable energy consulting firm, found that the amount of new solar electric capacity increased last year by 76 percent from 2011, raising the United States’ market share of the world’s installations above 10 percent, up from roughly 5 to 7 percent in the last seven years. [...]

The average cost of a solar panel has declined by 60 percent since the beginning of 2011, according to the findings. Some analysts said that low prices would force consolidations among manufacturers, prompting a rise in the cost of panels and a potential slowdown in momentum for the American installation industry.

But as other costs of solar systems also decline, marginal increases in the price of panels may not be as important, [Shayle Kann, vice president for research at GTM] said.

In the fourth quarter of 2012, for example, panels represented 13 percent of the cost for an average residential solar system, down from 32 percent in the fourth quarter of 2010, he said. 

The utility sector had the biggest jump in solar installations, more than doubling compared with 2011, according to the article.

In other solar news The Times also reports Suntech Power is poised to be taken over partly or entirely by the municipal government’s holding company in its hometown, Wuxi, China. According to the article, the company is going broke.

Suntech has been driven to the financial brink by an obligation to pay more than $541 million to holders of convertible bonds at the end of this week. It stopped releasing financial reports last year after disclosing in July that it had invested in 530 million euros, or $690 million, worth of German bonds that might prove fraudulent. The company’s cash reserves have been dwindling, analysts have said, and Chinese state-owned banks have been reluctant in recent months to lend more. [...]

The collapse of Suntech is a milestone in the precipitous decline of China’s green energy industry in the last four years. More than any other country, China had bet heavily on renewable energy as the answer to its related problems of severe air pollution and heavy dependence on energy imports from politically unstable countries in the Middle East and Africa. [...]

State-owned banks have provided $18 billion in loans on easy terms to Chinese solar panel manufacturers, financing an increase of more than tenfold in production capacity from 2008 to 2012. This set off a 75 percent drop in panel prices during that period, which resulted in losses to Chinese companies of as much as $1 for every $3 in sales last year.

The huge loans and subsequent proliferation of solar panels sent prices into free-fall and prompted a tariff war with the U.S. of about 40 percent on Chinese-made solar panels, according to the article.

For more background on the U.S.-China solar tariff tiff see the Daily Energy Dump archives (here, here, here, here, here, here, here and here).

Update: President Obama gave his speech at the Argonne National Laboratory in Lemont, Ill., reports Rachel Rose Hartman writing for YahooNews. 

“President Barack Obama argued in a speech in Illinois Friday that investing $2 billion over the next 10 years to research alternative energy sources and technologies is the most effective way to reduce the nation’s dependence on foreign oil.

“Making all cars and trucks run on electricity and domestic fuels instead of gas is ‘the only way to break that cycle for good,’ Obama told an audience[. ...]

“As for how the $2 billion trust would be funded, the White House on Friday proposed using royalties generated from offshore oil and gas production.”

(Image of Obama from May 2012, from Wikimedia Commons)

At a time when large dams are being taken down, not put up, the state of Alaska is proposing to construct one of the tallest and most expensive hydroelectric dams ever built in North America.

Did you know hydropower is the most widely-used renewable source of energy, producing 19 percent of the world’s energy, according to the USGS. China is the largest producer of hydroelectricity, followed by Canada, Brazil, and the United States, according to the Energy Information Administration.

Still, hydropower is far from perfect despite being a renewable energy source, particularly environmentally because it affects land use, homes, and natural habitats in the dam area. Dams and hydro plants can also obstruct fish migration and change water temperature.

Yet, hydropower is still finding backers, particularly in developing countries, countries retooling electric grids, or in the case of the U.S., refining the type of plant used as was done at Yellowstone National Park with its micro-hydro plant.

(Here’s a link to past posts on hydropower and includes stories about India, Congo Republic and Brazil among others.)

An interesting March 6 article (also linked-to in the subhed above) from Felicity Barringer of The New York Times points out the challenges of hydro power development in the 21st century. In “Proposed Dam Presents Economic and Environmental Challenges in Alaska,” Barringer says Alaska is proposing “to construct one of the tallest and most expensive hydroelectric dams ever built in North America.”

The Alaska Energy Authority is planning to build a 735-foot, $5.2 billion structure on the Susitna River in a largely empty south-central part of the state, which is watered by runoff from the arc of the Alaska Range. The dam, designed to generate up to 600 megawatts of electricity, would create a new power supply for more than two-thirds of the state’s population.

But in Alaska, where natural energy resources and wildlife are both foundations of the economy, the proposed dam presents twin conundrums.

One is economic: which is better, creating a reliable source of hydroelectricity and weaning some of the state off natural gas, or building a spur off a proposed pipeline to bring gas from the North Slope to the populated region from Fairbanks to the Kenai Peninsula? Or both? The other is environmental: what serves the environment best, replacing natural gas-fired electricity with hydroelectricity, which is free of greenhouse gas emissions, or keeping the Susitna watershed untrammeled and avoiding the risks involved in changing the dynamics of a major salmon stream? [...]

While energy is a foundation of the Alaskan economy, it is most visible in the federal arena. The big political fights over energy have involved federal lands, like the Arctic National Wildlife Refuge or the National Petroleum Reserve. Discussions over how Alaskans should generate their own energy are less frequent and lower-key.

But now, the prospect of building the new dam is being drawn into a debate in the Legislature over a proposal much more familiar to environmental groups: the plan to build a $45 billion natural gas pipeline from the North Slope to the Midwest, perhaps including a spur that would carry some gas to south-central Alaska, where regional power plants are already fueled by gas.

Having this gas provide reliable electricity at stable and affordable prices, said an analyst of both projects, would make the dam superfluous and avoid its environmental impacts.

The dam project is one that was conceived decades ago and saw new daylight when the Legislature and Gov. Sean Parnell brought it to the fore in 2010, the Times says, as a way for the state to attain its policy goal of having half its energy provided by renewable resources by 2025. “The dam legislation passed without a single dissenting vote,” Bassinger says.

While the proposed dam is far upstream from Alaska’s famous salmon runs and beyond blocking them, opponents say the Susitna River project will affect the river’s rate of flow. That a dam will affect a river’s flow would appear to be indisputable. The question is how much, how negatively, and how to find the right balance if there is one to be found?

According to the article, a spokeswoman for the Alaska Energy Authority, Emily Ford, says the dam would be a hedge against a sharp rise in energy prices, while helping the state reach its renewable resource goal. But until the issues of stream flow, fish impact and other concerns are sorted out in the ongoing study there will be no decisions, Ford says in the article.

“In 2015, if things go as planned, the state will ask federal regulators for a license, she said, and construction could start in 2017.”

(Photo of the Susitna River, Alaska, from the Denali Bridge, via Wikimedia Commons)

The company announced last year that it would begin winding down its solar operations, but stressed that wind and biofuels would remain part of the company’s portfolio. 

Citing the most basic principle of “not making any money,” BP announced last week that it has dropped its solar energy business. According to Takepart.com as reported on YahooNews, “Not that solar energy isn’t a viable energy source, but we worked at it for 35 years, and we really never made money,”  BP CEO Bob Dudley said at an energy conference.

In an article for NPR, Jeff Brady said, BP announced it was winding down its solar business last year, and says it is still committed to other renewable resources, such as wind power and biofuels production.

But the move away from solar is especially striking considering BP’s recent history. In 2000, the company changed its logo to resemble the sun and made a big deal of its “beyond petroleum” campaign.

BP’s exit from solar has more to do with a changing business than lack of will.

“The solar industry BP was involved in 10 years ago has very few similarities to the solar industry today,” says Finlay Colville, vice president of the research firm NPD Solarbuzz.

Colville says BP was one of the early companies in the solar business. Back then, the market was based on a different model — one more focused on research and development. He says now the business is all about efficient production and low prices, something more suited to the Asian companies taking a lead role in the solar panel-manufacturing business; so BP’s exit from solar doesn’t mean the industry overall is in trouble.

The Takepart.com article, which oddly doesn’t mention the link to the NPR source, notes that California has mandated having solar on some its newer construction projects.

On the state level, California has mandated that 33 percent of the state’s electricity be renewable by the end of the decade. There are currently 227 solar projects in California, with many more applications pending.

Solar energy development is not without challenges. Solar projects are eating up productive farmland in California’s San Joaquin Valley, and the creation of solar panels produces hazardous waste that must be transported to approved sites, a process often ignored in the calculation of solar’s carbon footprint. Better technologies are needed to store electricity generated by the sun.

The article also mentions the bringing-to-light of the enormous amounts of hazardous waste solar production causes. The Daily Energy Dump covered that in February with this story on how the solar industry is grappling with this issue.

As Jason Dearen said in an updated version of the earlier article on solar hazardous waste, end users are hardly attuned to the waste caused by the fossil fuels used to transport the carcinogenic cadmium-contaminated water and the toxic sludge created when metals and other toxins are removed from water used in the manufacturing process.

After installing a solar panel, ‘it would take one to three months of generating electricity to pay off the energy invested in driving those hazardous waste emissions out of state,’ said Dustin Mulvaney, a San Jose State University environmental studies professor who conducts carbon footprint analyses of solar, biofuel and natural gas production.

The waste from manufacturing has raised concerns within the industry, which fears that the problem, if left unchecked, could undermine solar’s green image at a time when companies are facing stiff competition from each other and from low-cost panel manufacturers from China and elsewhere. [...]

The increase in solar hazardous waste is directly related to the industry’s fast growth over the past five years — even with solar business moving to China rapidly, the U.S. was a net exporter of solar products by $2 billion in 2010, the last year of data available. The nation was even a net exporter to China.

New companies often send hazardous waste out of their plants because they have not yet invested in on-site treatment equipment, which allows them to recycle some waste.

Nowhere is the waste issue more evident than in California, where landmark regulations approved in the 1970s require industrial plants like solar panel makers to report the amount of hazardous materials they produce, and where they send it. California leads the consumer solar market in the U.S. — which doubled overall both in 2010 and 2011.

The Associated Press compiled a list of 41 solar makers in the state, which included the top companies based on market data, and startups. In response to an AP records request, the California Department of Toxic Substances Control provided data that showed 17 of them reported waste, while the remaining did not.

The NPR article said solar is the fastest-growing source of new energy in the U.S. If BP needs to get out it appears there are plenty of parties willing to take its place, and the capacity may be there for them to do so.

According to Solar Energy Industries Association President Rhone Resch, solar prices have fallen nearly 60 percent in the past two years alone, but despite lower prices, less than 0.5 percent of the country’s electricity comes from solar.

Rapidly advancing technologies are opening up astonishing sources of oil and gas all over the world. We are entering a new era of fossil fuels that is reshaping global economics and politics—and the planet.

That’s the subhed for an article by Vince Beiser at Pacific Standard. For more than 100 years humans have been pulling oil from the ground, and it’s probably been just as long that humans having been predicting the end of oil as a resource, nowadays known by the phrase “peak oil.” Writes Beiser:

The story of Kern River reflects our entire history with oil: every time we think we’re starting to run out of it, new technologies arise that find us more. The widely circulated fears of a few years ago that we were approaching ‘peak oil’ have turned out to be completely wrong. From the Arctic to Africa, nanoengineered materials, underwater robots, side-scanning 3-D sonar, specially engineered lubricants, and myriad other advances are opening up titanic new supplies of fossil fuels, many of them in unexpected places—Brazil, Australia, and, perhaps most significantly, North America. ‘Contrary to what most people believe,’ declares a recent study from the Harvard Kennedy School, ‘oil supply capacity is growing worldwide at such an unprecedented level that it might outpace consumption.’

Yet, much to the consternation of many, it never really does go away. New technologies continue to open the way for more and deeper drilling. Daniel Yergin comes back to this time and again in his great read “The Prize, The Epic Quest for Oil, Money & Power,” which has the review from Publisher’s Weekly said, “limns oil’s central role in most of the wars and many international crises of the 20th century.”

It also points to how, as another reviewer at the above-linked site puts it, “how oil went from freewheeling business of refiners and speculators to an instrument of great geopolitical importance.”

As Beiser writes, ”[f]or centuries, the ever-shifting map of where energy comes from has defined much of the character of our world.” That’s as true now as ever as the following stories help convey.

Gas resumes from flowing from Eni’s Libya plant

The New York Times’ Stanley Reed reports “Italian energy giant Eni began Monday to restart operations of the trans-Mediterranean natural gas pipeline it closed Saturday after fighting between two Libyan militias threatened its gas complex west of Tripoli.”

Since the fall of Col. Muammar el-Qaddafi in 2011, Libya has been in a state of chaos as rival militias vie for turf and treasure. But until now the armed groups have left Libya’s oil and gas fields alone — or in Eni’s case, have even carefully protected the operations, which keep the country’s lights on and the money flowing in.

‘The energy installations have been left out of the instability because there is wide recognition about as to how important they are to the economy,’ said Richard Cochrane, a security analyst at IHS.

Why the militias crossed a line this past weekend is not entirely clear. One theory, not denied by Eni, is that the two militias were fighting for the privilege of guarding Libya’s most important oil and gas installation, as well as the economic and political benefits that accrue to whoever has that status.

The pipeline is the single transmission conduit for Libyan natural gas to Italy and, from there, elsewhere in Europe, Reed said.

The great Burma (black) gold rush

Walter Russell Mead highlights how Burma’s new democracy is opening the hydrocarbon door for its energy industry, amongst other industries, and giving it the potential for great wealth.

Because exploration (especially offshore) has been limited, numerous foreign energy companies are on the move. ‘There has never been a better time for you to come to Myanmar and search for opportunities in the oil and gas sectors,’ Burma’s Energy Minister Than Htay told Big Oil bigwigs at a conference in March last year. Another conference attended by international oil companies took place in Yangon today; the Burmese government pledged to put up‘over 20′ offshore blocks for auction by April. This is in addition to 18 onshore blocks opened for bids in January. ‘In our language,’ a Burmese oil tycoon told Agence France-Presse, ‘we call [oil and gas fields] ‘treasure troves’ as we can expect that they can bring us a large amount of treasure.’

“Burma also sits astride one of the most important sea trade routes in the world, and its territory abuts China—for now the most populated and resource-hungry market in the world. These are big opportunities for an infant democracy,” Mead said.

In a related story, via Mead, YahooNews reports that Myanmar plans to put over 20 offshoreoil and gas exploration blocks up for auction by April.

China is poised to become a major importer as well. Htin Aung said China’s 495 mile gas pipeline, which connects the Bay of Bengal with Yunnan province in southwest China, will start operations in June, while a parallel 481 mile oil pipeline will begin pumping in September.

The pipelines are strategically important to China, which now routes most energy imports through the narrow Strait of Malacca and wants to develop an alternate supply route. The pipelines pass through an area of northeastern Myanmar where violence recently broke out between the government and ethnic Kachin fighters who want greater self-rule. China has been concerned about the skirmishes and brokered peace talks between the two sides in February.

Oil and gas are often blamed for many misfortunes. But it seems politics is its midwife.

Indeed, even when governments — or governments of free countries, at least — don’t want to improve their country’s oil supplies it is hard to stop, as this Congressional Research Service report said. From the summary:

Congress is faced with proposals designed to increase domestic energy supply, enhance security, and/or amend the requirements of environmental statutes. A key question in this discussion is how much oil and gas is produced each year and how much of that comes from federal and non-federal areas. On non-federal lands, there were modest fluctuations in oil production from fiscal years (FY) 2008-2010, then a significant increase from FY2010 to FY2012 increasing total U.S. oil production by about 1.1 million barrels per day over FY2007 production levels. All of the increase from FY2007 to FY2012 took place on non-federal lands, and the federal share of total U.S. crude oil production fell by about seven percentage points.

Natural gas prices, on the other hand, have remained low for the past several years, allowing gas to become much more competitive with coal for power generation. The shale gas boom has resulted in rising supplies of natural gas. Overall, U.S. natural gas production rose by four trillion cubic feet (tcf) or 20% since 2007, while production on federal lands (onshore and offshore) fell by about 33% and production on non-federal lands grew by 40%. The big shale gas plays are primarily on non-federal lands and are attracting a significant portion of investment for natural gas development.

The summary continues by noting that “the number of producing acres may or may not be a function of how many acres are leased, and the amount of acres leased may or may not correlate to the amount of production[.]“

In conclusion the report said there are substantial, and already accessible, oil and natural gas reserves and resource potential in federal areas. And, that in the end it is red tape that holds back drilling on Federal lands compared to that done on non-fedral lands. But that is a far cry from no drilling at all on federal land, as even the opening up the Arctic National Wildlife Refuge show.

Beiser’s article is a full read and illuminating, covering how the world continues to change because of advances in oil and gas extraction technology, and, of course, politics.

All of this amounts to an economic bonanza, generating hundreds of thousands of jobs nationwide (though the areas where the drilling is actually taking place don’t always get the benefits they expect, as Lisa Margonelli explains in “The Energy Debate We Aren’t Having”). Moreover, it might bring the U.S. closer to the long-held dream of energy independence. The federal Energy Information Administration predicts imports of oil and other energy supplies will drop to 13 percent of total U.S. energy use by 2035, down from 29 percent in 2007.

And the fracking boom is only just beginning. There are believed to be oceans of yet-untapped shale gas and oil in Argentina, China, and several countries in Europe.

“Maybe we’ll figure out a means to innovate our way out of climate change, or at least slow its progress enough that we can adapt to its impacts. If there’s one thing our history with fossil fuels shows, it’s that we are unbelievably good at adapting, at finding new ways to overcome problems once thought impossible to solve,” he said, at the end.

Update: Made a slight grammatical edit in first paragraph.

A new Harvard study questions the efficacy of wind power as an energy source.

The study, Rethinking WInd Power, suggests that real-world generating capacity of wind farms is being overestimated. The research in mesoscale atmospheric modeling was published on Feb. 25, in the journal Environmental Research Letters.

The study addresses the geophysical limits and climatic effects caused by turbine drag.

Each wind turbine creates behind it a ‘wind shadow’ in which the air has been slowed down by drag on the turbine’s blades. The ideal wind farm strikes a balance, packing as many turbines onto the land as possible, while also spacing them enough to reduce the impact of these wind shadows. But as wind farms grow larger, they start to interact, and the regional-scale wind patterns matter more.

[Harvard applied physicist David Keith]’s research has shown that the generating capacity of very large wind power installations (larger than 100 square kilometers) may peak at between 0.5 and 1 watts per square meter. Previous estimates, which ignored the turbines’ slowing effect on the wind, had put that figure at between 2 and 7 watts per square meter.

In short, we may not have access to as much wind power as scientists thought.

‘One of the inherent challenges of wind energy is that as soon as you start to develop wind farms and harvest the resource, you change the resource, making it difficult to assess what’s really available,’ says [lead author Amanda S. Adams].

But having a truly accurate estimate matters, of course, in the pursuit of carbon-neutral energy sources. Solar, wind, and hydro power, for example, could all play roles in fulfilling energy needs that are currently met by coal or oil.

‘If wind power’s going to make a contribution to global energy requirements that’s serious, 10 or 20 percent or more, then it really has to contribute on the scale of terawatts in the next half-century or less,’ says Keith.

If we were to cover the entire Earth with wind farms, he notes, ‘the system could potentially generate enormous amounts of power, well in excess of 100 terawatts, but at that point my guess, based on our climate modeling, is that the effect of that on global winds, and therefore on climate, would be severe—perhaps bigger than the impact of doubling CO₂.’

Harvard said, the research was funded by the Natural Sciences and Engineering Research Council of Canada.

Report: Government energy loans lead to cronyism

Government watchdog Cause of Action put a report out on Feb. 28, saying the governments outsized influence on markets perverts business incentives, and leads to cronyism. The study finds a 95 percent correlation between companies that received Department of Energy loan guarantees and subsequent campaign contributions.

Could the Department of Energy Loan Guarantee Program  be characterized as a breeding ground for cronyism in the distribution of loans through the 1703, 1705, and Advanced Technology Vehicle Manufacturing Loan Guarantee Programs?

Cause of Action was able to determine, through publicly available data combined with a FOIA production[1], that for corporations[2] who have received a loan guarantee of any amount, the likelihood that it made campaign contributions increases significantly. Of the data available, 95% (.95) of DOE loan recipients with less than $1 billion in annual revenue documented political contributions by the organization or senior level staff. Comparatively, only 31% (.319489) of similarly sized organizations that did not receive loans made political contributions in one way or another.

To date, ATVM, 1703, and 1705 loans have awarded guarantees in the amount of $34.5 billion. [3]

According to its website, “Cause of Action is a nonprofit, nonpartisan government accountability organization that investigates, exposes, and fights job-killing federal government regulations, waste, fraud, and cronyism.”

(H/T PowerLine for the above links)

Obama names EPA and Energy cabinet positions

The candidates names were not a secret and today President Obama announced his nominees to run the Environmental Protection Agency and to head the Department of Energy, according to a Reuters article on YahooNews. Obama selected EPA veteran Gina McCarthy to replace Lisa Jackson as EPA administrator and MIT scientist Ernest Moniz to take over for Steven Chu as Energy secretary.

McCarthy, currently the assistant EPA administrator for the EPA Office of Air and Radiation, has worked for Democrats and Republicans in the past, including Obama’s 2012 presidential opponent, former Massachusetts Governor Mitt Romney. [...]

A former undersecretary of energy during the Clinton administration, Moniz is currently director of the Massachusetts Institute of Technology’s Energy Initiative, a research group that gets funding from industry heavyweights including BP, Chevron, and Saudi Aramco for academic work on projects aimed at reducing greenhouse gases.

The article said, environmentalists and Democrats largely welcomed McCarthy’s nomination, but were less enthusiastic about Moniz’s selection.

Obama also nominated Sylvia Mathews Burwell, head of the Walmart Foundation, to become director of the White House budget office.

All three nominations require confirmation by the Senate.

Mo. House allows hydro power to count as renewable energy

According to the Associated Press, the Missouri House voted last Thursday to allow hydroelectric power to be used toward meeting the state’s renewable energy requirement — an effort criticized by sponsors of the original initiative approved by voters.

A 2008 voter-backed law requires Missouri investor-owned utilities to use renewable energy sources for increasing amounts of energy production. That requirement is 5 percent next year, 10 percent in 2018, and 15 percent in 2021. It also restricted what hydroelectric power can be applied.

The House legislation would allow hydroelectric power from plants in Missouri, facilities owned by Missouri power companies and those shared under a purchased power agreement to be used starting in 2018, the story said.

In its effort to wean itself from nuclear energy, the country has vastly increased its coal consumption

Germany will this year start up more coal-fired power stations than at any time in the past 20 years as the country advances a plan to exit nuclear energy by 2022, according to Bloomberg’s Stefan Nicola.

New coal plants with about 5,300 megawatts of capacity will start generating power this year, the Muenster-based IWR renewable energy institute said in an e-mailed statement today, citing data from the German regulator. About 1,000 megawatts of coal-fired capacity are expected to come offline, it said.

German Chancellor Angela Merkel shut down the country’s nuclear power plants in response to the Fukushima Nuclear Power Plant disaster following a tsunami in 2011, the article said, and is seeking to replace the remaining nuclear plants with renewable generators and efficient fossil-fired stations.

Efforts to promote greener energy will come at cost. According to Reuters, “Germany’s transition to renewable energy may cost up to 1 trillion euros ($1.34 trillion) in the next two decades, the environment minister said.

Indeed, the move to shut down the country’s nuclear industry may be counter productive to the environmental concerns addressed by anti-nuclear policy, as greenhouse gas emissions in Germany, Europe’s biggest economy, rose 1.6 percent last year as more coal was burned to generate power, according to the Environment Ministry.

This comes on the heels of an announcement by the Merkel government that it “agreed on draft regulation to allow the tapping of shale gas via hydraulic fracturing, or fracking,” according to a separate Bloomberg article.

Merkel’s government is keen to develop domestic energy sources as it closes nuclear plants by 2022 and shifts to renewable power. While a successful drilling campaign would redraw the energy map across Europe, a continent reliant on Russia for about a quarter of its gas, public opposition means little headway has been made on fracking in Germany. [...]

The practice is rising on the political agenda as industry tries to absorb increasing energy costs resulting from Merkel’s nuclear exit. [...]

Germany sits on as much as 2.3 billion cubic meters (81 billion cubic feet) of shale gas, enough to boost the current output of natural gas 100-fold, according to Volker Steinbach, the head of the natural resources department of the Federal Institute for Geosciences and Natural Resources.

The decision, the article said, is opposed by the Green Party, which wants the practice banned in its entirety, and the Social Democrats, who have called for a temporary ban on fracking.

This will become a bigger political issue as Germany heads toward its next election on Sept. 22.

Yet another solar company that accepted millions in federal subsidies from the Obama administration is failing

SoloPower announced on Wednesday that it is restructuring and reducing its workforce. According to a press release, the restructuring and layoffs are “designed to trim costs and address market conditions as the company transitions from an R&D focus to commercial manufacturing and sales.”

Forbes contributor Ucilia Wang expands the story, noting that it was just last fall that SoloPower began manufacturing at its new solar panel factory in Oregon and aimed to eventually make use of a federal loan guarantee to expand production.

SoloPower now joins a long line of solar equipment manufacturers worldwide who have struggled mightily to stay in business in the past two years. A glut of solar panels has caused prices to crash and forced dozens of manufacturers to either file for bankruptcies, idle production lines or scratch new factory plans. The impact of this imbalance of supply and demand has affected everyone from industry stalwarts such as First Solar and SunPower to startups such as Solyndra and Abound Solar.

Cheaper prices have made solar panels more attractive to power plant developers and companies that install solar panels on the roofs of homes and businesses, however. Solar energy proponents want the price of solar electricity to fall so that it could better compete with cheaper power from coal and natural gas power plants.

Oregon and Portland, where the factory sits, approved nearly $58 million in incentives — loans, tax credit and other tax breaks — to attract SoloPower a few years ago, when the company was looking for a place to build its first factory. Before that, the company had a pilot production line at its headquarters.

SoloPower also snagged a $197 million federal loan guarantee in a program designed to promote clean power generation and job creation. The company wouldn’t be able to make use of that loan guarantee unless it could get its first production line at the new factory up and running, however.

The story broke first at The Oregonian where Molly Young reported the California-based company

already has received a $10 million state energy loan backed in part by Portland funding and a $20 million manufacturing Business Energy Tax Credit that will pay $13.5 million in cash.

But SoloPower has struggled to ramp up production in Portland, where initial plans outlined a $340 million thin-film solar panel factory that would eventually employ 450 within five years.

The first line was originally slated for completion in April 2012. But missed goals forced executives to renegotiate a $197 million federal loan guarantee in January, The Oregonian reported earlier this month.

Young said the company’s Chief Technology Officer Mustafa Pinarbasi has already left the company, and, according to Dow Jones’ VentureWire, Craig Cornelius, a managing director for SoloPower’s key private investor, New Jersey-based Hudson Clean Energy Partners, also resigned recently.

Other energy news

Study: Reliable reserves from Barnett Shale through 2030

A new study from the University of Texas at Austin says the Barnett Shale natural gas boom is strong enough to provide longterm economic benefits, and “foresees slowly declining production through the year 2030 and beyond and total recovery at greater than three times cumulative production to date.”

HT HotAir

The study was funded by the Alfred P. Sloan Foundation, and was conducted by the Bureau of Economic Geology (BEG) at UT.

The study forecasts a cumulative 44 trillion cubic feet (TCF) of recoverable reserves from the Barnett, with annual production declining in a predictable curve from the current peak of 2 TCF per year to about 900 billion cubic feet (BCF) per year by 2030.

This forecast falls in between some of the more optimistic and pessimistic predictions of production from the Barnett and suggests that the formation will continue to be a major contributor to U.S. natural gas production through 2030.

The study’s model centers around a base case assuming average natural gas prices of $4 for a thousand cubic feet. However it allows for variations in price, volume drained by each well, economic limit of a well, advances in technology, gas plant processing incentives and many other factors to determine how much natural gas operators will be able to extract economically, according to the UT overview.

Here’s a link to the FAQ of the Barnett Shale study.

NPR picks up on the study with its own story with lead geology professor Scott Tinker:

With the amazing leaps in imaging technology these days, you wouldn’t think thousands of wells drilled in the Barnett come up dry — like the oil wildcatters in the 1930s, ’40s and ’50s in East and West Texas.

But Tinker says you would be wrong.

‘It is kind of like the old wildcatter days,” he says. “These unconventional reservoirs are pretty new to the scene. And as the natural gas price was high not that long ago, it really pushed the edges of this field.’

That means there are a lot of North Texas landowners driving around in brand new pickups because the energy companies leased their land — only to find out there’s no gas underneath.

While concerns about environmental impact have grown as fracking and natural gas production have increased, this study focused on future production of shale-produced gas, rather than environmental concerns.

‘It’s a very thorough and impressive study,’ says Scott Anderson, senior policy adviser for the Environmental Defense Fund who specializes in natural gas. Anderson says the study paves the way for increased production of electricity from a commodity that, in the past, has been seen as unreliable and volatile.

Related: Obama adviser said energy policy shifting as abundance replaces scarcity

“As U.S. oil and natural gas production booms, the Obama administration’senergy policy has been “fluid” by necessity to adapt to the huge economic opportunities and climate challenges posed by growth, the top White House energy and climate adviser said on Wednesday,” according to Reuters.

“In a speech to a room packed with energy analysts and lobbyists, Obama adviser Heather Zichalacknowledged that U.S. energy policy “might not look perfectly pretty from the outside” as it evolves to shifting supply-and-demand scenarios.”

EU’s record carbon glut poses risks for auctions

Ewa Krukowska and Alessandro Vitelli of Bloomberg write that Europe’s carbon prices may sink to a new low as political wrangling over a plan to cut a record glut of permits in the world’s biggest cap-and-trade market risks deterring investors from national auctions.

Germany, Europe’s biggest emitter, sold 5.03 million permits today via the European Energy Exchange AG with the lowest bid ratio in four weeks after canceling a Feb. 22 auction, the Leipzig-based bourse said. Prices may slide more than 30 percent to below 3 euros ($3.91) a metric ton unless European Union policy makers can convince traders the surplus can be fixed, according to Jefferies Group Inc.

Carbon has plunged more than 85 percent in the past five years as the euro area’s second recession since 2008 cut industrial demand for permits. Nations from Germany to Greece began this year selling more than 40 percent of their allowances in auctions instead of giving them away for free. Failed auctions may push the cost of emitting one ton of carbon dioxide into the atmosphere even lower as unsold credits in EEX auctions are held over for the next four sales .

The surplus almost doubled to 887 million tons last year, Bloomberg New Energy Finance in London estimated on Feb. 4. That compares with 1.96 billion tons emitted by the 12,000 installations owned by factories and power plants included in ETS, according to estimates by New Energy. Preliminary data for 2012 will be published in April, according to Bloomberg.

Brookfield Renewable boosts hydroelectric portfolio

According to a press release, Brookfield Renewable Energy Partners L.P. today announced the completion of the previously announced acquisition of a 351 MW hydroelectric portfolio from a subsidiary of NextEra Energy Resources LLC.

The portfolio consists of 19 hydroelectric facilities and eight upstream storage reservoirs primarily on the Kennebec, Androscoggin and Saco rivers in Maine, with an expected average generation of approximately 1.6 million megawatt hours annually.

The acquisition complements Brookfield Renewable’s existing portfolio and operating platform and increases its footprint in the New England market to nearly 1,300 MW of installed capacity.

Brookfield operates one of the largest publicly-traded, pure-play renewable power platforms globally, the release said.

UAE applies for more nuclear reactors

According to Reuters, the United Arab Emirates’ Emirates Nuclear Energy Corp has applied to the Gulf Arab state’s nuclear regulator for a licence to build the oil-exporting country’s third and fourth nuclear reactors, the state news agency WAM reported on Friday.

Via CNBC

Oil drops to 2013 low on weak global data

MarketWatch reports crude-oil futures fell to the lowest levels of the year today after disappointing Chinese manufacturing data and record euro-zone unemployment renewed concerns about global economic weakness.

Maine senator backs tax breaks for offshore wind

And finally, accordoing to the Associated Press, U.S. Sen. Susan Collins of Maine is co-sponsoring a bill to boost offshorewind energy generation, which is being aggressively pursued in the state.

Collins, a Republican, joins Democratic Sen. Tom Carper of Delaware in introducing the Incentivizing Offshore Wind Power Act. A House version of the bill is also being introduced.

Geologic data does not come cheap, especially when you are using it to build a multimillion-dollar geothermal powerplant. Just ask Susan Petty, president and chief technology officer at AltaRock Energy. Her company is part of a $43.8-million pilot project to tap thermal energy from Oregon’s Newberry Volcano. Engineers are injecting water deep underground to fracture superheated rocks and create a geothermal reservoir. Their eventual goal is to recirculate pressurized steam back to the surface to test a new kind of technology called an enhanced geothermal system (EGS). Unlike conventional power plantsthat rely on near-surface hydrothermal systems like springs and geysers, EGS can draw energy up to depths of three to five kilometers. Over the next 50 years, the U.S. Geological Survey estimates, EGS power plants could produce 100 gigawatts of economically viable geothermal energy, an amount equivalent to about 10 percent of the country’s current electrical capacity.

Yet geothermal wells need to be drilled in the right place. Without data on the distribution and quantity of geothermal energy in the upper part of the earth’s crust or a volcano as a reference point, wells may not produce much energy at all. To date,two to five out of every 10 geothermal wells prospected end up dry. Petty says that, in terms of the available exploration data, the geothermal industry is in the same place oil and gas companies were during the early 1900s. Wells cost between $2 million and $5 million, meaning geothermal investors risk losing millions on poor odds, Petty says. “The risk involved in geothermal prospecting sets the industry apart from other renewables.”

The risky nature of the business could soon change, however.

A wealth of geologic data from all 50 states and the Gulf of Mexico has been sitting unused in state and federal filing cabinets for decades. The Arizona Geological Survey is leading a coalition of universities and federal agencies on a nationwide treasure hunt to find and digitize these legacy data in a National Geothermal Data System (NGDS) to eliminate some of the financial risk companies like AltaRock face while prospecting for geothermal resources. Since the project’s inception in 2008 under $35-million in grants from the U.S. Department of Energy Geothermal Technologies Office, collaborators have digitized information from over 1.25 million oil and gas, water, and geothermal wells and expect to have as many as three million wells in the system by the end of the year.

Read the whole thing and see how the scientists work lead them to believe geothermal energy can generate three million megawatts of renewable electricity — approximately 10 times the capacity of U.S. coal power plants.
Nuclear facility captured by rebels in Syria; Update: Rebels present IAEA with demands over captured nuclear facility
A Reuters report from Feb. 24 said Syrian rebels had captured the site of a suspected nuclear reactor near the Euphrates river. The site is the same one destroyed by Israeli warplanes six years ago, according to Reuters.

According to the U.S., the Al-Kubar site, around 60 km (35 miles) west of the city of Deir al-Zor, was a North Korean-designed nuclear reactor geared to making weapons-grade plutonium. The site appears to be no more than storage facility for scud missiles at this point, said Reuters.

In an update, YNetNews.com reports a spokesman for the Free Syria Army hinted Sunday that the rebels would be willing to allow International Atomic Energy Agency (IAEA) inspectors into the Al-Kibar nuclear facility, which they seized last week.

‘We’re willing to cooperate with the IAEA if our conditions are met,’ the FSA said in a statement.

The London-based Arab newspaper Al-Sharq Al-Awsat further quoted a commander of one of the rebel brigades as saying that the rebels would be willing to lend the IAEA their cooperation in investigating the site, ‘As long as the revolution is protected.’

He added that the FSA has set up a special security parameter around Al-Kibar, to protect it.

The IAEA has never been allowed to visit the suspected nuclear site, the article said.

Via ENENews

Colorado orders Abound Solar to clean up hazardous waste at four sites

Mike Jaffe of the Denver Post reports Colorado health and environment officials have ordered Loveland-based Abound Solar, the bankrupt solar-panel maker, to clean up hazardous waste at four Front Range locations.

The Abound facilities are storing thousands of ‘unsellable’ solar panels and thousands of gallons of toxic liquids, according to Colorado Department of Public Health and Environment reports.

“The Department views these 2,000 pallets of solar panels as a characteristic hazardous waste for cadmium,” a report on a Denver warehouse said.

In January, the health department issued a compliance advisory, which is ‘an informal enforcement action,’ said Joe Schieffelin, manager of the department’s solid- and hazardous-waste program. It is the first step in requiring a cleanup.

The attorney for Abound’s bankruptcy trustee, Adam Singer, in a response letter challenged the state health department’s calling some of the panels hazardous waste.

Singer said the trustee is still seeking a buyer for the panels and is also reviewing a bid from a contractor for cleaning up the remaining waste. He did not respond to telephone and e-mail requests for comment.

The cost of the cleanup is estimated by the trustee to be $2.2 million.

According to the story, The company spent $70 million of a $400 million federal loan guarantee that will leave taxpayers with a bill of $40 million to $60 million, once the bankruptcy is settled.

Click here to the Daily Energy Dump coverage of its bankruptcy in June 2012.

Protestors decry Lithuania’s shale gas plans

Protesters demonstrated Tuesday in the Lithuanian capital against the government’s plans to let the U.S oil company to begin shale gas exploration, according to an Associated Press story by Liudas Dapkus.

An estimated 500 protesters shouted and banged drums in central Vilnius in response to a recent government move to issue Chevron an exploration license for western Lithuania. [...]

According to estimates by the National Geological Service, Lithuania could have 50 billion to 60 billion cubic meters of shale gas reserves, or about 20 years’ worth of gas at the country’s current rate of consumption.

Russia currently supplies all of Lithuania’s gas, according to the AP. Extracting its own gas would decrease the Baltic country’s dependency on Russia.

Limited data and unreliable estimates on air pollution from oil and natural gas production is hindering the Environmental Protection Agency’s efforts to police the drilling boom, the agency’s internal watchdog said in a report released Thursday.

Inspector General Arthur Elkins Jr. said the EPA has failed to directly measure emissions from some pieces of equipment and processes, and some estimates it does have are of “questionable quality,” according to the Associated Press story.

The EPA, under President Barack Obama, has stepped up regulation of natural gas drilling, which has been booming thanks to hydraulic fracturing, or fracking. About 25,000 wells a year are being fracked, a process in which water, chemicals and sand are injected at high pressure underground to release trapped natural gas.

Vestas to cut manufacturing workforce

The AP’s Nicholas Riccardi reports from Denver, Colo., “wind manufacturer Vestas announced another round of layoffs on Thursday, saying that Congress’ last-minute extension of a tax credit for wind energy generation came too late to save jobs.”

U.S. grasslands losing to biofuel crops

In its science section a United Press International story says research shows the rush to increase planting of biofuel feedstock is rapidly killing off unique grasslands and pastures in the central United States.

Christopher Wright and Michael Wimberly of South Dakota State University — analyzing satellite images of five states in the U.S. corn belt — determined 1.3 million acres of grassland had been replaced by corn and soybean fields between 2006 and 2011, NewScientist.com reported.

Demand for both crops has risen with incentives to use them as biofuel resources instead of food, the researchers said.

The loss of native grasslands and pastures was greatest in South Dakota and Iowa, they said, with as much as 5 per cent of pasture being converted to cropland each year. This is having an impact on wildlife, the researchers report, especially on ground-nesting birds that use grasslands and their surrounding wetlands as breeding grounds.

Via EnergyDigger

Related: U.S. biofuels draw ire from both sides

Estonia unveils national electric car network

Walter Russell Mead highlights an electric car initiative, that while promising, may be limited and useful only in small European countries. The initiative is to heavily invest in an electric vehicle fast-charge network.

The network, consisting of 165 fast chargers, was officially opened for use today; a single operator is responsible for the administration of all stations and the clients can use the same payment solution and technical support across the country.

Each Estonian town, as well as bigger villages now have their own fast chargers; the stations installed along highways maintain a minimum distance of 40 to 60 km. [...]

According to the head of the Estonia’s EV programme, Mr Jarmo Tuisk, it was the lack of a proper fast charging infrastructure that hindered a more widespread use of electric vehicles until now.

Mead says Estonia has turned itself into a laboratory for whether EVs will work or not. “Greens (and the head of Estonia’s EV network) like to protest that only poor infrastructure is keeping electric vehicles from taking off. But it isn’t just infrastructure that makes electric cars a poor substitute for gas-powered cars. A maximum driving distance of 140 km (about 87 miles) is tiny. Stopping every hour or so to charge for 30 minutes is inconvenient. And though it’s still too early to know for sure, one troubling sign for the nascent charging system is the low number of electric vehicles currently in use in the country: 619 electric cars roam the Estonian countryside, but about 500 of these are owned by the state. [...] If they fail in Estonia, they won’t succeed anywhere.”

Linn Energy to buy Berry Petroleum for $2.5B

In mergers & acquisitions news, Linn Energy agreed to buy the Berry Petroleum Co. for about $2.5 billion, according to the New York Times DealBook.

By purchasing Berry, Linn will significantly bolster its oil production and increase its holdings in California and the Permian Basin in western Texas. The company estimates that its newest acquisition will increase its proven reserves by 34 percent and its production capabilities by 30 percent. And Berry’s reserves are estimated to be about 75 percent oil and liquids, considered to be significantly more valuable than natural gas, given current prices.

At BreakingViews.com Christopher Swann gets to the heart of deal, by noting the quantum step forward it represents (subscription required).

Unlike a corporation, a master limited partnership is considered to be the aggregate of its partners rather than a separate entity. However, the most distinguishing characteristic of MLPs is that they combine the tax advantages of a partnership with the liquidity of a publicly traded stock.

MLPs allow for pass-through income, meaning that they are not subject to corporate income taxes. Instead, owners of an MLP are personally responsible for paying taxes on their individual portions of the MLP’s income, gains, losses, and deductions. This eliminates the “double taxation” generally applied to corporations (whereby the corporation pays taxes on its income and the corporation’s shareholders also pay taxes on the corporation’s dividends).

MLPs make distributions that are similar to dividends, and these are generally paid out on a quarterlybasis. It is important to note that cash distributions are not guaranteed, and every unitholder is responsible for the taxes on his or her proportionate share of income, even if the MLP does not pay a cash distribution. [...]

Unlike a corporation, a master limited partnership is considered to be the aggregate of its partners rather than a separate entity. However, the most distinguishing characteristic of MLPs is that they combine the tax advantages of a partnership with the liquidity of a publicly traded stock.

MLPs allow for pass-through income, meaning that they are not subject to corporate income taxes. Instead, owners of an MLP are personally responsible for paying taxes on their individual portions of the MLP’s income, gains, losses, and deductions. This eliminates the “double taxation” generally applied to corporations (whereby the corporation pays taxes on its income and the corporation’s shareholders also pay taxes on the corporation’s dividends).

MLPs make distributions that are similar to dividends, and these are generally paid out on a quarterlybasis. It is important to note that cash distributions are not guaranteed, and every unitholder is responsible for the taxes on his or her proportionate share of income, even if the MLP does not pay a cash distribution.

A master limited partnership is a publicly traded limited partnership, according to InvestmentAnswers.com. Shares of ownership are referred to as units. MLPs generally operate in the natural resource, financial services, and real estateindustries.

Unlike a corporation, a master limited partnership is considered to be the aggregate of its partners rather than a separate entity. However, the most distinguishing characteristic of MLPs is that they combine the tax advantages of a partnership with the liquidity of a publicly traded stock.

MLPs allow for pass-through income, meaning that they are not subject to corporate income taxes. Instead, owners of an MLP are personally responsible for paying taxes on their individual portions of the MLP’s income, gains, losses, and deductions. This eliminates the “double taxation” generally applied to corporations (whereby the corporation pays taxes on its income and the corporation’s shareholders also pay taxes on the corporation’s dividends).

MLPs make distributions that are similar to dividends, and these are generally paid out on a quarterlybasis. It is important to note that cash distributions are not guaranteed, and every unitholder is responsible for the taxes on his or her proportionate share of income, even if the MLP does not pay a cash distribution.

An older piece (from August, 2007) by Michael Cumins in Morningstar explains well the tax structures of a master limited partnership.

Monitoring the Yahoo and the Bloomberg energy news feeds here at the Daily Energy Dump we have been noticing the steady increase in gas prices being posted over the last few weeks.

Typical will be a Monday Associated Press story noting Massachusetts gas prices up 9 cents, or AAA says Michigan gas prices up 5 cents in the last week, or Rhode Island gas prices jump another 8 cents.

These are essentially news-in-briefs, or NIBs as they say in the business, and may not elicit much follow up. Unless it looks a trend and the general populace notices. Well, people have noticed the trend as these NIBS beginning to become larger stories.

Today brings broader coverage of rising gas prices. The CNSNews reporter Julia Seymour says, “Consumers are taking another huge hit in 2013. First, the two percent Social Security tax hike began the year. Now, gas prices are soaring ever closer to $4 a gallon and have jumped 51 cents a gallon since Dec. 20.”

She says some in the media began to notice around Feb. 11, while others have taken longer to catch up.

ABCNews picked up on it on Monday. The report says, via the transcript, “prices often spike in the spring as refineries switch over to a summer blend of gasoline, but this year they’re rising well ahead of schedule.”

The Washington Post, though couched with interesting headline: Gas prices are on a mysterious climb, has a story as well.

Steven Mufson reports that according to AAA, the average price of a gallon of regular gasoline has jumped 45 cents in the past 31 days, which he says is the fastest run-up since 2005. “Retail gasoline prices have climbed for 33 days in a row. A month ago, a gallon of regular gasoline cost $3.30; on Tuesday it stood at $3.75 nationwide.”

Mufson’s list of reasons for the run up of gasoline prices are the because of refinery closures and maintenance, lower oil production by Saudi Arabia, market anxiety about tensions in Iran and Iraq.

(He also says there is, guarded optimism about the prospects for economic recovery in the United States, Europe and China. But this is a cherry-picked, throwaway line. It’s not clear why guarded optimism would send prices higher. The linked-to Post story actually says the U.S. economy shrunk. “The American economy shrank at the end of last year for the first time since the recession ended, according to new government data, as deep cuts in federal spending torpedoed what otherwise looked to be a modest recovery,” according to Ylan Q. Mui, on Jan. 30.)

Still, Mufson gets the other high-price drivers right, most importantly market anxiety and the refinery closures.

The price of crude oil, which makes up about two-thirds of the price of gasoline, remains extremely high by historical standards. The price of a barrel of the benchmark West Texas Intermediate grade of crude oil for March delivery climbed 80 cents to settle at $96.66 a barrel on the New York Mercantile Exchange. In London markets, the price is about $20 a barrel higher.

One factor is lower crude oil output from the Organization of the Petroleum Exporting Countries. Saudi Arabia is producing about 700,000 fewer barrels a day than a year ago, according to the International Energy Agency.

[...]

But some analysts also pointed to refinery issues. Several refineries have been shut down for routine maintenance, and in the eastern United States, several refineries simply went out of business in the past year.

Mufson quotes from a Valero slide presentation in which the company ”estimated that nearly 1 million barrels a day of refinery capacity has been closed on the East Coast or in the U.S. Virgin Islands in the past two years[.]“

Indeed, Hess announced it is closing its Port Reading, N.J. refinery in January. The company says it was losing money on refining, and closing the plant allows it to focus on exploration, according to the 24/7 Wall St.com article.

[Hess will] try to sell its 28 million barrels of terminal storage capacity. Hess closed its joint-venture 350,000 barrel-a-day refinery in the U.S. Virgin Islands last February. Petroleos de Venezuela SA (PdVSA) was the company’s partner in that refinery.

With crude on the East Coast priced at higher Brent crude levels, the refineries have faced a severe disadvantage compared with mid-continent refineries with access to cheaper West Texas Intermediate crude. As transportation networks for the cheaper crude work their way into the eastern United States, the differential will likely only get worse before it gets better.

So, there is a tightening of supply from refineries closing in the East, partly because the crude is so expensive to ship to those refineries. The Energy Information Administration says in its outlook for February and forward that today’s high price per barrel of Brent crude oil spot price at $119, will go down to average $109 per barrel in 2013 and $101 per barrel in 2014. It was an average of $112 for 2012.  The projected discount of West Texas Intermediate (WTI) crude oil to Brent, which averaged $18 per barrel in 2012, averages $9 per barrel in 2014 as planned new pipeline capacity lowers the cost of moving midcontinent crude oil to the Gulf Coast refining centers, according to the EIA.

A New York Times article from Oct. 24, 2012 (Oil Refining’s Fortunes Rise) helps fill out that picture. It says that while the refining business has always been difficult the midwest and Texas shale booms have helped the industry. Valero is one focus of the story.

The refinery business has long been the difficult stepchild of the oil industry, expensive to run, prone to accidents and a low-margin headache for executives who preferred drilling for gushers.

But signs of the improving fortunes for the industry can be seen at Valero Energy’sThree Rivers refinery here, about 70 miles south of San Antonio at the doorstep of a giant new shale oil field.

Five years ago the midsize operation barely eked out a return from the gasoline and diesel fuel it produced from crude oil, and the company considered selling the plant. It was processing increasingly expensive oil from Africa and the Middle East, and the costs were high to ship it by tanker, unload it in a nearby port and then transport it here by a 55-mile-long pipeline. The price of the refinery’s main power source, natural gas, was soaring too.

Now a new drilling boom in South Texas is delivering local crude oil several dollars a barrel cheaper than international prices. Another domestic drilling surge, in natural gas, has produced a 60 percent drop in domestic prices over the last four years. Together those changes have provided the Valero refinery $665,000 a day in savings, raising profit by 400 percent since 2008.

[...]

Profits are flowing at most refineries, especially those close to the newly drilled Midwest and Southwest shale oil fields and to Gulf of Mexico ports. Those operations make up roughly three-quarters of the country’s refining sector. The refiners are buying up fleets of railroad cars to connect with new shale fields, and investing heavily in new pipeline terminals, storage tanks and equipment to produce diesel for Europe and Latin America.

But the sector has been historically volatile, and some analysts caution that the refiners are vulnerable to any economic downturn, either globally or in the United States, and higher natural gas prices that could be caused by a cold winter.

Today oil futures dropped more than 2 percent, according to MarketWatch.

The market was hit by a large block of trades, spurring speculation that a commodity fund ‘got on the wrong side of the market” — that a fund was in trouble and was “forced to liquidate,’ said Stephen Schork with the Schork Group.

Nanex, which supplies real-time data services, reported that the April crude-oil futures contract was hit with over 2,500 contracts within two seconds Wednesday morning, sending oil prices sharply lower.

Weekly U.S. oil-inventory numbers from the American Petroleum Institute will arrive on Thursday, a day later than usual because of the Monday Presidents Day holiday.

According to MarketWatch, analysts polled by Platts expect the data to show a climb of 2 million barrels in crude stockpiles for the week ended Feb. 15, along with declines of 1.4 million barrels each in gasoline and distillate inventories.

New technology could help restart Japan’s nuclear industry, but hurdles, costs and a reluctant public would need to be overcome

Nuclear energy has many problems. The potential for catastrophic accident, how to dispose of nuclear waste, and the ability to use fissionable material to make bombs, perhaps rank as the top three most recognizable problems.

But any serious discussion on energy production will note that nuclear energy has many advantages that should be considered. Nuclear reactions release a million times more energy, as compared to hydro or wind energy. Hence, a large amount of electricity can be generated. One of the biggest advantages of nuclear energy is that there is no release of greenhouse gases, which helps the environment. There are also political advantages to using nuclear, in that it can free countries of their dependency on foreign oil.

And while the advanatges and disadvantages to using nuclear energy are weighed the search for improvements to reactors continues.

Matthew Wald of the NewYork Times highlights one corrective being considered in the wake of the Fukushima Daiichi nuclear accident, which happened nearly two years ago on March 11, 2011. Scientists at the Electric Power Research Institute, a nonprofit utility consortium, are zeroing in replacing the zirconium rods with ceramics, Wald reports.

Among the most striking elements of the catastrophe at Fukushima Daiichi nuclear reactors in Japan were the hydrogen explosions that destroyed the upper parts of some of the reactor buildings. The hydrogen was released by a metal called zirconium in the overheated core.

[...]

Zirconium is used not for its strength or for its resistance to heat or its price but because it is nearly transparent to neutrons, the subatomic particles that are released from the nucleus when an atom is split and go on to split other nuclei in a chain reaction.

Zirconium has always been known to release hydrogen when overheated, and that gas will burn or explode at a variety of concentrations, making it particularly troublesome. And under some circumstances, the fire cannot be extinguished with water. [...]

The institute, with $800,000 in research funds from the Energy Department, is looking at the feasibility of using silicon carbide in place of the zirconium. That is the ceramic that nuclear engineers use for the “pebble bed” type of reactor: the ceramic wraps around the fuel so that it cannot get hot enough to melt, and the ceramic will not burn.

Wald notes that there are a number of manufacturing challenges to overcome as well as the Nuclear Regulatory Commission’s skittishness, and, the reluctance of reactor owners who will need to be convinced that introducing this new solution will not add something else that could go wrong.

While this type of experimentation is ongoing, Japan continues to deal with the fallout of the Fukushima accident. Indeed, the long term consequences of shuttering all but two of its 54 reactors following the accident have pushed consumption and energy grid needs to the fore, forcing the population to confront it’s own often opposing desires.

Olga Belogolova at the National Journal has a long look at this problem in a story from last week entitled, “Why Japan can’t quit nuclear power.” Belogolova points out that anti-nuclear protestors do no want any of the 52 closed reactors to come back online, but Japan lacks alternate sources of energy that are plentiful and cheap.

After 60 years of dependence, the country is economically, historically, and culturally handcuffed to the atom. It has no ready remedy, and even the long-term fixes could break the Japanese economy.

Which may explain why, just a month after the November protest, Japanese voters elected as prime minister Shinzo Abe, who is more open to restarting Japan’s stalled nuclear industry than his predecessor. The election represents a choice that Japan and many other countries have made and will keep making: immediate economic security over long-term safety and environmental concerns. The energy source may vary—in Japan it’s nuclear power, but in the United States it’s fossil fuels, and in the Persian Gulf it’s oil—but the choice is the same. Call it the myopia of power.

Solely understanding the depths of it reliance on nuclear power does little to offer solutions. There are simply too many other correlating associations to make any cut-and-dry decisions. According to the article, Japan has the largest reserve of nuclear material of any non-nuclear-weapons state—”enough to make hundreds or even thousands of nuclear bombs.”

If Tokyo moved to phase out nuclear energy without ending reprocessing or permanently burying all of its spent fuel it would also create a security risk, creating a target for terrorists, as well as violating the country’s international nonproliferation pledges because the fuel would have nowhere to go, according to the article.

A nuclear phaseout would also jeopardize Japan’s energy independence by forcing it to import more fuel. With virtually no domestic energy resources, Japan is already the world’s largest importer of liquefied natural gas, the second-largest importer of coal, and the third-largest net importer of oil, according to the U.S. Energy Information Administration.

And, lastly there is the economic problem. Shutting down facilities sheds jobs, increase electricity costs. Moreover, importing more fossil fuels pulls money out of the Japanese economy, which continues to reel through a 20-year slump, though there were signs of improvement before the nuclear disaster.

The increased electricity prices brought on by a nuclear phaseout would increase the burden on households by $10 billion or $115 per household, according to the National Journal. Japanese businesses would suffer and there would be a loss of an estimated 400,000-plus jobs, according to the Institute of Energy Economics, Japan. That in turn would lead to an approximately $11 billion annual decline in corporate tax revenue, and perpetuate the “escalating and already massive debt problem faced by the world’s third-largest economy.”

There are no easy answers for Japan, and if one is honest about the pros and cons of nuclear energy there is no way Japan will shut down the entire industry for good. There is too much at stake and too few non-reneawble options. Belogolova says it well at the end: “Faced with the choice between economic sustainability and the far-off promise of renewable energy, most countries are choosing, and will continue to choose, to protect their economy.”