Ukraine and Russian natural gas

Gas PipelinesGas ExportsThe  crisis in Ukraine,  a Putin power play, is significantly supported by Russia’s  position as a very large supplier of natural gas to Western Europe. The main Gazprom supply lines  transport around 400 million cubic meters per day to a number of countries highly dependent on this energy source. While Norway supplies gas to the northern tier countries, Germany is also heavily dependent on Russian gas. If the Western powers threaten more serious sanctions, that country can retaliate by cutting off the gas.Gas ImportersUkraineTherefore, Putin believes he is in a strong position to hold the Western European countries and NATO in check, threatening to take over the Russian-speaking parts of Ukraine, while holding his European customers hostage to Russian gas supply. (See graphics, taken from a recent Time Magazine article).

An obvious move would be to reduce Europe’s dependence on Russian gas, though any move in this direction would take a long time and is therefore useless as a tool to defuse the crisis. If it were to be considered even as a long range strategy, here are some facts.

Gazprom sends around 400 MM cubic meters per day of natural gas to its customers, mostly in Europe. Let’s assume that some of this gas could be replaced with gas from new LNG tankers (the current tankers are in use supplying existing customers). There would also have to be some new LNG offloading facilities hooked up to some existing and some new pipelines. A typical large LNG tanker hold 3 billion cubic feet of gas. By my  calculations, each tanker load of LNG could replace about 20 percent of Gazprom’s daily shipments. In other words, a fleet of perhaps 30 new LNG tankers going back and forth between Qatar, America and other potential suppliers would be required to land one tanker a day in Europe to reduce Europe’s dependence of Russian gas by only twenty percent. This would also require construction of several new LNG liquefaction facilities, such as that being built by Cheniere Energy Company in Louisiana, which will send shale gas-based LNG to Europe.LNG

For additional perspective, total world LNG production in 2011 amounted to 32 billion cubic feet per day. This is equivalent to ten LNG tankers supplying the entire world in that year, versus twenty new LNG tankers to take the place of 20 percent of Russian gas to Europe. It would make more sense to greatly expand shipment of Norwegian gas via existing or new pipelines. I haven’t heard any speculation about that, but any Western ideas about breaking Russia’s monopoly on natural gas to Europe is an idle threat. The NYTimes article this morning corroborates this unfortunate fact.

 

 

 

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China Shale Gas: Not so fast!

AI-BX567A_CSHAL_D_20121203123606The 17-23 February Issue of ICIS Business News featured an article on China’s potential to become a major producer of hydrocarbons using hydraulic fracturing of shale. It is well known that China has large shale deposits, actually estimated to have  more recoverable gas than those in our country. If these are developed, the world energy scenario would again change, with China potentially a low cost energy country, depending on coal and natural gas. If the gas contains liquids, China’s petrochemical producers would make low cost ethylene as well. And the country would become a “cleaner” electricity producer as new power plants use gas instead of coal – desperately needed due to the intense pollution caused by coal burning.  But there are substantial difficulties facing China as it starts to plan its future in shale gas production.

Shale wells require a considerable amount of water, which is already scarce in many parts of China. So water for fracking will have to compete with agricultural, commercial and domestic users. Secondly, China’s shale gas is generally found at much greater depths and less favorable formations than in the U.S. This greatly increases drilling costs and makes gas production more problematic in some areas. Third, there is already a great deal of antagonism in China about all types of pollution. Fracking is therefore likely to be strongly opposed in many municipalities as it is in Europe and parts of the states. Finally, fracking in different types of shale requires a great deal of experience and inventiveness, including massive investments in reservoir mapping, including 3DSeismic, CT scanners and advanced imaging solutions. So, there is a considerable learning curve in China even if technology is brought over by Western firms, which is happening to some extent, but with concern about lack of protection for sophisticated technology.

Petrochina and Sinopec are already engaged in exploratory fracking, as are foreign companies like Shell and Total.

All in all, it is is estimated that it will be ten years before China can become a large producer of shale gas. This will, among other things, require the government to set up rules to regulated the licensing, exploration and production involved in establishing China’s hydraulic fracturing industry for shale development. In China, the ground below the surface belongs to the state, a far different situation than in the U.S.

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EPA Should Subsidize Hardships Caused By Shutdowns of Coal-Fired Power Plants

images A recent New York Times issue featured an article on the problem facing many residents in the Appalachian states as scores of coal fired power plants are  shut down as a result of the EPA’s actions under the Clean Air Act. These plants will be shuttered due to pollution caused by mercury, arsenic, chlorine and other pollutants, not because of high carbon dioxide  (associated with coal burning) in the flue gases. The lost generating capacity will be recouped by power plants using natural gas – the only acceptable fuel now that no more nuclear plants are being built and fuel oil is far more expensive with crude oil at the      $ 100 per barrel level.  Natural gas is competitive with coal at $ 3 per million BTU, but not at the 5-6 $ level or higher as has recently been the case due to severely cold weather and high natural gas demand.

Where coal continues to be used, power plant operators are or will be installing upgrades that cost hundred of millions of dollars. Also, The EPA recently set a standard for carbon emissions from new coal-fired power plants that will have the effect of new plants requiring completely new technologies (combined cycle or oxygen instead of air burning - refer to my January 8th, 2014 post) to allow feasible carbon capture. This means that when the remaining coal-based power plants are eventually shut down, electricity costs in those regions will further increase.

Referring back to the NYTimes article, some help is being provided to Ohio residents suffering from “sticker shock” on their utility bills by a state program that holds utility bills to six percent of residents’ income- an excellent idea that should be copied by other states. Right now, states like Ohio have a budget surplus (partly due to high tax revenues associated with fracking and industries supporting the extensive fracking going on in Ohio). Other Appalachian states may not be in the same position.

It may therefore make sense for the EPA, which has the overall responsibility for pollution control, to take a leadership position in this area: The effect of the U.S. shifting its power production from coal to natural gas is having unequal effects on the livelihood of residents, which should arguably be dealt with by some sort of state or federal subsidy similar to what is happening in Ohio. This recalls another blog post (October 14,2013) describing substantial subsidies paid by the German government to residents whose electricity bills have risen dramatically as the country shifts substantial generating capacity from nuclear energy to wind power.

I think a good case can be made to help electricity users cope with massive rises in their monthly bills as countries make dramatic shifts in their energy and environmental policies.

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Breakthrough for wind energy?

windfloatWind turbine-based energy is already far ahead of solar as a source of renewable energy. But wind energy could play an even much more important part if it could overcome the “nimby” effect that has kept or delayed these installations in many parts of the US and in other parts of the world. Few people want to live close to the huge, noisy turbines or even look at them when they are a considerable distance away, This has specifically delayed the proposed very large wind turbine installation near Nantucket Island, for example, even though it is miles away from Cape Cod.

A recent article in Bloomberg BusinessWeek describes efforts by several U.S. firms to develop wind turbine installations on floating platforms that could be placed in the Atlantic or Pacific Oceans  far away from shore. Floating platforms make this possible, since there is then no need to anchor the installation to the ocean floor. The concept is very similar to deep ocean drilling for oil or gas which now uses stationary vessels to house the drilling rig.  Floating platforms can be placed 20 or more miles away from shore, where they will no longer be considered a nuisance. Wind turbines as high as 350 feet are being built by Siemens. One of these is planned for an offshore floating platform offshore Maine by a consortium including the University of Maine.

One of the developers, Principle Power,  installed a 2MW turbine in a floating vessel offshore Portugal and hopes to eventually generate 150MW at this location. And the Department of the Interior recently okayed a 30MW floating wind farm offshore Oregon that the company will build with six Siemens 5MW turbines. Project cost is estimated at $200MM. Floating wind turbine platforms now cost slightly more than stationary platforms, but learning curve experience should bring their price down. Principle Power is a private company based in Seattle,

Alla

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Nanotechnology Breakthroughs or Conversation Pieces?

images This is a subject that is perennially mysterious, because it is hard to get your arms around. It is about atomic-sized particles able or targeted to do things that were never done before.  It has been around for many years, yet seems to have made little impact in our lives. Or the impact has been too small to notice or too inconsequential. But are we perhaps at the threshold of important new developments that could make a big difference? Here are some recent news as reported in Chenected, the blog of the American Institute of Chemical Engineers. The last item is from the February 22nd edition of the Wall Street Journal.

-  BASF, which has been investing in building chemicals, has  been developing a technique to allow faster production of concrete building components with lower carbon emissions. Nanosized particles of calcium silicate hydrate allow concrete to harden quickly at ambient temperatures, rather than using steam to speed the hardening process.

-  Cosmetic creams are intended to penetrate and renovate the skin. New findings allow creams containing nanoscale compounds to adjust a patient’s DNA to treat skin-related disorders by turning off specific disease-causing genes. Skin cancers are one of the targets of nucleic acid particles 1000 times smaller than the diameter of a human hair.

- Carbon nanotubes, the blackest material known, can perfectly cloak objects in the dark of night by neither reflecting or scattering light. Use in stealth aircraft and other was machinery are an obvious application.

- A new coating that repels most liquids (100 different ones tested) has been developed from polymethylsiloxane nanoscale cubes. The coating clings to the pore structure of the material being protected, creating a fine web and leaving pockets of air which account for 95-99 percent of the coating.

-  The lightest material know has been developed by German researchers using zinc oxide and graphite, based nanostructures.  75 times lighter than Styrofoam,  it could, for example, be used in the electrodes of lithium ion batteries, significantly reducing battery weight. An almost limit less number of applications can be visualized.

- Early detection of cancer is an all-important goal. Early stage clinical trials are beginning on infrared-emitting coated nanoparticles that could seek and target melanoma tumors, including where they might have spread. Tests in animals have revealed no toxicity.

-  Again on the health front, nano particles can absorb the toxins associated with a variety of bacteria, including some that resist antibiotics(!) Hard to visualize, but researchers “wrapped a red blood cell membrane around a biocompatible polymeric nano particle” according to an article in Technology Review, the MIT magazine. One red blood cell can create 3000 of the nanoparticles, each 85 nanometers in diameter.

- Tiny sensors called nanobots can be injected into the bloodstream which can transmit information to a smartphone. This allegedly allows tracking changes in blood chemistry, the early detection of cancer from the DNA of a tumor and the precursor signals of a heart attack!

This is highly complicated stuff for industrial chemical engineers like myself. But that does not mean that we shouldn’t try to understand current research that has the potential of changing our world.

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Maximizing crop yields: Technology and Chemistry are helping

GMO tomatoes - Copy I have not for some time posted anything relating to the overhanging problem of increasing the world’s food supply as the global population keeps growing and the amount of arable agrarian land keeps declining due to land development and coastal flooding.  But several recent articles  on how technology, chemistry and climate change are impacting developments in agriculture have caught my eye.

Recently, a private firm called The Climate Corporation was acquired by Monsanto. The company was started by several former employees of Google, backed by Khosla Ventures,  Google Ventures and other investors, who were very knowledgeable in acquiring and handling enormous amounts of data. They became aware of the fact that weather and climate data is available from 2.5 million locations, as well as 150 billion soil observations and multiple forecasts from major climate change models. With access to these data, the Climate Corporation built complex models that use these data to carry out risk analyses to provide farmers with insurance that protects them from extreme weather. It  also provides farmers information to help them decide the best seeds to plant as well as the time of year to plant and harvest. Information is provided on how much fertilizer to use and what the expected yield is likely to be each day (!). With weather patterns becoming more erratic, it is easy to see why farmers are very interested in this service, which is sold in a number of ways.

It is easy to understand why Monsanto bought this firm, which complements Monsanto’s ag chemicals product line. Emulating what IBM did when in the 1990s it decided to provide “solutions” to their customers instead of selling them boxes and software, Monsanto can now work more closely with farmers, though The Climate Corporation will allegedly be operated as an independent entity.

There is a global need to produce more food as the rising number of people (nine billion by 2050) and the growing appetites of wealthier populations will arguably create a crisis.  Climate change will make the problem even worse due to higher temperatures and wetter conditions that spread infections and insects into new areas, with very hot days already reducing crop yields. This means that biotech crops, in other words, genetically engineered foods, will have an essential role in providing adequate food.

In spite of considerable advances,  genetically modified plants have not really increased our edible food supply. Much of our corn and soybeans have been genetically modified to resist insects, but little of these crops end up in human food consumption (One use: high fructose corn syrup).  These animal feed crops are so profitable that farmers are now planting less wheat, the most important crop for human consumption.

Nevertheless, much work is being done in the GMO area to develop crops of edible food that will be able to withstand climate change, but this generally requires engineering complex traits with multiple genes. Some promising work is now developing mold-resistant potatoes which will be able to stand higher growing temperatures and humidity.  Potatoes are a key staple for millions of people in the world with production estimated at 380 million tons. Rice, which feeds nearly half the people in the world, thrives in hot and wet conditions, but is vulnerable to rising sea water and uncontrolled flooding. Transgenic rice, now also under development, would have drought, heat and submergence tolerance.  . The demand for wheat, the most widely grown crop, is expected to rise by 60% by 2050. Wheat is very heat sensitive. Production of wheat between 1980 and 2008 was considerably lower than it would have been without global warming. The next GMO battle may well be over transgenic wheat.

There continues to be strong popular resistance, particularly in Europe, to genetically modified foods. So, with more and more research now being carried out on GM foods, which would greatly increase food supply, the battle between supporters and adversaries will certainly sharpen.

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With Shale Crude U.S. production soars

ShaleIn late 2013, U.S. crude oil production exceeded 8 million barrels per day, reaching a level not seen since 1988. (So much for “Peak Oil”.) Imported crude oil and petroleum products dipped to 28 percent of domestic demand, down from 60 percent in 2005. both figures from the Energy Information Administration (EIA). In 2014, oil production is expected to rise to 8.54 million barrels per day(!). About 29 percent of U.S. production comes from so-called “tight formations”, requiring hydraulic fracturing and horizontal drilling. Five states (Texas, North Dakota, Wyoming, Oklahoma and Colorado) have seen major increases in crude oil production from fracking. Substantial amounts of crude are also being produced from the Utica shale in Pennsylania and West Virginia.

While fracking is usually associated with the dramatic increase in natural gas production and associated large drop in the gas price (except for the current bump due to the extreme cold weather), fracking has made an even large impact of the domestic crude oil front, with oil production consistently rising beyond the forecasts. Since domestic oil consumption has recently started to decline (smaller, more efficient cars, other energy saving devices), the U.S. is coming much closer to energy self-sufficiency in contrast to Brazil, China, and India, which are heading in the opposite direction.

The fracking technology continues to face substantial opposition in some states, notably New York, though incidences of water pollution, never very numerous, keep declining due to more regulations and greater enforcement. The issue of water use will always be a local matter, depending on supply and demand (See my November 20th, 2013 post on Pennsylvania’s experience). Opponents of fracking would presumably be OK with paying three times as much for natural gas and continuing to import large amount of crude oil from countries we would prefer not to use as sources (Venezuela, Saudi Arabia, Russia). But there’s no question that hydraulic fracturing of shale is here to stay.

Still, before we get too enthusiastic about our technological success in augmenting our domestic crude and natural gas production there is another issue which is that shale wells using the fracturing process experience a more rapid decline in production than ordinary oil and gas wells. This means that we have to keep drilling more and more wells to maintain, to say nothing of increasing our domestic production. Also, fracking wells are much more expensive to drill than conventional wells, where pressure brings the crude oil to the surface, at least at first. Offshore oil wells are also much more expensive. All of this means that crude oil prices will not drop much below the current $ 100/barrel price. But we can surely live with that price, as our economy has learned to absorb this price level for a couple of decades. While our domestic oil price has at times dipped below the global standard price as set by Brent crude, and some of our new oil is sold at lower prices because of transportation issues, crude oil is a fungible commodity and so our oil price will stay around the $ 100/barrel level. Natural gas price will not stay as cheap as has been the case over the last few years as demand from regions where gas costs $ 10-15 per MMBtu (versus $ 3-5 here) will have an upward effect on our price as export terminals start operations. But we will maintain a substantial cost advantage over most other countries.

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