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By Robert Rapier on Nov 20, 2014 with 8 responses

Torrefaction via Radio Waves

During the past five years that I spent in Hawaii, I worked on a number of different projects. The company I worked for invested in energy projects, and our focus was on converting biomass into energy. In my role, I often evaluated companies and technologies to determine the potential technical and economic viability.

I have found over the years that the vast majority of biomass to energy projects aren’t economically viable for one reason or another. I have looked at companies that utilize many different conversion technologies, and most of the time my job consisted of searching for fatal flaws of different approaches. I was the guy who said “No.” That approach saved my employer a lot of money, because none of the companies I said “No” to are thriving today. Most went out of business.

But I didn’t like always being the guy who said “No.” I wanted to put steel in the ground and build something. So I searched for ways to say “Yes”, or at least to turn “No” into “Maybe.” CONTINUE»

By Russ Finley on Nov 17, 2014 with 41 responses

New IEA Study: Least Cost Scenario has Nuclear as the World’s Largest Source of Electricity by 2050

An article in Grist about the same study had a different headline: “How solar can become the world’s largest source of electricity.” From the study:

The hi-Ren requires cumulative investments for power generation of USD 4.5 trillion more than in the 2DS, including notably PV but also wind power and STE (Solar Thermal Energy).

The study also notes that, in theory and given enough time, power systems that don’t burn fossil fuels should eventually pay for themselves with fuel cost savings (which is also a trait of nuclear). See Figure 5 below.

IEAResults

Figure 5 from IEA Study

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By Andrew Holland on Nov 13, 2014 with 2 responses

US-China Climate Action: A Reason for Optimisim

On Wednesday in Beijing, President Obama and his Chinese counterpart Xi Jinping announced a series of agreements at a surprisingly fruitful APEC summit. The US and China came to agreements on issues as diverse as military relations, trade, investment, visas, and a range of other issues. Certainly, the Chinese are not acting like they’re dealing with a U.S. President hobbling into a lame-duck period.

The biggest agreement, however, comes in the area where President Obama still has a great amount of power, both domestically and internationally, to take action: climate change. This is also an area where action by the Chinese government both has meaning for a domestic constituency and among the international community. While observers had expected some sort of deal on climate change, the scope and ambition of the deal were a surprise. Last year, I had written that “U.S. – China Agreement on Climate Shows Promise” – and with this announcement, we see that the promise is on its way to bearing fruit.

Of course, we can only judge the effectiveness of any deal on climate change over a long horizon. This deal does appear, though, to put both the US and China – and the rest of the world with them – on a track to beginning to actually meet the challenges of climate change.

The Terms of the Agreement: Ambition on Both Sides

Under the deal, the United States will cut emissions 26 to 28 percent below 2005 levels by 2025, while China agrees that its emissions will hit a peak and begin declining by 2030 at the latest, while also increasing its share of non-fossil energy to 20 percent in that same period. The White House claims its emissions cuts can be met “under existing law” (so, no need for Congressional action) and China, meanwhile, will deploy up to 1,000 gigawatts (a terawatt) of new nuclear, wind, solar and other zero-emissions generation to meet its goal. The targets are there, and so are the means.

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By Robert Rapier on Nov 7, 2014 with 11 responses

KiOR in Default on Loan

Update Sunday 9:30 PM PST: KiOR announced Chapter 11 bankruptcy this evening. The press release says that the company has “accepted a bid for substantially all of its assets from certain affiliates of Vinod Khosla” and that they have entered an agreement with one of Vinod Khosla’s organizations for debtor-in-possession (“DIP”) financing. The press release also notes “Common stock investors should note that effective November 6, 2014, the Company has been delisted from trading on the NASDAQ stock exchange and that other creditors have priority over shareholders under the provisions of the U.S. Bankruptcy Code. The Company does not anticipate any recovery for existing KiOR common shareholders as part of these proceedings.” KiOR’s bankruptcy this year was Prediction 5 on my my 2014 Energy Predictions made in January.

Update Friday 4:30 PM PST: This afternoon KiOR filed a Form 8-K with the SEC. This form is used to notify investors of important material events. In the report, KiOR indicated that they had received a Notice of Default and Acceleration from the Mississippi Development Authority (MDA) notifying KiOR that all obligations are now due and payable within three (3) business days from November 3, 2014. This default accelerates KiOR’s other loan obligations. In addition to the $78.6 million now payable to the MDA, KiOR says this default “accelerates the Company’s obligations under the following debt agreements:”

  • Loan and Security Agreement, dated January 26, 2012, among the Company and each of 1538731 Alberta Ltd. as agent and lender, 1538716 Alberta Ltd. and KFT Trust, as amended on March 17, 2013, October 21, 2013 and March 31, 2014. As of November 3, 2014, an aggregate amount of approximately $127.8 million is immediately due and payable. As a result of the MDA Notice, the loan accrues an additional four percent (4%) per annum default interest rate.
  • Senior Secured Convertible Promissory Note Purchase Agreement, dated October 18, 2013, among the Company, KiOR Columbus, KV III, KFT Trust and VNK Management, LLC and KV III in its capacity as agent, as amended on October 20, 2013 and on March 31, 2014. As of November 3, 2014, an aggregate amount of approximately $95.7 million is immediately due and payable.
  • Senior Secured Convertible Promissory Note Purchase Agreement, dated March 31, 2014, as amended on July 3, 2014, among the Company, KiOR Columbus and KFT Trust and KFT Trust in its capacity as agent. As of November 3, 2014, an aggregate amount of approximately $10.4 million is immediately due and payable.

So KiOR now owes, immediately due and payable, over $312 million. On the plus side, the 8-K notes “KFT Trust made a Protective Advance to KiOR in the aggregate principal amount of $1,102,691.” That is such a specific amount that I wonder if that might be the bill from the investment bank that has been shopping KiOR during the forbearance period.

My guess is that this now triggers a bankruptcy declaration next week. CONTINUE»

By Andrew Holland on Nov 5, 2014 with 35 responses

After Election, Republicans Must Prepare their own Climate Policy

The Republicans have won a clear victory. They will take over the Senate, expand their control of the House, and deserve congratulations for their win.

Now, it is time to govern. The challenges that this country faces are long. And governing is different than campaigning. It means dealing with problems as they come – and not always in what fits best in a 30 second advertisement.

After this election, climate change is an issue that Republicans may think they are safe to ignore. The President has made a big push to regulate carbon emissions through the EPA over the last two years. Some outside groups sought to bring climate action into the campaign. Today, the electoral results could not be more clear: Obama’s policies were repudiated at the polls. Throughout the election, Democrats in swing districts went out of their way to avoid talking about climate change or the EPA.

Republicans could think that they are safe to continue saying “I’m not a scientist” when asked about climate change. They could think this means they don’t need a climate policy. That would be the wrong lesson to take from this.

President Obama’s policies on climate change are all wrong. His Department of Energy picks winners and losers among politically connected companies. His command-and-control policies at the EPA will ensure that “no lawyer is left behind” in a flurry of lawsuits over where to build power plants, and what kind of production is allowed.

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By Robert Rapier on Oct 31, 2014 with 8 responses

Is President Obama Manipulating Gasoline Prices?

Executive Summary for Those with Short Attention Spans

For those who tend not to read much past the headline, the answer to that question is “No.” If you want to understand a bit more about the issue of falling gas prices during election seasons, read on.

The Rotating Roles of Accused and Accuser

It never fails during election season that when gasoline prices are falling, the party out of power and media members sympathetic to that party will start to make accusations and insinuations that the President is manipulating gasoline prices in order to win elections. It happened when Clinton was in office, it happened when Bush was in office, and now it’s happening while Obama is in office. The only things that change are the party that is being charged of manipulating prices, and the people who are defending or accusing that party. This year it’s Fox News doing the accusing, and MSNBC defending. CONTINUE»

By Robert Rapier on Oct 21, 2014 with 45 responses

EPA’s Sleight of Hand on Cellulosic Fuel Rule Change

A few years ago, I wrote a post about the US Environmental Protection Agency’s (EPA) attempt to mandate a non-existent fuel into existence, and then fine refiners for not buying this fuel. That post was called “Why I Don’t Ride a Unicorn to Work“, and was designed to call attention to federal biofuel mandates that weren’t grounded in reality.

But what if I call a rhinoceros a unicorn? Does that mean unicorns then exist?

This week we have a guest post from Todd “Ike” Kiefer, who argues that this is effectively what the EPA has done. By declaring that the definition of cellulosic biofuels is ambiguous, the EPA has signaled that non-cellulosic feedstocks can qualify for full cellulosic tax treatment. Mr. Kiefer explains.

Previously Mr. Kiefer wrote an article highly critical of the Navy’s efforts promote biofuels in a periodical that is sent to Congress and top military leaders. The article was entitled Energy Insecurity: The False Promise of Liquid Biofuels (discussed here). His biography can be found at the end of the article. CONTINUE»

By Robert Rapier on Oct 16, 2014 with 26 responses

LanzaTech’s Vulnerability

It’s been years since I looked at this article I wrote on LanzaTech in 2007, but today I was made aware that it’s been linked to from an article in Biofuels Digest: Junk or treasure? Looking at carbon monoxide and LanzaTech. LanzaTech CEO Jennifer Holmgren had some comments referencing my previous article that are worth addressing. So let me summarize.

LanzaTech proposes to take waste carbon monoxide from sources like steel manufacturers and ferment that to produce ethanol. Holmgren says that the bacterium they use for their fermentation, Clostridium autoethanogenum, is highly ethanol tolerant. The scientific literature mentions tolerance in the 2% to 4% range, and says that the ethanol production rate slows down beyond 4%. I did see one patent application where they mentioned ethanol via this process in the 5.5% to 6% range.

To my knowledge LanzaTech hasn’t publicly stated the ethanol concentrations they achieve, and this prevents really rigorous calculations. Holmgren states that we needn’t make assumptions since “distillation energy requirements are textbook calculations and easy to calculate.” This only true if we know the ethanol concentration in the solution being distilled. As Holmgren’s own link showed in her response, it takes nearly twice as much steam to distill a 5% ethanol solution as it does a 10% ethanol solution. But without knowing for sure what their ethanol concentration is, we can’t know the energy requirement. So, I gave an example in my previous article to illustrate my point, which is this. CONTINUE»

By Robert Rapier on Oct 15, 2014 with 24 responses

Saudi Arabia Still Calling the Shots

The US Shale Oil Boom

There have been a lot of stories over the past few years about the implications of the US shale boom. To review for those who might have been living in a cave for the past 5 years, the marriage of horizontal drilling and hydraulic fracturing (fracking) has reversed 40 years of declining US oil production and created a shale oil and gas boom.

As amazing as it would have seemed a decade ago, US oil production is increasing at the fastest pace in US history. In the past 5 years US oil production has increased by 3.22 million barrels per day (bpd). The overall global oil production increase during that time was only 3.85 million bpd, meaning the US was responsible for 83.6 percent of the total global increase over the past 5 years.

US Oil Production 1965 through 2013 Fracking

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By Jennifer Warren on Oct 14, 2014 with 3 responses

The OPEC Oil Market Gambit

The latest news in the declining oil price saga comes from Saudi Arabia. Last week softening prices of Brent crude oil, the global benchmark, appeared to be resulting from weaker growth prospects in Europe and Asia. This week, according to a Reuters exclusive, the Saudis suggested that market share is preferable to them over the higher prices that other OPEC members such as Venezuela prefer. However, senior Saudi officials would not comment on this market share agenda that was reported as a result of last weeks investor and analyst meetings in New York, where Reuters obtained their information.  It is also hypothesized that the Saudi trial balloons could be a vehicle to help other OPEC members see the wisdom in all members sharing in production cuts to shore up prices, not just the Saudis, which is par for the course.

OPEC Driving

By the November 27th meeting, more clarity from OPEC is expected. Concerns about U.S. oil supply growth with the potential for glut have been on the radar of numerous analysts for over a year. The prices of Brent crude and West Texas Intermediate (WTI) have fallen in tandem in the last few months. WTI dropped to $85 Friday October 10; January WTI futures fell $5.03 since Sept. 30 to $84.73 a barrel today on the New York Mercantile Exchange. The Energy Information Administration (EIA) noted October 8:

The price of North Sea Brent crude oil,[the global benchmark], has fallen to around $91 per barrel, the lowest level in more than two years and about 21% lower than its year-to-date peak of $115 per barrel on June 19. Average monthly Brent spot prices had traded within a narrow $5 per barrel range, from $107 to $112 per barrel, for 13 consecutive months through July 2014.

Saudi Arabia, the OPEC producer with the most influence, has made adjustments to production and pricing. Saudi Arabia cut its crude production by about 400,000 barrels a day in August. This reduction was tied to lower exports to Asian markets. OPEC said it had reduced estimated demand for its crude by 200,000 barrels a day for 2015. The EIA curbed its forecasts for OPEC oil and other liquid fuels production to 35.51 million barrels a day in 2015, down 350,000 bpd from last month’s forecast. For crude oil output alone the EIA cut its forecast by 300,000 bpd to 29.24 million bpd. In September, OPEC pumped nearly 31 million bpd. The EIA projects that Brent crude oil prices will average $98 a barrel in the fourth-quarter of 2014. Brent traded around $88 as of early afternoon October 13th.
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