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By Robert Rapier on Oct 21, 2014 with 15 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 21 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 23 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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By Robert Rapier on Oct 9, 2014 with 31 responses

The Bell Tolls for KiOR

A Lesson Learned

If there’s one thing billionaire venture capitalist Vinod Khosla has learned over the past decade, it’s that the oil companies aren’t as stupid as he thought. In 2004, Khosla was telling anyone who would listen to him that the only things standing in the way of running the entire country on biofuels were the oil companies, and a lack of funding. He set out to change both of those things, vilifying the oil industry at every turn, and convincing Congress to shell out tax dollars so he could show the dinosaurs in the oil industry how Silicon Valley rolls.

The result has been a debacle, with billions of investor dollars and tax dollars flushed down the toilet. What Khosla didn’t appreciate is that he isn’t smarter than the people in the oil industry. It’s just that the computing and information technology industries were still relatively new, and a great deal of innovation was still taking place in a young field with lots of room for innovation. The oil industry is 150 years old, and while the fracking boom shows that innovation still takes place in the oil industry, it is a very mature industry. Thus change tends to be incremental, not exponential. Almost everything that appears novel to an outsider like Khosla has almost certainly been investigated by multiple companies.

But Khosla convinced a lot of influential people that the energy industry just needed a visionary like himself to shake things up. He gave lots of talks and testified before Congress. He created ludicrous projections for how quickly cellulosic ethanol could scale up. (See my article “Vinod Khosla Debunked.”) Investors (including taxpayers via Congress) couldn’t give him money fast enough, and he proceeded to blow through it as he learned some hard lessons in the energy business, sometimes “inventing” things that had been around for a long time. CONTINUE»

By Russ Finley on Oct 8, 2014 with 13 responses

Renewable Energy Versus Wildlife Conservation

birdswithturbine

Migrating waterfowl at feeding grounds via Pembina Institute

The argument goes something like this:

Real environmentalist: “We should not allow the destruction of orangutan habitat for palm oil biodiesel!”

Apologist: “In fact by displacing fossil fuels, palm oil biodiesel is helping orangutans, as well as everything else that is alive on the planet! Orangutans are at serious risk due to climate change. Some primate species are forecast to to lose more than 95% of their current ranges!” CONTINUE»

By Robert Rapier on Sep 30, 2014 with 6 responses

US Crude Oil Exports Headed to South Korea

The Ban on Crude Exports

One of the 2014 predictions that I made back in January was “The crude oil export ban will not be lifted in 2014.” The present ban on US crude oil exports dates to the The Energy Policy and Conservation Act (EPCA) of 1975. The act effectively bans crude oil exports to all countries except Canada. The export of refined products, such as gasoline, diesel, and jet fuel is allowed.

But given that the US is still a net importer of crude oil to the tune of ~5 million barrels per day (bpd), on the surface it seems silly to entertain the notion of exporting crude oil. The problem essentially comes down to the location of the crude being produced, and the configuration and location of US refineries. Prior to the shale oil boom, crudes processed by refiners had been getting heavier and more sour (i.e., contained more sulfur). As a result, refiners had invested heavily in equipment that could process these types of crudes.

Enter the shale oil boom, which has been producing ever-greater volumes of light, sweet crude since 2008. There is a limit to how much of this crude can be processed by refineries that have been configured to process heavy, sour crudes, and as a result some areas of the country are oversupplied with lighter oil. This in turn has led to discounts — sometimes very large — of light, sweet crudes relative to heavier crudes that are internationally traded. CONTINUE»

By Andrew Holland on Sep 24, 2014 with 5 responses

Business Leaders Join Call to Action on Climate Change

On Monday, September 22, I took part in the Climate Group’s annual kick-off of “Climate Week NYC.” We heard from political leaders like Secretary of State John Kerry, Executive Secretary of the UNFCC Christiana Figueres, French Foreign Minister Laurent  Fabius, and Ban Ki-moon the Secretary General of the UN. ASP helped arrange Secretary Kerry’s climate speech, which is worth reading in its entirety.

As someone working on climate policy in Washington, I’ve heard from these speakers on these issues before. Their leadership is important; we cannot effectively address climate change without political action – but it is not novel.

Likewise, when the UN climate summit meets at UN headquarters on Tuesday, September 23, the over 120 heads of state will prove significant in providing the national leadership that will set standards and provide direction for how to address climate change in both UN negotiations and at their national level.

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By Robert Rapier on Sep 20, 2014 with 28 responses

The Most Consumed Fuel by State

I saw a very interesting graphic several days ago that shows the most consumed fuel in every state in the US:

Most Consumed Fuel by State

Image Credit: Movoto

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By Andrew Holland on Sep 18, 2014 with 14 responses

Winter is Coming: US and its Allies Must Prepare a Strategy to Boost Ukraine’s Energy Security

It appears that the war between Ukraine and Russian-backed separatists may now be coming to an end, as a cease fire agreed on September 5 looks (increasingly) durable.

However, the end of the war does not mean the end of the struggle. Western policymakers must beware of complacency. Once CNN, the BBC, and the New York Times have gone home and NATO’s leaders have turned their attention to the next global flashpoint (Iraq, as it looks to be), we know that the Russians will test Ukraine. They will test the Ukrainian people’s desire to remain truly independent. They will test the Ukrainian leadership’s ability to turn down the comforts and corrupt spoils that working with Russian businesses has brought to former leaders. They will test the West’ attention span and commitment. CONTINUE»