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By Robert Rapier on Aug 28, 2014 with 13 responses

Global Biofuels Status Update

Introduction to the GSR

Today I want to take a deep look at the global biofuels picture, drawing mainly from the Renewables 2014 Global Status Report (GSR) that was released in June by REN21, the Renewable Energy Policy Network for the 21st Century. I had intended to draw data primarily from the recently released Statistical Review of World Energy 2014, but I believe that the GSR is the most comprehensive report available when it comes to the global renewable energy picture. The GSR has more complete renewable energy data than the BP Statistical Review, but both reports complement each other. Full disclosure, however, I have been a contributor to the GSR for the past five years.

Before I begin, let me introduce REN21 and what are they trying to achieve. From the foreword to the 215-page report: CONTINUE»

By Robert Rapier on Aug 13, 2014 with 28 responses

Why Natural Gas Prices Collapsed

Over the course of the next two columns, I plan to finish up the recent look at BP’s Statistical Review of World Energy 2014. The final two columns will focus on renewable energy, and carbon dioxide emissions.

Today I want to provide an update on the natural gas picture, as prices declined sharply at the end of July. I have laid out the argument since last winter that because of the deep inventory hole that developed over the course of the exceptionally cold winter, natural gas prices would remain high relative to last year, and that as a result natural gas producers would likely report higher year-over-year profits. (For background on the inventory picture, see my February column Natural Gas Inventories are Headed Toward Zero). CONTINUE»

By Robert Rapier on Jul 30, 2014 with 31 responses

King Coal Deposed in West, but Reigns in East

Introduction

This is the 3rd installment in a series that examines data from the recently released Statistical Review of World Energy 2014. The previous posts – World Sets New Oil Production and Consumption Records and The US and Russia are Gas Giants – delved into world oil and natural gas production and consumption figures. Today’s post looks at the global coal picture.

Coal Consumption

In the US, coal consumption has been flat to declining for the past 20 years. Just since 2007, US coal consumption has fallen by more than 20%. This is the primary reason the US leads all countries in reducing carbon dioxide emissions over that same time period. (This will be covered in an upcoming article). Still, the US accounted for 11.9% of the global demand of coal in 2013. This was good for 2nd place globally among countries for coal consumption, but the 455.7 million metric tons of oil equivalent (Mtoe) that the US consumed in 2013 was roughly the amount we consumed in 1987.

The declining demand story is the same in the European Union (EU). Since 2007, coal consumption in the EU has fallen by 12%. While the consumption decline since 2007 is not as dramatic as that in the US, the decline in EU coal consumption since the late 1980s has been greater. In 1989, US and EU coal consumption were almost identical (480.5 Mtoe for the US versus 487.6 Mtoe for the EU), but then consumption in the EU fell sharply during the 1990s. Today the EU share of the world’s coal consumption is 7.5%.
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By Robert Rapier on Jul 24, 2014 with 7 responses

The US and Russia are Gas Giants

Introduction

This is the 2nd installment in a series that examines data from the recently released Statistical Review of World Energy 2014. The previous post – World Sets New Oil Production and Consumption Records – delved into world oil production and consumption figures. Today’s post looks at the global natural gas picture.

In 2013 global natural gas production advanced 1.1% to a new all-time high of 328 billion cubic feet per day (Bcfd). Except for a one-year decline in 2008-2009, global gas production has risen fairly steadily for about three decades, and production has more than doubled during that time span:

Global Gas Production 1970 through 2013

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By Robert Rapier on Jul 10, 2014 with 17 responses

World Sets New Oil Production and Consumption Records

Last month BP (NYSE: BP) released the Statistical Review of World Energy 2014. This report is one of the most comprehensive sources of global and country level statistics on production and consumption of oil, natural gas, coal, nuclear power and renewables. Right after the release of the report, I wrote a short post discussing the highlights. Today I will take a deeper dive into oil production and consumption figures. In coming weeks, I will delve into the rest of the report.

Oil Production

First a note about BP’s definitions. “Oil” in the BP Statistical Review (BPSR) is defined as ”crude oil, tight oil, oil sands and natural gas liquids”, but excludes biofuels and liquid fuels produced from coal or natural gas. Consumption numbers do include all liquid fuels, so consumption numbers are always greater than production numbers, but this is merely an artifact of BP’s definitions.

Global oil production advanced in 2013 by 557,000 barrels per day (bpd), reaching a new all-time high of 86.8 million bpd (an increase of 0.6 percent over 2012). After declining in 2009, global crude oil production has now increased 4 years in a row. But as I noted in last month’s short article, while global oil production did indeed set a new record, the US production increase alone was 1.1 million bpd. Thus, outside the US global production actually declined by 554,000 bpd. CONTINUE»

By Robert Rapier on Jun 23, 2014 with 10 responses

Where The US Got Its Oil in 2013

How Much Oil Do We Import?

As events in Iraq continue to unfold, we have been getting quite a few queries on just how much oil the US imports from Iraq. In my previous post – The Top 10 Oil Producers in 2013 — I showed that even though the US is a major oil producer, we are an even greater oil consumer. So we import millions of barrels a day of oil from over 40 countries — one of which is in fact Iraq.

The Energy Information Administration (EIA) tracks US oil imports and finished product exports, and I have tabulated our Top 10 sources of crude oil imports from 2013. Overall, the US imported 7.7 million barrels per day (bpd) of crude oil in 2013, a 2 million bpd decline since 2008. We imported another 2.1 million bpd of finished products like diesel, gasoline, and jet fuel, but we also exported 3.6 million bpd of petroleum and petroleum products (mostly as finished products).

Where Does Our Imported Oil Come From?

Of the 7.7 million bpd of crude oil imports, 3.5 million bpd (45 percent of the total) came from OPEC countries. Saudi Arabia was our largest OPEC supplier at 1.3 million bpd (17 percent of the crude import total). But our biggest supplier of crude continues to be Canada. The 2.6 million bpd of crude we got from Canada in 2013 represents a 66 percent increase in the past 10 years and made up a third of US crude oil imports in 2013.

US Crude Imports in 2013

Top 10 Sources of US Crude Oil Imports in 2013 (million barrels per day).  CONTINUE»

By Robert Rapier on Jun 20, 2014 with 10 responses

The Top 10 Oil Producers in 2013

This week BP (NYSE: BP) released their Statistical Review of World Energy 2014. I have been diving into the report, and as always will write a series of articles based on the latest results. Today I want to provide an update of the world’s Top 10 oil producers for 2013 based on the BP report.

Top 10 Oil Producers in 2013
Top 10 Oil Producers in 2013. Figures are “million barrels per day.” 

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By Robert Rapier on Jun 17, 2014 with 10 responses

The Oil Markets as a Thanksgiving Turkey

This week BP (NYSE: BP) released their Statistical Review of World Energy 2014. This is always a big event for energy wonks, and as always I will break it down in a series of articles. My goal is always to flesh out important tidbits that were perhaps overlooked by the media. Here are some of the major findings from this year’s release that have been reported. In 2013:

  • US oil production had the largest increase in the country’s history
  • US oil demand grew at a faster pace last year than China’s, although China’s overall energy demand grew faster
  • Asia increased solar output last year more than Europe for the first time ever
  • Emerging economies accounted for 80% of energy consumption growth
  • Global oil production rose to a new all-time high

In one of those overlooked tidbits I like to point out, while global oil production did indeed set a new record — rising in 2013 by 557,000 barrels per day (bpd) over 2012 — without the US increase of 1.1 million bpd, global production would have declined by 554,000 bpd. But I will take a deeper dive into that starting next week. Today I want to talk about Iraq.

Or, more precisely the impact the unfolding events in Iraq have had on the global oil markets, and more specifically how those oil markets actually work. I had an interesting discussion with someone last week, after a remark was made about oil companies using any excuse — like potential supply disruptions in Iraq — to immediately jack up oil prices. CONTINUE»

By Robert Rapier on Jun 9, 2014 with 111 responses

When the Wind Doesn’t Blow

Hawi Wind Farm

Every morning after I wake up, I have a routine. The first thing I do, regardless of how sleepy I might still be, is slip on my shoes and run a mile. This erases the fog of sleep and gets me ready for the day. As an aside, I can highly recommend a quick run in the morning for just about everyone. The time commitment is minimal, it’s good for the heart, helps with stress, and it kicks the brain into high gear much faster than a cup of coffee can (which I still have later in the morning).

When I am traveling, I will often use a hotel treadmill, and catch up on the news for a few minutes as I run. But when I am in Hawaii, I run outdoors in all but the worst weather. The town I live in — near the north end of the Big Island — is known for the wind. In fact, the school mascot where my children have attended school for the past five years is “Ka Makani”, which means “the wind” in Hawaiian. There is a 10.6 megawatt (MW) wind farm — Hawi Renewable Development Wind Farm  (shown in the picture above) — 20 miles north of where I live.

While the wind there blows enough to support a wind farm, and more often than not I have to run against it during some part of my run, on some mornings everything is dead still. On those mornings, I know I can look to the west and see black smoke rising into the sky. CONTINUE»

By Robert Rapier on May 29, 2014 with 10 responses

The MLP Parity Act is a No-Brainer for Renewable Energy

Introduction to MLPS

A Master Limited Partnership (MLP) is a publicly traded partnership with a tax structure that enables it to attract low-cost capital. The main attraction of an MLP from an investor’s point of view is that MLPs don’t pay corporate income tax. Profits are passed directly to unitholders via regular distributions. Profits from conventional corporations are taxed at the corporate level, then a second time via the personal income tax on distributed dividends. In contrast, MLP distributions are taxed just once, at the individual level.

But MLP distributions aren’t immediately fully taxed either. In fact most of the distribution — typically 80 to 90 percent — is classified as a return of capital under the depreciation allowance, which subtracts capital depreciation from net income to account for the fact that assets like pipelines and wells lose value over time.

The depreciation allowance lowers the immediate tax bill but also the cost basis of the MLP investment, resulting in a larger capital gain when the MLP is sold. Over time the tax-deferred income can be invested elsewhere, allowing investors to compound returns that would have otherwise been taxed, while also earning a steady stream of income. This has made MLPs an extremely popular income investment. CONTINUE»