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By Geoffrey Styles on Jun 25, 2014 with 1 response

Condensate Pries Open the Oil Export Lid

US Administration OKs Exports without Requiring Congressional Approval

I see that the US Commerce Department has given two US companies permission to export condensate that would otherwise be trapped here under a 1970s-vintage ban on US oil exports. This validates the view, as described in a white paper from the office of Senator Lisa Murkowski (R-AK) earlier this year, that the administration has the statutory authority necessary to allow such exports.

After decades of investment to process the increasingly heavy and sour crude oil types available for import, most US refineries, particularly on the Gulf and west coasts, are no longer equipped to run large volumes of the extremely light condensates and oils now coming from onshore shale deposits. Allowing producers to achieve world-market prices for their output should boost the economy and raise tax receipts, yet is unlikely to harm consumers.

Condensate Exports Won’t Reduce US Gasoline Production

Condensates are a class of hydrocarbons distinct from crude oil, but they share enough oil-like characteristics frequently to be lumped in with the latter, as in US export regulations. The technical definition of condensates encompasses both the “natural gasoline” extracted during the processing of natural gas produced from oil fields (“associated gas”,) as well as the heaviest liquids separated from “non-associated” gas, i.e. from gas fields, rather than oil fields. CONTINUE»

By Geoffrey Styles on Jun 12, 2014 with 10 responses

Does EPA’s CO2 Rule Open A Back Door to Cap & Trade?

EPA’s Proposed “Clean Power Plan” Would Require 50 State Plans

Last week the US Environmental Protection Agency released for comment its proposal for regulating the CO2 emissions from existing power plants. It follows EPA’s emissions rule for new power plants published late last year but takes a different, more expansive approach.  If implemented, the “Clean Power Plan” would reduce US emissions in the utility sector by around 25% by 2020 and 30% by 2030.

One of its most surprising features is that instead of setting emissions standards for each type of power plant or mandating a single, across-the-board emissions-reduction percentage, it imposes distinct emissions targets on each state. Based on analysis by Bloomberg New Energy Finance, some states could actually increase emissions, while others are required to make deep cuts. The resulting disparities have apparently triggered new interest in state and regional emissions trading as a means of managing the rule’s cost.

Trading Emissions Is Hardly A New Idea

Although emissions trading has become more controversial in recent years, it proved its worth in holding down the cost of implementing previous environmental regulations, such as the effort to reduce sulfur pollution associated with acid rain. It works by enabling facilities or companies with lower-than-average abatement costs to profit from maximizing their reductions and then selling their excess reductions to others with higher costs. The desired overall reductions are thus achieved at a lower cost to the economy than if each company or facility were required to reduce its emissions by the same amount. CONTINUE»

By Geoffrey Styles on May 12, 2014 with 4 responses

US Strategic Gasoline Reserve: Solution or Band-Aid?

A Belated Response to Sandy

I was traveling when I saw a press release from the US Department of Energy (DOE) announcing the establishment of a strategic gasoline stockpile to serve the Northeast. Responsive to calls for such a reserve in the aftermath of the fuel distribution problems caused by “superstorm” Sandy in 2012, Secretary Moniz also framed it as part of a broader effort to beef up US energy infrastructure.

Although it is encouraging to see DOE recognize some of the limitations of the current US Strategic Petroleum Reserve (SPR), I am disappointed that the new stockpile appears merely to copy the Clinton-era Northeast Heating Oil Reserve, in both quantity and approximate location, rather than reflecting a thorough rethinking of the entire concept of strategic fuel inventories, involving all stakeholders.

The Current SPR Is Outdated in Many Ways

As I noted in a post here last summer, the crude oil SPR and its Gulf Coast facilities were envisioned and stocked for a different world of falling domestic oil production, rising oil imports–mainly through Gulf Coast ports–and US refineries that supplied only domestic customers. Yet while the SPR’s roughly 700 million barrels in storage would last much longer in an emergency than they would have done in the previous decade, the reserve’s other shortcomings have grown as the US energy situation has evolved in the last several years. CONTINUE»

By Geoffrey Styles on Apr 2, 2014 with 3 responses

ExxonMobil Confronts the “Carbon Bubble”

Shareholders Quiz ExxonMobil on Climate Risks

Last fall I devoted a lengthy post to the notion that future policies to address climate change expose investors in companies producing fossil fuels to a bubble in asset valuations. So I was particularly interested to see that ExxonMobil (XOM) issued a report this week responding to specific shareholder concerns along these lines. Although the term “carbon asset bubble” did not appear in XOM’s report, the latter’s references to carbon budgets and the risk of stranded assets in a low-carbon scenario were aimed directly at this emerging meme.

Unsurprisingly, ExxonMobil’s management reassured investors that, “none of our hydrocarbon reserves are now or will become ‘stranded’.” Wisely avoiding past tendencies to question interpretations of climate science, the company’s analysis appears to be grounded in mainstream views of climate change. It focuses on the costs and achievability of an extreme low-carbon scenario, and on the resilience of the company’s portfolio under various climate policies.

You Can’t Get There from Here without Breaking the Economy Again

XOM’s analysis is based on the company’s latest Outlook for Energy, an annual global forecast broadly similar to the main “New Policies” scenario of the International Energy Agency (IEA). It has fewer similarities to the IEA’s “450″ scenario that underpins carbon bubble claims. The company expects energy demand to grow at an average of about 1% annually over the next three decades–faster than population but much slower than the global economy–with increasing efficiency and a gradual shift toward lower-emission energy sources: Gas increases faster than oil and by more BTUs in total, while coal grows for a while longer but then shrinks back to current levels. Renewables grow fastest of all, producing about as much energy in 2040 as nuclear power does today. As a result of these shifts global greenhouse gas (GHG) emissions peak around 2030 and then decline gradually.

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By Geoffrey Styles on Mar 20, 2014 with 19 responses

Environmental Groups Gear Up to Stop US LNG Exports

LNG As the Next Battle after Keystone

A collection of environmental groups, including the Sierra Club, Friends of the Earth and 350.org apparently just sent a letter to President Obama, urging him to require a Keystone-XL-style environmental review — presumably entailing similar delays — for the proposed Cove Point, Maryland liquefied natural gas (LNG) export terminal. Given the President’s “all of the above“ approach to energy and his recent remarks in support of wider natural gas use, the hyperbole-laden letter seems likelier to rev up the groups’ activist bases than to influence the administration’s policies.

Either way, its timing could hardly be coincidental, coming just as opinion leaders across the political spectrum have seized on LNG exports as a concrete strategy for countering Russian energy leverage over Europe in the aftermath of President Putin’s seizure of Crimea. If, as Robert Rapier and the Washington Post have suggested, the Keystone XL pipeline is the wrong battle for environmentalists, taking on LNG exports now is an even more misguided fight — at least on its merits.

Wrong on Science, Wrong on Scale

Referring to unspecified ”emerging and credible analysis”, the letter evokes the thoroughly discredited argument that shale gas, pejoratively referred to here as “fracked gas”, is as bad or worse for the environment as coal. In fact, in a similar letter sent to Mr. Obama one year ago, some of the same groups cited a 2007 paper in Environmental Science & Technology that clearly showed that, even when converted into LNG, the greenhouse gas (GHG) emissions of natural gas in electricity generation are still significantly lower than those of coal, despite the extra emissions of the liquefaction and regasification processes. The current letter also implies that emissions from shale gas are higher than those for conventional gas, a notion convincingly dispelled by last year’s University of Texas study, sponsored by the Environmental Defense Fund, that measured actual — not estimated or modeled — emissions from hundreds of gas wells at dozens of sites in the US.

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By Geoffrey Styles on Feb 21, 2014 with 23 responses

Fuel Cell Cars and the Shale Revolution

Carmakers’ Persistence with Fuel Cell Cars Could Still Pay Off

Being effectively snowed in last week gave me some time to catch up on my reading backlog, including an article in the Washington Post’s “Capitol Business” edition on “Are We Ready for Hydrogen Cars?” Published in conjunction with this year’s DC Auto Show, which I missed, it mentioned a new fuel cell model from Hyundai for the California market, while providing some background on a technology that looked much more like the next big thing a decade ago than it does to many, now.

We can’t talk sensibly about the prospects for fuel cell cars to become practical without discussing the cost of fuel cell components, the infrastructure to deliver H2 to vehicles, and the suitability of various options for storing it safely onboard. However, I was surprised the article failed to mention a new factor that might do more than anything else to improve the odds for this technology: shale gas. CONTINUE»

By Geoffrey Styles on Feb 12, 2014 with 22 responses

Can Solar Fill the Hydropower Gap During California’s Drought?

Solar Is Growing, But Hydro Remains Much Bigger

A tweet this morning sent me on a fact-checking expedition into state-level  electricity statistics. The subject was a San Jose Mercury article with the unwieldy title, “Drought threatens California’s hydroelectricity supply, but solar makes up the gap.” The article’s quote from the head of the California Energy Commission implied that solar power additions were sufficient to make up for any shortfall in hydro, historically one of the state’s biggest energy sources.

My gut reaction was to be skeptical: Solar has been growing rapidly, especially in California, but even with nearly 3,000 MW of photovoltaic (PV) and solar thermal generation in place, it’s still well short of the scale of California’s 10,000 MW of hydropower dams, especially when you consider that the latter aren’t constrained to operate only in daylight hours. However, I also know better than to respond to a claim like this without checking the data on how much energy these installations actually deliver.

The Comparison Has Shifted In the Last Year

My first look at the Energy Information Administration’s annual generation data seemed to confirm my suspicions. In 2012 California’s hydropower facilities produced 26.8 million megawatt-hours (MWh), while grid-connected solar generated just 1.4 million MWh. However, when I looked at more recent monthly data, the mismatch was much smaller, due to solar’s strong growth in the Golden State. For example, in October 2013 California solar power generated 435 MWh, or nearly 24% of hydro’s 1.8 million MWh.

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By Geoffrey Styles on Jan 31, 2014 with 2 responses

“All of the Above” vs. “Best of the Above”

Energy’s Brief Appearance in the State of the Union Address

Energy issues received scant mention in Tuesday’s State of the Union speech, consisting mainly of a victory lap for the President’s “all of the above” formulation and a somewhat contradictory promise to place even more federal lands off-limits to drilling. While browsing through reactions from various energy leaders and environmental groups I was intrigued by one critique of Mr. Obama’s approach from an environmental NGO, arguing that he should instead be placing the country’s bets on “best of the above” energy. They weren’t the only ones to object to the current approach.

It’s clear from their statement that Earthjustice has definite ideas about what’s best and what isn’t, but their comment merits further discussion. After all, who could argue against supporting the best energy sources? And isn’t all of the above just a sop to the status quo, in which a diverse array of energy sources dominated by fossil fuels provides the energy for the rest of the economy?

Obama and “All of the Above”

As President Obama noted Tuesday, his reference to an “‘all of the above’ energy strategy”–a debatable characterization in itself–referred to a key phrase in his 2012 address to Congress. It’s worth recalling the context, in an election year in which the Republican nominee was certain to focus on conventional energy when it was delivering US production growth in both oil and natural gas that couldn’t have been imagined just a few years earlier.

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By Geoffrey Styles on Jan 20, 2014 with 21 responses

A Solar Car for the Masses?

Ford’s Solar Car Isn’t Just A Toy

It’s car show season again. I’m not sure I’ll have time to take in the DC Auto Show later this month, but if I do, the entry I’ll be keenest to see won’t be the new Corvette “supercar” or the Acura TLX prototype, as much as those speak to my love of cars. Instead it’s the Ford “C-MAX Solar Energi” concept, an unlikely marriage of electric vehicle (EV) and solar photovoltaic panels (PV). The car previously debuted at this year’s Consumer Electronics Show in Las Vegas.

This isn’t the first time a carmaker has put solar panels on the roof of a car, even if we exclude competitions like the Solar Car Challenge and many other efforts to test how far or fast one-off solar vehicles designed by engineering students or enthusiasts could travel. However, I believe this is the first time an “OEM” has added solar panels to a production car for the purpose of providing a significant fraction of its motive power.
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By Geoffrey Styles on Dec 19, 2013 with 4 responses

Converting Coal to Gas in China: Trading Smog for CO2

China’s Production of Synthetic Natural Gas Has Global Implications

In its latest Medium-Term Coal Market Report the International Energy Agency (IEA) forecasts a slowing of coal demand growth but no retreat in its global use. That won’t surprise energy realists, but the item I wasn’t expecting was the reference in the IEA press release to growing efforts in China to convert coal into liquid fuels and especially synthetic natural gas (SNG).

It’s not hard to imagine China’s planners viewing SNG as a promising avenue for addressing the severe local air pollution in that country’s major cities, but the resulting increase in CO2 emissions could be substantial. It could also affect the economics of natural gas projects around the Pacific Rim.

A Solution for China’s Smog?

Air quality in China’s cities has fallen to levels not seen in developed countries for many decades. There’s even a smartphone app to help residents and visitors avoid the worst exposures. Much of this pollution, in the form of oxides of sulfur and nitrogen and particulate matter, is the result of coal combustion in power plants. Although China is adding wind and solar power capacity at a rapid clip, after years of exporting most of their solar panel output, the scale of the country’s coal use doesn’t lend itself to easy or quick substitution by these renewables.

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