Category: Daily News

As oil crashes, ‘America’s untapped energy giant’ could rise

Geothermal Power Plant in Iceland [image credit: Wikipedia]

Geothermal energy is expensive even compared to renewables, but are the economics about to change? Maybe not, as the Russians and Saudis seem to have called off their oil production war, so sudden availability of lots of experienced but out-of-work shale drillers may not happen, although the virus factor continues. Also subsidy rates are biased towards intermittent wind and solar, compared to more reliable geothermal power sources.

The coronavirus oil crash could be good news for this renewable energy underdog, says Grist.

Disruptions to supply chains and slowdowns in permitting and construction have delayed solar and wind projects, endangering their eligibility for the soon-to-expire investment tax credits they rely on.

There’s another form of renewable energy, however, that might see a benefit from the recent global economic upheaval and emerge in a better position to help the United States decarbonize its electricity system: geothermal.

Geothermal energy comes from heat beneath the earth’s surface that we can tap into to generate electricity and to heat and cool our buildings. In a report released last year detailing the growth potential of geothermal energy, the Department of Energy called it “America’s untapped energy giant.”

Unlike wind and the sun, subsurface heat is available 24/7, perpetually replenished by the radioactive decay of minerals deeper down.

But compared to wind and solar farms, geothermal power plants are expensive to build. The cost can range from $2,000 to $5,000 per installed kilowatt, and even the least expensive geothermal plant in the U.S. costs more than double that of a utility-scale solar farm.

Engineers have to drill thousands of feet into the ground to reach reservoirs of water and rock hotter than 300 degrees F in order for the plants to be economical. Plants generate electricity by pumping steam or hot water up from those reservoirs to spin a turbine which powers a generator.

Experts told Grist that drilling can account for anywhere between 25 to 70 percent of the cost of a project, depending on where it is, the method of drilling, and the equipment required. But now, the companies that supply the machinery and services for drilling are starting to slash rates.

That’s because they are the same suppliers the oil industry uses, but oil companies are idling drilling rigs and cutting contracts left and right. They’re getting pummeled by the largest oil price crash in decades, the result of plunging demand due to the pandemic and a glut in supply because of a price war between Saudi Arabia and Russia.

On Tuesday, the U.S. Energy Information Administration revised its short-term outlook for crude oil production, predicting a steep decline through 2021. All of the suppliers who are normally digging for oil are now eager for new business.

Full article here.

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April 10, 2020 at 05:24AM

Wind turbine models overestimated output: to cost millions per year

Who could have guessed turbines might block the wind going to other turbines?

H/T Sasha Via Bloomberg:

The world’s biggest developer of offshore wind farms issued a reality check to the industry, saying it has overestimated the amount of time its turbines are generating electricity.

Copenhagen-based Orsted A/S announced that offshore wind farms wouldn’t produce quite as much power as previously forecast. The adjustment could shave millions of dollars of revenue a year off each project. It’s also a warning to other developers who may have used similar analysis to estimate the economics of their projects.

Orsted is the leader in placing turbines at sea, with projects across Europe, Asia and the U.S. Even so, those wind farms with blades wider than the wing span of jumbo jets are relatively new, and they have relied methods to analyze wind strengths that haven’t yet racked up a long track record.

“Our findings point to a higher negative effect on production than earlier models had predicted,” Orsted’s Chief Financial Officer Marianne Wiinholt said on a call with reporters. “This is not a a major setback for the industry at all. The industry will still grow. We are more competitive than gas or coal.”

Shares in Orsted sank as much as 10% in Copenhagen after the news, which came a day ahead of the company’s planned release of its financial statement. The company, which is half-owned by the Danish state, kept its full-year outlook unchanged for 2019.

Turbine maker Vestas Wind Systems A/S fell as much as 3.5%, as did SSE Plc, which recently won U.K. government contracts to support the construction of what will be the biggest offshore wind project in the world.

Despite the plunge on Tuesday, Orsted’s stock is up 31% this year, double the 15% gain for the OMX Copenhagen 25 Index and higher than the 22% gain for the S&P 500.

Other developers may soon find similar problems. Orsted regularly compared its estimates to those from external consultants that are used widely in the industry, Wiinholt said. Usually Orsted’s models were actually below those benchmarks, she said, meaning more optimistic competitors could face an even steeper re-adjustment.

“It is an industry-wide issue,” Wiinholt said.

The tests show that the company’s current production forecasts underestimate the negative impact from the so-called blockage effect, which arises when the wind slows down as it approaches turbines. It also underestimated the negative effect of the so-called wake effect, in which wind speeds drop between wind parks, it said.

Full story

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April 10, 2020 at 04:30AM

AR6 SOD Reviewers Needed – please light a candle

Guest announcement by Dave Burton,

Denunciatory rhetoric is so much easier and cheaper than good works, and proves a popular temptation. Yet it is it far better to light the candle than to curse the darkness.

Rev. William L. Watkinson

I’m writing to ask you, dear reader, if you have relevant expertise, to please register with the IPCC as an AR6 (6th Assessment Report) WG1 (Working Group One) SOD (Second Order Draft) Expert Reviewer, and also to please tell me when you have done so. If you are already registered as an AR6 expert reviewer, then thank you, and please tell me that, too. (My contact info is on my web site: https://sealevel.info/.)

The IPCC’s deadline to submit comments has been extended, because of the COVID-19 crisis, so we still have eight weeks left to comment on the AR6 WG1 SOD. The deadline for submission of comments is now June 5, 2020, at midnight CET (which is 7PM EDT), or perhaps 6PM EDT if they really meant CEST, as seems likely.

I won’t sugarcoat it: reviewing IPCC climate reports is an unpleasant chore. Not only are the Reports enormous, the IPCC’s policies make the “expert review” process largely ineffectual.

Despite the similarity in names, the IPCC’s expert review process does not resemble academic peer review. The IPCC’s expert reviewers have no authority of any sort, and the authors are free to ignore anything or everything that the reviewers write.

The IPCC’s authors promise to eventually write responses to all expert reviewer comments, but they will not permit the expert reviewers to see those responses, until after the final version of the Report is released to the public. While reviewing the Second Order Draft, an expert reviewer is not permitted to see the other reviewers’ comments on the First Order Draft, nor even the authors’ responses to his own comments on the First Order Draft.

They did the same thing for AR5, which greatly frustrated me, and significantly degraded the effectiveness of the review process, and the quality of the final Report.

For instance, in comments about several different parts of the AR5 Report, I complained about their practice of adding Prof. Peltier’s 0.3 mm/yr GIA adjustment to arrive at AR5’s inflated 1.7 mm/yr supposed average rate for 20th century sea-level rise. In every case, the authors rejected my complaints. But the reasons they gave were contradictory! Sometimes their response claimed that they did not include the 0.3 mm/yr adjustment (“the 1.7 mm/year rate does not have a 0.3 mm/year correction applied,” they said). Other times they claimed that it was proper to include the 0.3 mm/yr adjustment (it was “done to extract the 1.7 mm/yr SLR supposed to reflect climate processes only,” they said).

I suppose that inconsistency happened because they had multiple people writing the responses. But since I was not permitted to see any of their responses until after the final report had been released, there was no way for me to point out their confusion to them, and that incorrect number remains in the final AR5 Report.

Another problem is that they make the expert reviewers sign confidentiality agreements, and then refuse to tell the expert reviewers who the other expert reviewers are. That’s why I would like you to tell me if you have registered as an expert reviewer: so I can know who I can talk to about it, without violating the confidentiality agreement.

So, you might be wondering, after all that, why would you want to participate?

● Well, it’s a dirty job, but someone needs to do it.

● Also, it gives you a sneek peek to let you see what’s coming.

● Also, it puts your comments and criticisms on public record. The IPCC promises that, eventually, after the final AR6 WGI Report is released, all the reviewer comments and the authors’ responses will be made public.

● Also, it will potentially help me, because once you’ve signed the confidentiality agreement and have been accepted as a reviewer, it will be “legal” for me to consult with you, about my own comments.

● Also, it gives you better moral standing for criticizing inaccuracies in the AR6 Report, later. Nobody will be able to say, “you had your chance, but you declined to take it, so shut up.”

● Also, it is even possible that, in some small way, your review comments just might persuade the authors to actually correct some errors, and improve the Report.

● Also, because “It is better to light a candle than to curse the darkness.”

This is the IPCC’s “AR6 WGI FOD Expert Review Guidance Note.”
https://www.ipcc.ch/site/assets/uploads/2019/04/AR6_WGI_FOD_Expert_Review_GuidanceNote.pdf

Here are their guidance notes for lead authors, including the literature publication deadlines for use in the Report:
https://www.ipcc.ch/site/assets/uploads/2018/11/AR6_WGI_LAM1_Book.pdf

The expert reviewer registration / application form is short and simple. You can register online, here::
https://apps.ipcc.ch/comments/ar6wg1/sod/register.php

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Dave Burton

My contact info is on my web site: https://sealevel.info/

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April 10, 2020 at 04:17AM

COVID-19’s Threat to U.S. Energy Security

The US shale oil industry serves a vital national interest by protecting the country from price or supply shocks. 

For the past decade, the United States has enjoyed a remarkable boom in the production of oil and natural gas. Mainly due to technological advances in fracking, America has become the world’s largest producer of oil as well as a major player with respect to natural gas. Given the role that energy supply plays in international politics, the benefits that accrue to the U.S. from this fact are obvious.

With respect to oil, the United States is a relatively high cost producer; shale oil (produced by fracking) is much more expensive to produce than the oil that gushes forth from the mammoth fields of Saudi Arabia and elsewhere. On the other hand, U.S. shale oil production is much more nimble. Compared to the years and billions required to open new fields, especially off-shore, shale oil wells can be brought into production relatively quickly; at the same time, they degrade relatively quickly as well. Thus, whereas most oil production involves long-term planning and commitments, shale oil can be thought of more like a manufacturing process: When one stops drilling, production falls off quickly, and when one resumes, it can rise relatively quickly as well.

What this has meant, in effect, is that U.S. production has effectively capped the price of oil. When it rises above the level at which shale oil production is profitable (approximately $45-55 per barrel), U.S. production can ramp up relatively quickly and stop or reverse the price rise.

But the obverse of this is that when oil falls below $45, U.S. shale oil production is unprofitable and can be expected to shrink rapidly, endangering the financial health of many U.S. oil companies and posing the threat of widespread bankruptcies in the oil patch. This is what has been happening recently, thanks to both the drop off in demand due to the COVID-19 global slowdown and the “price war” between Saudi Arabia and Russia. Whatever their other motives may have been, both countries had reason to resent the rapid expansion of U.S. oil production and, to put it as mildly as possible, would not be sad to see the U.S. industry decimated.

The presidential strategy thus appears to be one of raising world oil prices in order to avoid the decimation of the U.S. oil industry. This is a completely understandable strategy, but it suffers from some serious drawbacks.

President Trump has recently engaged with both President Putin of Russia and Crown Prince Mohammed bin Sultan of Saudi Arabia, in an attempt to get them to agree to production cuts to support the price of oil. On April 2, the President tweeted that he “expect[s] & hope[s] that they [Saudi Arabia and Russia] will be cutting back approximately 10 Million Barrels [a day], and maybe substantially more.” Today, Opec and Russia reached a deal to cut production by just this number. But even if such extensive cuts can be achieved in practice (and past experience shows it is far from a foregone conclusion that they can), it does not seem like this will be sufficient to save U.S. producers.

In the short term, it appears unlikely that the world oil price can rise to the $45-55 level until the current pandemic is safely behind us. Oil prices did rise in reaction to the President’s tweet and in response to some indications of a Saudi-Russian deal, but not to levels that would ensure the financial solvency of the oil patch. In a situation of vastly reduced demand, it is hard to see how U.S. shale can be profitable.

In the long term, a strategy of propping up prices seems even less attractive. It would mean, in effect, that the U.S. industry could exist only on the sufferance of Russia and Saudi Arabia. It would cause a continuing diplomatic weakness; at any point, either country could raise production and create a crisis in the U.S. shale oil industry.

An alternative strategy would start from the recognition that, by effectively capping oil prices, the shale oil industry serves a vital national interest by protecting the country from price or supply shocks. As such, we should be willing to spend money to make sure that it can continue to serve that function. This does not mean that we should be producing oil unprofitably at current levels when world prices are low; it does mean that we should maintain the capability to ramp up production quickly when prices rise. What “quickly” means in this context depends on the size of the Strategic Petroleum Reserve (SPR): Our policy should be to have a big enough reserve to augment supplies such as to keep prices below, say, $60 per barrel until increased U.S. production kicks in.

Full post

The post COVID-19’s Threat to U.S. Energy Security appeared first on The Global Warming Policy Forum (GWPF).

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April 10, 2020 at 03:36AM