Apologies, I just realized my post yesterday somehow got destroyed… so here it is again, this time in complete form.
The year in review and the year ahead by Derik Andreoli (Logistics Management)
The second liquefied natural gas (LNG) export facility in North America—originally designed for imports—is being constructed in Louisiana. The Federal Energy Regulatory Commission released an environmental assessment of the Sabine Pass LNG facility. FERC found that approval of the project, with a few changes, would not significantly affect the “quality of the human environment.” The deadline for comments is January 27.
Getting thirsty, yet?
Perhaps the West is looking a bit like Texas where: Water has always been a concern for 65-year-old Joe Parker, who manages a 19,000-acre cattle ranch here in South Texas. “Water is scarce in our area,” he says, and a scorching yearlong drought has made it even scarcer. What has Mr. Parker especially concerned are the drilling rigs that now dot the flat, brushy landscape. Each oil well in the area, using the technique known as hydraulic fracturing, requires about six million gallons of water to break open rocks far below the surface and release oil and natural gas. Mr. Parker says he worries about whether the underground water can support both ranching and energy exploration.
A tunnel beneath the Yellow River, China’s second longest, and related water gates and ditches have been completed for the eastern route of the country’s giant south-north water diversion project. Water diverted from the Yangtze, China’s largest river, along the eastern route will flow through the tunnel to the parched northern provinces of Shandong and Hebei as well as Tianjin Municipality, the Shandong Provincial Construction Management Bureau of South-to-North Water Diversion Project said in a statement on Sunday.
One of the government’s top scientists says much more research is needed to determine the possible impacts of shale gas drilling on human health and the environment. “Studies should include all the ways people can be exposed, such as through air, water, soil, plants and animals,” Dr. Christopher Portier wrote to The Associated Press in an email.
Federal environmental regulators took steps Friday to deliver drinking water to several Dimock Twp. homes where tainted well water has been tied to nearby gas drilling, according to three families who spoke with EPA officials.
The U.S. Environmental Protection Agency abruptly changed its mind Saturday about delivering fresh water to residents of a northeastern Pennsylvania village where residential wells were found to be tainted by a natural gas drilling operation. Only 24 hours after promising them water, EPA officials informed residents of Dimock that a tanker truck wouldn’t be coming after all. The about-face left residents furious, confused and let down — and, once again, scrambling for water for bathing, washing dishes and flushing toilets.
About being a net petroleum products exporter…
Growing tension with Iran and a threat to global crude supplies may be dominating oil traders’ attention but a potentially bigger story is breaking on the demand side of the market. Petroplus, Europe’s largest independent refining company, this week began shutting down three of its five refineries, halting about a quarter of a million barrels of daily production.
Meanwhile in the MENA
As the US completed its official withdrawal from Iraq, a series of events stoked a political crisis that will push Iraq toward a precipice. Observers questioned the timing of Prime Minister Nuri al-Maliki’s audacious moves against two of Iraq’s senior Sunni politicians, Vice President Tareq al-Hashemi and Deputy Prime Minister Saleh al-Mutlak. All within days of the troop withdrawal, Maliki called on the parliament to depose Mutlak, who recently likened Maliki to Saddam, and the judiciary issued an arrest warrant for VP Hashemi’s alleged involvement in terrorist activities. Kurdish officials have refused to comply…
The Arab League has urged the Syrian government to end its violence against protesters and allow League monitors in the country to work more freely, but stopped short of asking the U.N. to help.
Iran’s top nuclear official announced this weekend that the country was on the verge of starting production at its second major uranium enrichment site, in a defiant declaration that its nuclear program would continue despite new international sanctions restricting its oil revenue.
Iran’s Revolutionary Court has sentenced an Iranian-American man to death for spying for the CIA, officials said on Monday, a move likely to aggravate U.S.-Iranian tensions already high because of Tehran’s disputed nuclear program.
Iran has described the US Navy’s rescue of 13 Iranian fishermen held by Somali pirates as a “humanitarian gesture”. Foreign Minister Ali Akbar Salehi said his country had also rescued foreign sailors from pirates on occasion. But he said such acts did not affect overall relations between countries.
Venezuelan President Hugo Chavez dismissed a U.S. warning to avoid close ties with Iran on Sunday, denouncing what he said was Washington’s attempt to dominate the world as he welcomed the Iranian president to the Latin American nation.
And things are getting worse in Nigeria
Nigeria’s president has said for the first time he thinks sympathisers of the Islamist Boko Haram group are in his government and security agencies. Goodluck Jonathan’s comments come amid a wave of violence blamed on Boko Haram which has left dozens of people dead in the north, most of them Christians. Mr Jonathan also said the security situation was now more complex than during the civil war four decades ago.
A general strike in Nigeria over the elimination of a fuel subsidy has brought the country to a standstill. Shops, offices, schools and petrol stations around the country closed on the first day of an indefinite strike.
Nigeria was paralysed by strike action over high fuel prices on Monday, with shops, schools and banks shut, roads empty and thousands of people joining demonstrations in large cities. Police shot dead one man and injured several others in Lagos, a union leader said, near to where several thousand people had gathered peacefully in a park to denounce President Goodluck Jonathan’s administration.
A bit on coal
Exports of coal are helping drive the business for railroads, but will new regulations leave the business in the dust? Coal exports may account for less than 10 percent of U.S. production, but strong demand from overseas buyers proved critical for domestic mining companies facing weak utility markets in 2011.
And some other stuff
Economic growth was disappointing in 2011 and a strong rebound is unlikely in 2012, but North America’s railroads will continue to outperform the overall economy, especially in the intermodal sector.
More than 60 percent of truckers surveyed in November said they expect volume to increase in 2012, with only 2 percent expecting freight levels to decrease, says trucking acquisition analysis and research firm Transport Capital Partners. An even larger share, 70 percent, said they expect rates to rise
Truckload rates rose less than some carriers expected but more than shippers wanted in 2011, with spot market rates on average rising 7.4 percent and contract rates climbing an average 6.5 percent, a freight pricing specialist says.
An system that allows ships to make emulsion fuel onboard could help ship operates save on bunker cost while also ensuring compliance with global and regional emissions standards, according to the company that makes it. (my note: we’re talking fuel savings of 5 to 15%…)
In April I wrote a quick post on the (un)economics of the much-hyped shale gas ‘revolution’. That post was inspired by comments made by long-time oil industry analyst Henry Groppe which were published in the Globe and Mail. In that post, I leaned on the insights of petroleum geologist and industry consultant Art Berman, who had been arguing eloquently and persistently that shale gas reserves are greatly overstated. The point that Art argued in his 2009 presentation at the annual ASPO-USA conference (.pdf), is that the production rates for conventional gas fields and shale gas fields are significantly different. Shale gas produces high volumes for short periods while conventional fields produce at relatively low rates but do so over a long period of time. The problem with the shale gas reserve estimate methodology is that the models which accurately predict conventional production rates are being applied to unconventional plays in order to forecast future production and estimate total reserves. As a consequence, high initial flows are forecasted to decline at much slower rates than a growing body of empirical evidence suggests will be the case. This misapplication of models has resulted in a situation where the “volume of commercially recoverable [natural gas] has probably been greatly over-estimated.”
In October, I attended the annual ASPO-USA conference where I had the opportunity to talk with Art and take in another of his excellent presentations on the subject of the Marcellus shale play. For the more technically inclined, you can download the presentation from here (.pdf).
According to Art Berman the economics of shale gas production have not improved and the conclusions he drew from other shale plays apply to the Marcellus. He makes numerous forceful points: Read more…
12/23 Update: For an update on the (un)economics of shale gas production go here, and for an update on the NY Dept. of Environmental Protection’s decision to prohibit hydrofracing, announced on 12/22 go here.
In my seventh fold posts, I focus on the nexus of the 3-E’s – energy, the environment, and the economy. After years of research, I’ve become convinced that a techno-fix to our 3-E problems simply will not scale up to meet the world’s growing energy demands, and that the best mitigation strategy is voluntary conservation. The problem, of course, is that while conservation preserves natural capital, conservation stifles the accumulation (and hoarding) of monetary wealth. Motivated to exploit nature for profit, energy companies have engaged a tactical marketing campaign in which the primary objective is growth at all costs (so long as they are not forced to pay these costs!). In this post, I hope to convince you that there is a significant risk that we cannot afford the long-term environmental and health costs associated with shale gas production. I hope that reading this post will help you see through the shale gas hype and motivate you to take a stand against the sinister and predatory practice of hydraulic fracturing (hydrofracing… pronounced hydro-frack-ing).
Let’s begin with the question, “What is shale, and why does it need to be hydrofraced?” Read more…