Geopolitics: As the North American Shale Revolution Unfolds

Every modern industrial nation requires affordable energy to run its industry, commerce, and to keep its citizens comfortable within their homes. For the last few decades, energy consumers in the western world have lived under the threat of having their energy supplies cut off, by belligerent suppliers in OPEC, Russia, and other bullying dictatorships.

Preliminary Map of Global Shale Gas -- Much More to Come

With the coming of new energy technologies that are unlocking vast supplies of previously inaccessible oil & gas, Russia's and OPEC's stranglehold over more civilised and cultured parts of the world appears to be weakening.

The Gulf is not the only area where the established oil powers are in danger of crumbling. The biggest single loser of all will most likely be Vladimir Putin's Russia, a regime largely dependent on high energy prices and a captive market with no real alternative plan.

..."Russia has just seen its aspiration market disappear. The US is already a bigger gas producer than Russia," Redman said. _Guardian

As US energy production continues to shift away from OPEC toward domestic producers, US industries can once again plan their production schedules based upon a more reliable energy supply. So that as US and Canadian industries re-build based upon more reliable and cheaper supplies of fuels and energy, other countries that depend upon more expensive and less reliable forms of energy -- such as Germany -- will increasingly lose out to North America.

Thanks to new applications of drilling technology to unlock natural gas trapped in shale rock, the nation’s output has surged and energy experts almost unanimously forecast that prices will remain low or moderate for a generation.

...“It has become clear to me that the responsible development of our nation’s extensive recoverable oil and natural gas resources has the potential to be the once-in-a-lifetime economic engine that coal was nearly 200 years ago,” U.S. Steel Chairman John Surma said in a speech this year.

Industrial companies are betting that the surge in the domestic production of natural gas is much more than a blip. Cheap and plentiful supplies of natural gas are flooding the U.S. market, and prices in the United States are as low as a quarter of what they are in Europe or Asia.

“For the foreseeable future, thanks to the recovery of vast U.S. underground gas deposits of shale, natural gas is likely to remain 50 to 70 percent cheaper in the U.S. than in Europe and Japan,” said a recent report by the Boston Consulting Group. _WaPo

Whether these new technologies ultimately create a new "economic renaissance" depends upon whether government agencies are able to keep their corrupt and ideology-stained paws off the private enterprise boom.

A sudden surplus of previously rare high quality energy is likely to have unforeseen effects on several parts of the world.

"In the past, when OPEC was cutting production by half a million barrels, everyone was jumping up and down. Today no one cares as we have a real surplus of oil," said the head of Azeri state oil firm Socar's trading arm, Valery Golovushkin.

"There is already plenty of oil in the Mediterranean. We at Socar are relying on long-term supply contract to Asia. But quite honestly we don't feel any particular joy from taking it to Asia and wasting money on freight," said Golovushkin, a veteran of the Soviet oil export industry. _Reuters

The North American shale boom caught a lot of global oil market suppliers flat-footed.

As North American shale oil & gas continues to rise in production -- and as other shale producers in Europe, Asia, South America, Australia, and elsewhere come on line -- the problems for OPEC and Russia will only be compounded further.

It is likely that a number of regional wars will be fought over oil resources, as individual oil dictatorships find that their own production is not able to pay for their ambitions and their need to pacify their people. Many of these wars will be supported and encouraged by Russia -- in an attempt to ramp up the risk premium for oil, and overall oil & gas prices.

The consequences of these rapid shifts in new oil & gas supplies have only begun to shake out. Watch carefully, and be very cautious.

Brian Wang has followed the ramp up of North American hydrocarbon production very closely

Comparing Costs of Energy Production

This article is adapted from material previously published on Al Fin Energy blog

RCE Summary of James Conca at Forbes

The editors of Real Clear Energy took a look at a recent attempt to compare lifetime costs for different electrical power sources:

[James] Conca differentiates between lifetime costs and other ways of comparing costs, specifically overnight costs and levelized costs:

"By life-cycle costs, I mean the total costs of building, operating, maintaining, fueling and decommissioning a thermal power plant, a solar array, a wind farm or hydroelectric dam over its life, that is, 15 years for a wind turbine, 40 years for a fossil fuel plant, 60 years for a nuclear plant, or 80 years for a large hydroelectric dam. Dividing those total costs by the amount of energy actually produced, not theoretically possible or installed capacity but actually produced, gives a life-cycle cost in ¢/kWhr. How we finance this cost is a totally different issue, one at which we generally fail as a society."

As the graph shows, hydro has the lowest costs at 3.3 cents per kWhr. This is due mainly to almost zero fuel costs and the 80-year life cycle of hydroelectric dams. Nuclear is second lowest with 3.5 cents, largely because of low fuel costs and the 60-year life expectancy of nuclear reactors. Coal is 4.1 cents, wind 4.3 cents, natural gas 5.2 cents and solar is the most expensive at 7.7 cents per kWhr.

Although fuel costs are free for wind and solar, their intensive capital costs, aggravated by the enormous amount of collection facilities that must be built, drive up their lifetime costs. It takes 9,500 windmills, for instance, to equal the life-cycle output of one AP1000 nuclear reactors, which is not the biggest reactor being built. Wind requires ten times the steel, concrete and copper per kWhr than any other energy source.

Natural gas plants are relatively cheap to built but are entirely dependent on future prices of natural gas, since fuel supplies make up 90 percent of the cost. _RCE Summary of James Conca at Forbes

James Conca Energy Cost Comparisons in Forbes suggest natural gas as the current frontrunner, although Conca cautions about future changes in fuel costs. Full set of references included.

A comprehensive analysis would have to include several other factors which are rarely included in a cost comparison. But it is good to have more people working on this problem.

The following images come via "Neutron Economy"'s article: Deconstructing anti-nuclear economic myths - a response to Veronique de Rugy. (h/t 111th Carnival of Nuclear Bloggers at Yes, Vermont Yankee)

This image looks at EU countries by residential costs of electricity. It can be seen that nations which depend upon big wind and big solar -- such as Germany and Denmark -- pay a high price for power. And their costs are just beginning to build, as they double down on stupid.

The above image looks at levelised costs for producing electricity by source. Solar and offshore wind score particularly badly by this metric. But regular onshore wind would score almost as badly if the costs of intermittency were included in overall costs. That is one of many deficiencies in the "levelised cost" metric, failing to account for all the costs of intermittency -- which over the long run is the largest cost of big wind power besides the short lifespan of the powerplant.

Cost effectiveness of nuclear power for surface ships

The above study looks at US navy ships, but the cost comparisons should hold across the board for all long voyage, ocean going vessels.

More: Japan restarts Ohi reactor No. 3

Despite irrational green-fueled public protest, Japan carried through with the re-start of one nuclear reactor over the weekend. This should be only the first of many re-starts, as it is uneconomical to allow expensive power plants to sit unused in the midst of a power shortage. Particularly when the cost of nuclear fuel is extremely low in comparison to other forms of fuel.

Japan's political challenge of re-starting its nuclear facilities points out the global challenge of combating lefty-Luddite dieoff.orgiast anti-nuclear greens -- whether in Japan, Germany, Australia, the UK, or the US. Greens are leading Germany down a treacherous slope which will result in energy catastrophe unless a wiser leadership steps in.

Devising a wise energy strategy is difficult, due to the many factors involved, and the various approaches to comparing different methods of power production.

You must look at capital costs (or overnight costs), as well as costs of operation and maintenance, along with costs of replacement or decommissioning. But what is almost never included in the calculations -- at least for intermittent unreliable sources such as big wind and big solar -- are the costs of intermittency that must by absorbed by the grid and by grid customers.

Below is a table from the US EIA using data from 2010, comparing a wide range of power plant capital costs along with operating and maintenance (O&M) costs:

2010 USEIA Power Plant Costs PDF

Notice that variable O & M costs for wind and solar are listed as $0.00 -- quite a joke! When the true costs of all O&M and intermittency are included with the nominal costs of wind and solar, the true nature of the boondoggle quickly becomes apparent.

The same criticism should always be applied to "levelised" costs of power production, such as the third graphic from the top, above. If the costs of intermittency and O&M are not included in the calculations -- along with all capital costs, government subsidies, and costs of insurance, financing, legal fees, likely changes in fuel costs, decommissioning, etc. etc., it is difficult to plan energy strategies over a multi-decadal time span.

If everyone follows the irrational, knee-jerk route taken by Germany and perhaps Japan -- which is the path preferred by the US Obama administration -- the western world is in for some very serious trouble in the not-so-distant future.

Supplement: Calculating Levelised Cost of Energy (One Method) --

The basic formula used is based on the US NREL formula for the levelized cost of energy (net): Net COE = ICC * CRF / AEPnet + (LLC + O&M + LRC + MOE) – PTC, in US $/kWh

where ICC = Initial Capital Cost (total debt), $
CRF = capital recovery factor, 1/yr = int / (1 – (1 + int)^-Life)
AEPnet = Net Annual Energy Production, kWh/yr (net of plant own use) = (kW capacity) * (capacity factor) * (hours/year)
LLC = Land Lease Cost, $/kWh
O&M = Levelized Operating & Maintenance Expense, $/kWh
LRC = Levelized Replacement/Overhaul Cost, $/kWh
MOE = Miscellaneous Operating Expense, $/kWh
PTC = US Production Tax Credit, $/kWh

__Energy Technology Expert

Such methods for calculating levelised costs are conspicuous for what is left out -- namely all costs of intermittency, plus all governmental influences pro and con, plus all costs of necessary ancillary infrastructure, etc.

An Abundant Future?

Onstage at TED2012, Peter Diamandis makes a case for optimism -- that we'll invent, innovate and create ways to solve the challenges that loom over us. "I’m not saying we don’t have our set of problems; we surely do. But ultimately, we knock them down.”

Peter Diamandis runs the X Prize Foundation, which gives rich cash awards to the inventors and engineers who'll get us back to the moon, build a better car and explore the genome. And watch for more prizes to come. _TED

It is difficult to get an audience for abundance these days, given how popular doom has come to be in the movies, the news media, in academia, and global politics. But there is reason to believe that some of the more popular dooms -- such as peak oil doom, climate catastrophe doom, overpopulation doom, resource scarcity doom, etc -- are not due to take place anytime soon.

Long-term forecasts are rarely sunny or even middling. In fact, they’re often fairly dystopian: Peak oil, peak gas, peak water, peak food, mass hysteria, zombie apocalypse.

Yet, to believe such specific long-term forecasts, you must believe that, now, folks have the never-before-seen ability and technology to accurately make long-term forecasts based on far distant supply pressures, unknowable future innovations and myriad other factors in the complex beast that is the global economy. Consider just one example: The (always moving) Peak Oil date certain has come and gone many, many times. Why? Extracting from easy-to-find conventional sources may slow. But there was just no way for folks in the 1950s to know that, 60 years later, we’d still be finding caches of oil (and natural gas) and innovating new ways to get at said energy sources more cheaply. Every decade, the world consumes more energy, yet every decade, the known energy reserves increase.

...The belief the future will be unmitigated disaster isn’t new to this generation. Humanity is prone to be hypersensitive to unknown future risk. Our brains evolved through tens of millennia to be keenly focused on survival—hence our tendency to focus on the negative. This was handy when one was trying to stay three steps ahead of giant hungry predators and gather enough sustenance to survive a snowy winter in the wilderness, but is probably less useful in helping us think more clearly about the future.

Over the past 100 years average human lifespan has doubled, average per-capita income (inflation adjusted) has tripled and childhood mortality is down by a factor of ten. The cost of basic necessities has fallen—sometimes radically. (If you haven’t watched that video yet, stop and do it now.)

And the future likely only features still more health- and wealth-creating innovations—in the US and elsewhere. _Forbes Doom is not coming

The author of this optimistic Forbes article is probably right, as long as the governments of the world are not allowed to shut down free markets based upon their misguided senses of doom -- or for any other reason.

When Russia became the USSR, many authors and journalists were highly optimistic about the future of the new country. And for a while, things seemed to be going well for the USSR.... until the reality of a failed centrally planned economy set in. The same disaster happened in China with Mao's totalitarian government, and the malaise continued until a new set of rulers opened up China's markets.

It is fine and good to be optimistic about the future of a free people in an opportunity society. But never forget how eager some government officials always seem to be, to shut it all down for reasons of power and ideology. It has happened before and it could easily happen again in your home country, if you let it.

More optimism:

Peak oil is dead

How Canada is adjusting to the North American energy boom

China's big new shale energy wealth

And so on, from South Africa to Argentina to Israel to Vietnam. New resources are being found and better ways to utilise old resources are being developed. The potential for a huge new global energy and industrial revolution is there, and would undoubtedly proceed unmolested -- if it were not for dysfunctional governments.

The most acute shortage is human ingenuity, followed by skilled manpower. But bad government trumps almost everything else, at least on the national and international scale. On a local and regional scale, human capital can often hold out long enough for the dysfunctional governments to be overthrown or voted out or otherwise disposed of.

The Need for Vital Energy vs. the Giant Green-Industrial Complex

...in the U.S., new technologies such as hydraulic fracking and vertical drilling have vastly increased estimates of North America’s energy resources, particularly natural gas. By 2020, the United States, according to the consultancy PFC Energy, will surpass Russia and Saudi Arabia as the world’s leading oil and gas producer. _Kotkin

All healthy, modern industrial economies require abundant supplies of energy. Any organisation or institution which obstructs the supply of energy to a modern nation is the deadly enemy of that society and those people. Today, the huge, well-funded green-industrial complex is exposing itself as opposed to all reliable and affordable forms of energy. This means that there is a war, of sorts, taking place in modern industrial nations, between the pro-prosperity forces and the energy-starvation forces.

ImageSource
More:

The divide between the fossil-fuel industry and the green movement is increasingly dividing the country by region, class, and culture....President Obama in recent days has gone out of his way to sound reassuring on energy, seeming to approve an oil pipeline to Oklahoma this week after earlier approving leases for drilling in Alaska. Yet few in the energy industry trust the administration’s commitment to expanding the nation’s conventional energy supplies given his strong ties to the powerful green movement, which opposes the fossil-fuel industry in a split that’s increasingly dividing the country by region, class, and culture.

...No single sector affects more people and industries than energy, and none is more deeply affected by the disposition of government. Energy divides the nation into two camps. On one side there are the regions and industries dependent on the development and use of energy. They include the increasingly expansive energy-producing region stretching from the Gulf Coast and the Great Plains to parts of Ohio, Pennsylvania, and the Appalachian range.

...Nine of the 11 fastest-growing job categories are related to energy production, according to an analysis by Economic Modeling Systems Inc. Energy jobs pay an average of $100,000 annually, about the same as software engineers earn in Silicon Valley.

Perhaps more important politically, this bonanza is now spreading to historical battleground states Ohio, Pennsylvania, and Michigan. Long-depressed areas like western Pennsylvania are reversing decades of decline as new finds and advances in natural-gas drilling have opened up vast new stores of domestic energy. The new energy wealth has created new jobs, enriched property owners, and provided states with potential huge new sources of revenue.

...Given the success in the other energy states, California—with double-digit unemployment—might reconsider its policies, but this is unlikely. “I asked [Gov.] Jerry Brown about why California cannot come to grips with its huge hydrocarbon reserves,” John Hofmeister, a former president of Shell Oil’s American operations and a member of the U.S. Department of Energy’s Hydrogen and Fuel Cell Technical Advisory Committee, told me recently. “After all, this could turn around the state."

Brown’s answer, according to Hofmeister: “This is not logic, it’s California. This is simply not going to happen here.’”

...If all [national] energy subsidies were removed, the fossil-fuel industry likely could shrug off the hit, while the heavily subsidized green-industrial complex would markedly diminish. Yet even if Congress refuses to continue the green subsidies, it’s probable that administration regulators would find ways to slow fossil-fuel expansion in a second Obama term. Responding largely to the Democratic environmental lobby, they have already overruled the State Department to delay the Keystone XL pipeline from Canada.... _Joel
Kotkin

It is slowly sinking into Barack Obama's mind that he confronts perhaps the first real political test of his charmed career. This time, the abysmal economic condition of the country can be laid squarely at his feet. With a real unemployment rate of 11% and an underemployment rate above 20%, the housing market continuing to decline across large swathes of the country, and 73% of the US population saying the country is "on the wrong track" -- Mr. Obama's spin machine has its work cut out for it.

Canada, on the other hand, appears to have been taking a more rational pro-energy approach from the very start of its current administration.

The [Canadian] government’s notion of an energy strategy — emphasize the power and efficiency of markets, get rid of red tape, finger environmental radicals, and remind the U.S. how secure Canadian supplies are — received a double boost this week...

...the main reason for both the strong Canadian dollar and high petroleum prices is that government money factories from the U.S. Federal Reserve to the European Central Bank are trying to bail out their political masters by debasing their currencies. It’s got little or nothing to do with Fort McMurray.

The good news on the policy front is that this spat helps put paid to the notion that Canada is ever likely to get a comprehensive and intrusive energy strategy of the kind usually embraced by left liberal governments _GWPF Peter Foster

Countries across the western world had best get out the disinfectant, to remove the green rot which is eating away at their industrial and economic strength. The alternative to such vigorous spring cleaning is a progressive sinking into the twin quagmires of debt and demographic decline.

You are not likely to enjoy that alternative.

Power to the Galactic Empire!

How would an advanced galactic empire generate its power?

Some fraction of the radiation seething from the disk would be reflected and focused onto the power plants. Each power plant would transmit collected energy as a collimated microwave beam from a 100-mile diameter antenna. _Discovery

Discovery
A truly advanced civilisation on the Kardashev scale would harness the power of black holes to drive starships (PDF), power their industries, and gain control over both matter and time. We may have a few years to go before reaching that level.

A consortium of super-civilizations might pool resources to build a chain of power stations encircling the black hole. It would be the heart of a robust and fault-tolerant energy grid connecting numerous worlds like a fantasy scene out of the film "Tron."


However, I think it is more likely that a federation of expanding space colonies, spawned from a single mother civilization, would work together to maintain their viability. This wouldn't run into the thorny question of how two or more independent but similarly co-evolved species manage to contact each other and work out a practical energy infrastructure. _Discovery

Researchers at the U.S. Department of Energy's Los Alamos National Laboratory believe that magnetic field lines extending a few million light years from galaxies into space may be the result of incredibly efficient energy-producing dynamos within black holes that are somewhat analogous to an electric motor....The energy in these huge magnetic fields is comparable to that released into space as light, X-rays and gamma rays. In other words, the black hole energy is being efficiently converted into magnetic fields.


Colgate and Los Alamos colleagues Vladimir Pariev and John Finn have developed a model to perhaps explain what is happening. They believe that the naturally magnetized accretion disk rotating around a black hole is punctured by clouds of stars in the vicinity of the black hole, like bullet holes in a flywheel. This, in turn, leads nonlinearly to a system similar to an electric generator that gives rise to a rotating, but invisible magnetic helix.
In this way, huge amounts of energy are carried out and away from the center of a galaxy as a set of twisted magnetic field lines that eventually appear via radio waves from luminous cloud formations on opposite sides of the galaxy. _SD

So you see, humans do not yet understand how black hole energy is converted into all the forms of energy that are propagated within and throughout the galaxy. But give us some time -- and a respite from all the energy starvationists hounding our steps -- and we just might take it to the next level.

Price of Oil: Economic Breakeven vs. Political Breakeven Prices

The following table provided by the Bank of Kuwait gathers current reported break-even prices of major oil producing nations:

Oil Break-Even Prices
Nation	US$/Barrel
Bahrain	40
Kuwait	17
Saudi Arabia	30
U.A.E.	25
Oman	40
Qatar	30
Canada's oil sands	33

Based on the formula, profitability of these countries' oil operations are in order:

Profitability at $100/barrel oil
Nation	Break-Even Price	Profitability
Kuwait	17	488%
U.A.E.	25	300%
Saudi Arabia	30	233%
Qatar	30	233%
Canada's oil sands	33	203%
Bahrain	40	150%
Oman	40	150%

__Source

The tables above present rough estimates for economic profitability for oil production in various nations. Such numbers create a "price floor" of sorts for oil markets. But a lot more is involved than mere economic profitability. When entire nations base their budgets upon oil & gas income, another type of "breakeven" enters the4 picture: political breakeven.

Here you can see the political breakeven prices, which countries must receive for their oil in order to meet their fiscal budgetary demands. The political breakeven prices are rising almost every year now. Several oil producing nations are now dependent upon $100 per barrel oil prices now, and others are pushing to keep prices at that level just to maintain a safety margin for their governments.

Fareed Zakaria used the above logic in his predictions that oil prices must stay high -- that they cannot possibly fall much below current market prices.

But he and many others of like mind are ignoring the shadow side of global energy markets: shaky demand caused by the threatened stumbling of economies in Europe, the US, and increasingly, China. If global demand crashes, political breakeven becomes essentially irrelevant.

Peak oil theorists have generally neglected the demand side of the equation, always insisting that demand will grow exponentially, no matter what. We may soon discover whether they were right, as political peak oil threatens to show its ugly nethers yet again.

The whole house of cards is currently built upon a trumped-up demand, which originates largely in one specific country:

If something happens to collapse the bubble of demand in that country, a cascading collapse of commodities demand could very well set in around the globe. Interesting times, as they say.

More: Marginal oil, with its greater risks and higher cost of production, will exert more influence on oil prices as it moves to becoming 10% of global supply by 2035.

Of course, improved technologies will make marginal oil more affordable over time -- to the point that "marginal oil" will probably become more profitable than conventional oil in many of the oil states that have allowed their oil field infrastructure to decay, without investment or upkeep.

Week ending close of oil price at NYMX from 2006 to present

Making sense of such a fluctuating trend requires a lot of background information, along with a finely tuned intuitive sense. Several forces are at work: political, speculative, technological, supply :: demand economics, demographic trends, human nature, and even criminal interests. The balance is subject to rapid and catastrophic shifts.

Anyone who makes confident predictions in such an environment has either vested interests, solid gold insider information, or a declining mentation.

A Declining America Under Obama: Dealing With the Aftermath

Not so long ago, a high-ranking Chinese official, who obviously had concluded that America's decline and China's rise were both inevitable, noted in a burst of candor to a senior U.S. official: "But, please, let America not decline too quickly." Although the inevitability of the Chinese leader's expectation is still far from certain, he was right to be cautious when looking forward to America's demise.

For if America falters, the world is unlikely to be dominated by a single preeminent successor -- not even China. International uncertainty, increased tension among global competitors, and even outright chaos would be far more likely outcomes. _FP

The accelerating decline of America under Obama is not coincidental. It is an active process originating in the White House, working its way down the federal bureaucracy to impair virtually every function of the US economy and private sector, starting with energy.

“For the first time in U.S. history, net coal capacity is in decline. On top of 38 gigawatts of generation that is already being run below normal levels or slated for early retirement, NERC predicts another 36 to 59 gigawatts will come offline by 2018, depending on the ‘scope and timing’ of EPA demands. That could mean nearly a quarter of all coal-fired capacity.”

It is coal-fired plants that currently provide fifty percent of all the electricity generated in America! The EPA is feverishly trying to force a quarter of that capacity offline. Why? Because the EPA claims that these plants are “polluting” the air. The air in America has never been cleaner. _CFP

Besides shutting down the coal industry, Obama has blocked offshore oil drilling, blocked the Keystone pipeline for Canadian oilsands, threatened to abort the shale oil & gas bonanza, impeded development of safer, more advanced nuclear power, and shunted billions of dollars of funding to political cronies who are backing unreliable and exorbitantly expensive big wind and big solar projects.

As a result, the cost of energy in America is getting set to rise at the same time that the availability of energy is set to decline. Added to all the other economic burdens under Obama, and the US private sector will have good reason to cry.

When America's energy declines, American industry and commerce will also decline. As economic conditions at the grass roots level continue to degenerate under Obama, incidents of civil disorder and disobedience are likely to occur in multiple locations, manifesting in multiple ways.

The re-election of Obama in 2012 would allow a further accelerated decline in the quality and reliability of US energy and electrical power infrastructure. Obama's wholesale attack against the US private sector would be amplified, in order to remove the source of funding for the opposition to the political power elite. With a further breakdown in the private sector economy, conditions leading to civil disorder would be expanded to more parts of the country.

Living in an urban setting would become even more hazardous, as the decline of "the commons" accelerates. The dividing line between public employees and private citizens will grow more stark, as public sector union pensions and benefits create a new elite, at the expense of a shrinking group of private taxpayers. This will lead to a growing antipathy toward government and government employees at all levels -- a very dangerous and unstable situation. (see pensiontsunami.com) The longer that President Obama remains in office, the longer it will take to come to grips with this "under the radar" problem.

US military and law enforcement have devoted a good deal of thought to how they will deal with widespread outbreaks of civil disorder in the US. The development of "non-lethal" weaponry is one response to the growing threat, under Obama. This PDF download (h/t Wired) is a report on some of the latest types of non-lethal weapons, which has been released to US government agencies for discussion and planning. While these weapons are nominally considered "non-lethal," in practise a certain number of deaths and disability injuries are likely.

Of course, as the US government continues its decline under Obama, weapons which were meant for the exclusive use of official US government agencies, will eventually fall into the hands of other groups, organisations, and individuals. That means that a wide range of criminal and quasi-criminal groups are likely to obtain powerful weapons of both lethal and "non-lethal" varieties -- although the non-lethal variety would likely be easier to obtain. Possessing both types of weapons would allow groups a wider latitude of strategies and tactics.

If President Obama remains in office for much longer, he may need to withdraw all overseas US troops just to deal with the growing civil disorder within US borders. Mr. Obama is not likely to be bothered by petty issues of posse comitatus or the like, if he sees his power base coming under threat.

Mr. Obama has taken a bad situation -- decades in the making -- and made it incalculably worse. And he will continue making it worse as long as US voters allow him to. The aftermath is likely to be explosive -- not only for America.

Another consequence of American decline could be a corrosion of the generally cooperative management of the global commons -- shared interests such as sea lanes, space, cyberspace, and the environment, whose protection is imperative to the long-term growth of the global economy and the continuation of basic geopolitical stability. In almost every case, the potential absence of a constructive and influential U.S. role would fatally undermine the essential communality of the global commons because the superiority and ubiquity of American power creates order where there would normally be conflict. _FP

The accelerating decline of America under Obama is likely to result in civil disorder within the US, and global war outside the US.

Elections have consequences.

A Thought-Provoking Chart That Cuts Both Ways

One way to gauge support for the price of oil is to calculate the breakeven price. In other words, what is the dollar amount per barrel that would be required for an oil-producing country to balance its fiscal budget? Several factors go into this calculation such as the location (and quality) of a country’s reserves, and the spending habits of the federal government. _EM

It is not difficult to see that some countries rely more upon a higher price for oil than others. Oil dictatorships derive most of their revenue from petroleum, and find themselves whipsawed whenever prices fluctuate according to natural market forces.

Breakeven Price of Oil (Brent) by Country
These governments tend to become dependent upon oil revenues, and grow careless about government budgeting and corruption control as a result. Money that should be spent upgrading oil production infrastructures, is instead diverted to Swiss bank accounts and to purposes of placating the public and paying off cronies in the private sector.

Russia, which is currently the world’s largest oil producer, has leaned on the profits of the natural gas and crude oil exports to account for nearly 14 percent of the country’s GDP in 2010. But Russia isn’t the only export-dependent country. Many countries in the Middle East, such as Saudi Arabia and Iran, have used oil profits to ease “Arab Spring” tensions by financing public programs.

However, Carnegie notes that the fiscal budgets of many oil-exporting countries were rising prior to the citizen revolution due to a lack of non-oil revenues, rapid population growth and generous welfare systems. For example, Saudi Arabia, which generates 80 percent of its government revenue from the petroleum sector, has increased government spending roughly 54 percent since 2008. Other countries such as the UAE (up 48 percent), Bahrain (up 53 percent) and Qatar (up 59 percent) have seen government spending increase over the same time period.

Carnegie says the result is “OPEC countries have stronger incentives to defend higher oil prices, i.e. any drop in the oil price could mean lower OPEC production in order to try to secure higher oil prices.” It also means these countries are “less likely to invest in building additional production capacity.”

This only adds to our argument that we could see oil prices continue at their current levels despite a weaker global economy and softening demand for oil. _EM

On the other, concealed side of the chart, are oil-consuming nations and regions, whose budgets are stretched and stressed by these inflated oil costs. So the same thing which helps the oil dictatorships -- high oil prices -- tends to hurt everyone else -- it cuts both ways.

Even the not-so-solid BRICs are split between net energy producers and net energy consumers. Russia in particular is a typical oil-dependent quasi-dictatorship, while India and China are dependent upon energy imports. Brazil is attempting to re-create itself as a global energy powerhouse.

This is a poignant scenario, where oil suppliers have tied themselves over their own oil barrels by overspending, while at the same time their artificial inflation of global oil costs ties most other nations over the same oil barrels.

So while popular news media talk about high food prices or high consumer prices, what they are actually talking about is artificially inflated high oil prices -- necessitated by the corrupt and profligate spending practises of the oil producing nations themselves. The same high oil prices which allow corrupt oil states to survive, are at the same time helping to push the rest of the world deeper into recession.

Of course, even with low oil prices, the problems of debt and demography would still be slowly killing the ineptly led social democracies of the world. But the tragedy could at least be stretched to last a bit longer, without the added costs of high energy expense.

What will be the end result of this global game of tug-of-war? Why, war, famine, pestilence, and all around hardship, of course. When something cannot keep going indefinitely, eventually something will happen to stop it.

Protect your assets. Choose a safe and secure location for yourself and your loved ones. If you can secure a measure of ethical profit in the midst of the chaos, count it a bonus.

On the other side of the inevitable disruption, a whole raft of advanced technologies are backing up, waiting to be utilised by a smarter and wiser bunch of people. The high tech infrastructure will not be destroyed entirely. Enough of it will be left to provide a jump start to a higher level.

We had better get smarter and more capable. Because out there in the real universe are challenges and latent catastrophes that we need to be preparing for -- instead of wallowing in the corrupt faux catastrophes of carbon hysteria, peak oil doom, overpopulation doom etc.

How a Rational US President Would Create Jobs Now

A rational US president who was genuinely concerned about revitalising the American economy, would first remove all unnecessary and nonsensical government impediments to business investment and enterprise. Commerce and industry are particularly susceptible to government restrictions on the energy, power, and fuels that run society's crucial machinery. That would be a good place to start.

Video h/t Washington Examiner

Imagine if all of Obama's devastating policies of energy starvation were revoked. The resulting growth of jobs, revenues, and energy production would be astounding. Growth of jobs directly involved in energy production, transport, and sales, would be just the beginning. Each new energy job would stimulate the creation of supporting jobs in services, housing, manufacturing, infrastructure, etc. And so it goes: growth breeds growth.

The images below are taken from a report released last week by Wood MacKenzie, looking at the impact of relaxing just a few of President Obama's anti-energy policies (h/t Powerlineblog).

Job Creation Under Relaxation of Obama RulesWood Mackenzie’s analysis found that U.S. policies which encourage the development of new and existing resources could, by 2030, increase domestic oil and natural gas production by over 10 million boed, support an additional 1.4 million jobs, and raise over $800 billion of cumulative additional government revenue.
_quoted_in_Powerlineblog

Enhancement of Government Revenues Under Relaxation of Obama Anti-Energy RulesThe report assumes that the following changes would be made to existing Obama policies in order to allow energy and economic recovery to occur:

• Opening of Federal areas that are currently “off limits” to exploration and development
• Commencement of leasing, drilling and development activity in currently closed regions. Regions to be opened include: Eastern Gulf of Mexico, portions of the Rocky Mountains, Atlantic OCS, Pacific OCS, Alaska National Wildlife Refuge (ANWR) – 1002 Area, National Petroleum Reserve, Alaska (NPRA) and Alaska offshore

• Lifting of drilling moratorium in New York State
• Commencement of drilling and development of Marcellus shale in New York State

• Increased rate of permitting in the offshore Gulf of Mexico
• Allows for a return to pre-Moratorium exploration and development activity

• Approval of the Keystone XL and other future Canada to U.S. oil pipelines
• Facilitates additional Canadian oil sands development, thereby increasing the demand for U.S. supplied equipment and infrastructure

• Regulation of shale resources remains predominately at the State level
• Environmental regulation of shale gas and tight oil plays are not duplicative or unduly burdensome. Permitting levels are at sufficient rates to develop resources in a timely manner _quoted_in_Powerlineblog

Increased Energy Production Due to Relaxation of Just a Few of Obama's Energy Starvation Rules
The improvements projected in the Wood MacKenzie report (PDF) are based largely on the revocation of Obama's de facto offshore oil moratorium, the approval of pipelines from Canada through the US for oil sands transport, and a cleaner and more streamlined set of regulations overseeing shale oil & gas production. The report also assumed an opening of currently blocked oil & gas resources in the Arctic and in the US mountain states, for development, and a reduction of duplication of bureaucratic environmental regulations.

In reality, according to Al Fin energy analysts, a more rational pro-energy policy would improve North American jobs, government revenues, and energy production far more quickly and to higher levels than the Wood Mackenzie report suggests. The reason our analysts are so confident is that potential for development of massive coal and kerogen deposits were not closely considered in the projections. Nor was the potential for development of advanced nuclear energy technologies for both uranium and thorium cycle reactors carefully considered.

Abundant energy opens the doors to other industries and commerce, which means more jobs and more revenues even in areas far removed from direct energy production or sales. The converse is true: energy starvation reduces jobs and revenues not only in the energy-related industries, but in society as a whole. And that is where the US stands under President Obama's policies.

Energy starvation -- shutting down reliable energy in favour of unreliable forms of energy such as big wind and solar -- is never a smart policy. It is a strongly ideological policy promoted by green faux environmental activists, with the unspoken aim of whittling away at the industry and commerce which support advanced economies. Economies which fall under the curse of energy-starvation policies slowly succumb to worsening economic conditions.

Adapted from an article published on Al Fin Energy

More: Three more places where Obama policies are holding back wealth and energy creation: Julia, Arctic, Bakken

The Obama agenda could not be more destructive of US jobs and the US economy if it were designed specifically to wreck the private sector.

A Pandemic of Malthusian Illiteracy?

Global economy optimists however say that "Malthusian illiteracy" lurks behind remaining adherents of Peak Oil theory - which basically says conventional oil production will stagnate and fall but demand will go on growing. _MarketOracle

As knowledgeable analysts come to understand that oil demand, rather than oil supply, is currently in the driver's seat, some of the impetus behind the peak oil panic has subsided. And yet the "Malthusian Impulse" continues to drive many observers, against their more rational proclivities. Still, global hydrocarban reserves continue to grow, year after year, and oil demand is slated to decrease in time.

New sources for transport fuels are likely to come from many directions, including new gas-to-liquids (GTL) technologies. Oxford Catalyst's microchannel GTL technology is very much in demand, as are other new varieties of GTL technologies. The market for GTL fuels may be more than 20 million barrels per day! Imagine the impact of that huge new supply on the global oil market. (Note that approximately between 5 and 10 million barrels per day could be produced via GTL from currently flared gas alone. Stranded gas could double that number.) More information at this PDF white paper download from Velocys, creator of the Oxford Catalysts microchannel technology.

A more conventional source for GTL transport fuels is the large scale technology championed by Shell.

In 2011, Shell began shipments from its Pearl GTL project in Qatar...The project is able to produce 140,000 b/d of fuel and 120,000 b/d of ethane and condensates... _Petroleum Economist

And that is just the beginning. As long as the huge price spread between the cost of natural gas and the cost of crude oil remains, more and more GTL projects will kick in to take advantage of this "easy money."

Second and third generation biofuels from biomass technologies are beginning to come on line, slowly (consult Al Fin Energy blog for updated news on this topic). Advanced biofuels technologies are not likely to take an appreciable bite out of crude oil demand for another 5 or 10 years. As long as natural gas prices stay this low, only the most efficient biofuels projects will be able to compete in the liquid fuels markets without government subsidies. But by the year 2030 if the technology continues to develop, the writing will be on the wall. This is a biological world, after all.

Advanced nuclear power technologies are likely to aid the development of new fuels technologies of all kinds, supplying safe and abundant power and heat for a multitude of energy development projects from oil sands to oil shales to biomass and aquaculture projects in cold climates, irrigation and desalination of saltwater in arid climates etc etc.

Other factors leading to a decreased demand for crude oil includes the increasing use of both natural gas and biomass as feedstock for the vast chemicals industry -- an industrial sector previously dependent upon petroleum for feedstock. (see Al Fin Energy blog for much more)

The ongoing global economic downturn and demand destruction extends from Europe to Japan to the US, and is beginning to put stress on the Chinese and Indian economies -- despite all the rah! rah! hype about the coming age of the Chindian global economy. Many nations which have maintained hefty consumer subsidies for transport fuels are being forced to reduce the subisidies. More downward pressure on demand.

Malthusian theories are appealing for their simplicity. And yet the never-ending and never-fulfilled Malthusian predictions of doom ignore the most salient and disruptive human technology of all -- the goal-oriented innovativeness of the human mind.

Despite the best efforts of energy-starvationists in the Obama administration, in the EU bureaucracy, in national bureaucracies of EU nations and advanced nations around the globe -- the prospects for abundant energy and fuels in the future are quite good, as long as the clowns in power do not destroy the economies they oversee.

If you have abundant clean energy and fuels, everything else is doable.

Will Oil Cost $500 a Barrel When the Climate Resets?

Climate Reset via WUWT
The graph above illustrates a "climate reset" occurring due to the solar cycle effect. The next abrupt climate reset is due to occur any moment now -- within the next several years. As depicted above, the "global temperature" is due to abruptly drop to average levels not seen in over 100 years, then to slowly return to near current levels near the middle of the current century.

With all the talk of "peak oil" and oil prices shooting up to $500 a barrel or above very soon, it is worth considering how modern societies will face decades of cooling weather when fuel prices are very high.

First of all, what are the valid points of the "peak oil argument?" Christophe de Margerie, the CEO of France's Total oil company, presents one of the most rational definitions of peak oil:

... he was saying that the world is fast approaching the maximum volume of oil it can possibly produce, which he reckons is about 95 million barrels a day; that's just 8 percentage points higher than the 88 million barrels a day the world consumes at the moment. _FP

A very valid point. The planet has only so many oil rigs, so many trained oil workers and engineers, so many points of production that can be brought into play -- at least until the dawn of artificially intelligent robotic oil exploration, discovery, and production.

Another valid point from the peak oil argument comes from Doug Casey, investor and man of the world:

Peak oil is a geological concept. It basically holds that all the low-hanging fruit has been picked. Now, philosophically, it rubs me the wrong way, in that I have total confidence that human ingenuity will find scores of ways to produce new hydrocarbon fuels – and lots of totally new energy sources in addition. Furthermore, the higher oil prices go, the more will be found – and the more it will be economized. So, in a free-market world, oil is a non-problem.

But we don’t currently live in that kind of world. In the meantime – let’s say the next 10-20 years – oil is an issue, for simple geological reasons. And also because, even though consumption has been basically flat in the advanced world for decades, consumption is going to grow radically in “Chindia” and the rest of the developing world. The biggest problem though is likely political, especially because of the increased political risk in the Middle East, where most of the world’s oil reserves are. You’ve got to be bullish on oil. _HoweStreet

Casey is saying two things about peak oil: 1. The sweet, light crude is becoming more rare and more dear. 2. Free market responses which would make it easy to substitute and adjust to changing supplies, are being hampered by political forces. In other words, Political Peak Oil is in play. One other point Casey is making to support his belief that oil prices are likely to shoot up: He believes that China and India will increasingly drive world oil demand for the foreseeable future.

For those reasons, Casey believes that oil could soon shoot up to $200 or $250 a barrel. If Casey's assumption about Chindia demand are correct, his conclusion on oil price could also be correct. But....

Al Fin energy futurologists and economic forecasters do not believe that India and China are ready to drive the global economic steamroller due to the many serious internal and regional problems each nation faces. And given the serious combined problems of debt and demographic decline which the current drivers of the world economy -- The Anglosphere, Japan, and Europe -- are suffering, we are more likely to see another global economic downturn before too long. This is likely to occur well before China and India are ready to steer the machine.

What does all that mean in terms of the cost of staying warm throughout the 2010s and 2020s? It means that unless the advanced nations of the world can dump their "energy starvationist" governments and learn to use the resources which are available, some societies accustomed to reliable power and heat will find it difficult to keep the lights on.

Energy Storage: The State of the Art

The state of the art for energy storage leaves a lot to be desired at virtually every scale. Power grids and individual businesses, institutions, and residences are far too vulnerable to power fluctuations and unpredictable outages.

Images via ESA (ht NBF)
For those who are curious about the state of the art, the Electricity Storage Association provides a useful comparison for different methods for electrical energy storage (via Brian Wang).

One significant omission from the ESA list is "Cryonic Energy Storage," which may prove to be the best of the current crop of contenders for now, until "flow batteries" are perfected.

Large -scale stationary applications of electric energy storage can be divided in three major functional categories:

Power Quality. Stored energy, in these applications, is only applied for seconds or less, as needed, to assure continuity of quality power.

Bridging Power. Stored energy, in these applications, is used for seconds to minutes to assure continuity of service when switching from one source of energy generation to another.

Energy Management. Storage media, in these applications, is used to decouple the timing of generation and consumption of electric energy. A typical application is load leveling, which involves the charging of storage when energy cost is low and utilization as needed. This would also enable consumers to be grid-independent for many hours.

Although some storage technologies can function in all application ranges, most options would not be economical to be applied in all three functional categories.

... _ESA

More graphic comparisons from ESA below:

Read the entire ESA comparison sheet for more information.

Cryonic energy storage has far more potential than compressed air storage, given the phase change energies involved.

Among electrical battery storage methods, flow cell batteries are most scalable and versatile in application. Newer approaches to flow cells using more viscous electrolyte media should allow the technology to be used in vehicular power storage applications.

Adapted from an article at Al Fin Energy

Obama Doubles Down on Stupid as US Economy Stalls

The US economy is facing another extended downturn, as Obama's economic policies fail yet again to lift US employment prospects. Years ago, Obama promised to keep unemployment under 8% -- as it was when he took office. Unfortunately, unemployment seems to be heading back toward double-digit territory, in the long term.

Under President Obama unemployment has remained above 8 percent for every single month, with the exception of January 2009 when he entered the Oval Office, rising as high as 10.1 percent in October 2009. By any measure, this is a terrible track record, and as even The New York Times acknowledged earlier this week, “no American president since Franklin Delano Roosevelt has won a second term in office when the unemployment rate on Election Day topped 7.2 percent.”

The dire jobs figures are just part of an extraordinarily grim picture for the US economy, nearly two and a half years into the Obama presidency. As ABC News reported yesterday, “a cascade of negative economic reports this week is leaving Americans wondering if this is really a recovery from the recession that officially started December 2007 and ended June 2009.” And the housing market, in which 67 percent of Americans have a stake, is in serious trouble, with home prices sinking to their lowest levels since 2002, falling by 4.2 percent in the first quarter of 2011 and for eight straight months in a row.

In addition, the White House is paralysed in the face of the nation’s towering debts, which reached 62 percent of GDP by the end of 2010, the highest percentage since the end of World War Two. The Congressional Budget Office warned last year in its “alternative fiscal scenario” that “with significantly lower revenues and higher outlays”, the federal debt could grow to a staggering 87 percent of GDP by 2020, rising to 109 percent by 2025 and 185 percent in 2035.
It is little wonder that 66 percent of Americans now worry the federal government will finally run out of their money, and Moody’s Investors Service is threatening to downgrade America’s sterling credit rating unless it gets to grips with the debt crisis. Undoubtedly, the very future of the United States’ position as the word’s only superpower is at stake in the next few years _Telegraph

So what is Obama doing to fix the US' economic problems? He is doubling down on stupid by shutting down a big new oil pipeline from Canada. Not only does this new "Marie Antoinette-esque" policy hurt American energy, industry, and jobs, but it threatens to rile up Canada as well. While in keeping with an overall Obama policy of energy starvation, taking this action at this time makes the US President look even more foolish than usual.

PHMSA is mandating that TransCanada provide a detailed “restart plan,” conduct “mechanical and metallurgical” testing, and analyze the pipeline components that failed last month.

In addition, the order instructs TransCanada to conduct a review of its entire pipeline system within 60 days, among other things.

The order comes at a politically sensitive time for TransCanada. The company is seeking federal approval to expand its Keystone pipeline to carry Canadian oil sands from Alberta to Texas.

The proposed project, known as Keystone XL, is currently undergoing a multi-agency review that is being headed up by the State Department. Comments on the project’s latest layer of environmental review are due by Monday. _The Hill

When combined with the Obama administrations attacks against offshore oil drilling, shale oil fracking, new nuclear reactor design approval, coal plants and new coal technology etc. -- this latest attack on the importation of Canadian oil sands liquids reveals the Obama administration as even more anti-energy than Jimmy Carter.

In the meantime, Obama's crew continues to promote expensive and unreliable solar and wind energy mega-projects technologies -- presumably in an attempt to prevent these funds from reaching other energy projects which might actually supply usable and reliable energy to the American economy.

Of course, never attribute to ideology what could more easily be explained by corruption: One of Obama's biggest financial supporters and public fans, General Electric, is heavily invested in big wind energy and is diving into big solar. The administration is always happy to supply waivers and grant favours to those who are willing to play on the team.

Meanwhile the rest of the US economy is floundering, with no help to be found from an administration of corrupt revolutionaries without a clue.

More: Brian Wang describes the significant buildup of Canadian oilsands production. The Obama - Salazar - Reid policy of energy starvation never made very much sense. If these stuck-on-stupid idiots remain at the controls of US energy policies for much longer, the US may have to join the Organisation of Third World Countries.

More 6June11: More on the political / faux environmental forces lining up in opposition to the Keystone XL cross-border project (including map). With such a large and influential part of government and society promoting suicidal energy policies, the rot will be difficult to excise in time to prevent significant hardship, unless an electoral and taxpayer revolution occurs in the next 2 years.

Which Form of Energy is the Safest?

WaPo_via_NextBigFuture
At least a small part of the news media is finally moving away from nuclear hysteria. The Washington Post (via Brian Wang) has decided to break away from the pack and present a more honest look at the dangers associated with the different important forms of power generation.

History suggests that nuclear power rarely kills and causes little illness. That’s also the conclusion engineers reach when they model scenarios for thousands of potential accidents.

Making electricity from nuclear power turns out to be far less damaging to human health than making it from coal, oil or even clean-burning natural gas, according to numerous analyses. That’s even more true if the predicted effects of climate change are thrown in.

Compared with nuclear power, coal is responsible for five times as many worker deaths from accidents, 470 times as many deaths due to air pollution among members of the public, and more than 1,000 times as many cases of serious illness, according to a study of the health effects of electricity generation in Europe _WaPo

Of course, Brian Wang does a better job of explaining the issue than the Washington Post, as you might expect. Brian reveals that even wind, solar, and biomass energy production have killed many more than nuclear power.

The only two deaths associated with the Fukushima reactors incident were caused by the earthquake and tsunami. Compared to 9.0 earthquakes and 50 ft. tsunamis, nuclear power is as safe as a mother's arms.

It is important to point out that the damning statistics aimed at coal are computed by Lancet authors -- a journal which has not compiled the most trustworthy public health stats over the past 10 years. And yet, even if coal deaths are being over-estimated by a factor of 10, they are still significant when compared to nuclear.

Future use of integrated gasification combined cycle (IGCC) coal plants will slash pollution from coal use. And a new method of using waste fly ash from coal -- turning it into a high value, life-saving product -- will cause the informed public to look at even that ugly waste product differently.

Even with 40 year-old reactors, nuclear power is the safest source around by far. Imagine how much safer nuclear could be if Mr. Obama's NRC ever got off its fat, lazy, pompous arse, and did its job?

Cross-posted to Al Fin Energy

The US is #1 in Hydrocarbon Resources Worldwide: Why Is the Obama Administration Pursuing a Policy of Energy Starvation?

EnergyTribune
A new report from the Congressional Research Service points out that in terms of total hydrocarbon resource, the US possesses the largest inventory of any nation on Earth. But under the Obama regime, an unstated but unrelenting program of "energy starvation" is being carried out -- from the DOE to the Department of Interior to the EPA, even including the NRC. It is one thing to be energy-poor because you lack the resources. It is quite another to intentionally cripple your own economy using half-baked policies of carbon hysteria, nuclear fear, and faux environmental crisis fabrication.

From coal to gas to oil to methane hydrates to kerogens, bitumens, uranium and thorium, the energy resources of the US remain largely untapped in comparison to their potential.

America’s combined energy resources are, according to a new report from the Congressional Research Service (CSR), the largest on earth. They eclipse Saudi Arabia (3rd), China (4th) and Canada (6th) combined – and that’s without including America’s shale oil deposits and, in the future, the potentially astronomic impact of methane hydrates.

...if the White House is in any way serious about impacting the economic Black Hole that is the burgeoning national debt, reinvigorating business big-time, creating real jobs and restoring ebbing national wealth, the best shot by a distance if you’re American ... well, you’re standing on it, or rather above it.

...While the US is often depicted as having only a tiny minority of the world’s oil reserves at around 28 billion barrels (based on the somewhat misleading figure of ‘proven reserves’) according to the CRS in reality it has around 163 billion barrels. As Inhofe’s EPW press release comments, “That’s enough oil to maintain America’s current rates of production and replace imports from the Persian Gulf for more than 50 years”. Next up, there’s coal. The CRS report reveals America’s reserves of coal are unsurpassed, accounting for over 28 percent of the world’s coal. Much of it is high quality too. The CRS estimates US recoverable coal reserves at around 262 billion tons (not including further massive, difficult to access, Alaskan reserves). Given the US consumes around 1.2 billion tons a year, that’s a couple of centuries of coal use, at least.

...In 2009 the CRS upped its 2006 estimate of America’s enormous natural gas deposits by 25 percent to around 2,047 trillion cubic feet, a conservative figure given the expanding shale gas revolution. At current rates of use that’s enough for around 100 years. Then there is still the, as yet largely publicly untold, story of methane hydrates to consider, a resource which the CRS reports alludes to as “immense...possibly exceeding the combined energy content of all other known fossil fuels.” According to the Inhofe’s EPW, “For perspective, if just 3 percent of this resource can be commercialized ... at current rates of consumption, that level of supply would be enough to provide America’s natural gas for more than 400 years.”

...With 85 percent of global energy set to come from fossil fuels till at least 2035 no matter what wishful thinkers may prefer, current US energy policy – much like European – is pure political pantomime. _EnergyTribune

Adapted from an article at Al Fin Energy

Is North America the New Energy Kingdom?

With rising production from shale fields, the U.S. surpassed Russia last year to become the world’s largest supplier of natural gas. Shale now accounts for 10 per cent of the country’s natural gas production – up from 2 per cent in 1990. Chesapeake’s production from its next Texas project, expected by the end of 2012, will by itself supply the energy equivalent of 500,000 barrels of oil a day. _Globe&Mail

We know that Canada is overflowing with hydrocarbons from shale oil to oil sands to coal to natural gas to methane hydrates.... But the US was supposed to be "all tapped out" ever since oil production peaked back around 1970. Is it possible that all of the peak oil and peak energy doomers who foretold the end of US oil & gas may have been a bit premature?

U.S. domestic production for the year will be 140,000 barrels a day higher than last year (which was 410,000 barrels a day higher than 2008). Although the U.S. Energy Information Administration (EIA) says U.S. production will decline next year, who knows?

...As an article last month in The New York Times observed: “Just as it seemed that the world was running on fumes, giant oil fields were discovered off the coasts of Brazil and Africa, and Canadian oil sands projects expanded so fast, they now provide North America with more oil than Saudi Arabia. In addition, the United States has increased domestic oil production for the first time in a generation.” Further still: “Another wave of natural gas drilling has taken off in shale rock fields across the United States, and more shale gas drilling is just beginning in Europe and Asia.”

...For natural gas, the U.S. has the four largest fields in the world: the Haynesville field in Louisiana (with production up by 77 per cent in 2009); the Fayetteville field in Arkansas and the Marcellus field in Pennsylvania (both with production up by 50 per cent); and the Barnett field in Texas and Oklahoma (with production up by double-digit increases). The EIA reports that proven U.S. reserves of natural gas increased last year by 11 per cent to 284 trillion cubic feet – the highest level since 1971.

Beyond shale oil and shale gas, there’s the awesome energy promise of methane hydrates, frozen crystals of water and gas that lie beneath the northern permafrost and beneath oceans floors around the world in quantities that boggle the imagination.

“Assuming 1 per cent recovery,” the U.S. Geological Survey says, “these deposits [in U.S. territory] could meet the natural gas needs of the country (at current rates of consumption) for 100 years.” _Globe&Mail

Gas producers are scurrying to find ways to export gas to cold, hungry customers in Asia and Europe. LNG -- liquified natural gas -- is one approach which is being developed for the export market. GTL -- gas to liquids -- is another approach that is likely to be developed inside the US within the next 10 years. Both approaches will allow for easier entry into the lucrative export markets. The GTL approach will also -- if economical -- allow gas to be converted into liquid fuels at a profit. That should help reduce North American dependency on overseas oil, once developed.

Cross-posted to Al Fin Energy

Natural Gas -- The Eternal Flame

The world is swimming in hydrocarbons. One modest sign of the richness of shale gas deposits is this waterfall in western New York state, where a natural methane seep provides an eternal flame for hikers. US shale gas has become an amazing economic and geopolitical phenomenon, with money to be made across large swathes of the lower 48 states. Homeowners who heat their homes with gas have also had a lot of reasons to be happier about their energy bills over the past two years or so.

Waterfall photo credit: Jessica Ball, as lovely as she is tough.

Just one of the amazing "gold rush" shale gas deposits in the US will be highlighted in a television documentary on CNBC November 23 2010.

Oil vs Gas MMBTU
Natural gas is significantly cheaper than oil, per unit of heat energy, as seen in the graph above. Someone who could economically convert gas to liquids (GTL) might be able to take advantage of that price difference and make a lot of money.

Robert Rapier recently highlighted the Shell Oil GTL plant in Malaysia, and made reference to the larger Shell GTL plant to be completed in 2011 in Qatar. If the price of oil continues to be much higher than the price of gas -- in energy units -- such GTL conversion plants could well pay off.

Given the large amount of natural gas which is flared into the atmosphere every year, some intriguing new approaches to on-site conversion of GTL at gas wells -- including offshore wells, may offer a profitable income stream for smaller producers and individual wells.

It has been proven that natural gas is constantly being generated deep beneath the Earth's crust -- inside the hot mantle. We do not yet know how much of that gas penetrates into the crust to the point of economic extraction by humans, but it is likely to prove significant, in the opinion of Al Fin energy analysts.