Cal on March 30th, 2017

Cal on March 29th, 2017

Cal on March 28th, 2017

In the US city of San Diego, California the local electric utility has installed a new battery energy storage facility that will store up to 2 megawatts of electricity — enough to power 1,000 homes for four hours. San Diego Gas & Electric’s vanadium redox flow battery substation will store energy from solar panels and release it when resources are in high demand during peak business hours. The California Public Utilities Commission is requiring state utilities to meet a target of 1.3 gigawatts of additional power storage by 2020. Flow batteries get their name because they use liquid chemicals (electrolytes) that are separated by a membrane. The reaction between the two chemicals frees up electrons, creating electricity. Flow battery systems have an expected life-span of more than 20 years and could have less degradation over time from repeated charging cycles than other technologies. Vanadium redox flow batteries are a type of rechargeable battery that employ vanadium ions in different oxidation states to store chemical potential energy. Flow batteries work well with intermittent energy sources such as solar panels and wind turbines because of their ability to be idle for long periods without losing a charge. In addition, they scale more easily because all that is required to increase capacity is more liquid; the hardware remains the same.

Research from Bloomberg New Energy Finance (The “Global Energy Storage Forecast, 2016-2024”) projects that the annual investment in energy storage systems will increase six-fold to $8.2 billion in 2024. BNEF expects $44 billion to be invested in storage between now and 2024. Over this period, about 45 billion watts (81 gigawatt hours) of energy storage capacity will be installed globally, excluding pumped hydroelectric systems. The top five storage markets will be Japan, India, the US, China, and Europe. Together they will represent 71% of the global total for storage installed in 2024. Currently the largest market for energy storage is electric utilities.  This will gradually transform to homes and businesses over the next decade. IHS Markit predicts over the next decade, lithium-ion batteries will become the mainstream energy-storage technology, with more than 80% of global energy storage installations incorporating this technology by 2025.

The International Energy Agency suggests some trillion dollars worth of crude oil and natural gas assets could be abandoned by 2050. The IEA estimates that a rapid change in climate policy away from fossil fuels and towards renewable energy, nuclear and carbon capture would leave a total of $1 trillion of oil assets and $300 billion in natural gas assets stranded.

Major oil companies Exxon, Shell, and Chevron have announced they will spend as much as $10 billion this year on exploring for and producing US shale oil. These companies have been attracted to the shale oil fields because of the quick return on investment in comparison to the expensive deepwater ocean projects that take many years to complete.

Iran’s South Pars oilfield on the Iran-Qatar border was officially opened last week. While this field is claimed to hold 14 billion barrels of oil, initial production will be only 35,000 b/d. Prospects for this field are significant because of the large amount of crude oil it may hold but also for the advanced production techniques being used.  The offshore wells will use floating production and storage ships which will allow the oil to be shipped directly from the well-head to market.

Saudi Arabia is slowly conceding ground to US shale oil producers and is decreasing crude oil exports to the US market to concentrate on China and other Asian markets. In the last few weeks Saudi Arabia has entered into supply agreements with Malaysia, Indonesia, Japan and China. Saudi exports to the US could fall by as much as 300,000 barrels per day this month.

Russia’s central bank says it is basing its economic forecasts on crude oil falling to the $40 a barrel range later this year. World oil prices are currently in the $48-$50 range.

German scientists turned on the world’s largest artificial Sun – the world’s largest solar simulator. The artificial light, created from 149 powerful short-arc xenon lamps, was tested last week at the German Aerospace Center near Cologne. The giant honeycomb-like apparatus can focus all of its simulated solar energy to a surface of 8 by 8 inches. By doing so, the surface would receive the equivalent of 10,000 times the normal solar radiation. The goal of the experiment is to improve the production processes for solar fuels, including hydrogen, which is seen to be an important renewable energy source in the future.  The very high temperatures created will help the scientists to find new ways to obtain hydrogen. Hydrogen is considered to be the fuel of the future because it burns without producing carbon dioxide.

 

with h/t Tom Whipple

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Cal on March 27th, 2017

Cal on March 26th, 2017

The US Energy Information Agency (EIA) forecasts US shale oil production will rise by some 300,000 barrels per day this year and another 500,000 b/d in 2018. Industry sources talk about increased efficiency and production gains, suggesting to many that the EIA’s forecast is conservative and that the US shale oil production increase may be higher. Increased US oil production is bad news for OPEC which is trying to maintain higher crude oil prices. For most oil market observers, a six-month OPEC production cut will not be a long enough time to have a lasting effect on crude oil prices and most believe that a six-month extension will likely be voted on at the next OPEC meeting in May. Kuwait already has called for an extension and Saudi Arabia is talking about going along with an extension. Iran’s oil minister said last week that his country would keep its crude oil production capped at 3.8 million b/d, provided other OPEC members stick to their agreed upon production quotas.

As US shale oil production can respond to market price signals more rapidly than other producers around the globe, the International Energy Agency believes that a $80 oil price could increase US production by as much as 3 million barrels per day in the next five years.

OPEC is also concerned about the emerging policies of the Trump administration which are aimed at increasing US oil production as quickly as possible. Among the numerous policy changes that the new administration has already made, or says it will make, are decreased regulations on fossil fuel emissions; opening up more federally-controlled land for oil exploration; reducing corporate income taxes which could free up as much as $10 billion for drilling; and imposing a “border tax” which would make imported oil much more expensive.

Iraq, which is not part of the OPEC led production cut, pumped 4.57 million b/d of crude oil in February and plans to increase this to 5 million by the end of this year.

Russia hinted that since increased production from the US shale oil industry may undermine the OPEC led production cut, it might pull out of the agreement and start a new price war. As nearly all of its oil production comes from conventional, low-cost wells, Russia may believe it is in a good position to weather a further price decline.

China’s strong interest in Brazilian crude oil has set off alarm bells among various producers in Oceania and the Middle East, prompting Australian and Persian Gulf crude oil suppliers to lower their selling prices in an effort to remain competitive and protect their market share in Asia.

Major oil companies are selling their holdings in the heavy oil sands of Western Canada and moving investments to shale fields. This month Royal Dutch Shell and Marathon Oil disclosed sales of operations that largely removed both firms from the heavy oil reserves. Last month, Exxon Mobil wrote down all of its heavy oil reserves from its Kearl project in northern Alberta, saying extracting the oil was no longer economic at current prices.

In the US state of Alaska, Repsol and Armstrong Energy say they made the largest US onshore oil discovery in three decades. The conventional oil was found in the Horseshoe-1 and 1A wells located in Alaska’s North Slope. According to Repsol, the reserves comprise approximately 1.2 billion barrels of recoverable light oil.

French oil company Total said it started production at a deep-water prospect with a capacity of 100,000 barrels per day. Moho Nord is the largest development to date in the Republic of the Congo.

The removal of the 40 year ban on US crude oil exports has led to record export numbers. US crude shipments surged to a record 1.21 million barrels a day in mid-February, up from 32,000 in 2010, when most of the country’s production couldn’t be sold overseas because of the ban. Exports averaged 900,000 b/d in the month of February.

A flood of natural gas swamping the US is turning into a global glut, sinking prices and dimming the hopes of American producers to export their way out of an oversupplied domestic market. Natural-gas futures prices have fallen 25% over the past 2½ months. There are indications that natural gas output from the Permian Shale region in the state of Texas will increase by about 25% over the next year, threatening to send prices below $2 per million British thermal units.

The International Renewable Energy Agency says global energy-related carbon dioxide (CO2) emissions could be reduced by 70% by 2050 and completely phased out by 2060. To help achieve this, the share of renewable energy in primary energy supply would need to increase to 65% in 2050 from 15% in 2015. An additional $29 trillion of energy investment would be needed to 2050, equivalent to 0.4% of global gross domestic product.

 

with h/t Tom Whipple

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Cal on March 26th, 2017

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Cal on March 23rd, 2017