Cal on May 28th, 2017

The world’s largest oil producers agreed this week to continue to hold back oil production for another nine months in a bid to raise sluggish world crude oil prices. The deal was agreed between members OPEC and non-OPEC producers including Russia. The participants said they would continue to make cuts of 1.8 million barrels of crude oil a day until March 2018. For three years the oil market has been steadily undermined by the rise in US shale oil production and increasing demand from China. The risk remains that higher oil prices will simply fuel a resurgence in US production that could wipe out the effect of the cuts.

With all the talk of peak oil demand looming in the media these days, Forbes tells us What The Prophets Of Peak Oil Demand Are Missing. We learn that peak oil demand is not a new concept and goes back to the 1970s when predictions were made of oil’s imminent demise. These prognostications even came from the oil companies themselves. But changes in technology and demand and supply conditions kept oil production booming.

Peak oil demand is not theoretically invalid, the way most of the peak oil supply arguments were, but it suffers from the same problem as the peak oil supply debate, namely that the discussion is dominated by faux experts who don’t realize that many of their ideas are not new and their evidence is often dubious….Expectations are heavily based on anecdotal reports, and especially aspirations, rarely solid analysis.

What’s in a name?  France’s new President Macron has renamed the nation’s energy department “Ministry of Ecology and Solidarity”.

South Korea has a new hydrogen fuel cell electric power plant. Built by Doosan Corporation, the plant is the largest of its kind in the country and is equipped with hydrogen fuel cells in order to generate electrical power for various purposes. The facility can produce fuel cells as well as use them to generate electricity. It has the ability to produce 144 units of 440-kilowatt fuel cell systems on an annual basis. While fuel cells get a lot of discussion in transportation circles, they have long been associated with industrial uses due to their ability to generate electricity as well as heat. They are attractive as primary power systems because they require a very limited amount of space and are ideal for indoor use because they produce no harmful emissions.

India has cancelled plans to build nearly 14 gigawatts of coal-fired electric power stations this month as the price of solar (determined in the nation’s solar auctions) keeps “free falling” to levels once considered impossible. In January 2016, Finnish company Fortum successfully bid to generate electricity in India with, at that time, record low tariff, or guaranteed price, of 4.34 rupees per kilowatt-hour (about US 7 cents). This month, an auction for a 500-megawatt solar facility resulted in Indian firm Acme bidding 2.44 rupees (about US 3.8 cents)  – below the wholesale price charged by a major Indian coal-power utility of 3.2 rupees. The latest auctions are significant since they bring solar power below the average purchase power cost in India for the second time this month.

Tim Buckley, director of energy finance studies at the Institute for Energy Economics and Financial Analysis, said the latest solar auctions in India will have “profound” implications on global energy markets. “For the first time solar is cheaper than coal in India and the implications this has for transforming global energy markets is profound.” This has serious implications for stranded coal-fired facilities in India and other countries. Buckley estimates some £6.9 billion worth of existing coal power plants in India are “no longer viable because of the prohibitively high cost of imported coal relative to the long-term solar electricity supply contracts”.

This week in the US, Tucson Electric Power, an Arizona electric utility company, announced it had reached an agreement to buy solar power for 20 years at less than 3 cents per kilowatt-hour. The bid by NextEra Energy Resources was for a 100-megawatt solar system capable of powering 21,000 homes in the Tucson, Arizona region. This is the first time such a low solar price has been offered in the US. Similar prices have been seen in solar auctions in other countries for over a year now. The average US residential price for electricity is about 13 cents per kwh, while the average commercial price is 10.5 cents.

report by Friends of the Earth predicts “at least” 75% of all UK homes will be powered by renewable electricity by 2030. In 2016 renewables (wind and solar) supplied a quarter of UK electricity.

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Cal on May 28th, 2017

Cal on May 27th, 2017

“For the first time solar is cheaper than coal in India and the implications this has for transforming global energy markets is profound.”

— Tim Buckley, director of energy finance studies at the Institute for Energy Economics and Financial Analysis, commenting on the results of solar auctions in India this week where the successful bids by solar companies led to prices below the wholesale cost of coal-generated electricity.

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Cal on May 26th, 2017

Cal on May 25th, 2017

McKinsey & Company asks: Self-driving car technology: When will the robots hit the road? “A close examination of the technologies required to achieve advanced levels of autonomous driving suggests…such vehicles are perhaps five to ten years away.”

Volkswagen Group is in talks with Exxon Mobil Corp. and Russia’s Gazprom to support its efforts to promote automobiles powered by natural gas.  CEO Matthias Mueller says the German automaker is working on a shift towards electric cars and fuel-saving technologies as it looks to lower its fleet-wide carbon dioxide (CO2) emissions and to overcome its diesel-emissions scandal. Mueller said:

“We are now really trying to think out of the box and find solutions that can be helpful at least in this transition period of 10 to 20 years.”

WhaTech predicts the global compressed natural gas (CNG) vehicle market will grow at a 4.9% annual rate over the 2017-2021 period. Future Market Insights is more optimistic saying the global automotive natural gas vehicle market (both CNG and LNG) will expand at an annual growth rate of around 5-7% between 2017 and 2025, due to stringent government emission regulations and a growing demand for fuel efficient vehicles. (CNG is primarily used in automobiles, light trucks and locomotives while LNG is used in heavier vehicles like buses and transport trucks.)

ACT Research reported that last year US and Canadian sales of heavy-duty trucks running on natural gas were at a 3% share of the overall heavy-duty truck market.

In the US, the Indiana Harbor Belt Railroad is converting its entire 31 locomotives fleet to duel fuel diesel/CNG. This is the first railway in the US to convert to CNG. By 2020, 70% of the fleet will be using CNG as its primary fuel source. The Indian Harbor Belt Railroad, located in Chicago and northwest Indiana, is the largest terminal switching railroad in North America.

In India, state-owned Indian Railways has issued a tender for conversion of an additional 30 locomotives to run on compressed natural gas (CNG). There are currently 17 locomotives running on CNG in its fleet. Indian Railways is also trialling liquefied natural gas (LNG). The move to natural gas is part of the railway’s plan to save $6.5 billion on energy use over the next decade.

Indonesia is converting 5,000 taxis and government vehicles to compressed natural gas (CNG). The Indonesian government is actively promoting the usage of natural gas in order to reduce pollution and diversify fuel in the public transportation sector. New legislation that is expected to require all gasoline stations to have at least one dispenser of natural gas.

The National Association of Convenience Stores has an article on the history of fuels retailing in the US.






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Cal on May 25th, 2017

Cal on May 25th, 2017

Cal on May 24th, 2017

Excerpted from the Wall Street Journal, May 21, 2017


Get Ready for Peak Oil Demand

There’s a growing consensus that the end of ever-rising consumption is in sight. The big question that many oil companies are debating: When?


The world’s largest oil companies are girding for the biggest shift in energy consumption since the Industrial Revolution: After decades of growth, global demand for oil is poised to peak and fall in the coming years.

New technologies that improve fuel efficiency are starting to push down the amount of gasoline and diesel that’s needed for transportation, and a consensus is growing that fuel demand for passenger cars could fall as carbon rules go into effect, electric vehicles gain traction and the internal combustion engine gets re-engineered to be dramatically more efficient. Western countries’ growth used to move in lockstep with their energy consumption, but that phenomenon is starting to decouple in advanced economies.

While most big oil companies foresee a day when the world will need less crude, timing when that peak in oil demand will materialize is one of the hottest flashpoints for controversy within the industry. It’s tough to predict because changes to oil demand will hinge on future disruptive technologies, such as batteries in electric cars that will allow drivers to travel for hundreds of miles on a single charge.

Hitting such a plateau would mark the first time that demand has declined even when economies are growing since Col. Edwin Drake jury-rigged a pipe to drill for oil in Pennsylvania in the late 1850s. Yet, for many companies and investors, the question isn’t whether this immense turning point will happen—it’s when.

Getting that timing right will separate the winners from the losers, and it has become a major preoccupation for energy economists and a flashpoint for controversy within the industry.

Forecasts for peak oil demand diverge by decades. The Paris-based International Energy Agency argues that demand will grow, albeit slowly, past 2040. And the two biggest U.S. oil companies, Exxon Mobil Corp. and Chevron Corp., say peak demand isn’t in sight.

But some big European producers predict that a peak could emerge as soon as 2025 or 2030, and they are overhauling their long-term investment plans to diversify away from crude oil. Royal Dutch Shell PLC and Norway’s Statoil SA are placing bigger bets on natural gas and renewables, including wind and solar.

“Nobody knows” when demand will peak, says Spencer Dale, group chief economist for BP PLC, which issues a widely watched annual outlook. The company’s base case calls for a peak in the mid-2040s—with the caveat that it could come sooner or later. “There are huge bands of uncertainty around that,” Mr. Dale says.

The uncertainty stems from a host of variables, including the pace of technological changes that will make renewables and electric vehicles more cost-competitive; the toughness of new regulations aimed at curbing greenhouse-gas emissions and climate change; and the rate of economic growth in developing countries, which is currently driving the increase in oil demand.

Those factors are making it much harder to predict long-term demand than in the past, according to many energy-industry executives and economists.

Calling it accurately is high stakes for an industry sitting on trillions of dollars of crude-oil reserves. Whenever it finally does happen, the tipping point from global oil-demand growth to decline will reverberate through the energy world, knocking down oil prices and some companies’ shareholders.

The idea that electric vehicles and alternative forms of energy will increasingly displace crude oil is one that big-name investors are starting to ask about.

“We have lots of clients in the financial sector asking about peak demand,” says Linda Giesecke, research director at Wood Mackenzie, an energy consulting firm. “It’s because you have this threat of disruptive technology” such as electric vehicles, she says. “If it is disruptive, it will come fast. That’s why it’s so hard to forecast.”

Case in point: Shareholders of Occidental Petroleum Corp. voted this month to ask the company to assess long-term impacts of climate change on its business. It was the first time such a proposal passed at a major U.S. oil-and-gas company. BlackRock Inc., the world’s largest asset manager, supported the resolution, marking the first time it went against management wishes to support such a climate resolution.




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