North Sea Oil and Gas Output Down by 10%.

It is anticipated that production of both oil and gas from the reserves under the North Sea will be down by about 10% from previous estimates according to a new survey of the U.K. energy industry. This means that the U.K.'s "security of supply" is further compromised, making us even more dependent on imported oil and gas, and this will hit the Chancellor of the Exchequer's budget, along I suppose with the cost of diverting military might from Iraq to Afghanistan. Someone will have to pay for it, and I imagine that will be the punter and the taxpayer - most of us being both. Indeed, I expect that the real indicator of peak oil (and peak gas too) will be rising prices, signifying the decline of resources. There is apparently a surge of interest (mostly from small companies) wishing to explore the North Sea, in consequence of the increasing cost of its bounty, but of course this merely means that more people will make a quick buck if they are successful, while depleting the resource even faster. There is only so much oil and gas down there: enhanced production only shortens the term of our reliance upon these fuels. As I noted in my immediately previous posting, the U.K. now produces half its electricity using coal, which has been substituted for gas now the price has gone up. It is ironic that in the early 1980's, Britain switched much of its coal-fired power stations over to gas, due to the cheaper nature of the latter; now it appears that coal will be the better buy and so we will use more of it once again. I read the other day that "U.K. Coal" is set to import considerable quantities of coal from Australia, which has enormous reserves. I remember too that the U.K. abandoned its production of "town gas" in the early 1970's, and all cookers and other such appliances were converted to "North Sea Gas", being principally methane with a higher calorific value, when this new supply was initially tapped. My father worked for the South Eastern Gas Board at the time, among the many, many different occupations he had during his interesting working life, and I used to go around with him while he did the necessary engineering. Since he had left home by this stage, this was how I spent a number of school holidays in my early teens, when I went to stay with him. I also recall reading of a number of failed suicide attempts when it was not understood that natural gas is effectively non-toxic, compared to the "old" town-gas which, being rich in carbon monoxide, provided the ideal means for "doing oneself in" by turning the gas on and sticking your head in the gas-oven. Should society return to making town-gas from coal, as it very probably will, this option will return too!
The North Sea fields are a microcosm of the world situation, since although there is a decline in production, there remains an estimated equivalent of 16 -25 billion barrels worth of oil and gas left to be extracted (around 1% of the world's total), and so there will be plenty of oil and gas for many years to come, it is simply that we cannot continue to draw it from the Earth at current rates. Old wells are running dry and new wells are fairly small in their capacity. Last year the production of oil and gas was 2.9 million barrels per day, which is sharply down from 4.5 million barrels as a daily output in 1999. By 2010, it is expected to be down to 2.6 million barrels a day. The main reason for the fall in supply is described as "poor reservoir performance". Now this appears an ominous euphemism. It may mean that there is less oil and gas than was originally estimated (I was going to use the word "gauged" but of course there is no direct measurement and all quoted figures for reserve capacity are only estimates), or that the geology is such that the well is less permeable than it was thought to be, meaning that less of its capacity can actually be extracted, whatever it may total. Either way, the cost will soar, and since everything demands on oil or gas both for manufacturing and transport, including food, that means the price of everything will be hiked-up.

Coal back in the U.K.

As oil and gas run-out, what is there left? Coal or nuclear... and renewables at some level as yet undecided it would appear. Fossil fuels and uranium are in effect concentrated sources of energy, while all renewable resources have a diffuse nature and are hence difficult to concentrate into the huge levels of energy that we actually consume. Of the fossil fuels, it appears that coal may be once again in the ascent. Due mainly to the industrial strife that surrounds the history of British coal-mining, and the "Custer's Last Stand" strike of Arthur Scargill in the mid-1980's, after which Margaret Thatcher's government had many of the mines "sealed" with concrete, as a mark of delineation to that era, it is easy to think that the show has long been over for coal. This is not true in fact, and of the 62 million tonnes of coal we still burn annually in the U.K., around 20 million tonnes is mined within the U.K. - around 50:50 from near-surface and deep locations.
When I was a child living in South wales, there were nearly one million men employed in the coal-mines there; then coal-mining stopped completely, the only working mine I am aware of being "Big Pit", which has been preserved as a mining museum. Now, the mine at Cwmgwrach (said as: "Kumrak") has been reopened and is said to be set to begin production some time this year. This is a landmark moment for the coal industry since it represents the first opening of a deep mine for 30 years. There are just seven deep-mines working in the U.K. Demand for coal has risen in the U.K., and indeed, 50% of the nation's electricity is currently produced in coal-fired power stations, which almost double the 30% figure recorded in 2005, in consequence of colder weather conditions during the past two winters and soaring gas prices. Those prices probably can be taken as an indicator of resource availability and both gas and oil supplies from the North Sea have fallen significantly during recent years. It is argued by some that the oil-revenue so abundant during the early 1980's was squandered to pay the numbers of unemployed who resulted from the collapse of most of the hard manufacturing industry - in an apocalyptic show-down between the Thatcher government and the trade unions. Industry was the sacrificial lamb to destroy the power of the unions which had brought Britain to chaos and economic uncompetitiveness throughout the 1970's. Some will remember the "three day week" that Edward Heath put the nation's workforce on, in order to cope with the power shortages caused by a succession of miners' strikes; Margaret Thatcher was swept to power on a wave of malcontent, called the Winter of Discontent in 1978/79, when most of the unions had called strikes and rubbish was piling-up in the streets. The nation had had enough of "Labour" which by then had little to do with "Socialism".
There are estimated to be around 89 million tonnes of coal remaining at Cwmgwrach, and that an annual production of 1 million tonnes per year will result from 2008 onwards. The mine was closed in 1999 on grounds that it was no longer profitable to run it. The availability of cheap natural gas from the North Sea (and the crushing of the Miners' Union) rendered gas the cheaper option, but a combination of less available and more expensive gas and more efficient mining methods for coal have cast this "black" industry into a "greener" light. I must look into exactly what these methods are and how they differ from their former counterparts, but there is apparently less waste than there used to be and the energy than can be produced from coal is "very clean" - I presume that means that much of the noxious gases are scrubbed from the flue emissions, now.
A revamping of the mining industry wholesale, if that will occur, means the creation of many new jobs and the resurrection of many of the former "pit-villages" whose communities were destroyed by the collapse of coal mining. The U.K. government's plans to approve a new generation of nuclear reactors (said erroneously to be carbon-free, when they are not if the construction and uranium milling and processing is taken account of) were dealt an awkward blow last week by the High Court in London, who declared that the decision to approve them was illegal because of flaws in public consultations. I'm sure this will be sorted-out, and there will be more nuclear power, at least to replace the old reactors that need to be decommissioned by 2025. However, until this issue is resolved, and in any case since the level of investment in renewables is risible, and we have to burn something, I expect to see a near miraculous resurrection of the coal industry - and perhaps the attendant new "pit-villages" will prove to be the first of the new localised communities that will be engendered, post peak-oil.

"Unconventional Oil" will Damage Environment.

There are some estimates that the world has 4.6 trillion barrels of oil left, which equates to about 150 years worth at current demand. However, this is misleading since 3.6 trillion barrels of that are "locked-up" in unconventional sources such as oil sands and will prove hugely expensive in terms of the energy required to extract it and damaging to the environment. Hence the conventional (real) oil is probably enough for 30 years (1 trillion barrels) , and that is if all of it can be winkled-out from the geology that contains it. According to a new report from Wood Mackenzie, who are a consultancy based in Edinburgh, within 15 years, any extra oil supply will come from highly energy demanding and polluting sources such as the oil sands of Canada and the Orinoco tar belt in Venezuela. The oil sands of Alberta do not contain oil as such, but bitumen which must be cracked into oil, and the same goes for the Orinoco reserve. The United States has very large deposits of oil-shale etc. and of course coal, believed to contain more carbon than the whole of the Middle East oil fields, but processing it into oil will return a very poor EROEI (Energy Returned on Energy Invested) and so it might not be worthwhile beyond the production of oil for niche applications - certainly not for running today's enormously inefficient fleet of cars in their presently vast and growing numbers. In addition to the demand from extractive energy and pollution, very large quantities of clean water are required for these processes, hence imposing pressure on another resource. It is sometimes said that "it takes energy to extract energy" but more literally producing one kind of resource always consumes another one (or more than one, e.g. gas and water).
To date, the development of only 8% of the 3.6 trillion barrel "reserve" of unconventional oil has started, for the simple reason that the world has relied on those far more readily available conventional resources of oil and gas we are familiar with. A mere 15% of those putative 3.6 trillion barrels are actually oil at all, even being of the heavy and extra-heavy kind that is far more intensive in its processing than the light crude that surges through the veins of the modern world, being relatively easily processed into gasoline and similar fuels. Wood Mackenzie were sanguine that some big fields will still be increasing their production by 2020, but this will not offset the decline of many (most?) of the others, and accordingly these sources of unconventional oil are the only way to prevent the world from running out of it altogether. Natural gas products such as liquids and condensate are also predicted to become important growth commodities but there is a limit to how much gas can be extracted from the Earth, with some estimates predicting that "peak gas" will happen just a decade or so after "peak oil" and clearly sooner if more of it is turned into synthetic crude.
Major oil companies, Royal Dutch Shell, Total (of Europe), ExxonMobil and Chevron (in the U.S.) have begun to invest substantially in Canada and Venezuela, while others (including Chinese energy groups) are evaluating the possibility of extracting heavy oil from Madagascar. In regard to gas, Devon Energy spent $2.2 billion in 2006 on expanding its already substantial holding in the Texas Barnett shale by acquiring Chief Oil and Gas. It is anticipated that the development of shale deposits of this kind will allow the U.S. to obtain 40% of its gas from unconventional sources by 2020.
Matthew Simmons, an industry backer who shook the oil world by questioning how much oil Saudi really has it its holdings and whether it can realistically continue to expand production to meet rising global demand, has metaphorically poured water on the truth of the massive "unconventional" reserve saying that "the ability to extract heavy oil in significant volumes is still non-existent. Worse, it takes vast quantities of scarce and valuable potable water and natural gas to turn unusable oil into heavy low-quality oil."
He concluded: "In a sense, this exercise is like turning gold into lead."

Will melting Arctic Ice mean More Oil and Gas Exploration?

Almost one quarter of the World's remaining oil and gas reserves are in the Arctic. Getting to them, and carrying the booty away from their frigid locations has typically posed numerous problems; however, the nature of the Arctic is changing. Drilling in the far North involves coping with extremely low temperatures, unpredictable ice-floes, some of the roughest seas on Earth, and the logistical challenges of transporting oil and gas from far-flung locations, often offshore at that, hence compounding the scale of the task. As the Arctic continues to warm, there will be less ice, especially during the summer months, when shipping-routes once rendered impassable, might become clear for significant durations of the year. New drilling sites might also become accessible. Although there is much speculation and uncertainty, those nations with land above the Arctic Circle, are in a scrum to secure rights to the lands of the Arctic, and to the shipping lanes through it.
It is difficult to find a single figure for how much oil and gas there is remaining that can be extracted from the Earth, and indeed exactly how near we are to exhausting this supply. Probably it will never be exhausted entirely, but as its production grows ever tighter the economics of the World will become strained. Geologists and economists give different answers, and those employed by oil companies seem to tend towards more optimistic values. The issue is sometimes further obfuscated by lumping all sources of oil together as though they were a single resource, which is highly misleading, as not all oil is so easy to obtain as we are used to from conventional oil wells. A useful quotient is the EROEI (Energy Returned On Energy Invested), and if that falls below about 3, then the source may not be worth extracting. The value is now around 8 for the fields in the Middle East, whereas it was nearer 100 in the early days of oil exploration - "the "Gushers" that we now only see on worn film-footage. Probably the tar-sands and oil-shales in various parts of the world will be very hard won in terms of the amount of oil they can yield, but desperation will drive actions to this end, as the Middle East oil supplies become compromised either through geology or politics, including war. Such enthusiasm over the prospect of drilling in the Arctic may also reflect desperation, and a firm denial that the oil-wealthy world we have accepted as a status quo will change entirely, and soon. In my analyses here, I have assumed the best consensus figure I can find of one trillion barrels, or one thousand billion barrels of oil, which is enough for about 30 years if it can all be extracted, and that is highly debatable. I estimate that supplies will become seriously comprimised within ten years.
It is of course ironic, if the effect of global warming (which consensus of scientists says is due to human activities and their emission of CO2) is to melt-away the Arctic ice, so permitting further oil and gas to be had, and consequently more CO2 to end up in the sky, causing yet more warming. However, if we do not get at that extra quarter, we may be down to at best a supply of just over 20 years from other sources. I suspect that nowhere will be sacred and drilling will be done in nature reserves, and everywhere and anywhere there is oil or gas, no matter what the human risk or environmental costs of doing so.
Drilling in the Arctic, if it happens, will be at best a short-term measure, and will actually mean that at most another 30 p.p.m. of CO2 is added to the atmospheric load - not a big deal - certainly not compared to the eventuality of running out of oil which it can at best stave-off for a bare few more years.

Electricity from Coal... and Oil too!

The prospect if making crude oil synthetically appears increasingly attractive as the natural reserves of it become depleted. Synthetic crude oil is not of the same chemical composition as the material that is extracted from oil-wells, but it is essentially hydrocarbon in nature and can be turned into fuel for cars, planes and other methods of transport. It can also be processed into a useful feedstock for industry e.g. in the manufacture of plastics and synthetic fibres to underpin the commerce of the world and clothe its societies. Hydrocarbons can be produced from syngas, which is a mixture of carbon monoxide (CO) and hydrogen (H2) formed from some carbon-rich source such as natural gas or coal, by reacting it with steam at elevated temperatures usually aided by the presence of a catalyst. Since natural gas production is predicted to peak in only a decade or so after oil, any attempt to build a hydrocarbon economy based on gas is likely to prove of only short-term benefit, and the obvious carbon source is coal, since there is sufficient to be had for hundreds of years. The technology is tested and proven too, since the company Sasol satisfies most of South Africa's oil demand by coal-liquefaction, as it has for many years. The coal is converted to CO + H2 and this is converted to hydrocarbons using the Fischer-Tropsch process. As a matter of fact, it was this technology that kept Hitler's invasion and military programme going throughout WWII, in the face of initial scepticism that Germany's war-effort would be short-lived because the country had insufficient natural fuel resources to keep it going, and supplies from the Middle East were cut-off by the Allied navies. I have seen various estimates of how much oil can be produced per tonne of coal, ranging from 0.2 to 0.33 tonnes of it. Put another way, to make a tonne of synthetic crude takes anywhere between 3 and 5 tonnes of coal. In the form of a fine powder, coal is also used to fire power stations to produce electricity, and about 30% of that in the U.K. is made from coal, a figure that has increased since the North Sea gas reserves began to decline significantly. There is still plenty of gas in the North sea, but our nation's demand for it has now outstripped what can be supplied from there, hence we are now importing more gas from Norway and from other regions of the world.
There is a technology that combines the production of electricity with oil synthesis from coal, which is called Integrated Gasification Combined Cycle (IGCC). The difference between an IGCC plant and a conventional one is that instead of burning the coal powder in a furnace as normal coal-fired power plants do, the coal is converted into syngas and it is this that is burned in a turbine - hence it is another form of-gas-fired plant. There are many potential advantages to IGCC plants: for a start they are at least 10% more efficient in terms of their thermal energy (heat) output than are conventional plants, they use 40% less water (an important point as pressure on water increases, especially in countries like China), produce around half as much ash and solid waste, and are almost as clean as natural gas-fired plants in terms of their environmental emissions. Some of the gas can also be drawn-off e.g. to make synthetic fertilisers or synthetic oil, which is my interest here.
Right, let's look at some figures. There has been a study made of a similar technology by the U.S. DOE, which concluded the following statistics (I am grateful to McCrab for alerting me to this work, some few months back, but I am looking at it with renewed interest since my calculations of biofuels indicate them to be severely lacking as a substitute for conventional oil). This is for a single plant:

Coal consumed per day: 9,266 tons
Liquid hydrocarbons: 12,377 barrels per day
Electric power: 676 MW
Thermal Efficiency: 52.6%

So, nearly 53% of the coal's energy is being turned into something useful as opposed to just 33% extracted into electricity by a conventional coal-fired power plant. The electric power produced in this case study comes from the excess syngas which is burnt in an IGCC turbine at high efficiency, and so the same amount of coal can produce both electricity and liquid hydrocarbons. I shall try to do the math on this, but first of all we have the inevitable matter of "units" to consider. the U.S. ton (short ton) is not the same as the British (long) or the metric ton (tonne). As a scientist not a nationalist, I shall use the (metric) tonne, which is 1,000 kilograms. The U.S. ton is based on there being 100 pounds to the hundredweight, rather than 112 pounds as we assume over here. Hence 1 tonne = 1.1023 U.S. ton. (and about 0.98 British tons).

In 2005, 409 TWh of electricity were generated in the U.K. from all sources. This implies an average annual generating capacity of: 409 x 10*12 Wh/8760 h = 4.67 x 10*10 W. Hence, at a capacity of 676 MW, this could be met by 4.67 x 10*10/676 x 10*6 = 69 plants.

The coal consumed is 9,266 tons (8,406 tonnes) per day = 3,068,212 tonnes per year. And to run 69 plants = 3,068,212 x 69 = 212 million tonnes of coal per year.

Each plant yields 12,377 barrels per day of liquids x 365 = 4,517,605 barrels per year x 69 plants = 311,714,745/7.3 barrels per tonne = 42,700,650 tonnes per year.

We can compare this with the 73 million tonnes of oil used for everything, 57 million tonnes used for all transport and 44 million tonnes for road transportation annually in the U.K.

O.K., so if we made all our electricity from coal to gas to liquid processing, we have also met 55%, 75% and 97% respectively of the demand cited. These are meant merely as figures for thought, and I do not think it is feasible to introduce 69 new plants of this technology in short order. The road transport requirement could be cut to one third by using hybrid "Prius" vehicles, and so a mere 23 plants could provide that, and if we opened 2-3 of them per year we would be at capacity within a decade. We would of course need to dig the coal infrastructure to fuel them. Personally, I think that it is more important to use this "gasification" technology to provide feedstocks for industry and to make some fertilisers for agriculture. We are still going to need to provide food in as self-sustained a fashion as is possible. So, if we made half our electricity from coal, we could simultaneously provide 21 million tonnes of synthetic oil per year. 50% of our road transportation fuel equals 7.5 million tonnes of oil (if burned in hybrids) leaving 13 million tonnes of oil (or its CO + H2 equivalent) for industry and agriculture. However, there are many issues concerning pollution and CO2 emissions to be addressed if we are to take this path. If we installed 3-4 such plants per year beginning now, we would be able to meet this capacity within a decade, by when I predict that world oil will be in significantly restricted supply, and whence placing us in a relatively secure position in terms of energy based on an annual requirement of just over 100 million tonnes of coal.