Thursday, June 25, 2009

Saudi Oil Boss Says World Needs Fossil Fuels.

Despite the new green revolution, which points to lofty targets to curb carbon-emissions and a future greatly underpinned by renewable energy sources, a Saudi oil-leader has said that when the situation of what can be provided by renewables is evaluated objectively, they can provide only a minute share of the total energy requirement. He told the Royal Academy of Engineering last week that oil, gas and coal would remain the energy sources of choice, and that there were plenty of them left.

Addallah Jum'ah recently stepped-down as CEO of Saudi Aram-co, which is the state-owned oil company, and his statements will prove a red rag to a bull, unsurprisingly for environmentalists, but also economists and oil analysts - many who have worked for years in the oil industry - who have good reasons to believe we are close to the peak of oil production, and in any case that oil will run short within the near future rather than that we have hundreds of years left, which Mr Jum'ah's estimate of a remaining 15 trillion barrels would seem to indicate.

It is true that the sum-total of renewable energy (geothermal, wind, solar etc.) accounts for only 1% of total energy used throughout the world. However, Jum'ah thinks that while renewable energy production will grow at a greater rate than oil production, it will remain small. He said: "The volume of new energy supplied by renewables will still be only half of the additional energy provided by oil or by gas and only a fourth of the new energy expected to come from coal."

The reality of economic growth - the basis of capitalism - depends on all kinds of resources, not only of energy but of metals and other finite materials. Without them we cannot climb out of the present or future recessions, or sustain a viable global economy, and there is a great danger to be had in overestimating resources. The investment banking industry massively overstated its assets, thus fooling Western economies into the degree of slack left in the system. There appears to be little resource surplus left, leaving one to speculate that we are experiencing the painful death-knell of capitalism.

If the same happens with the oil industry as did the banking sector, we will suddenly find ourselves in deep trouble. Jum'ah's figure of 15 trillion barrels of oil left is apparently derived by including all sources - not just conventional crude, but unconventional oil such as from tar sands, and presumably to arrive at such a huge figure, shale and coal liquefaction. None of the unconventional sources of oil are likely to be cheap, and it is the dearth of cheap oil that will do its damage to the world economies and bring an end to capitalism.

Related Reading.
"Greens told no alternative to fossil fuels," By Domenic O'Connel and Jonathon Leake.

Tuesday, June 23, 2009

Fuel from Algae within 10 - 15 Years.

According to Raffaello Garafalo, who is the executive director of the European Algae Biomass Association, it will take around 10 - 15 years to implement the production of fuel from algae on the large scale. Algae figure among some of the earliest living species on Earth, and it is speculated that crude oil (petroleum) may have originated from the decomposition ("cooking") of algae that had become absorbed into porous rock strata over many years. It is thought that although making fuel from algae is currently much more expensive by 10 - 30 times than standard biodiesel, the costs could be brought down to around $500 t0 $550 a tonne, which is about $68 - $75 a barrel, and close to the current price of crude oil.

I have noted previously that the escalation in the price of oil is likely to trigger another recession - a point made by another commentator today. Thus, on grounds of rising oil prices, the literal shortage of oil per se and the volition to cut carbon emissions, making fuel from algae looks to be a good move. There are, it must be admitted, a number of technical challenges that must be overcome before this becomes a practical strategy, but there has been research scale production during the past 5 years or so, and there was a major effort made in the United States, during the aferrmath of the 1973 oil shock, when the price of oil more than quadrupled in the wave of the OPEC nations, who decided to punish the West for its support of Israel over the Yom Kippur (also called the Ramadan) war by restricting the supply of oil by 5%.

Algae can be considered "carbon neutral" since as is the case for other forms of plant-life, they absorb CO2 through photosynthesis while they grow. There are additional energy costs attendant to the farming and processing of algae into fuel, for example by transesterification, as is done for other kinds of plant oil, e.g. rape- seed oil to make biodiesel. Another possible means for converting algae into fuel is through hydrothermal processing, which obviates the need to remove the water from it first, since by heating the raw material under pressure, the water it contains acts as a reactant and breaks the oil into smaller hydrocarbon fragments, which have therefore a higher thermal yield, similar to hydrocarbon fuels from crude oil, e.g. around 42 GJ/tonne over around 36 - 38 GJ/tonne for biodiesel. The energy costs for the latter process may be as low as half that required for the former, and standard procedure.

As I have noted previously, algae can be grown anywhere thus avoiding the competition on arable land between growing crops for food and crops for biodiesel.

Related Reading.
(1) "European body sees algae fuel industry in 10-15 years."
(2) "$80 barrel could trigger new recession,"

Thursday, June 18, 2009

Arctic Oil - How Much is There?

As projected efforts to grab what is left of the world's bestowal of oil range to further extremes, and into the Arctic - the Antarctic remaining so far sacrosanct - the question arises of how much oil can really be recovered from the Arctic? One might view such schemes to drill in the most inhospitable places on Earth as an act of desperation, since it will not be an easy task to recover oil from them, and the price of oil so recovered will inevitably reflect this difficulty. Almost 6% of the earth's surface (that's 30 million km^2) lies above the Arctic circle, and it is one of the most extreme environments on the planet. It is mostly locked in ice, without existing pipelines or other means for transportation of oil and gas.

That said, since it is rumoured that there may be one quarter of the remaining hydrocarbons on Earth there, it is an irresistible proposition. One possible bestowal of global warming/climate change is that formerly closed shipping-lanes such as the fabled North West passage are now passable, for significant portions of the year and so it might be possible to sail oil tankers up into the Arctic to carry oil to the rest of the world. It is a short-term benefit however, since we are now on the forty-year slide-down the back-end of Hubbert's peak, and now would be the time to implement in earnest alternatives, which as far as is possible are independent of oil, while we still have fuel in hand to do so. Otherwise it will simply be too late to avert the kind of catastrophic out-plays of a world so utterly dependent on oil when it runs out of oil - cheap oil at any rate, which is the only kind that can be recovered at anywhere near the 30 billion barrel budget that humankind relies on each year.

I am coming to the conclusion that we are witnessing the end of capitalism. This particular economic scene depends on perpetual growth and all evidence is that we are close to the peak of production, not just of oil and natural gas, but metals or various kinds, especially those used in the electronics industry. With insufficient resources to underpin it, as is now becoming evident, growth is impossible. Imagine a world without computers in ten years, or cell phones, Sat-nav devices and the whole caboodle of modern living, including 600 million cars on the roads.

Most of the resources above the Arctic circle lie on continental shelves, underwater, since some 40 billion barrels of oil and 1136 trillion cubic feet of natural gas along with 8 billion barrels worth of natural gas liquids have been developed onshore there. Most of this is in the Western Siberian basin and the North Slope of Alaska. Under the conditions prevailing, oil is not a runny liquid but a thick almost tar-like substance with problems of getting it moving, requiring inputs of energy in terms of steam to heat pipes and other components of the extractive system.

The United States Geological Survey (USGS) has undertaken a study in collaboration with geologists from Canada, Denmark, Greenland, Norway and Russia, whose report "Assessment of Undiscovered Oil and Gas in the Arctic", was published last week. Since much of the area in naturally unexplored, the group had to resort to some method of approximation to get a figure for this. They divided the region into 69 separate components with at least 3 km depth of sedimentary rock which is the kind often known as "oil source rock" which is where oil is most likely to be found.

Only resources of at least 50 million barrels of oil or 300 billion cubic feet of gas (which is energetically equivalent to 50 million barrels of oil) were included and so it can be deduced that there is at least 69 x 50 million barrels = 3.5 billion barrels equivalent (and probably quite a bit more than this, which is the lower limit). However, since it is known that fields containing 50 million barrels of oil or its equivalent of gas contain 95% of all known oil and gas resources by volume, it is clear that the amount that can be recovered from Arctic fields is fairly limited, and probably not more than a few months worth of the world's total consumption.

The report also gives its conclusions as being "without reference to costs of exploration and development." Hence while there may be some money to be had from Arctic oil, it does not get us out of the oil-hole.

Related Reading.
"How Much Oil is Under the Arctic?", by Chris Nelder.

Saturday, June 13, 2009

Khurais Oil Field Begins Production.

Reckoned at 1.25 million barrels a day, the Khurais oil field will increase Saudi oil production from 11.3 mbd to 12.5 mbd. Situated 160 km south of Riyadh, oil is now being pumped into tanks there in a project that will move more oil than the output of Qatar or Indonesia, at a cost of 37 billion Suadi riyals ($10 billion) . By 2013, another project reckoned to produce 0.9 mbd from an expansion of the Moneefa oil field, will extend Saudi output capacity above an additional 2 mbd.

The Khurais field in fact comprises of three fields, Kurais, Abu Jifan and Mazalij, which yield Arabian light crude, highly sought after since it is readily refined into petrol. The minister for petroleum and mineral resources has made clear that the Kingdom does not depend on this additional supply of oil, and current requirements for oil are not high enough to demand it.

The Kingdom claims it could produce 15 mbd should demand so dictate, and has outlined plans for how this might be done, although there are no immediate intentions to increase output further. I recall King Abdullah saying a while ago that oil "should be left in the ground for future generations", which will leave Saudi in a very powerful position as supplies of oil wane elsewhere throughout the world.

In addition to its oil otuput, the Khurais field will also produce 315 million cubic feet per day of sour gas and 70,000 bpd of natural gas liquids, which will be processed at the Shedgum and Yanbu gas refineries. A reserve of 27 billion barrels of oil is reckoned for Khurais. The global economic recession has slowed demand for oil and this has prompted the OPEC nations to cut oil production, including Saudi. It is expected that Khurais will be producing oil for the next 20 - 25 years.

Altogether, the project necessitates drilling 420 wells and constructing 4 new oil and two new gas processing plants. An expansion of seawater well-injection by 4.5 million barrels a day at the Qurayyah treatment plant is also necessary.

Related Reading.
"Saudi Aramoco Starts Production From Khurais Oil Field in Riyadh, Saudi Arabia,"

Sunday, June 07, 2009

New Light Crude Oil Found Off Brazil.

A new oil well has been discovered under 2,210 metres (6.850 feet) of water off the Brazilian coast. The new find was reported by BG Group Ltd - who are the U.K.'s third largest producer of natural gas - is 250 km from Rio de Janiro and 33 km to the northwest of the Tupi well. BG are based in my own town, Reading, and are in partnership with the Portugal based Petroleo Brasileiro SA and Galp Energia SGPS SA. Light crude has already been recovered from a drilling project that is underway already.

It is thought that Tupi is part of a larger pre-salt area which could contain 50 - 100 billion barrels of oil. It is quoted that this is enough to "supply all US needs for 7 to 13 years", but will the US get all of it and should they indeed? What about the rest of the world? Statements like this seem to me to underline the inevitable conflicts that will ensue over grabbing the world's remaining oil.

Light crude is especially precious since it is more readily refined into petrol (gasoline) than are heavier grades of oil and if this projected large quantity can be recovered it will prove a jewel, indeed. Spark ignition engines (which burn petrol) can be more easily fabricated than diesel engines which require heavier engineering and so production costs of vehicles are reduced.

Inevitably, heavier grades of oil will provide the majority of oil in the future since light crude peaked in around 2005, meaning that either new cracking technology must be implemented on a very large scale to convert heavy grades to lighter petrol fuels or future engines will be mostly of the high compression ratio, diesel, type which burn heavier hydrocarbon fractions. Since around 40% more tank-to-wheels miles are routinely extracted from diesel engines than from their spark-ignition counterpart, the latter would be the more energy efficient course of action.

Inevitably, we need to move toward energy efficiency, and not be comforted by red herrings that imply the car-profligate status quo can be maintained for much longer.

Related Reading.
"BG Finds Oil at Another Well in Brazil's Santos Basin (Update 2)," By Guy Collins and Eduard Gismatullin:

Tuesday, June 02, 2009

Moscow Times.

I picked-up a copy of the Moscow Times during a recent visit to the city of that same name. The former USSR is a fascinating place, and where I have travelled extensively and have many friends there, extending from the edge of western Europe to the other side of Kazakhstan. For so many years we feared "The Russians", in the cause of the cold war and all other complexities that prevailed upon us in the aftermath of World War 2, summarised well by George Orwell (real name Eric Blair - no relation to Tony as far as I know?) in his satirical novel "1984" which rather than being a prognosis or prophetic anticipation of future events, was a parody of 1948, with its references to rationing and other such events that we might well anticipate again, especially in regards to fuel and indeed food if we don't begin to support our indigenous farming industry.

The Moscow Times tells that the strength of the Rouble is likely to create antagonism over trade. When I first visited Russia under communist times, the official exchange rate was one rouble for the pound, although I was taken aside by a pleasant young man who offered me ten times the official bank rate. He offered me other distractions too, but I have no persuasions in this direction, and am used to being offered money and sex in travelling throughout eastern Europe and Russia. It is a simple matter of trade, of course, but caveat emptor!

In the Sochi, Krasnodar Region, Russian Railways have endorsed a project for refurbishment of their transport system in collaboration with Austria, Slovakia and Ukraine at a cost of $4.3 billion with the formal intention of accelerating trade connections between Asia and Europe. What does strike me is the immense task that President Dmitry Medvedev (successor to President Putin) has in coordinating the vast region of distance and culture that is the former USSR. When I first visited Armenia, my host, Professor Hrant Yeritsyan from the Yerevan Physics Institute took me to the Sergey Parajanov museum (Parajanov was born in Georgia but adopted and became adopted by Armenia, and fell into a 5 year jail term on charges of homosexuality and subversion, which I do not know the veracity of, although it is widely commented that these were "trumped-up"). He was most famous as a film-director and deprived of artistic materials while serving his time, he made puppets from pieces of abandoned fabric. He died of lung-cancer aged just 65, but I often feel that like James Dean and Marilyn Munroe he probably lasted long enough to do what he was planned for on this earth.

I mention Parajanov in part because I admire his artistic skill and integrity but also that Professor Yeritsyan said to me at the Parajanov Museum, "Chris, sit here, because President Putin sat here", indeed along with other leaders of related nations including Georgia, which has since has a bust-up with Russia over reasons that I can't quite understand. My Russian friends tell me that it's all rather complicated, but politics usually is, isn't it?; anyway I can claim to fame that I sat at the same table and in the same chair as Vladimir Putin, who seems to be quite well respected among the former soviets of my affectionate acquaintance.

In a mirror of the West, there is also an article in the Moscow Times to the effect that of the 300 workers employed at a gear-cutting machine plant in the Saratov Region, only 17 are working exclusively on the jobs they were hired for... this reminds me very much of the situation in British Universities, where you end up doubling as secretary, porter, and all else while raising cash to pay the salaries of administrators... it is in large measure the reason why I left the university system formally anyway, and set up my own business. My novel University Shambles is a light-hearted glimpse of how bad things can get in any corporate organisation when things go badly awry, and that includes universities. That said, from what I gather, the Russian university system maintains its high standards, while ours in Britain anyway, has descended into the proverbial.

About time the government addressed the matter of professors with no published work etc. rather than continuing the pretence that we are a far better educated nation. We could take a lesson or two from the Russians, who actually care about these things whereas our political system, and its knock-on effects, is run by lawyers and people from public ("private" in US nomenclature) school with degrees in really useful subjects like "classics" from Oxbridge and having destroyed our industrial base we have to put the kids somewhere, and call it a "university" whether that accolade is justified or probably not.

Related Reading.
[1] The Moscow Times, May 29 - 31, 209 Weekend.