Sunday, April 28, 2013

REPOST: Liquefied natural gas safe and fun, advocates say

What is LNG or liquefied natural gas? To give you an insight, read this article from

English: A liquefied natural gas storage facil...
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The term “liquefied natural gas” may bring to mind images of sprawling terminals and processing facilities pumping volatile hydrocarbons through pipes and gleaming metallic tackle. You may see visions of giant tankers Asia-bound with ice crystals running down the sides, liquefied cargo sloshing around just waiting to blow.

In reality, LNG is much less volatile or explosive than many other hydrocarbon products, as I learned from ConocoPhillips COP +0.93%’ Peter Micciche at the LNG 17 exhibition last week in Houston. It does not need to be pressurized to remain liquid, and its high ignition point – higher than gasoline or diesel – as well as its lightness and lack of oily residue mean that it can be processed, dispensed and transported more safely than many other products. Micciche’s demo, which can be found on YouTube, is choc-full of gimmicks designed to calm the public’s fear of natural gas catastrophes, at least on the liquefaction and transportation side.

Micciche, a friendly guy with a salt-and-pepper beard who is the manager of ConocoPhillips’ Kenai LNG Facility in Alaska, showed the crowd the LNG in a canister, basically an oversized metal Thermos. In order to become liquid, natural gas needs to be cooled to about minus 260 degrees Fahrenheit in a processing facility, and at that point it can be carried around in an insulated container. No pressurizing is required to keep it liquid; it simply evaporates little by little as the liquid warms up. If the LNG is kept in a container that releases pressure, it won’t explode.

At the Houston exhibition, Micciche brazenly poured the stuff on the floor, where it made a “pitt-patt” sound and disappeared in a puff. He poured it into an occupied goldfish bowl, where it swirled and steamed on the surface until all that was left was a crust of frozen ice on the top while the fish swam around inside. He also poured it into a beaker and lit it – it burned evenly with a yellow flame much like the one from a burner on a stovetop. He seemed to truly enjoy playing with the super-cooled substance and brought spectators into his land of fun.

North American oil and gas companies are banking on LNG becoming more widely adopted as an industrial fuel, a transportation fuel, and an export. The LNG space could see significant M&A over the next year or two as gas producers sell stakes in projects, or sell themselves entirely, and end-users look to secure supply, as Mergermarket has reported. Chevron recently acquired a 50% stake in the Canadian export terminal Kitimat for about $1.3 billion, and in February 2012, private equity firm Blackstone Group agreed to put $2 billion into Cheniere Energy’s Sabine Pass export terminal.

To be fair, much of the political opposition to LNG, both as an export and a domestic product, has to do with the environmental impacts of hydraulic fracturing and the potential price increases for current users of natural gas (which includes any customer of an electric utility that generates power from natural gas power plants). Those are different discussions and different equations. But anyone wondering about the safety of the stuff itself can rest easy that we won’t be seeing natural gas-caked seagulls washing up on any beaches, and we can put it in cars as long as the gas tank isn’t airtight.

The Natural Gas Engineering Handbook, which was co-authored by Dr. Ali Ghalambor, can provide you with more information on petroleum production. You can also visit this Facebook page for more updates. 

Thursday, April 25, 2013

In response to increasing diesel demands: North Dakota builds new refinery

After a long-standing diesel demand problem, the government is finally recognizing the need for new infrastructures to support growing needs. On April 10, 2013, North Dakota Governor Jack Dalrymple, together with several state politicians and investors, gathered to break ground for the construction of a new refinery—the first since 1976.

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North Dakota produces more crude oil in the country than any other state, with the exception of Texas. This is mainly due to the Bakken shale formation, a layer of oil-rich rocks which extends up to two miles deep into the ground. With this kind of resource, the state has been expected to support the oil needs of its residents, which at present rate is approximately 53,000 barrels per day.

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Unfortunately, North Dakota has only one refinery, thus forcing the state to import more than half of these barrels, and ultimately relying on the refineries in the US gulf for much of its diesel. This comes with a more alarming fact, however, as forecasters have predicted that North Dakota will be consuming at least 75,000 barrels per day by the year 2025.

Governor Jack Dalrymple recognizes the importance of building these new refineries. “Diesel fuel is something that's highly valued around North Dakota,” he said. “Refineries will allow us to use our Bakken crude right here at home.”

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This Ali Ghalambor Facebook page shares more updates on the oil and gas industry.

Tuesday, April 23, 2013

Repost: Trucking Industry Is Set to Expand Its Use of Natural Gas

The New York Times recently reported that the trucking industry is set on switching from petroleum to cleaner burning natural gas - a move which may also benefit consumers if prices remain low:

The natural gas boom has already upended the American power industry, displacing coal and bringing consumers cheaper electricity.

Now the trucking industry, with its millions of 18-wheelers moving products like potato chips, underarm deodorant and copy paper around the country, is taking a leap forward in switching from petroleum to cleaner-burning natural gas. And if natural gas remains cheap, consumers may benefit again.

This month, Cummins, a leading engine manufacturer, began shipping big, new engines that make long runs on natural gas possible. A skeletal network of refueling stations at dozens of truck stops stands ready. Major shippers like Procter & Gamble, mindful of both fuel costs and green credentials, are turning to companies with natural gas trucks in their fleets.

And in the latest sign of how the momentum for natural gas in transportation is accelerating, United Parcel Service plans to announce in the next few days that it will expand its fleet of heavy 18-wheel vehicles running on liquefied natural gas, or L.N.G., to 800 by the end of 2014, from 112. The vehicles will use the new Cummins engines, produced under a joint venture with Westport Innovations.

U.P.S., like the rest of the industry, still has a long way to go in the conversion, but the company hopes to make natural gas vehicles a majority of its new heavy truck acquisitions in two years.

The company is benefiting from incentives provided by various states and the federal government, which offer tax credits and grants for installing natural gas fuel stations and using vehicles fueled by natural gas.

“By us doing this it will help pave the way and others will follow,” said Scott Wicker, chief sustainability officer at U.P.S.

“Moving into L.N.G. is a means to get us onto what we see as the bridging fuel of the future and off of oil,” he said. “It’s the right step for us, for our customers and for our planet.”

The move could also cut the country’s oil import bill. There are currently about eight million heavy and medium-weight trucks consuming three million barrels of oil a day while traveling the nation’s highways. That is nearly 15 percent of the total national daily consumption and the equivalent of three-fourths of the amount of oil imported from members of the Organization of the Petroleum Exporting Countries. Roughly two-thirds of the diesel used as transportation fuel nationwide feeds three million 18-wheelers, the main trucks hauling goods over long distances.

In the last four years, the natural gas shale drilling boom has produced a glut of inexpensive fuel, leading producers to argue that the country should wean its commercial and municipal transportation systems from a dependence on imported oil to domestically produced natural gas.

It is cheaper, saving truckers as much as $1.50 a gallon, and it burns cleaner, making it easier to meet emissions standards. The domestic fuel also provides some insulation from the volatile geopolitics that can drive up petroleum prices.

Still, manufacturers and fleet owners have been slow to switch, partly because natural gas vehicles can cost almost twice as much as conventional trucks and because only a few gasoline stations have the specialized equipment needed to dispense the fuel.

Now, as name-brand manufacturers and chains like Nike and Walmart have pressed for transportation of their goods by natural gas vehicles and companies like U.P.S., FedEx and Ryder System have started exploring the option, truck makers have begun bringing natural gas vehicles to the market. Major manufacturers, including Navistar and Volvo, have plans to offer long-haul natural gas vehicles.

Clean Energy Fuels — a company backed by the financier T. Boone Pickens and Chesapeake Energy — has peppered major routes with 70 stations, many at truck stops operated by Pilot Flying J. (The truck-stop company, whose chief executive is Jimmy Haslam, owner of the Cleveland Browns, is separately under investigation for potential rebate fraud.)

Clean Energy has plans to complete 30 to 50 more by the end of the year. Shell has an agreement to build refueling stations at as many as 100 TravelCenters of America and Petro Stopping Centers while ENN, a privately held Chinese company, hopes to build 500 filling stations as well.

That emerging network “really has changed the interplay between the shippers and the contracted carriers,” said Andrew J. Littlefair, Clean Energy’s chief executive. “The whole deal’s beginning to change.”

Though the network is growing rapidly, it has a long way to go. As of May 2012, only 53 L.N.G. fueling stations were in the United States, more than two-thirds concentrated in California, along with 1,047 compressed natural gas stations around the country, according to the Energy Department. In comparison, there were 157,000 fueling stations selling gasoline.

Vehicle use of natural gas in the United States is still negligible but it has been growing. Among fleets whose vehicles travel shorter routes, like transit buses, refuse haulers and delivery trucks, use of compressed natural gas is much further along. Last year, more than half of newly purchased garbage trucks ran on compressed natural gas.

The federal Energy Information Administration last year projected that if enough L.N.G. filling stations were built and economic conditions were right, sales of heavy-duty natural gas vehicles could increase to 275,000 in 2035, equivalent to 34 percent of new vehicle sales, from 860 in 2010. But estimates vary. Citigroup recently forecast that 30 percent of the heavy truck fleet would shift to natural gas by the end of the decade, but some in the transportation industry put that figure much lower.

L.N.G. trucking is slowly gaining traction internationally as well — especially in Canada and Europe — although conversion in the United States, where gas is relatively inexpensive, is expected to be faster. Trucking industry experts project that 5 percent of the European heavy trucking fleet could run on natural gas by 2015, rising to as much as 15 percent by 2020.

“Natural gas will be a part of that play in commercial vehicles, but our view is, it’s not going to replace diesel,” said Roe C. East, general manager of the natural gas business at Cummins. He added that natural gas could capture as much as 10 percent of the heavy-duty truck market in North America in the next five years.

One obstacle is cost. There are some tax incentives, and the Obama administration funneled stimulus money to various projects. ENN, the Chinese company, for instance, has teamed up with a small company now operating as Blu in Utah that used federal stimulus money to help open a natural gas fueling station in Salt Lake City in 2011.

But industry executives say that the incentives are not enough to get the system going and solve what Bill Logue, chief executive of the FedEx Freight Corporation, called the “chicken-and-egg dilemma” of which comes first, the trucks or the stations.

“We believe that public policy supporting the development of natural gas infrastructure is critical and should be prioritized,” he said in an e-mail message. “Individual drivers and private companies cannot realistically be expected to resolve the dilemma themselves.”

Another issue arises alongside the very appeal of the fuel: its low price.

Because natural gas is now in demand to meet so many different energy needs — including industrial electricity and home heating — prices could rise, as they have in recent months, especially if the Obama administration begins approving the fuel for export to countries where gas commands a much higher price, as some producers and lawmakers are pressing the Energy Department to do.

As U.P.S. executives explain it, the economics for the switch to natural gas are complex.

Prices for L.N.G. and diesel fuel vary around the country, so the company matches its L.N.G. trucks with states where it can get the lowest-cost gas on long-term contracts and the most generous grants. The rule of thumb, according to U.P.S., is that truck operators save 30 to 40 percent per mile driven on gas over diesel.

A big part of the equation is a 50-cent-per-gallon tax credit the federal government offers to companies that use L.N.G., but that is scheduled to expire at the end of the year.

(There are also federal taxes that work against gas use, including a 12.5 percent federal excise tax on new heavy trucks that is more onerous on L.N.G. vehicles because they are far more expensive.)

“The economics are getting better and better to where it’s less of a leap of faith than it used to be,” said Kurt Kuehn, chief financial officer of U.P.S., although there is still risk because the upfront cost is so high. It still takes seven or eight years for the savings from replacing diesel with the cheaper fuel to cover that cost, he said. For many companies, that may prove too long to wait.

But Clean Energy executives say that the margin between the fuel prices is so wide that the time for recouping the investment is shortening — perhaps to as little as one to three years.

Mr. Pickens, a Clean Energy board member who has been an advocate for switching the national trucking fleet to natural gas, said that even if the price of natural gas rose by roughly 50 percent, to $6 per thousand cubic feet, truck fleets would most likely still save money.

“Natural gas will always be less than diesel,” he said, “because the price of oil is set globally by OPEC and they have to have a price high enough to keep their social commitments and stay in power.”

Mr. Pickens predicted that a majority of the nation’s long-haul truck fleet would be fueled by natural gas in seven years because 70 percent of the 18-wheelers operate in defined regional areas, and a natural gas truck can drive 600 miles on a single fill-up.

“I promise you it will all fit together and the stations will be there,” he said.

Dr. Ali Ghalambor is an internationally recognized expert on petroleum engineering. Find more news on the affected industries and updates on developments in the natural gas boom by liking this Facebook page.

Sunday, April 21, 2013

The great reduction on Iran oil imports

The oil importation relationship between Iran and other countries is usually subject to seasonal fluctuations. Sometimes it spikes, sometimes it goes down. In foresight, however, it seems that the current reduction on oil importation from Iran will carry on. As a matter of fact, the US State Department is expecting that many importers of Iranian crude oil will make further significant cuts in their purchases.

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This is pursuant to US laws which urge all countries to make “significant reductions,” or reductions as stipulated by the US government, in the volume of their crude oil imports coming from Iran. Those who do not conform to this rule may run the risk of having their banks being cut off from the US financial system under US sanctions.

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Amidst these talks of importation reduction, however, is an alleged political underpinning which touches on Iran’s long-standing nuclear issue. The above US sanctions apparently aim to cut off Iran’s funding sources for the Tehran nuclear program. Iran, however, denies these claims and states that its nuclear program is not for anything other than for civilian purposes.

Iran has the world’s second largest natural gas reserves, and is currently one of the world’s largest importer of crude oil.

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Dr. Ali Ghalambor is one of the country’s foremost experts in natural gas and petroleum engineering. He is also a respected professor, consultant, and textbook author. Catch the latest in the oil and gas industry by visiting this Facebook page.

Wednesday, April 17, 2013

REPOST: 'Wake-up call' sounded on stalled renewable energy initiatives

This article published in Los Angeles Times reports the need for a rapid expansion in low-carbon energy technologies to avoid producing green house gases that drives climate change. 

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WASHINGTON -- The push to produce more energy from renewable sources has stalled, and “the average unit of energy produced today is basically as dirty as it was 20 years ago,” according to Maria van der Hoeven, executive director of the International Energy Agency, a Paris-based intergovernmental organization that researches the energy sector and holds reserves of oil in case of supply disruptions.

Van der Hoeven’s statement pointed to the amount of carbon dioxide emitted by the world’s power plants, the greatest source of the greenhouse gases driving climate change. To track greenhouse gas output over time, the IEA has developed a new gauge, the Energy Sector Carbon Intensity Index (ESCII), to show how much carbon dioxide is emitted, on average, to provide a particular unit of energy. The index measured 2.37 metric tons of carbon dioxide per metric ton of oil-equivalent in 2010, compared with a ratio of 2.39 metric tons of carbon dioxide per metric ton of oil-equivalent in 1990.

Countries are installing ever-greater amounts of solar and wind energy, the IEA noted, even during tough economic times. But “growth of coal-fired power is actually outpacing the increase in generation from non-fossil energy sources,” van der Hoeven wrote in an op-ed in the Huffington Post.

The United States, for instance, is burning less coal but is exporting more of it to fuel power plants in Asia. Overall, the world consumes about 50% more energy than it did in 1990, mainly due to the growth of emerging economies, van der Hoeven said. And with carbon dioxide emissions the same from each unit of energy over the last 20 years, record amounts of greenhouse gases are pumped into the atmosphere annually, she said.

The vast majority of climate scientists say that the world needs to keep global average temperatures from rising more than 2 degrees Celsius, or 3.6 degrees Fahrenheit, above average temperatures in the mid- to late 19th century. At this rate of burning coal and installing renweables, “the world is on track to have global temperatures rise by 6 degrees Celsius,” or 10.8 degrees Fahrenheit, by the end of this century.

“The overall lack of progress should serve as a wake-up call. We cannot afford another 20 years of listlessness,” van der Hoeven wrots. “We need a rapid expansion in low-carbon energy technologies if we are to avoid a potentially catastrophic warming of the planet but we must also accelerate the shift away from dirtier fossil fuels.”

Van der Hoeven made the comments in the run-up to a meeting this week in New Delhi at the Clean Energy Ministerial, a group of ministers representing countries responsible for 80% of global greenhouse-gas emissions.

Be more updated on the shale gas industry by visiting this Ali Ghalambor Twitter page.

Tuesday, April 16, 2013

The road to clean air and energy self-sufficiency

So much has been said about the development of the energy industry in the US, particularly with the growth of the shale gas industry. The boom in natural gas supplies could usher in accelerated growth of the economy as the industries that heavily use the resource could benefit greatly from lower costs.

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Meanwhile, protests from environmentalists have also been trying to block further efforts to take advantage of the shale gas revolution as there are dangers present in the haphazard growth of the industry, which could reverse whatever progress the nation has had in environmental protection and battling climate change.

President Obama has made it clear that he wants to pursue an ‘all of the above’ energy strategy – a strategy that focuses on both the growth of clean energy and the development of domestic oil and gas resources.

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The problem is that such strategy does not seem to be feasible. Sacrifices will have to be made in favor of one agenda over another. If clean air is the priority, then efforts made for the development of the shale gas could be hindered.

Experts and analysts, however, have noted that there may still be an option that takes both sides of the debate into account and will result in better outcomes. Good regulation seems to be the key to the conundrum, and it will take high standards and regulation, the participation of environmental groups in policy-making, and the strict compliance of those involved in the energy industry to ensure that shale gas development remains sustainable.

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Tightening the rules on the operations of companies in the shale gas industry may be seen as a hindrance but, ultimately, it is necessary to ensure upward development that is safe and non-hazardous to the environment.

This Twitter account for Dr. Ali Ghalambor shares the latest developments in the shale gas industry.

Monday, April 15, 2013

Repost: China Must Exploit Its Shale Gas

Elizabeth Muller from New York Times reports on the importance of recognizing hydraulic fracturing to the broader effort to contain climate change as shown in the situation faced by China:

IF the Senate confirms the nomination of the M.I.T. scientist Ernest J. Moniz as the next energy secretary, as expected, he must use his new position to consider the energy situation not only in the United States, but in China as well.

Mr. Moniz, a professor of physics and engineering systems and the director of M.I.T.’s Energy Initiative, sailed through a confirmation hearing Tuesday before the Senate Energy and Natural Resources Committee.

But some environmentalists are skeptical of Mr. Moniz. He is known for advocating natural gas and nuclear power as cleaner sources of energy than coal and for his support of hydraulic fracturing to extract natural gas from shale deposits. The environmental group Food and Water Watch has warned that as energy secretary, he “could set renewable energy development back years.”

The criticism is misplaced. Instead of fighting hydraulic fracturing, environmental activists should recognize that the technique is vital to the broader effort to contain climate change and should be pushing for stronger standards and controls over the process.

Nowhere is this challenge and opportunity more pressing than in China. Exploiting its vast resources of shale gas is the only short-term way for China, the world’s second-largest economy, to avoid huge increases in greenhouse gas emissions from burning coal.

China’s greenhouse gas emissions are twice those of the United States and growing at 8 percent to 10 percent per year. Last year, China increased its coal-fired generating capacity by 50 gigawatts, enough to power a city that uses seven times the energy of New York City. By 2020, an analysis by Berkeley Earth shows, China will emit greenhouse gases at four times the rate of the United States, and even if American emissions were to suddenly disappear tomorrow, world emissions would be back at the same level within four years as a result of China’s growth alone.

The only way to offset such an enormous increase in energy use is to help China switch from coal to natural gas. A modern natural gas plant emits between one-third and one-half of the carbon dioxide released by coal for the same amount of electric energy produced. China has the potential to unearth large amounts of shale gas through hydraulic fracturing. In 2011, the United States Energy Information Administration estimated that China had “technically recoverable” reserves of 1.3 quadrillion cubic feet, nearly 50 percent more than the United States.

The risk is that what is now a nascent Chinese shale gas industry may take off in a way that leads to ecological disaster. Many of the purchasers of drilling rights in recent Chinese auctions are inexperienced.

Opponents of this drilling method point to cases in which gas wells have polluted groundwater or released “fugitive” methane gas emissions. The groundwater issue is worrisome, of course, and weight for weight, methane has a global warming potential 25 to 70 times higher than carbon dioxide, the principal greenhouse gas that results from the burning of coal.

Moving away from fossil fuels entirely may make sense in the United States, where we can potentially afford to pay for more expensive renewable sources of energy. But developing countries have other priorities, like improving the education and health of their people. Given the dangers that hydraulic fracturing poses for groundwater pollution and gas leaks, we must help China develop an approach that is environmentally sound.

Mr. Moniz has warned of the need to curb environmental damage from the process. But he has also stressed the value of natural gas as a “bridging” source of energy as we strive to move from largely dirty energy to clean energy. Extracting shale gas in an environmentally responsible way is technically achievable, according to engineering experts. Accomplishing that goal is primarily a matter of engineering and regulation.

That is where we need the engagement of environmental activists. At home, they can push the United States to set verifiable standards for clean hydraulic fracturing and enforce those standards through careful monitoring. Internationally, American industry can lead by showing that clean production can be profitable.

We need a solution for energy production that can displace the rapid growth of coal use today. Switching from coal to natural gas could reduce the growth of China’s emissions by more than 50 percent and give the world more time to bring down the cost of solar and wind energy to levels that are affordable for poorer countries.

For more news on the developments of the shale gas industry, follow this Twitter account on Dr. Ali Ghalambor.

Sunday, April 14, 2013

Regulation and the growth of the shale gas industry

There are two sides to the coin in the development and growth of the shale gas industry. On one side, there are plenty opportunities for the growth of the economy, ushered in by the boons granted by an upsurge in the nation’s supplies for natural gas. As covered in previous entries, this advantage may give the US enough leverage to influence the global oil market and promote free-market principles.

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On the other side, there are the protests against the extraction of natural gas as the process used could do more harm to the environment than continued dependence on fossil fuels. Environmentalists argue that, because natural gas is mostly methane, if a lot of it escapes into the atmosphere, then it could trap much more heat in.

Fracking wells are known to leak and there are no conclusive studies yet that prove that the leakage amount is small enough not to affect the atmosphere and the climate. But even if it is indeed a small amount, the speedy growth of the industry could change the situation drastically.

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This is why experts argue that the shale gas industry could do much more with strict regulations in place. As shown by a pact made for fuel drilling in Pennsylvania, environmentalists have some conditions for the energy industry, and a cooperative relationship can indeed be achieved.

With the growth of the industry, it is important to put certain restrictions in place to direct the movement toward positive outcomes instead of continuing to do things haphazardly. The difference between the rules currently in place and better regulation isn’t very large, however, and with combined efforts of the industry, the government, and the citizens, better outcomes for the natural gas boom can be achieved.

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Receive timely updates on the shale gas industry by following this Dr. Ali Ghalambor Twitter account.

Thursday, April 11, 2013

The issue on fuel purity

Just recently, New York heating oil businesses were put under the scrutiny of state and federal authorities for allegedly cheating tens of thousands of customers for many years by selling adulterated oil.

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The dirty facts: why adulterated fuel is harmful

On a narrow perspective, impure oil can greatly affect the efficiency of an engine it is used in. As notes, “these adulterated substances severely impact the functioning of engine leading to motor knocking” and “can damage the vehicle to an extent of complete engine seizure.” This eventually results to a great inconvenience on the consumer’s part, as the resulting damages greatly overshadow the measly amount paid for the impure fuel’s purchase.

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On a more universal standpoint, moreover, the use of adulterated fuel poses a grave environmental threat, as burning waste oil in furnaces would result to an unrestrained release of toxic pollutants into the atmosphere. It can also contribute to soot pollution, further resulting to hundreds of asthma-related hospital visits per year. This reason concerns public welfare, thus making the sale of adulterated fuel grave enough to be criminalized.

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With over 30 years of experience in the petroleum engineering industry, Dr. Ali Ghalambor is an important figure in the oil and gas sector and is widely respected for his valuable contributions as a writer and practitioner. Catch more updates on the oil and gas sector by following this Twitter page.

Wednesday, April 10, 2013

Questioning the logic of US natural gas exports

Natural gas production in the US has been promising, and many people are now convinced that the nation is entering a new era of natural gas abundance. Because of the discovery of previously inaccessible shale deposits in the Earth, natural gas producers are now pushing for an end to the current limits on US natural gas exports.

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To this day, however, the country’s natural gas imports continue to maintain a rather large margin against exports. While imports have gone down from an average of 15.7 percent in the last 20 years to 12.7 percent in November of last year, the energy independence pipedream remain what it always has been—a pipedream.

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Despite opposition from alliances such as America’s Energy Advantage which aim to fight the loosening of export restriction, natural gas producers stick to their logic: selling American produce to the highest worldwide bidder is the way to go. Regardless of the country producing enough gas for domestic consumption, this logic asserts a country’s right to market its own produce to the free market. Hopefully, by doing so, it could improve current efforts in increasing natural gas production and ultimately, lead the US to become a force to be reckoned with in the gas exports arena.

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For engaging discussions on the oil and gas industry, visit this Dr. Ali Ghalambor Wordpress blog.

Tuesday, April 9, 2013

Filling up the classrooms: The rise of petroleum engineering students

Back in 2004, the petroleum engineering industry was in a tight situation. Petroleum engineers were a rare commodity, and oil companies were looking for fresh college graduates. Most petroleum engineers were already aging by then, and many people dreaded a looming staffing crunch. The last decade was a difficult time, indeed.

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Today, however, the tables have turned and the future looks promising. A flourishing job market and high starting salaries have ushered in a new wave of future petroleum engineers to continue the legacy of distinguished forerunners, such as Dr. Ali Ghalambor and Dr. Boyun Guo.

The major factor: attractive starting salaries

In 2011, CNBC reported that petroleum engineers get one of the highest starting salaries, with fresh graduates expecting to earn a whopping $80,849 per year. In 2012, Ostermann reported that the figure rose to a minimum of $89,000 per annum—a large payoff for a mere bachelor’s degree.

Paul Willhite, a distinguished engineering professor at the University of Kansas, believes that many factors lie behind the sudden employment boom. Among these factors, oil prices have been most indicative.

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“One is the oil price is at historic levels, and it’s unlikely to go down much in the future,” he said. “In my view, the era of cheap oil has passed.”

Moreover, the impending retirement of many middle-aged petroleum engineers has threatened a likely turnover, further raising the demand for workers.

With all these taken into account, taking a petroleum engineering course may be more relevant now than it ever was in recent history.

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This Twitter page provides more relevant updates on the oil and gas sector.

REPOST: “Emissions Rules Put Alternative-Fuel Vehicles in a Bind”

This New York Times article talks about the possible effects of Environmental Protection Agency’s proposal to tighten the sulfur contents on gasoline products.

THE Environmental Protection Agency’s latest proposed tightening of limits on sulfur in gasoline, and its previous rules, will most likely have the perverse consequence of retarding the development of cars running on batteries, advanced biofuels or hydrogen — all promising but expensive technologies that have not become mass-market products.

At the least, domestically produced gasoline and rapid advances in technology to make the internal combustion engine more efficient are likely to help the conventional automobile survive against competition from vehicles powered by electricity, natural gas and other cleaner alternatives.

The E.P.A. last week announced its proposed new Tier 3 rules sharply reducing allowable amounts of sulfur in gasoline, which would help automobiles’ catalytic converters to capture more pollutants. Tier 1, the E.P.A.'s first set of rules, was established two decades ago, under the Clean Air Act of 1990. Tier 2 was a refinement in 2000.

The specifics of the regulatory rules are hideously complex, with restrictions phased in gradually and covering only a fraction of the new cars and trucks each model year. They are applied to several categories, including “heavy light duty truck” and “light duty truck.” But the overall picture is clear: pollutants that in the bad old days were measured in grams per mile are now measured in tenths or hundredths of a gram per mile. In Tier 3 they are measured in thousandths of a gram.

Francis X. Lyons, a former E.P.A. administrator for the Great Lakes region, said that the agency’s latest proposed limits on sulfur in gasoline “simply extends indefinitely the viability of traditional automobile engines.”

Obscured by all the numbers is that the various technologies promoted as alternatives to gasoline — batteries, fuel cells or natural gas — are now facing a refined internal combustion engine. The federal government in large part drove automakers toward engine improvements by requiring them to essentially double fuel efficiency by 2025.

At the same time, the federal government has established mandates for increasing amounts of renewable fuels in the gasoline mixture. While that mandate has not yet worked out on the schedule Congress intended, it is clear that gasoline — the product that federal and state governments have been hoping for a quarter-century to replace with a variety of alternatives — is actually a moving target.

 Gloria Bergquist, a spokeswoman for the Alliance of Automobile Manufacturers, a trade association, compared the car to the person in Zeno’s Paradox who walks half the distance to an objective, and then half of the remainder, then half again of what remains. The person gets closer and closer but does not quite reach the end point, which in this case would be a car producing zero emissions.

“The alternatives are having a harder time keeping pace,” Ms. Bergquist said. “Once they were further ahead. Now it really is a horse race.”

 The race is reflected in the E.P.A.'s mind-boggling terminology for clean cars. First there were Low Emission Vehicles, then Ultra Low Emission Vehicles. As the standards got even tighter, “ultra” was not enough, and there were Super Ultra Low Emission Vehicles. Then there were Zero Emission Vehicles, or ZEV, meant to be electrics, and then internal-combustion cars named, with no apparent sense of irony, Partial Zero Emission Vehicles.

The pursuit of an all-of-the-above strategy (a phrase popularized by President Obama but in practical use in the field of transportation energy and pollution since the early 1990s) assures that options will compete with each other, and not all will cross the finish line.

In the view of Mr. Lyons, the former E.P.A. official, the government can promote fledgling alternatives but not make them popular if the underlying technology is too expensive or inadequate to consumers’ needs. And among the technologies making strides are gasoline engines that are getting smaller, lighter and much more fuel efficient, he said.

Many environmental advocates, however, reject the idea that gasoline has an edge in a long-term competition with nonfossil fuels. Although environmentalists embrace the improvements in gasoline and the internal combustion engine, they say they are not meant to meet international goals to reduce greenhouse gas emissions by 80 percent by 2050.

“We still need to get to an electric-drive fleet to meet our long-term carbon goals,” said Luke Tonachel, the director of clean vehicles at the Natural Resources Defense Council.

He and other experts are still counting on a much greater penetration of electric vehicles, even if the vehicles have so far failed to become a mass-market product.

At the Union of Concerned Scientists, David Friedman, deputy director of the clean vehicles program, said that the Tier 3 proposal was a sign of success driven by the alternatives. “There is a long history of exactly this happening,” he said, recalling that when methanol was being promoted as a cleaner fuel the oil companies said, “'Hey, we can clean up our fuel, too.''

Something cleaner will have to be developed, he said, because one-third of Americans live in places that are out of compliance with federal air quality rules at least part of the time, partly because of tailpipe emissions from cars and trucks.

In the meantime, he said, the competition was driving some air improvements. “You can connect the zero-emission vehicle mandate to the Tier 3 standards we see today,” he said. “ZEV set the long-term bar, and the auto industry innovated until they could meet some of those standards, and that’s where we got Tier 3.”

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Sunday, April 7, 2013

REPOST: Can Algerian oil and gas catch a break?

This article discusses the downturn in oil and gas production in Algeria due to foreign investors' wariness on the country's safety and profitability.


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Algeria’s energy fortunes have been a bit of a roller coaster as of late. Almost as soon as they put a lid on a wide-reaching corruption scandal that brought down the heads of the country’s state-backed energy firm Sonatrach, a more pressing challenge emerged. The oil and gas-rich nation faced a steady downturn in production as foreign investors began viewing the country as increasingly inhospitable. The World Bank ranks the country 152nd in its global index of business friendliness.

Last year the state rushed to reverse course with an aggressive energy investment plan and promises of legislative change meant to bring in more new financial partners than had left. But, even that managed to disappoint as the new policies fell short of addressing traditional energy efforts in favor of uncertain shale potential.

More recently, the country’s energy sector has been left to fend off the overflow from the region’s recent tumultuous political transition. Sure, the North African nation largely escaped the kind of protest movements that ousted Gadaffi in the East and Ben Ali to the North, but they still had to deal with the regional unease. This was made significantly worse by a flare-up from Malian separatists to the south.

This periphery instability came home to roost in January when, in an apparent response to Algeria’s open air space for anti-separatist troops from Europe, armed militants raided a BP & Statoil-held natural gas site near the Libyan border. The raid and messy government response left scores dead, among them 38 foreign workers. The message to international energy firms was clear – Algeria offered enormous energy potential, but with it, enormous risk.

Growing Labor Frustration

Adding to the energy sector’s security concerns, this month saw growing frustration with job opportunities boil over with protests across the country’s south. According to an AP report, the south is home to only 10 percent of the country’s population, but also the majority of oil and gas reserves. With thousands turning out to demand a role in the country’s energy indsuty, the spotlight was turned on what activists believe is an uneven approach to developing Algeria’s most important industry.

Algeria is currently Africa’s third largest producer of oil, boasting an estimated 12.2 billion barrels of what is described as a “high quality light crude oil with very low sulfur and mineral contents”, by the U.S. Energy Information Administration. The majority of the country’s reserves are situated in the eastern Hasi Messaoud Basin (60%) with many of the country’s more recent discoveries centered in the Berkine Basin. Algeria produces about 1.27 million barrels per day, with more than half (750,000bbp) reserved for export. Much of this output is reserved for the United States market (40.5%), with OECD European member states, led by Spain and Italy, close behind (38.5%).

Further complicating the protest movement in the eyes of those in search of a little energy sector stability has been the sudden support from the North African arm of Al-Qaida. In an online message, the group called the protests a “natural response to the policy of marginalization and nepotism used by the corrupt Algerian regime”.

For a government trying to downplay the impact of regional unrest on local energy efforts, this was hardly welcome news. The Algerian leadership has been able to address earlier protest movements by increasing public spending aimed at frustrated groups. However, as production and revenue continue to fall and vital trading partners like the U.S. begin relying on closer and more stable resources, this approach may prove unsustainable.

How Big is the Problem?

It would be fair for any energy producing country facing such a roster of challenges to be a little worried. But for Algeria, these last few months may be a reason to panic – or at least take a good, long look at how they do business. After all, this is country that looks to energy revenue for just about all of their export revenue and almost as much of their state spending. To meet even their most basic needs, they will need to increase output and work to expand their production options to reduce their dependence on existing efforts high prices. As the Economist noted on February 9th, “To break even, (Algeria’s) budget banks on oil at around $120 a barrel, above typical forecasts for this year; today’s price is around $116 for Brent.”

The government has offered solutions in the form of new shale opportunities and plans for renewable development. However, with domestic demand rising and foreign investors on edge, such long range options may not be enough.

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Thursday, April 4, 2013

Trucking company tests liquefied natural gas fuel

This news article talks about how natural gas is poised to change the trucking industry.

For the first time in Canada, testing is underway on a type of fuel that could bring big changes to the trucking industry.

A trucking company is running some of its fleet in Calgary on LNG — otherwise known as liquefied natural gas.

Trevor Fridfinnson with Bison Transport says LNG is a significant change from using diesel.

The company expects to spend 30 per cent less on fuel with LNG trucks compared to diesel, and produce 30 per cent fewer emissions.

"It's good for people to have the general awareness about what our industry is doing in terms of being sustainable and being progressive from an environmental standpoint," said Fridfinnson.

Driver Matt Geib says the engine has just as much power and speed.

"A lot quieter than a diesel truck — honestly, that's about it," he said.

Bison is partnering with Shell Canada on the project. Shell is opening LNG fueling stations in Calgary, Red Deer and Edmonton.

The fuel stations are also a worldwide first for Shell. With low natural gas prices these days, company officials say projects like this make good financial sense.

"This is just the start, but we're pretty excited about the start," said Bob Taylor, manager of LNG Business Development at Shell. "We think there is a fair ways for this to go."

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Wednesday, April 3, 2013

From Russia with love: Why Britain is turning to Russia for natural gas imports

In a move that seemingly cemented the burgeoning energy partnership among European countries, Russian Foreign Minister Sergei Lavrov and British Foreign Secretary William Hague finally met to discuss the possibilities of natural gas export expansion. Russia, with its Nord Stream pipeline, has been considered to be an increasingly “vital energy partner” to Europe at large.

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“I am aware that Russia is interested in exporting more gas to the U.K.,” Hague said in an interview. “I hope that this is something our respective energy ministers might explore further together.”

The twin Nord Stream pipelines, which first commenced operation in 2011, was designed to carry about 1.9 trillion cubic feet of natural gas. It is currently running from Russia’s eastern ports through the Baltic Sea to Germany.

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Because of its possible benefits to the natural gas sector, Britain has since been considering linking the pipelines to many British ports. However, because the move is mainly backed by British energy company BP, Hague emphasized that considerations for the pipeline were primarily business matters and should be given more attention by concerned institutions.

"Any contract for gas supply would be a commercial matter and would have to comply with relevant EU as well [as] U.K. regulatory requirements," Hague stressed.

Hague also acknowledged the growing need for Europe to develop its own gas and oil fields, and suggested that to do so, partnering with international energy companies must first be established.

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Tuesday, April 2, 2013

REPOST: Gas prices dip again in latest Lundberg Survey

Lower prices in European crude oil help push down U.S. gas cost. This article shares the details.

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(CNN) -- U.S. gasoline prices have declined for four weeks straight and now average more than 20 cents a gallon cheaper than a year ago, according to a new nationwide survey.

The average cost of a gallon across the continental United States of regular stands at $3.71, down 3 cents from two weeks earlier, said Trilby Lundberg, publisher of the Lundberg Survey. Prices have fallen nearly 9 cents a gallon in the past four weeks and are 22 cents cheaper than at this point in 2012, Lundberg said.

Lower prices in the Europe's benchmark Brent crude oil are largely behind the most recent fall. More U.S. refining capacity coming back on line after seasonal maintenance also contributed, Lundberg said.

"From there, short-term, we may see more price-cutting soon, perhaps on the order of this approximate 3-cent decline," she said. "But the current picture suggests it won't be large."

Gas prices broke a three-month upward spiral in early March, which had climbed nearly 54 cents since late December.

The Lundberg Survey canvasses about 2,500 filling stations across the Lower 48 states every two weeks. The most expensive fuel in the latest survey, conducted Friday, was in Chicago, where pump prices averaged $4.10 a gallon; the cheapest could be found in Billings, Montana, at $3.33, Lundberg said.

Average per-gallon prices in other cities:

Atlanta: $3.57

Baton Rouge, Louisiana: $3.45

Boston: $3.75

Denver: $3.53

Las Vegas: $3.72

Memphis, Tennessee: $3.43

Miami: $3.74

Philadelphia: $3.64

San Francisco: $4.07

Seattle: $3.81

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