REPOST: Coal to gas moves are generating economic waves

How does replacing coal to cleaner energy resources induces economic waves? This Forbes.com article provides the information.

Image Source: forbes.com

Shifting from coal to gas hasn’t triggered the financial tailspin about which many utilities had warned. But it has created an economic wave, which is fostering the next-generation of energy jobs while also helping to clear the air.

All utilities that own and operate coal-fired fleets must decide whether to retire or to retrofit their aging plants, many of which were built in the 1950s. Multiple federal regulations are now in the pipeline and involve mercury, coal ash and greenhouse gases. That will result in the closing of a cadre of coal plantsand the construction of numerous combined-cycle natural gas facilities.

“Our analysis shows that switching to cleaner energy sources and investing in energy efficiency often makes more economic sense than spending billions to extend the life of obsolete coal plants,” says Steve Frenkel, director of the Union of Concerned Scientists‘ Midwest office. “Regulators should require utility companies to carefully consider whether ratepayers would be better off by retiring old coal plants and boosting electricity generation from natural gas and renewable energy sources like wind.”

Spending billions to upgrade old coal plants is unwise, he continues, saying that as much as 18 percent of the nation’s coal portfolio should be mothballed. That equates to 353 generators in 31 states.

While the industry is hoping for delay, action will ultimately be inevitable. Standard & Poor’s says that a third of coal plants are working to comply. Utilities such as Exelon Corp. and PSEG Corp. began ditching their older generators in the 1990s and replacing them with cleaner alternatives.

But the ratings agency says that two-thirds of the existing U.S. coal fleet is older than 30 years and must either be retired or retrofitted. The older and smaller facilities are better candidates for closure while the newer and bigger coal plants could be modernized. Coal now supplies about 40 percent of the electricity here while natural gas comprises about 30 percent, says the EnergyInformation Administration. That could rise to 40-50 percent in 20 years.

Coal is responsible for about a third of all carbon dioxide emissions. It also releases double the other pollutants regulated by the Clean Air Act that include sulfur dioxide and nitrogen oxide. When combusted, natural gas produces roughly half the emissions as does coal. But it, too, has its critics who say that the exploration methods are harmful and that more of the national treasure should be invested in sustainable energy.

Several utilities have recently announced that they would retire their older coal-fired plants and replace them with those that burn natural gas. The decisions are predicated on federal and state environmental laws as well as prior court cases, not to mention the relative cheap price of natural gas.

Georgia Power, a subsidiary of Southern Company, is retiring 2,000 megawatts of fossil-fired generation. Altogether, it will be shedding 15 coal and oil facilities. Five years ago, the parent’s fuel mix consisted of 70 percent coal but now it is 47 percent. That coal configuration will fall further unless technologies that would capture and bury carbon are commercialized.

“They are faced with economic choices that are becoming untenable,” says Craig Dowdy, a partner with McKenna Long in Georgia. “Now, with the pricing of natural gas, it has become a good option. I would still advise utilities to have diverse portfolios, which will be their continued plan as it will be for their regulators. It adds to the ultimate reliability.”

Meantime, Duke Energy just held a teleconference with analysts to discuss, in part, its move to shutter 6,800 megawatts of coal-based electricity by 2015. It will spend $9 billion to upgrade its generation fleet, which involves mostly the construction of natural gas units as well as an advanced coal gasification plantthat will become operational later this year.

The company’s progressive chief executive, Jim Rogers, is calling on the U.S. Congress to put a price on carbon. The timing is right, he said, during the call. That’s because the cost of competing fuels is becoming economical: natural gas as well wind and solar. Wind and natural gas have comprised the preponderance of installed generation capacity in the past decade.

Consider MidAmerican Energy, a unit of Warren Buffet’s Berkshire Hathaway: It is nixing five coal-burning facilities by 2016 in Iowa, which is all part of a legal settlement it had reached with the Sierra Club. At the same time, it will retrofit two other coal facilities there next year. For its part, MidAmerican has become a leading wind energy producer.

American Electric Power, meanwhile, said that it would close three coal-fired power plants in Ohio, part of an earlier legal settlement that also requires the company to build 200 megawatts of wind and solar. And, Minnesota Power, a division of Allete, said this year that it would shut down two coal plants in the northern part of the state within two years.

What is the economic impact of switching from coal to gas? Coal has typically been considered more plentiful and its overall tonnage rates have been cheaper than all other competing fuels. Hence its high market share. But the huge new swaths of shale gas that can also be found in the country’s regions where coal now sits also provide a potentially rich new vein.

Billions will be ultimately invested throughout the shale gas supply chain. Those jobs would replace, or add to, those in the coal fields.PricewaterhouseCoopers says the tally will be 1 million new shale-related jobs by 2025.

“Every utility will have a series of coal units that must be replaced over time,” adds attorney Dowdy. “That does not mean that coal will become obsolete. Clean coal technologies will develop but coal will not have the same percentage of the utility market that it has today.”

Federal regulations have hastened the move from coal to natural gas. But abundant and cheap shale gas has sped up that transition. That’s a boon to both the economy and the environment, although one that does not obviate the need for utilities to hold a mix of generation assets.

Other petroleum production issues can be read in this Ali Ghalambor site.

Pipelines through the centuries

Pipelines are considered to be indispensable in the oil and gas industry. Vital in gas transport processes, a pipeline system is “a transportation network of pipes, valves, and other parts connected together to deliver gaseous or liquid products from a source (supplier) to a final destination.”

Image Source: news.kievukraine.info

Pipelines, however, seem to have preceded modern natural gas use. Historical evidence suggests that pipelines existed as early as 900 B.C. The Chinese used bamboo tubes to build contraptions that resembled modern pipelines and utilized these apparatuses to carry natural gas.

In the United States, natural gas use didn’t take place until 1821. During this era, pipelines were composed of crude wooden structures which were made from no more than hollowed-out logs. These carried gas from “burning springs” to adjacent buildings where the gas was utilized for lighting. Because of this precarious nature of the technology, engineers came up with the iron pipe in 1843 to mitigate the risks of piping gas.

Image Source: storage.canoe.ca

The rise of modern pipelines

World War II marked an unprecedented surge in petroleum demand for the United States, especially in its war mobilization efforts. The demand heightened after the loss of 50 petroleum tankers which were seized by marauding German submarines. To cater to this emergent situation, the pipeline industry launched a massive program of emergency construction.

The most noteworthy pipeline project at the time was the construction of War Emergency Pipelines (WEP) which was financed by the government. WEP, essentially a nonprofit corporation, was composed of 11 pipeline and oil companies which were organized under government sponsorship. Since 1942, during the the height of WWII, WEP kicked off the construction of the world’s biggest large-capacity cross-country petroleum pipeline system. Of note is an oil line dubbed Big Inch, a line with a diameter of 24 inches and which spanned for 1,340 miles.

Image Source: loc.gov

From then on, the science of pipeline production has moved on to look for better and more modern ways to transport natural gas between destinations.

This Dr. Ali Ghalambor Twitter account provides updates on the latest in the petroleum industry.

Repost: “With Hugo Chavez gone, US oil industry eyes Venezuela”

It seems that Hugo Chavez’s death actually has a deeper impact than previously thought.  Oil analysts don't expect sudden changes in Venezuela oil policies after Hugo Chavez's death. But political change in post-Chavez Venezuela could open its oil industry to much wider foreign investment. Learn more about the future of Venezuela’s oil market by reading this article from The Christian Science Monitor.

Venezuelan President Hugo Chavez's death is not likely to result in near-term changes to the Venezuelan oil industry or global energy landscape, but it could ultimately result in political change that would reopen the country's energy industry to foreign investment.

As news of Chavez's death swept through IHS CERAWeek, the world's largest conference for energy executives, in Houston on Tuesday afternoon, participants flocked to televisions, looking for news on the political future of a country that has the second largest oil reserves in the world.

"It's too soon to say what Hugo Chavez's death means for oil prices," said IHS Vice Chair Daniel Yergin. "But it is certainly true that oil prices are what made Hugo Chavez possible," as the collapse of oil prices in the late 1990s "gave him the opening to become president" and rising oil prices since 2000 "gave him the financial resources to consolidate power."

Analysts and attendees at the Houston energy conference said it was unclear what would happen after the country holds an election for a new president. For now, Venezuela's Vice President Nicolas Maduro is in charge and the country's army chiefs are reported to be supporting him.

"Without (Chavez's) charisma and force of character, it is not all clear how his successors will maintain the system he created," Yergin said.

Among the major integrated oil companies, ConocoPhillips and ExxonMobil could stand to benefit greatly from regime change in Venezuela, if the new leadership allows overseas oil companies to return, analysts said.

The nationalization of Venezuela's oil industry in 2007 resulted in the exit of those two companies who were unable to reach a new agreement with the state-owned oil company PDVSA.

 

Too Early to Tell

"It's too early to tell how the new leader will handle it, but ConocoPhillips could benefit the most," said Fadel Gheit, senior oil analyst at Oppenheimer & Co.

ConocoPhillips was the biggest foreign stakeholder in Venezuela at the time of nationalization and could benefit greatly from regaining its former assets, Gheit said, adding: "The book value of assets that were confiscated was $4.5 billion (at the time.) The market value is now $20 to $30 billion... ConocoPhillips could eventually see a net gain of $10 billion."

But that assumes ConocoPhillips would want to return to the country. Venezuela's economic problems extend beyond the oil business. "It really much depends on what kind of government will follow Chavez," said Enrique Sira, IHS senior research director for Latin America.

"The only thing for sure is the fact that the industry is in very poor condition -- upstream, downstream, power, and distribution. Electricity has to be rationed. It has a gas deficit that's been running for years and the country doesn't produce anywhere near what it could produce," Sira said.

ConocoPhillips CEO Ryan Lance, who spoke Tuesday morning at the Houston energy conference prior to news of Chavez's death, noted how the global energy landscape has changed dramatically.

"The new landscape is like someone picked up the energy world and tilted it," he said, as countries with great demand for energy and those with ample supplies has changed. The U.S. is now exporting more of its natural resources than ever before, he said. Those exports include shipping record supplies of US gasoline to Venezuela. Meanwhile Venezuela oil exports to the U.S. are on the decline.

Sira said Venezuela could produce as much as 6 to 9 million barrels of oil a day but now it's probably less than 2.5 million barrels. He said oil production peaked in the early year at 3.3 million barrels.

Venezuela ranked fourth in oil imports to the U.S. last year at 906,000 barrels per day, according to the U.S. Energy Information Administration (EIA). But crude oil imports from Venezuela have been declining steadily since 2004, when they peaked at 1.3 million barrels per day.

Venezuela's refineries are also in such poor shape that it has to import gasoline and diesel from the U.S. In December, Venezuela imported a record 197,000 barrels per day of petroleum products from the U.S., according to EIA data.

In the short-run, oil prices may not be greatly impacted by regime change in Venezuela since for now the flow of oil from Venezuela to the U.S. and domestic fuel imports to the South American country are likely to continue current trends, said Houston-based energy analyst Andy Lipow. "We both need each other."

Read this Ali Ghalambor blog for more articles on the oil and gas sector.

Source: http://www.csmonitor.com/Environment/Latest-News-Wires/2013/0306/With-Hugo-Chavez-gone-US-oil-industry-eyes-Venezuela

Installing offshore pipelines: Facing the challenge of bringing gas onshore

Due to great demands for oil in recent years, offshore pipelines are also receiving great attention. To date, over a third of the growth in drilling worldwide is expected to come from offshore pipelines alone. This fueled a greater need for the development of offshore pipelines than before, and the number of petroleum engineers needed to efficiently develop and manage these systems has also increased.

Image Source: dnv.com

The task wouldn’t be easy, though. Offshore pipelines are known for being complicated systems as they are installed at the bottom of the sea, and engineers are required to have years of education and training before they can operate offshore pipelines. The location of these pipelines alone makes for an extremely demanding installation process; more so with all the details that come with the nitty-gritty of a system’s operation and upkeep.

Specialized knowledge is required to fulfill such a specialized function. Unfortunately, there has been a notable shortage of literature on petroleum engineering, prompting industry experts Boyun Guo, Shanhong Song, Ali Ghalambor, and Jacob Chacko to write Offshore Pipelines, an up-to-date reference for engineers and developers to conquer the challenging task of bringing oil and gas onshore.

Image Source: pipesyscon.com

The authors wrote the book with pipeline design engineers, pipeline operation engineers, and management personnel in mind, taking into consideration the following objectives:

• For learners to be able to learn cost-effective methods in the management and operation of offshore pipeline systems.

• For learners to be acquainted with the burgeoning science of “deepwater pipelining,” a relatively new technology which has been only developed in the past 10 years.

• For learners to be able to master the art of designing pipelines at a low cost without compromising safety and long-term operability.

Image Source: tower.com

This Ali Ghalambor Twitter account updates followers on the oil and gas industry.

REPOST: Energy-rich nations must lead on climate

This CNN.com article talks about the connection between renewable and clean energy and climate change.

Image Source: cnn.com

Four months ago today, U.S. President Barack Obama declared a state of emergency for five states and the District of Columbia over the approach of Hurricane Sandy. The super storm was a reminder that climate change is blind to faith, socio-economic status and geography. It also underscored that supplying cheap, sustainable energy and mitigating climate change is not a challenge for future generations – it is our challenge today.

And energy-rich nations have a shared responsibility to do more. After all, they have the financial and technical ability, as well as decades of expertise, to create the necessary growth of a new energy industry balanced by renewable sources of power.

But beyond having the resources and expertise, energy-rich nations also have an essential element for any sustainable solution: taking action now is in their own interests. In fact, it is an economic and environmental opportunity that it would be almost foolhardy to miss. Oil and gas are finite. Renewable energy is forever. To extend their energy leadership into the future, countries rich in hydrocarbons should seize this opportunity to invest profits into long-term economic growth.

Recent investments are demonstrating that energy-rich countries have recognized the potential payoff. For example, investments by the United Arab Emirates – home to the seventh largest proven oil reserves – account for 12 percent of the world’s installed concentrated solar power capacity. The United States, a nation predicted to become the world’s largest oil producer, invested $51 billion in renewables in 2011. And Saudi Arabia, a country synonymous with oil production, pledged to invest $109 billion to develop 41GW of solar capacity by 2032. In 2012, despite the global economic downturn, $268 billion was still invested worldwide in renewable energy. Today, renewables remain the fastest growing sector in the energy industry.

These investments are paying off. The price of solar panels has fallen by two-thirds in the last two years, due to the incredible scale-up of production capacity in China. And the price of onshore wind turbines has dropped by 10 percent. Together, renewable power (excluding large hydropower) accounted for 44 percent of new generation capacity added worldwide in 2011.

Yet despite these impressive strides, we need to deploy more renewable power to keep pace with rising energy demands caused by soaring growth in developing economies.

Moving the cost of clean energy to parity with conventional power will require a mix of diverse policy mechanisms, direct government investment and innovative platforms for knowledge-sharing. Energy-rich countries have the resources and expertise to drive the necessary change across these dimensions.

No universal policy will spur energy efficiency and renewable energy development. From the feed-in tariffs that have jump-started renewable energy deployment in Europe, to the state-level renewable portfolio standards that have supported growth in the United States, location specific policies have proven that different approaches can have similar results.

Local governments, states, provinces and countries must continue to be the test-beds for forward thinking policy that result in industry growth and investment. But policy experimentation alone is not enough. Governments, particularly in energy-rich nations, must find ways to multiply the impact of their leadership, by sharing effective policy, learning new policy and reaping the benefits of that experimentation.

While healthy competition has been at the core of innovation for centuries, innovating for the common good requires a new mindset. Safeguarding proprietary knowledge – fundamental to commercial competition – can hinder human development when it comes to advancing common needs like education, human health, poverty reduction, or in this case, global climate change.

In a world of widely distributed knowledge, commercial interests can also gain from a more collaborative model. Companies can no longer afford to rely solely on their own research to innovate complete solutions to complex problems. Instead, they should be able to buy or license information from other companies and implement it accordingly. Using this model, companies can specialize and share risk, as well as reap the rewards.

The estimated $50 billion price tag from Sandy is simply the start. Widespread droughts are driving up food prices around the globe. Powerful tropical storms combined with sea-level rise are doing more economic damage and costing more to recover from than ever before. In short, the economic risk of climate change – the high cost of inaction in the future – far outweighs the cost of action today.

Renewable and clean energy solutions must be essential components of the global energy mix moving forward. Energy-rich nations are in the best position to collectively carry that torch.

The time to do more is now.

Ali Ghalambor is one of the foremost figures in the oil and gas industry because of his remarkable contributions. Follow this Twitter page for more updates.

The roles of a pipeline design engineer in offshore drilling

The oil and gas sector greatly relies on pipes. To ensure the profitability of these sectors, an efficient piping system must be established. These systems are used to convey fluids, which may either be liquids or gases, from one location to another, and are central to petroleum processes.

Image Source: weholite.com

To ensure the efficacy of fluid transport using these piping systems, a relatively new engineering discipline has emerged: pipeline design engineering.

In recent years, the demand for pipeline design engineers has increased alongside the need for offshore drilling. To date, over a third of the growth in drilling worldwide is now expected to come from offshore pipelines, thus fueling the clamor for improved academic preparation for the challenging tasks that may confound the budding engineer.

Image Source: cannoncorp.us

It is for this reason that industry experts Boyun Guo, Shanhong Song, Ali Ghalambor, and Jacob Chacko penned Offshore Pipelines to provide students with up-to-date reference in facing the challenges of bringing oil and gas onshore. It also equips future pipeline design engineers with the following sets of skills:

• The ability to design low-cost pipelines that allow for safety and long-term operability.

• The ability to operate pipeline systems in a cost-effective manner.

• The ability to understand the relatively new science of deepwater pipelining.

Image Source: careersinoilandgas.com

Dr. Ali Ghalambor is a renowned leader in the oil and gas sector, and has constantly been recognized for his invaluable contributions in petroleum engineering technology and education. To read more updates on the oil and gas industry, visit this blog.

REPOST: Natural gas futures rally to highest level in nearly 6 weeks

This Nasdaq article reports how climate affects the demand for natural gas in the market .


NEW YORK--Natural gas futures settled at their highest level in almost six weeks Monday, lifted by forecasts for below-normal temperatures that suggest steady demand for gas-fired heating in the coming weeks.

Natural gas for April delivery settled 7.3 cents, or 2.1%, higher at $3.529 a million British thermal units on the New York Mercantile Exchange. That is the highest settlement for a front-month contract since Jan. 23.

A winter storm is expected to dump heavy snow from the Midwest to the Mid-Atlantic in the next few days, according to weather forecasts, while below-average temperatures are expected to persist for at least the next few weeks.

"The latter half of month, with below-normal conditions for the lion's share of the U.S.--that's just lending some late-season heating demand," said Matt Smith, commodity analyst at Schneider Electric.

Roughly half of all U.S. homes are heated using natural gas, so below-normal temperatures typically boost demand for the fuel in the winter.

According to Commodity Weather Group, below-normal temperatures are set to persist across much of the East Coast and Midwest over the coming weeks, the private forecaster said in its outlook for the next 11 to 15 days.

The coming storm is the latest event in a winter that has proven a boon for bulls in the natural gas market. Sustained cold temperatures have led to higher demand and have helped whittle away last year's massive inventory overhang.

Last week, the Energy Information Administration said natural gas inventories fell by a greater than expected 171 billion cubic feet, placing stockpiles at 2.229 trillion cubic feet. That is 12% below last year's level, when a combination of weak demand and surging shale gas production led to a glut of natural gas.

Market watchers caution that the recent rally likely has an expiration date, given the onset of spring.

"We're just running out of winter. Spring is three weeks away," said Dominick Chirichella, analyst at the Energy Management Institute in New York. "I think it's going to take a fundamental change to really convince the buyers to stay in the market at these levels."

Author of various books on petroleum production, Ali Ghalambor continues to deliver numerous technical presentations and courses throughout the world. This Facebook page contains more updates about the industry.