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.


Image Source: futurity.org


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.


Image Source: csmonitor.com


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.


Image Source: jumpthecurve.net


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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.

Image Source: petroleumengineer.at


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.


Image Source: buzzle.com


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

 

Image Source: forbes.com
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 CBC.com 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.


Image Source: europe.theoildrum.com


“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.

Image Source: pennenergy.com


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.


Image Source: telegraph.co.uk


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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 CNN.com article shares the details.
 

Image Source: cnn.com


(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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