Wednesday, February 24, 2010

North Sea Oil and Gas may Provide One Third of Britain's Energy by 2020.

Combined output of North Sea oil and gas has fallen considerably from its heyday at the end of the 1970s to 2.48 million barrels a day last year, a 6% fall from the previous year. It is convenient to account for both oil and gas in terms of the energy equivalent of a barrel of oil, although actual oil production has fallen from just above 3 million bpd in1979 to just over one million bpd now. It has been warned, however, that without further investment in exploration and development of further fields in the North Sea, production of oil and gas will decline to a mere 0.5 million barrels a day by the end of the decade, which amounts to just 11% of Britain's energy needs.

Ofgen chief executive, Alistair Buchanan has aid, "For the next two to three years, with gas supplies and power station availability we are in a powerful position. The problem is the speed at which it deteriorates." The lobby group, Oil and Gas UK thinks that a lack of investment during the past four years has been a main reason for falling gas and oil production levels. 2009 saw a decline in the number of wells drilled by 22% for development and 40% for exploration.

11 billion barrels of oil and gas has been "discovered" in both new and existing operations, which increases the total offshore reserves for the UK to around 25 billion barrels worth. That said, many of the newly identified deposits are located in the central North Sea or to the west of Scotland, and will require deep-water drilling which is expensive.

It is thought that with sufficient investment, UK offshore oil and gas fields could still be producing 1.5 million bpd by 2020, which would meet 35% of the country's total demand for energy. Otherwise, keeping the lights on may prove a challenge since 40% of our electricity is made in gas-fired power stations. Necessarily rising imports of oil for fuel remain a problem in their own right, however, and I predict a steep fall in the number of cars on Britain's roads by 2020 or well before then.

Related Reading.
"North Sea oil could last at least a decade," By Simon Bowers.

Tuesday, February 23, 2010

Oil Rises Above $80 a barrel.

On Monday, the price of a barrel of oil reached above $80 in New York. The cause was a combination of fears over supply as a strike hit the French oil industry and the vexed issue of uranium enrichment in Iran, which is alleged to be in the intention of making nuclear weapons. The United States affirms that the intention of Iran to build two new uranium enrichment plants is "further evidence" that it does not wish to "engage" with the international community. The issue of uranium enrichment by Iran has been simmering for some time and will not go away.

The Iranians deny that they aim to build nuclear weapons but only to enrich the uranium sufficiently to generate nuclear power. Naturally occurring uranium contains 0.7 % uranium-235 which must be increased (enriched) to around 3.5 % for use as a nuclear fuel. What is left is "depleted uranium" which finds application in making heavy armour-piercing shells and tanks. The enrichment is done using a centrifuge which separates the lighter 235-UF6 from the heavier 238-UF6 in uranium hexafluoride gas. To make a nuclear weapon, the enrichment must be carried on until the uranium-235 concentration reaches nearer 90 %, which is a far more exacting process.

In view of what has happened in Iraq, i.e. a war and 30 year contracts being awarded to western companies to exploit its oil, it may prove significant that Iran has large deposits of oil and natural gas. A newly discovered gas-field in Iran is thought to contain 12.4 trillion cubic feet of gas plus 249 million tonnes of condensate, together worth an estimated $85 billion. Iran also has a similar quantity of oil to Iraq as has been estimated at 138 billion barrels. As an energy target, Iran appears an attractive prospect.

Related Reading.
(1) "Oil rises above $80 a barrel on French strike, Iran tensions."
(2) "Iran discovers $85 billion oil and gas reserves."

Monday, February 22, 2010

London Taxis Powered by Hydrogen for 2012 Olympics.

Looking exactly like the familiar London black cabs, a fleet of taxis that run on hydrogen/fuel cell technology are proposed to be ready in time for the Olympic games, to be hosted in London in 2012. The top speed of these vehicles is 81 mph and they can be driven for 250 miles on a single filling of hydrogen. Hydrogen is of course not a fuel, but an energy carrier, and must be produced, ideally using renewable energy. Therein lies the snag. Iceland is already building a hydrogen grid, but is in an extremely fortunate position since it has ample supplies of geothermal energy. There are also only 300,000 Icelanders, and so the overall demand on the technology is accordingly less than in a country with 60 million, as is the population of the U.K.

In Britain, the renewable electricity would be provided, ideally at any rate, from wind-farms and solar energy plants, but until that is achieved on the grand scale, the hydrogen will be produced from natural gas rather than splitting water by "green" electrolysis. In a chicken and egg situation, the driver of a single hydrogen car would have a poor choice of filling stations to choose from, but as demand increased, more of them would appear, so goes the market-driven argument. Thus a fleet of London taxis would need some concomitant infrastructure in-place from the start.

Kit Malthouse, who is the deputy London mayor, made an announcement in 2009 that by 2012 there would be six hydrogen filling stations in the city, and that somewhere between 20 and 50 taxis should be on the roads by then, as part of the "Black Cabs Go Green" programme, along with an even more ambitious 150 hydrogen-powered buses.

The idea is to modify a standard black cab, and the initial few such taxis have been made at the Lotus headquarters in Norfolk, funded by the government's Technology Strategy Board. The consortium for the project is headed by Intelligent Energy, who make the fuel cells, while Lotus incorporates the cell into the body of the car, using a design in which a tank containing hydrogen under pressure occupies the space of a normal internal combustion engine. Electricity from the fuel cell is fed to a battery pack under the floor of the taxi, which is used to provide propulsion for the wheels.

So in effect this is an electric car. However, there are apparently considerable space-savings over a normal electric car, in which most of the volume of the rear is occupied by the battery-pack, i.e. where the passengers normally sit, and since the energy-source (I am avoiding the term "fuel") is carried on-board there is no need to charge the batteries during the day.

I have grave reservations about the practicalities of hydrogen cars, although in principle they might seem ideal. If the hydrogen can be made from water using green electricity, then we have a pollution-free transport system. However, the infrastructure required from scratch to produce the hydrogen in the first place would be huge, let alone issues of its distribution. I think that as far as 2012 is concerned, there may be a few flagship taxis on the streets of London, but we are so far from anywhere near the 33 million vehicles that are on the roads of Great Britain, and powered by oil, that the scheme is merely a political curiosity. Still, some will say that at least it is a start.

So it is, but if we are at the point of peak oil, and it is impossible to replace oil-powered vehicles by hydrogen/fuel cell alternatives before we experience severe shortages of oil-derived fuels, their impact will be nil. It is more important to face-up to the pressing and undeniable dearth of liquid petroleum fuels and to redesign as best we can, our society to one that is less dependent on transportation at the level we have come to take for granted.

Related reading.
"Hydrogen taxi cabs to serve London by 2012 Olympics," By Alok Jha:

Saturday, February 20, 2010

Warships On Standby Over Falklands Oil

The issue of British companies exploring for oil off the Falklands seems to be getting rather more fraught. A type 42-destroyer, the HMS York, was observed patrolling the neighbouring area, where Argentina has declared that drilling operations are illegal, and has introduced permits on ships that move from Argentine ports to the islands. The British prime minister, Gordon Brown, has warned Argentina that any disruption of links between the Falkland islands and the outside world would be met with force, including a survey vessel that is supported by a 1,000 strong land-based military detachment.

Mr Brown has emphasised that the security of the islands is maintained by Britain, including routine patrols and a deterrence force that "comprises a wide range of land, air and maritime assets." According to an MoD official, British interests in the South Atlantic are under the protection of warships, and if Argentina were to interrupt the free movement of shipping on the high seas, the action would be illegal and the decision would be made to employ the deterrence force.

The issue of sovereignty over the islands is sensitive, since Argentina claims them as its own and there is the matter of what oil and other mineral wealth might be garnered from within the 200 mile economic zone around the islands. According to the British, the Argentines are "posturing" in order to get hold of some of that wealth, in the form of future revenues, and the "recovery" of the islands which they term Las Malvinas is a major rallying theme of the nation's president, Cristina Fernandez de Kirchner.

Clearly this matter will not immediately go quiet, and probably not for many years, but I still doubt there will be an all-out military conflict between Britain and Argentine as happened in 1982. Since Britain is already involved in two wars, in Iraq and Afghanistan, do we really need another one?

Related Reading.
"Royal Navy warships on standby over Falklands oil dispute," by Damien McElroy:

Tuesday, February 09, 2010

Falklands War Shadow Over Oil Wealth.

1982 was an important year for me personally as it was when I sat my "finals", studying chemistry at Sussex University on the south coast of England; but for the nation and more globally it was the time of the Falklands War, which was waged in defence of British sovereignty over the Falkland Islands. I recall at the time there was some mention of "mineral rights", but can recall nothing more explicit than this or even where that allusion came from.

Many brave men lost their lives on both sides, as in most wars, or were terribly injured, physically and psychologically. The face of Simon Weston, who was severely burned, is a symbol of courage. He is a remarkable man and an inspiration to all who listen to him. He does not seem bitter.

Now it appears that some of that mineral wealth may exist in the form of oil. An oil-rig is due to arrive in mid-February, in microcosm of the fleet of ships sent to carry soldiers and munitions to wage war against the Argentines almost three decades past, but in this case to explore 100 miles north of the archipelago, where a geological survey has indicated there may be 60 billion barrels of oil.

The rig has been hired to the British "Desire Petroleum" company who will drill in the North Falkland basin and then lease it on to two other British companies, Rockhopper and Falklands Oil and Gas, and to the Australian BHP Biliton. The various firms will use the rig in rotation throughout this year. Shell put on hold its drilling projects in 1998 when the price of a barrel of oil fell to $12. Now with rising prices and peak oil on the horizon, meaning high costs and eventual actual scarcities, exploration projects of this kind are now looking once again viable.

Not surprisingly, Argentina is not a happy bunny, since it still claims sovereignty over the Falkland Islands which it calls the Islas Malvinas, having lost the war in 1982 and accuses the British of "occupation". It seems unlikely that there will be a second military conflict between the two countries but words of protest and defiance can be expected as the islands are a matter of national pride for Argentina. Given the waning in the North Sea fields, it is to be expected that Britain will look elsewhere for oil, including the region around Rockall, where there are sovereign rights.

The Falklanders will benefit to the tune of 20% of all profits and 9% of the royalties per barrel. The four main players have further promised substantial onshore investment which includes an overhaul of the main port at Port Stanley and building 350 new houses. There are 2,900 islanders there whose per capita income can be expected to rise appreciably, if even any substantial oil is recovered there, let alone 60 billion barrels. That said, not all are impressed by the potential loss of a traditional lifestyle based on fishing.

I shall watch this space to see if indeed oil is found and what consequences this may have.

Related Reading.
"Falklands oil prospects stir Anglo-Argentinian tensions." By Rory Carrol.

Monday, February 08, 2010

The Uranium Rush.

Last year Kazakhstan became the world's largest supplier of uranium, overtaking Australia and Canada, at 14,000 tonnes, or one fifth of world production. As supplies of oil are being sought in increasingly inhospitable regions of the globe to meet rising demand against finite supply, the hunt is on for uranium in the face of an emphasis to turn-away from fossil-fuel based power stations and toward nuclear. The statistic is often given that there is about 40 years worth of of uranium left, and this is the duration therefore of the provision of nuclear power.

In fact, there is much more uranium around than that, and the use of thorium and "waste" transuranics would see the industry continue well beyond the foreseeable future, including potential technology that actually destroys nuclear waste and turns it into useful energy. The EROEI of all the other energy sources that must be employed in the fabrication of nuclear fuel rods/pellets and the power plants themselves must be considered too in the necessary book-keeping exercise of viability. Ultimately, it is hoped, much of the energy for these tasks might be supplied in the form of nuclear electricity.

In Bangui, the capital of the Central African Republic, are plans to begin mining uranium, which is there in quantity. Niger too, is to receive 1 billion Euros worth of investment to open a uranium mine. The price of uranium is a strong driving force which rose from $10 a pound during the decades where "nuclear" was perceived as anathema, to $137 a pound two years ago. Given the current spot-price of unenriched uranium is $42 a pound, a majority of mining projects are now seen as viable.

Presently, America and Russia meet a fifth of world uranium demand in the form of decommissioned nuclear weapons, taken from the stockpile amassed during the nuclear arms race of the cold war. Without them, it is likely that the demand simply can't be met. Africa is also an easier place to operate in, as the regulations are rather less rigorously enforced. For example, radioactive shovels were found in sale in the local market in Arlit, a company town adjacent to the Areva uranium mine, in Niger. Indeed, Niger is the sixth largest uranium producer in the world and may well increase its ranking. Areva has implemented a plan to stop radioactive waste rock and scrap metal from getting into the local community, but the problem is clear.

Namibia and Malawi are also in the sights of new investors, and the situation has been aptly summarised: "Getting a mine going in Texas takes two bookshelves full of authorisations. In Africa you give a shovel to a guy on $2 a day and you've mining uranium."

Related Reading.
"The great uranium stampede," By Danny Fortson.