Houston, we have a problem

Houston, we have a problem… actually we have two problems

  1. Texas has massive power outages as an “unprecedented” polar vortex hits, and
  2. we just can’t agree on what to conclude from this event.

The current unfortunate (and I assume uncomfortable) situation in Texas where over 4 million people were without electricity earlier this week, is revealing about how people view the energy debate.

  • On one extreme I have seen multiple “sharings” of a (very) old photo of a helicopter de-icing a wind turbine to “prove” how reliance on renewable energy has caused the problems.
  • On the other extreme, it is claimed that the polar vortex is yet more proof that climate change is here and now and we should demand more renewables and shut O&G (and nuclear).

Both of these are confirmation bias in action.

Unfortunately, reality is likely to be far more complex. Texas looks like a plane-crash in the sense that a lot of things have had to line up (badly) for the outages to happen.

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50% Renewables: The Good the Bad and the Average

Three facts about wind generation of electricity in the UK:

(1) Headlines exclaim that the UK has beaten its own record and produced 55% of its demand from renewables alone.

(2) Similar headlines (here and here) boast of the average contribution of renewable power over the year (2020 is likely to be a record) and demonstrate the real and laudable displacement of coal and consequent dramatic (world-leading) reductions in GHG emissions.

(3) No headlines, but very real – days when wind and solar don’t contribute and these cause significant perturbations to the grid, price spikes and CO2 emissions rise.

All of these are factually correct – but depending how they are presented (or ignored) can significantly change the narrative.

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In the Court of King Crimson: lessons from Covid – Part 2

According to the author Stephen King, the Crimson King was “the orchestrator of chaos and decay” – and so it is with many faceless corporations: Big Tobacco, Big Oil, Big Pharma and now maybe Big Tech. 

To be sure the “Big” ones have some extremely bad history, lead in petrol, brutal marketing for a known killing habit, many medical scandals (from thalidomide to opiate epidemics), and now for Big Oil the entire carbon footprint of billions of consumers. Orchestrators of chaos and decay, you bet. 

The above may be a fair representation – and is one beloved of headline writers. However, there are alternative narratives that can be equally true and yet coexist. We have to be ready to accept some uncomfortable cognitive dissonance to be able to hold conflicting but valid narratives at the same time. Or just have very short memories.

The Big Pharma Redemption

Big Pharma has a bad rap – the brilliant Ben Goldacre has provided grist with Bad Pharma and indeed Bad Science. In the US “aggressive marketing” of opioid painkillers led to “100 deaths a day” from overdoses – and huge profits for the corporations. 

Add into this, the very human reaction of “chemophobia” and you get mistrust of the whole industry. Indeed, this may even be part of the reason for the rise in the anti-vax (pre-covid) movement.  Fear of chemicals and technology with very little understanding of the science is a common problem because cutting-edge technology in any domain is way ahead of a lay-person’s understanding.

But the other side of the narrative is so huge and so important that it is largely not noticed.

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Energy and Viruses: lessons from Covid ?

PART 1 – Selfless vs Selfish

It has been fashionable to look for equivalences between the Covid pandemic and the climate crisis. These have often had the form of: Covid is a global problem, the virus doesn’t respect national borders, and coordinated multilateral response is needed, short-term pain for long-term gain etc. Then, add on the clear and present benefits – clear air, bird song and a slower pace of life and equivalence becomes clear (at least for richer people). We can solve the pandemic through mutually supportive action, through following the science and we may even have the recipe to solve climate change into the bargain. Build Back Better.

However, as the virus goes from epidemic to pandemic to endemic, so cracks in this narrative are showing. 

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Primary Energy and Exergy

TL;DR It has been common to represent global energy usage in terms of Primary Energy – that is the energy potential of the various sources. However, this can be easily criticized because not all energy is equal and what we really want to understand is the “Useful Energy” that does work on our behalf at the end of any transformation process. The conversion of energy from one form to another (thermal combustion to electricity for example) is subject to the Second Law of Thermodynamics and there are always irreversible “losses” in conversion. Thus, depending on the efficiency of the conversion process(es), much less Useful Energy is used than available Primary Energy. Viewed from end-use perspective, one can argue that much less energy is required globally if we have more efficient sources of primary energy. Solar and Wind which generate electricity directly without any thermal combustion are significantly more efficient. Ergo, we don’t need to replace all of the current Primary Energy, only a fraction of it, to have the same amount of Useful Energy. Unfortunately its not that simple, and understanding the limitations of this argument shed light on why the energy transition is far more complex than the usual sound bites beloved of headline writers.

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Such Stuff as Dreams are Made On

It is normal to want to live in harmony with nature and the unrelenting negative news about climate and CO2 and energy speaks to this. Exciting examples of how things are being done create expectations about how the system should change but also create exasperation about how slow progress is. But the use of flagship projects should be managed with care – these are often in the news because they are the exception, not the norm.

 Gravity Sucks

A while ago, there was a widely-shared video of a huge truck carrying quarried rocks – the electric truck was painted green (of course) and to much adulation was reported to “never need charging”.   Factually correct because the specific circumstance is that the quarry is high on a hillside and its destination (a cement factory) is in the valley. The truck uses regenerative braking to charge its 600kw batteries, and the charge is sufficient to get it back up to the quarry. Magic. The nuance is of course that it carries load down and comes back up empty; thus the losses in generating and storing electricity are compensated for by the additional kinetic energy provided by gravity on the way down – the unladen truck weights 45 tons and carries 65 tons of material – so is 110 tons on the way down and 45 on the way back up.

In many ways this is not too different to counter-weight systems like funicular tramways or building elevators – only here instead of a mechanical transfer with friction losses and a “top-up” of input energy, there is an electro-chemical transfer (with associated losses but net gains).  The laws of thermodynamics still hold.

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The impact of Bullfrogs, Leopards and CO2 emissions

In the simplistic position in which all fossil-fuels are bad and that catastrophic climate-change is a few years away, gas is just another problem that has to be done away with.

However, in the real-world there are complex considerations that are lost in a binary, dogmatic world-view. The discovery of significant gas reserves offshore South Africa is a good case study.

Total and partners are currently drilling the second exploration well in the Block 11B/12B in the Outeniqua Basin offshore South Africa. The first well “Brulpadda” was drilled in 2018/19 evidencing a significant hydrocarbon accumulation.

This discovery of a large gas-condensate accumulation was correctly described as a “basin-opener” – as it significantly de-risks four additional prospects mapped across the block in a classic “string of pearls”, including the current Luiperd well.   Whilst there is always the voice in the background that says “oil would have been better”, this is still a fabulous prize, given its geographical location. Finding wet-gas 175 km offshore of Port Elizabeth and the 60 million people of South Africa, is not inconsequential, and indeed has been rapidly hailed as a “game changer” by WoodMac

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“Lower for Longer” was right and yet so wrong… Finding the real cost of the marginal barrel.

The Marginal Barrel and why does it matter?

The price of the “marginal barrel” in the world of oil is critical, as it dictates the price of all oil. The marginal barrel is the one (or at least a small number of barrels) that represents the gap between supply and demand. In a market that uses c. 100 million barrels of oil per day, the delta between supply and demand is typically only about 1% or 1mmbbls/day. In normal times the price bounces around within manageable ranges as this ebbs and flows. Price has no correlation to absolute supply (see image in title).

Price shocks occur when the deficit or surplus becomes larger. For example, in 2014 the oil price crashed from over $100/bbl to about $50/bbl before continuing south through 2015 because the US shale patch was adding about 1 mmbbls/d each year from 2012 onwards. Disruptions in conventional supply (Nigeria, Venezuela and Libya) left a gap in supply that was almost perfectly matched. However, when Libya brought back on-stream 1.4 mmbbls/day the market flipped into clear over-supply and the price tanked.

Obviously the 30% collapse in daily demand seen in 1Q 2020 due to Covid is and extreme example of this but is such an outlier it is better to focus on normal dynamics.

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When is a trend not a trend? Decline in the Legacy Production of the Permian

A longer version of my question….

The EIA kindly publishes detailed production data from the US. The monthly data is generally considered the most reliable. Here I am just looking at the Permian subset.

It is presented as total production – with the increment month-on-month being the net of a (big) decline in all previous production (“Legacy”) and a usually bigger increase in new production (although this recent example is of a small net decrease)

Rinse and repeat, month after month and the overall production increases.

However, there seem to be two unknowns:

  1. The actual decline of the Legacy and,
  2. The real “new” production
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Massive fossil fuel subsides must stop.

Returning to one of my favourite subjects – those disgraceful subsidies for fossil fuels. One of the features of having teenage kids is you often hear “whatever”, or more recently “no one asked” as conversation stoppers. In the same way, having reasonable conversations about fuel subsidies is often met with the “concerned citizen” equivalent – one such appeared on a previous blog post that laboriously (I thought) tried to show that it wasn’t a simple case of “Fossil-Fuels Bad (and subsidised), Renewables good (and yes subsidised, but that’s OK)”. Despite this I got the “whatever” style comment of how “we should just stop subsidising fossil fuels”.

So here I go again.  The infamous $5.2 Trillion headline has been widely debunked so will be ignored hereafter and whilst there are some places that have direct subsidies for production, in the vast majority these are “implied” subsides whereby the specific and very high petroleum taxes simply generate some rebates, and were discussed at length in the previous post.

However, there clearly are countries who subsidise the cost of (notably) petroleum products to their citizens. The headline number is often mentioned “$426bn” or “$372bn” or some such. A far cry from the debunked $5.2 Trillion, but still a big number, but you have to dig pretty hard to see who these bad actors are. The platitudinous headline is “fossil fuels subsides to consumers must stop” or in more thoughtful works, “should be swapped to subsidies for renewables”. Let’s just ignore that petroleum product molecules and renewable electrons are not always interchangeable, especially around transport.

Globally there are still more subsidies directed toward fossil fuel consumers and producers than toward renewable energy: currently around USD 372 billion is spent on producer and consumer fossil fuel subsidies, overshadowing the USD 100 billion in support to renewable energy (Best et al., 2015; International Energy Agency [IEA], 2018b; Merrill et al., 2017).

Note in the 33 pages of this report there is no definition of these subsidies other than the above – it is just gospel that they exist and must be swapped out. When digging, I found the cited IEA reference has no mention of subsidies at all in it, the Merrill paper is better, and references price-gap analysis.

Spoiler Alert: the countries that subsidise their citizens for say gasoline are clearly globally significant, get them to change and all will be well in the world…

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