DrumBeat: February 4, 2008

GeoTimes: Oil Around the World

● Norway Looks North for Oil and Gas

● Oil and Politics in Iraq

● Squabbles over the South China Sea

● Putting India on the World’s Petroleum Map

● Oil Rushes Back to Libya

Kunstler: Serial Bubbles?

Eric Janszen of iTuilip.com has made a splash in the mainstream media with his Harper's Magazine cover story on the "The Next Bubble." His thesis is that a new tidal wave of investment will shortly roll toward "infrastructure and alternative energy." By this Janszen means a revived nuclear power push, refurbishing highways, bridges, and tunnels, "high-speed rail," solar and wind power, and alternative liquid fuels. This coming boom, he says, would be driven by political fear about energy security.

On the face of it, Janszen's proposition seems more promising and intelligent than the previous engineered boom in suburban houses. But it raises a lot of questions and flags.

Oil Rises After Turkish Planes Attack Suspected Kurdish Bases

(Bloomberg) -- Crude oil rose after Turkish planes attacked suspected Kurdish insurgent bases and the Houston Ship Channel reopened following an 18-hour shutdown for fog.

US Crude Outlook-Refinery restarts seen supportive

NEW YORK (Reuters) - The restart of major units at two large Gulf Coast refineries should help offset some of the recent weakness in crude oil demand on U.S. cash crude markets this week, traders and brokers said Monday.

The Shell/Pemex 334,000 barrels per day Deer Park, Texas refinery began restarting units including the fluid catalytic cracker after a major turnaround on Sunday, according to a filing with Texas regulators.

United to charge fliers checking 2 bags

The charge will generate more than $100 million in revenue and cost savings each year, the UAL Corp. carrier said. The change takes effect with travel starting on May 5 and applies to tickets purchased on or after Monday.

Investors have urged airlines to pass on the higher costs of fuel onto passengers through ticket-price increases or similar surcharges.

France, Japan, US cooperate on nuclear reactors

France, Japan and the United States agreed Friday to cooperate in making prototypes of so-called "4th generation" nuclear reactors, according to statements released by each country's energy ministries.

These sodium-cooled reactors, which would not come on line until mid-century, produce more energy per unit of fuel than nuclear reactors currently in operation.

But early prototypes have been plagued with problems. The liquid sodium cooling agent is highly volatile, bursting into flames if it comes into contact with air, and exploding if it comes into contact with water.

'Green collar' jobs seen as prosperous

By 2030, nearly a half-million new jobs could be created in green industries.

Enbridge to lead carbon dioxide storage project

CALGARY — — Enbridge Inc., Canada's largest oil and natural gas pipeline company will lead a group of 19 energy industry participants in the Alberta saline aquifer project, or ASAP.

Under the project, the first of its kind in Canada, participants will seek, design and expand sites to store carbon dioxide in deep saline aquifers.

OPEC accelerating plans to increase oil production

LONDON (Thomson Financial) - OPEC is attempting to speed up plans to bring more oil production to market due to rapidly rising demand from China and India, according to experts gathered at international think tank Chatham House for a conference on Middle East energy supplies.

"OPEC plans to increase output by 3 mln bpd by 2012. They are accelerating their plans to cope with rising demand and to provide a spare capacity cushion for the market," one speaker said.

Earlier at the conference, speakers warned that oil prices will rocket should rising demand and shrinking oil fields lead to a shortfall in supplies.

They underlined that global crude demand is set to soar on the back of Chinese and Indian economic development.

Analysis: Putin to head Gazprom?

WASHINGTON (UPI) -- As the world's attention increasingly focuses on Russia's March 2 presidential election, speculation is rising about what President Vladimir Putin will do in the aftermath.

While it's a foregone conclusion in Russia that First Vice Prime Minister Dmitry Medvedev will most likely replace Putin, various theories have been floated, several of which seem to have Putin's support -- that he would take the post of prime minister under a Medvedev presidency, or continue discreetly to exercise power behind the scenes. Now the newspaper Pravda has put forth an intriguing scenario -- that Putin would replace Medvedev as chairman of the board of directors of Russia's natural gas giant Gazprom.

Ukraine makes first step to eliminate Russian natural gas middlemen

KIEV, Ukraine: The Ukrainian government on Saturday announced its first formal step toward eliminating a partly Russian-owned intermediary company from its natural gas purchase deals.

Prime Minister Yulia Tymoshenko said the country's National Security and Defense Council on Friday instructed the government to break up the contracts between the Ukrainian natural gas distribution monopoly Naftogaz and the Swiss-based trading company RosUkrEnergo because "they contain elements of corruption and are unprofitable."

China needs to cut energy reliance on coal - official

BEIJING (Reuters) - Power and coal shortages in China should serve as a wake-up call for the country to increase power production from nuclear and wind plants, and reduce its reliance on coal-fired generators, a leading energy official said.

Asia coal prices at record high

Coal prices at Australia's Newcastle port, a benchmark for Asian coal prices, jumped to a fresh record of more than $US115 a tonne ($127.25), as a global supply crunch worsened after a series of supply disruptions in key coal exporting nations.

Let us make billions or the lights will go out, warns energy industry

THE trade body for the energy industry says recent allegations of profiteering are a "fallacy" and warned that the alternative to price rises would be power cuts.

Bangladesh: Govt mulling gas import from Myanmar

Chief adviser's Special Assistant Dr M Tamim yesterday said the government is considering importing gas from Myanmar even if it might require sharing fertiliser with that country.

Japan, China study splitting gas profits

TOKYO (Reuters) - Japan and China are considering splitting profits from gas fields in disputed waters in the East China Sea, a Japanese daily reported on Monday, as the two sides race to resolve a row over resources ahead of a visit by Chinese President Hu Jintao in the spring.

Fire Shuts Down Norwegian Oil Platform

OSLO, Norway - A gas turbine fire shut down production from the 20,000 barrel per day Norwegian offshore oil field Njord A on Monday, without causing injury to the platform's 91 crew, the StatoilHydro ASA oil company said.

Rebels claim Nigerian oil delta attack

LAGOS (Reuters) - A prominent Nigerian militant group said on Monday it carried out an armed raid on a navy outpost protecting an oil pipeline hub which killed three soldiers on Saturday.

Zimbabwe: 'Mother of All Poor Seasons' Forecast

Their projection: the harvest may only amount to 30 percent of the total national maize requirements.

The experts blame the crisis on poor agricultural planning by the government and the excessive rains which have been falling since last December.

Most farmers failed to plant on time because they could not access seed, fertilizer and fuel, among other vital inputs.

Kenya: Acute Fuel Shortage Persists in Western Region

Fuel consumers in western Kenya are to continue paying dearly following prolonged disruptions of supply as the region grapples with an acute shortage of the commodity in the wake of political turmoil.

Triton Petroleum company which operates eight retail stations in Eldoret, Nakuru and Kisumu had all its premises affected by the post election violence and loss estimated at 60 per cent.

Armed escort to secure fuel supply

Kenya Shell, a major oil industry player, has discounted fears that fuel supply to the neighbouring landlocked countries of Uganda, Rwanda, Burundi and the Democratic Republic of Congo will be permanently affected by last week’s resurgence of violence in parts of the country.

The firm’s brand and communications manager, Ngaari Mwaura, said the government’s move to provide free security escorts to trucks transporting fuel to Uganda helped ensure oil supply was not badly disrupted.

Shell Says No Damage to Nigeria Pipeline After Attack

(Bloomberg) -- Royal Dutch Shell Plc's Nigerian venture said a pipeline manifold was undamaged and no production was affected following a gun battle in which three naval personnel were killed.

Dutch Gas Guzzler Tax Hammers Exclusive Cars

AMSTERDAM - Buying a Hummer just became 19,000 euros (US$28,000) more expensive in the Netherlands.

A new "guzzle tax" came into force on Friday, penalising cars that exceed a limit on emissions of the greenhouse gas carbon dioxide as the Netherlands seeks to reduce its contribution to global warming.

Australian Annual Inflation Gauge Jumps 3.9%, TD Says

Surging fuel costs and soaring home rents drove a pickup in inflation that may prompt Reserve Bank Governor Glenn Stevens to add to last year's two interest-rate increases. Price pressures are building as China's demand for Australian commodities prompts miners to hire workers, worsening a skills shortage that is stoking wages and consumer spending.

Pakistan: CNG crisis

Long queues of vehicles can be seen at the CNG stations throughout the country with vehicles returning back without fuel. The closure of the Sui purification plant following a rocket attack has been cited as the reason for the gas shortage and low pressure. Over 700 CNG stations in the country have been affected by the gas shortage along with domestic consumers, factories and power plants. The situation has resulted in a blame game with the distribution companies questioning the reason of connecting the CNG stations to the domestic network. All Pakistan CNG Association has threatened to observe a countrywide strike against the suspension of gas supply to the CNG stations. About 400 CNG stations have been closed down due to low gas pressure in Punjab and the NWFP.

Pakistan: Many industrial units on the verge of closure due to severe energy crisis

"We desire uninterrupted power supply for sufficient time to ensure completion of most production processes and adherence of the load shedding schedule control on unscheduled break downs", he said. He was of the view that the government should launch a campaign in the media to give true picture of the electricity situation to the masses so that undue usage of power could be controlled. He said severe energy crisis was beginning to take its toll as hundreds of industrial units have so far closed their production and many more are on the verge of closure. He called for measures to control line losses and improve the efficiency of the system.

‘Dean of Oil Analysts’ Maxwell: Oil Shortages Start in 2010; Peak Oil Hits 2012-2015

It all boils down to this, Maxwell told EnergyTechStocks.com: We live in a world where there is only about 1.2% more oil available each year, not enough to keep up with 1.5% annual demand growth. Between now and 2010, this supply shortfall will be made up through a drawdown in inventories, helped out by a slowdown in demand in 2008 and 2009 due to a recession or near-recession in the U.S.

But in 2010, Maxwell said, the shortfall will become greater than can be made up by what’s still in inventory, and thus will begin a long period of global oil scarcity that will get worse starting in 2012 or 2013, which is when Maxwell foresees a “peak” in conventional oil production. It gets even worse in 2015, which is when he expects a peak in the production of all liquids, a category that includes condensates, tar sands oil and biodiesel.

Latin American energy crisis

Strange things happen in the world of Latin American energy. In Argentina, the government decrees clocks must be put forward to counter the threat of blackouts. In Ecuador, where oil output is dropping, the government demands compensation from foreigners in return for protecting the environment by not drilling for oil.

The result is a developing regional crisis. In Argentina, price controls aimed at curbing inflation have boosted energy consumption while discouraging investment. In a recent analysis, Eurasia Group, a risk consultancy, highlighted the role of Latin American citizens’ apparently low tolerance of inflation, but high tolerance for state intervention. That encourages populist politicians to court favour in the short-term with price controls and, given high global energy prices, resource nationalism. No wonder Repsol of Spain is selling off bits of its ill-fated investment in YPF, Argentina’s domestic energy giant, to local buyers. Better regional political connections might help lift some price caps.

ICBC Deposes Citigroup as Chinese Banks Rule in New World Order

(Bloomberg) -- There's a new world order for banks, and the Chinese, for the first time, are the biggest, with a market capitalization that has made perennial No. 1 Citigroup Inc. a distant also-ran behind Industrial & Commercial Bank of China Ltd., China Construction Bank Corp. and Bank of China Ltd.

``The tables have been completely turned,'' said Daniel Yergin, the Washington, D.C.-based chairman of Cambridge Energy Research Associates Inc. during an interview at the World Economic Forum in Davos, Switzerland.

Uranium prices seen "choppy" on low output

CAPE TOWN (Reuters) - Spot uranium prices are likely to remain choppy in the face of "anaemic" production and will remain so for the near term, the head of a consulting firm that publishes uranium prices said on Monday.

Kazakhstan has so far been the strongest producer of the silvery white metal used as the basic fuel for nuclear power, but current world production is estimated to last about 3 to 5 years, leaving a potentially big gap in the market.

'Shocking' report finds radioactive vegetables

The newspaper said tests on asparagus, oats and onions produced in the Gerhard Minne wetlands showed that the level of radioactive substances was three times higher than the safe permissible level for human consumption.

Pointing out that intensive gold mining takes place in the area -- and that uranium as a by-product is found in mine dumps there -- the news report said large tracts of land in the area of the Wonderfonteinspruit were 150 times more radioactive than the permitted level.

Investment Guru Jim Rogers: U.S. Economy ‘Pretty Terrifying,’ But It’s Not End of the World

Still, Rogers made a point of saying he doesn’t think this is the end of the world. There should be pockets of prosperity in the U.S. even during the hard times, he said, adding that farmers in Iowa and oilmen in Oklahoma likely will fare well. While the owner of a lake house in Massachusetts will be hurting, he added, the owner of a lake house in Iowa won’t be.

Eco-Heat in Vermont Schools

It's a cold winter's day in the University of Vermont's Jericho research forest, but the discussion amongst the group there is heating up over how trees are being used to heat schools across the state. More than 30 Vermont schools are relying on wood chips as their primary heating source. Wood chip heating systems saved Vermont taxpayers an estimated $760,000 in energy costs during the 2005-2006 heating season.

What communities need to do to survive climate change

Many scientists agree that we have waited too late to address climate change and are now going to suffer some consequences. What is debatable is how severe those consequences will be.

Russian economy succumbs to the oil curse

This is the curse of commodity wealth, the "Dutch Disease" that eats at the competitive foundations of an economy and incubates a parasite culture. No doubt Russia's scientists, engineers, and cyber talent, will enrich the country, but first it must overcome the toxic effects of oil at $90 a barrel.

"We can no longer afford to buy Russian equipment," said Yevgeny Ivanov, head of Polyus Gold.

"The prices here are one and a half times higher than abroad so we're having to break our rigid rule and turn to foreign-made machinery. It is bad news for Russian firms. The commodity super-cycle is catching up with us through higher prices. It is a disheartening picture," he said.

Do high commodity prices speak for themselves?

Stunning new highs in some world commodity prices have catastrophists of all types tapping out SOS in their sleep.

There was, of course, the rise of oil which started 2007 at $50 a barrel and rose above $100 on the first trading day of this year, an all-time high. Wheat which began 2007 at around $5 a bushel reached $10, another all-time high, before retreating slightly. Soybeans which started last year around $6.50 a bushel ended the year above $12 and went on to set an all-time high last month just above $13. And, gold, that quintessential barometer of fear, rose from about $640 an ounce to above $900 recently, shattering its old highs.

UK: Price of food soars to all-time record high

FAMILIES already struggling to make ends meet are being hit by soaring food prices.

Figures yesterday revealed that costs have rocketed by 12 per cent in the last year alone, with the nation’s weekly shopping bill £15 higher than two years ago.

So That's Why Those Bottles Are There...

Thousands of plastic water bottles - approximately 600 pounds worth - sat in Alumni Mall Thursday giving observers a sip of reality: These bottles represent less than a week's worth of LMU's bottled water consumption. And this doesn't even account for bottles thrown into regular trash bins.

Keep consuming!

What’s most fascinating is the mistaken assumption that the developing world is righteously indignant about America’s unimpeachable lifestyle. The reality is that most global citizens want to be like Americans, with all the luxury, excess and environmental impacts that go with it.

A modest proposal

Instead of listening to this doom-and-gloom nonsense, I propose that we stay the course, that we continue on with the way of life we have cultivated and justly deserve thanks to our unique ability as humans to extensively impact the environment and ecosystems around us. If we have the ability to shape the earth's outputs to our needs, why waste time preserving what "used to be"? Nostalgia for the good old days does not translate to sound survival strategies.

Huntington Beach Mayor makes a run for congress

Cook is a member of the board of directors of the Association for the Study of Peak Oil and Gas and serves as Chair of the Energy and Environment Committee for the Southern California Association of Governments.

Drillers eye huge Appalachian gas field

STATE COLLEGE, Pa. - More than a mile beneath an area of Appalachia covering parts of four states lies a mostly untapped reservoir of natural gas that could swell U.S. reserves.

Geologists and energy companies have known for decades about the gas in the Marcellus Shale, but only recently have figured out a possible — though expensive — way to extract it from the thick black rock about 6,000 feet underground.

Raymond J. Learsy: Exxon Rakes in Record $10 Billion Quarterly Earnings While Cheering OPEC's Readiness to Cut Production

The Exxon earnings are not only obscene they are an outrage in that these are not profits that are earned in a competitive marketplace but simply by tailgating OPEC's manipulation. Exxon barely lifted a finger to earn its additional billions other than go along with prices that were the result of collusion by a cartel, and hardly a reflection of a free and unfettered international marketplace. The oil industry apologists are already lining up. To quote one of the spokesmen for the chief peak oil prankster, and cheerleader for ever higher oil prices, Matt Simmons, "A lot of these larger companies are challenged to grow production. That's one of the reasons that oil prices aren't necessarily expensive at $90 a barrel..." Much like Willy Sutton saying he has to hold up another bank because he needs a new getaway car.

OPEC will consider all options at March meeting

LONDON (Thomson Financial) - Qatari Oil Minister Abdullah bin Hamad al Attiyah said that all options were open for OPEC's meeting in March, despite some ministers hinting at cutting or increasing oil output.

Ryanair warns of profits 'storm'

Ryanair has warned that its profits could be halved this year as fuel costs rise and as the UK pound weakens.

The warning came as the budget airline reported that net profit dropped 27% to 35m euros ($52m; £26m) during the October to December quarter.

The drop was its first quarterly decline in a more than a year.

Chief executive Michael O'Leary said that the weakening profits were part of a cyclical downturn in the industry and a "perfect storm" may be lying ahead.

Oil expo thrives amid weakening economy

HOUSTON - Recession? What recession? When thousands of wheeler-dealers gather downtown this week to buy, sell and trade oil and gas projects, they'll be ready to shell out millions of dollars, perhaps tens of millions.

10,000-car backup as ice shuts Chinese road

BEIJING - Railway service inched back to normal Sunday in southern China, a day after one person died in a stampede by frustrated train passengers who were stranded for days because of snow ahead of an important holiday.

More than 10,000 vehicles were backed up on an icy section of a highway in central China's Hunan province, the official Xinhua News Agency said. The vehicles were backed up for nearly 45 miles, even though workers were removing ice from the roads Sunday, it said.

Kuwait to upgrade vital energy sector

The Gulf state of Kuwait plans to spend 51 billion dollars over the next five years to upgrade its vital energy sector which generates 95 percent of its revenue, a top oil executive said Monday.

Gazprom's Oil Unit Plans to Double Output, Invest $70 Billion

(Bloomberg) -- OAO Gazprom Neft, the Siberian oil company once owned by billionaire Roman Abramovich, plans to double crude production by the end of next decade through developing Arctic fields and investing $70 billion.

The oil unit of natural-gas producer OAO Gazprom wants to pump as much as 90 million metric tons by 2020, Chief Executive Officer Alexander Dyukov said in an interview published in the Moscow-based Kommersant newspaper today. His spokeswoman, Natalya Vyalkina, confirmed his comments to Bloomberg News.

CSIRO-Monash Uni biofuel method allays green concerns

AUSTRALIAN scientists say they have developed a greenhouse-friendly way of turning green waste into fuel.

The Furafuel bio-crude oil process, developed by CSIRO and Monash University, can be used to produce petrol and diesel from forest thinnings, crop residues and waste paper, most of which are normally dumped in landfill or burned.

UK's first emissions zone begins

The most heavily polluting lorries are facing charges of £200 per day to enter Greater London as Britain's first low emission zone (LEZ) comes into force.

The £49m scheme uses cameras to check all lorries over 12-tonnes entering the zone against a database of vehicles certified as meeting EU exhaust limits.

Firms whose vehicles are not on the database will be told to pay up.

Raymond J. Learsy:

To quote one of the spokesmen for the chief peak oil prankster, and cheerleader for ever higher oil prices, Matt Simmons . . .

Of course, Learsy and ExxonMobil are--by denying the reality of Peak Oil--in effect encouraging Americans to continue driving SUV's to and from suburban mortgages, in effect, encouraging greater consumption. They are not alone.

Dallas Morning News OpEd: Katherine Stout: More roads, not rail

Public transit backers failed last Tuesday to gain corporate support for legislation that would increase sales taxes for expanded public transit – otherwise understood to be an "ambitious" regional rail network. . .

. . . Keeping Texas moving is a high priority, and the inescapable fact is that Texas needs more roads, not more rail cars.

Mary Katherine Stout is vice president for policy at the Texas Public Policy Foundation, a nonprofit, free-market research institute based in Austin.

GM, drugs, religion, evolution, PO, AGW, Pop Overshoot.

You can find everyone's politics and more than you want to know, by
ID'ing their positions on the above.

And absolutely ZERO of the above will be talked about in political discourse.

Raymond J. Learsy:

I think Learsy is an idiot, but I do agree with him that XOM is riding OPEC's coattails. OPEC, Chavez, and Big Oil make strange bedfellows. There is no love lost between the former 2 and the latter, but any moves that restrict supply - intentional or not - benefit Big Oil as well by driving prices higher.

And XOM stockholders has been squished under OPECs boot many times as well.

Where was Learsy then??


Dunno if this is the right place to post this, and it may be old news anyway, but this article on coal use in China caught my eye:

There is a suggestion there that part of the melt of arctic ice is caused by soot from China's coal burn, which as I understand is rather greater than most models of GW suggest.

Let's hope mdsolars ideas of greatly increased PV in China come to pass!

Quote from the above article:

Meanwhile coal production in China increases at an astonishing pace, and most of the operating coal plants in China lack modern scrubbers to remove gross air pollution. In this regard, concerns over CO2 may be misplaced. It could be that black soot that settles on arctic ice is warming the northern polar regions more than the CO2 that accompanies that soot. And the ill-health attendant to that soot is beyond debate. The costs to remove genuine pollution, nitrogen dioxide, sulpher dioxide, carbon monoxide, particulate matter and toxic metals - is far, far less costly than attempting to sequester the CO2 emissions. And the technology to do this is well established.

No scrubbers! No wonder they have trouble with pollution. I can see how far off carbon sequestration is!


Correct me if I am wrong in my thinking, but using an average of 270,000,000 barrels per month from EIA finished motor gasoline report works out to 136,080*10^6 gallons per year. Divide this by 4,000 gallons/acre/year production by an algae farm equals 34,020,000 acres or a land mass about the size of Iowa at 36,013,440 acres or 56,271 sq miles. Doesn't seem like that large of an area, once spread out over the nation, to replace all of our gasoline (and I know thats just gasoline) with this potential solution. We just need action, over business as usual. I figure I can meet all of my needs with the area in my back yard. Can anyone tell me how to make my own algae pond to make diesel fuel? I believe there was a site out there were Savinar was trying to debate some of these biodiesel guys, I felt they held their own, in theory, I have yet to see any results yet though. Ah yes, found the link, it was this guy, Michael Briggs:


It seems like a lot of water. 56k square miles is bigger than Lake Superior and Lake Huron combined.

yes but how deep is it?

I don't think it has to be very deep to be a problem. If you're talking about flooding an area the size of the state of Iowa to a depth of several inches, and then replacing the huge amount of water that evaporates every day, you're talking about water use on a scale that is mind boggling. We're already having trouble getting enough fresh water to irrigate the crops we already grow.

Profitable algae to biofuels has not been accomplished. It is like solar photovoltaic cells and making electricity. It can be done but is not practical or profitable on a large scale compared to more competitive power generation. Cellulosic ethanol is so far from profitable it might bankrupt any nation attempting to convert to it.

One idea I saw took advantage of the fact that algae only needs around 1/10th of the amount of sunlight to grow, the rest causing the algae to need agitating to bring the algae which has not been exposed to the surface up and submerge the stuff on the top that has had its dose of sunlight.

That takes energy, and makes the process expensive.

the idea is simply to pipe the sunlight in with optic cables in the right amount, so you would have a building with several levels, each with tanks of algae, and each would get the correct amount of sunlight and would simply need skimming to harvest, and then drying.

Doing things indoors would also reduce evaporation.

homebrew -

I've looked into algae only superficially, but I think that with regard to the large scale production of biodiesel from algae, several questions are highly pertinent to its feasibility and cost-effectiveness.

1) While high-lipid strains of algae can be grown in enclosed bioreactors under highly controlled conditions, can an algae 'monoculture' realistically be maintained under steady-state conditions in an open pond, where a natural 'ecology' of various strains of algae plus other oganisms will eventually establish itself?

2) What is the maximum algae concentration that can realistically be grown in an open pond under the conditions of a) no mechanical agitation, and b) mechanical agitation provided?

3) Related to (2), what is the maximum algae concentration that can realistically be grown in an open pond while still maintaining aerobic conditions with a) no mechanical aeration, and b) mechanical aearation provided?

4) What are the nutrient requirements in terms of lbs NPK per dry-weight lb of algae produced? How are these nutrients to be provided?

5) What are the best methods for extracting the lipids from the algae, and what are the material handling considerations and energy requirements of such?

6) If we assume an algae lipid concentration of say 25 % by dry weight, then after lipid extraction we are left with 75% dry weight of organic algae mass. How is this large amount of highly biodegradable (and hence oxygen-demanding) material
to be handled and disposed?

My gut feel is that the large-scale growing algae in enclosed reactors will prove to be a technological deadend due to economic reasons and that unless high-lipid algae can be successfully grown entirely in open ponds, biodiesel from algae will go nowhere. Having said that, I am more than willing to be proved wrong.

Great list of questions, to which I add: How much energy is used in the process of drying the algae, which must occur before any additional processing?

At ASPO-USA Denver, I talked with one of the NREL reps who spoke there and being very interested in algae biodiesel production asked his opinion. He identified joule's list and my addition as the big problems in getting a decent EROEI for the process. He thought cellulosic ethanol more realistic IF a lowcost enzyme process could be established instead of the very costly--both in $ and EROEI terms--acid process (there's a process using water, but it takes too much time for the reactions to occur for any degree of high throughput/yield/scale).

I know of at least one company trying to prove you wrong. They plan to used large ponds covered by an inflated plastic dome. Separation of the oil does not require the algae to be dry. Simply dissolving the cell walls or mechanically breaking them to release the oil allows the oil to rise to the top. The remaining wet fraction could be fermented into methane.

I was very hopeful of algae-biodiesel to the point where I wanted to build my own "refinery" in 2005 prior to my talk with the NREL man. Have any you seen this popst at RR's blog, http://i-r-squared.blogspot.com/2007/05/algal-biodiesel-fact-or-fiction....

thomas deplume -

Yes, you can cover a large pond with an inflatable plastic dome, but the practical limit for each dome is probably not much more than an acre or so. However, algae biodiesel production facility of even modest size would require hundreds or thousands of acres.

The more I learn about these algae schemes, the more I'm convinced that there are very daunting scale-up obstacles, particularly in the area of material handling.

For example, let us take a quite modest algae biodiesel operation with a production capacity of say 100 barrels per day. At about 7 lbs per bbl 100 bbl/day is about 29,400 lbs/day of oil. If we assume that the algae we're growing has a lipid concentration of about 25% by dry weight, then we will need to grow about 118,000 lbs/day of algae.

I don't really know what the maximum algae concentration is practical for large pond, but I tend to doubt that it's much more than 1% by dry weight (doesn't sound like much, but 1% is VERY green and opaque water). If so, than that means we will have to handle 11.8 million lbs/day of algae-containing water. To harvest the algae that amount of water would have to be put through some sort of liquid-solid seperation step (or steps) prior to lipid extraction. The concentrate (say 30% solid by weight) would then go through lipid extraction and separation, and the spent algae cells sent to their final disposition (perhaps anaerobic digestion.

We are thus handling a very large quantity of aqueous goop to produce just 100 bbl/day.

Algae will contain on the order of 6% nitrogen and 1% phosphorus (give or take). Thus, in order to grow 118,000 lbs/day of algae we will need to supply over 7,000 lbs/day of nitrogen and almost 1,200 lbs/day of phosphorus. If these nutrients are to be supplied by sewage treament plant effluent, then a very large flow rate of sewage will have to by pumped through the pond each day.

Again, all this is just to produce 100 bbl/day of oil.

While, the above numbers can be noodled around with, I do think I am at least in the right ball park. My main contention is that while material handling and algae separation may be trivial on a lab scale, it becomes a very big deal once you are in the realm of even modest production levels.


Should read " ... at about 7 lbs per gallon, not 7 lbs per bbl.

You make some good points. But how do these factors compare to the water and natural gas used by the Alberta tar sands or the 99% water cut in some oil fields? Whether it is biofuel or rock oil there are enormous capital investments involved. As for a limit on the size of an inflated dome the Pontiac Silverdome covers 13 acres. Not that I believe anything that big is necessary the minimum practical size needs to be worked on. The different methods of production different companies are trying will answer all your questions in the next few years. Even if one method proves to be a big success the area that needs to be covered each day for the next few decades according to my calculation is around 10 square miles. Fortunately the ponds can use land not suitable for agriculture, uses only 10% of the water per acre that corn or beans would, and can utilize brackish water sources which are in abundant supply. Unfortunately there is not enough time left to upscale any method found to be practical.

You just knew Wing Nut Daily would jump all over this, and to the wrong conclusion...

New tests could further undermine 'fossil fuels'

Scientists who have confirmed that abiotic hydrocarbons are being released from the Lost City hydrothermal field in the Mid-Atlantic range at the bottom of the ocean say they are returning to that location this summer to try to confirm the presence of more complex hydrocarbon chains, a result that would further undermine the assumption that oils are the result of decomposed and compressed organisms.

Should solve any problems, in a few million years!

More seriously, it would have implications for where you looked, although some years ago a test rig, in Sweden I believe, did not discover the oil they had hoped - if my memory serves me correctly though there may have been some doubts about the methodology, how deep they went and so on.

The Siljan Ring Complex:

The location:


T Gold ‘they just did not drill deep enough’…


No Free Lunch:


More Stuff: (goes on about the lost city as well)


Dont hold yer breath...

Actually, we are creating the "stagnant ocean senario" supposed to have created the oil we burn today. If we harvest the biomass growing in the stagnant ocean and convert it into hydrocarbons to burn, we can push this global warming thing beyond anything this planet has ever seen. Frankly, I don't handle heat very well, I got heat exhausted in Vietnam and it hurts to get overheated now. I know from personal experience what slowly dying this way would be like. Trust me, you best be looking for ways to cool the planet off, rather than ways to slow the warming. Humans will cease to exist(and most other species, except perhaps those around the heat vents on the ocean floor).


"Further" undermine? What's the other evidence? That a little bird told him?

That oil is found at the bottom of the ocean, when no dinosaurs ever walked there.

I kid you not, that's his idea of "evidence."

For those who haven't been following this story, he's referring to this study in the very reputable Science.

However, the scientists in question were not interested in the origins of oil, as Corsi implies. Rather, they are interested in the origins of life.

I think most scientists agree that abiotic oil may exist. What they deny is that it exists in "economically interesting accumulations."

Just went over this with a guy from libertypost.

Peak Oil, Deep Oil and Son of the Evening Star -- Part I

Peak Oil and Deep Oil, Part II


"And the most recent volcanic flows at Yellowstone were a rock type called rhyolite, which is chemically equivalent to granite, except that granite is what you get if the rock cools and crystallizes at depth. That is, in a few million more years, the subterranean source of this molten material at Yellowstone might cool to become what we call granite. Then again, Yellowstone could also erupt upward in one of the largest volcanic explosions in geologic history. We will just have to wait and see. And maybe you will even read about it in The New York Times, if you are patient.

But what we do not find in Yellowstone is oil or gas. Despite the connection to a "hot spot" in the Earth's crust, there is nothing that even remotely could be called an oil or gas deposit. And the best science is that whatever is down under the ground at Yellowstone will never become oil or gas."

i think that oil from dinosaurs theory is the result of old chevron adds from the '70's.............................but apparently lots of people buy it.
and further back, anyone remember sinclair dino ? they had a green dinosaur, i think.

Yes, the mascot of Sinclair is a green dinosaur. You can still see some Sinclair gas stations out west. There's a refinery that's theirs too near Rock Springs, WY (or it might be Frontier, I forget exactly).

*edit* Oh, I just looked at the map. The refinery is in Sinclair, WY. Wonder who owns that one? :)

There have been plenty of chemical studies that show one can reduce carbon monoxide or carbon dioxide via Lewis acid catalysis — Fisher-Trope type processes — and get a variety of aliphatics (hydrocarbons).

However, evidence for the feasibility of a chemical process is not proof that nature produces her chemicals in that way.

This a very common in the chemical literature. A chemist will prove that a certain chemical process produces X and since X is a molecule in nature he asks the reader to wonder if nature uses that process.

As far as I can tell no one has shown there is a correlation between the feasibility and actual practice of Abiogenic means to produce oil.

Oh, and if an Abiogenic process does prove a fruitful theory for explanation of oil it still does not begin to address rates of production.

Cocktail napkin math on abiotic oil:

Barrels of oil used per day (2004): 84,000,000
Oil consumption in liters per year: 4,874,940,000,000
Which equals: 4.87494 cubic kilometers
Volume of all the oceans: 1,347,000,000 cubic kilometers
Number of years to fill all the oceans: 276,311,093
Estimated age of the earth: 4,500,000,000

If abiotic oil production is for real, there are several oceans worth of oil hiding down in the core of the earth, the abiotic production of oil is a really really recently started process, or it is happening too slow to make any difference to us.

(Or my math is off... it's bedtime)

I imagine this question has been covered till eyes roll, but anyway here it is again:

As 'easy' oil to produce is replaced by 'harder' oil, there would be be an energy loss, where or how is this accounted for in world production? Before, after, not at all?

I don't have an oil example, but there is a great example for natural gas. Here is a 3 year outlook paper by the Canadian Natural Resources board showing the cost per Giga Joule of natural gas increased in price by a factor of 4 over the last ten years. Scroll down to figure 3.4


Digging into the report you find that new fields are smaller and decline faster. More fields have to be drilled each year to support current production levels.

Hand in air :) My guess = Price. At 100 to one EROEI (Cantarell Shedgum Ain Dar, Abqaiq, Burgan) in heyday oil ran like water and demand was lower $10 oil or less. Today NGTL, Tar Sands, water cut, heavy/sour, CTL and biofuels the norm nearing 4 to one EROEI and under results in tank-farm-draining-demand intensity creating worldwide standard of living reduction and price headed for the limit of 'affordability'..

Thanks for the clarification. Perhaps you could help here. At the lower EROEI does the increased Energy required to gain the extractions get considered as an addition to the Global Demand numbers? For example If consumption not related to production and transport of oil were to stay flat, and the EROEI were to drop from 4:1 to 2:1, would our discussions paint this as flat global consumption or growing consumption.

If I understand correctly then if I have 4:1, then using 1 barrel, I could get 4, or a gain of net 3. If I went to 2:1, then my net gain drops to 1. With diminished net gain, I have to continually invest more to maintain available supply for the non-oil industry.

Thanks for any clarifications,


As I understand it we are talking about deliveries or supply. Sure others will help clarify. Liquid fuel that makes it to market. Whether it be natural gas conversion (which the head prankster says is really skewing the numbers) The problem today is that everything which can make 'oil' including darn near oven scrapings regardless of it's EROEI is going in to the total. Total which used to be light sweet crude primarily. And to our astonishment the total is NOT going up anymore even with all this 'added' contribution.

Personally I think it is this 'truth' which has gotten the head of Shell and the head of GM and other industry insiders to begin sounding like TOD readers here as of late.

So yes I would say you have it right. At some point we can see this process fading into a zero point in the not to distant future where every source that has a positive EROEI is being tapped and the total output begins to fail miserably even though their is tons of 'liquid fuel getting activity' being observed along with acres and acres of farmland, strip mines, and coalbed methane projects being done. In order for these things to become 'profitable' since they involve such high inputs of capital, labor and resources the 'price' or value of the finished product has to become infinately high to support it.

Our fervent hope is that at some point before this happens we will all wake up and promote powerdown and renewables. But unfortunatly we are already seeing that non-positive schemes and solutions are politically more attractive.

If consumption not related to production and transport of oil were to stay flat, and the EROEI were to drop from 4:1 to 2:1, would our discussions paint this as flat global consumption or growing consumption.

And that's a good one. As long as the oil being supplied to the market by production and transport is significantly better than say 4:1 then I would say that global consumption is a fairly good indicator of how much oil is really being burned in the (consumer)ships, trains, cars and aircraft of the world even though the level of oil procuring activity will have to go up a lot to provide it.

Per your example as it gets closer to 2:1 or lower, (I doubt we are anywhere near there yet) so much is being syphoned off into the production side of things w/o real returns that flat consumption would look like an increase. Pretty sure this would be the case for specific markets like ethanol. Guess my idea there is that the price will get so high that demand will finally effectively fall off a cliff and the number of conspicuous end users will be quite small. On paper anyway :) ...thought provoking

As the chief peak oil prankster, Matt S, repeatedly reminds us, data in the petroleum industry is invariably incomplete, but as I understand the matter, the oil products used in the oil extraction and refinement industry is counted in the production numbers. Ditto, electricity. Natural gas is a little murkier in that, as far I am aware, reinjected natural gas is not counted in natural gas production numbers.

We don't have numbers for net energy production (tradeable energy available to the non-energy sectors of the economy). Many of us believe that net energy has long peaked, and some of us hold that this peak was the truly significant moment in the peak oil event. In my humble view, the decline in net energy is the real force that is causing the world economy to fracture along the various stress raisers constructed by our shortsighted, but highly renumerated, managers, such as the morons behind the deregulation of financial markets and the geniuses who invented ever more complex financial instrumentation.

Gold production unable to keep up with desired expansion of monetary base so de-coupled and tied to Oil production.

Oil production unable to keep up with desired expansion of monetary base so de-coupled and tied to ???????

Lies? Blue Sky? Bullets?

CS (Candymountain Sugar)
PS (Pie in Sky)
BS (Brooklynbridge Sales)

Or if you like overriding and abundant faith in the resiliency of the American Consumer.

Short the markets go long on bicycles :)

and : short the markets go long on body bags too ;-)

Just my cornucopian nature ;-)

Re markets. The US returned to the slide from a week ago but for two days in a row now the China markets are not responding by 'catching the cold'. See what they do tonight. If China does decouple in relation to what is being seen as an attractive RMB vs. Dollar weakness and the markets continue to diverge like this then expect the US unwind to be helped along.

Jim Rodgers has been very vocal on this at Bloomberg and they are even giving him some play. There's that ancient curse again....and attract the attention of important people I heard here too.

Everyone should read Jeff Cooper's "Fireworks" chapter about "money", I think bullets or the materials to make them will back up the local money supply. The redneck who can make black powder from chicken manure will be very wealthy.

"Gold production unable to keep up with desired expansion of monetary base so de-coupled and tied to Oil production.
Oil production unable to keep up with desired expansion of monetary base so de-coupled and tied to ???????"

Future debt obligations ;-)

Thanks lads, and toilforoil I humbly quite agree with that humble view:) Stoneleigh says that financial bubbles have happened all through history and without anything to do with FF but I would think that those previous bubbles depended on some sort of energy, not FF, but energy nonetheless and that would be clearer if human eccentricities and pot stirring didn't make the water murky, as they do presently. Here is Stoneleigh at the automaticearth with a very nicely put view including a tainterian side dish.

Hi GreyZone,

Large credit bubbles have happened many times in the past in the absence of fossil fuels, although fossils fuels may well have contributed significantly to this one becoming the largest ever recorded. In a Tainterian sense, one can argue that the greater the energy surplus available, the greater the degree of socioeconomic complexity one would expect to be able to achieve.

We certainly have vastly exceeded the level of complexity associated with any previous bubble, and our financial sector is a prime example of that. Therefore I would say that there is a connection between energy and the credit mania, but not as simple a causative relationship as some might suggest, as financial markets have internal dynamics all their own that are grounded in human nature. Credit expansions end when the biggest sucker has been fleeced.

IMO the coming decline in net energy will be sharp as the effect of the bursting credit bubble moves from demand destruction to supply destruction. I would expect the decline in available energy to interact with credit deflation in complex ways and mutually reinforcing ways, each aggravating the other rather than one being the prime driver.
February 1, 2008 9:24 PM


Just a BTW-

Daniel Bouton is still the CEO of Societe General despite two “sincere” efforts at resignation and despite the demand of the French President and Finance Minister.

So now you know-The Rest of the Story.


In Karlsruhe Germany last week the power went out due to a technical shutdown in a conventional power plant.
a couple days later I read a German newspaper article which discussed that the large enrgy companies are getting more worried about this sort of thing all the time which happens due to the electric lines being more stressed. The general reason is that whereas previously energy was produced and consumed at the same place, that nowadays power plants are being built mainly in thinly populated Eastern Germany to power Western Germany (Nimby??) and that wind/alternative energy has to be fed into the system from a long distance, also forcing the power plants to throttle down. This stress on a previously realtively simple locally based and used energy/electrical system is getting to be a serious problem. I am sure there are technical issues that some of you can see in this (electrical engineers from power production side perhaps?) which are quite familiar in USA/UK. Does this sort of thing after a certain percent of alternative energy/distributed energy network feed in become simply untenable and cause high costs and constant breakdown/blackouts?

1) Increase voltage and amperage on existing power lines
2) Build new transmission lines.
3) Increase renewable generation and new nuclear plants.

If Germany insists on building it's new nuclear plants accross the Rhine in France, or in Poland, the Czech Republic and perhaps Sweden, you will need many more transmission lines.

Happy Lundi Gras !


I saw a paper recently arguing that it's impossible to make a large grid completely stable. Larger grids may be more stable day-to-day, but they become more prone to catastrophic crashes.

An example is the grid in the US northeast. After a couple of nasty blackouts in NYC, they set up the grid to share electricity over a broad area, including parts of Ohio, Canada, and New England. There were fewer blackouts. But the failure, when it came, was a doozy.

I think that it is uneconomic to make a completely stable grid (perhaps defined as one major failure every century or longer) but not impossible.

Redundancy and good practices consistently applied are key. The NE lacked both IMHO,

Happy Lundi Gras,


A couple of points:

- Alan

option 4] Make all business choose a number 1,2 or 3..[maybe local government could allocate them equally with a bit of leeway/flexibility].
Business start/finish/shift times are 1/2 hour staggered from 1-2-3. Spread the traffic, peak load etc.

- Alan + Leanan re grid stability: I suspect grid loads are getting worse. At one time it was mainly resistive heaters and lights. Now we have many stabilised supplies/SMPS, TV sets etc. these are a negative load decreasing voltage stability. A fun example is to disaster test the backup in a datacentre. I saw 6 tested in action and they all failed to perform seamlessly [or at all]. I think that the designs underestimate the nasty load of thousands of SMPS in a brown-out situation.

Interesting point about SMPS -- I worked on a battery powered device that used two Lithium camera batteries feeding 2-3 SMPS chips used to generate the 3.3V for the ICs and some other voltages for the display. It worked great through the majority of the battery lifetime (there was no recharge capability) but near the end of life, the battery voltage would begin to sag, so the SMPS would increase their duty cycles, causing the voltage to sag more and more. Positive feedback. After about a half hour of this the batteries would go into thermal runaway and melt the plastic case of the device.

Brownouts were useful when motors made up most of the load. Now motors are about half the load, from what I've read. So what is the likely alternative, blackouts?

That is even more interesting when you have a bank of series connected cells.

They have been sitting on float for months. Unequal internal leakages have left each cell in a random state of charge.

When the entire battery bank starts discharging, one cell will exhaust its store of active electrode material first, hence it will fail to support its terminal voltage.

The SMPS, seeing less voltage, like you say, increases its duty cycle to compensate, in order to keep its output steady.

The "empty" cell now receives energy BACKWARDS, as the still healthy cells strive to force their electron flow through the failed cell still in the circuit.

No battery "likes" to have current forced through it backwards. The results are at best a mess, at worst an explosion.

I have seen some rather spectacular displays when the weakest cell of a battery bank gets overrun. For that reason, I insist on wearing full protective gear against molten metal and acid when I had to service an active industrial battery bank.

It is very important to know the exact condition of every cell and be able to individually equalize the cells if one wants to avoid cleaning up highly corrosive messes.

I had even designed a battery charger that had 150 isolated 2 volt outputs, so that I could tailor each channel to the one cell it supported. That way, by monitoring the voltage (via a flyback pulse) from each channel, I could see exactly how each cell was performing, and be prepared to shut the entire bank down in the event any cell got "sick".

Because it was a flyback converter, I could still run it, albeit very little energy in the pulses, in a "loss of primary power" scenario. Main thing I wanted was just to see the amplitude of the flyback pulse to each battery so I could infer the terminal voltage from that. Because each battery had different DC on it, and the flyback pulse was AC, simple capacitor coupling let me see all pulses neatly overlaid on each other, so dying cells would stand out like a sore thumb. It made it easy to program an AVR Microcontroller to supervise it.

In an emergency, I could bypass the sick cell with a jumper cable.

Battery explosions can make quite a mess under the hood of a car, but a whole roomfull of batteries can create an unforgettable scene.

( SMPS stands for "Switched Mode Power Supply", which uses transistor switches to change battery DC into variable pulse width AC, put that through an inductor or AC transformer to get it to another voltage, then convert that back to DC.

"Flyback" is one of the circuit topologies used for SMPS. It can be used for step up or step down.

Its a roundabout way of doing things, but its the best we have in lieu of having a true DC transformer, which none of us know how to build yet. )

The context in which I know "flyback" is the pulses that sweep an electron beam across the surface of a cathode ray tube. "Flyback" is the brief time during which the little moving dot is dark and flying back (the current in the deflection coil is reversing) to start painting another line on the screen. It takes a high voltage to suddenly reverse the current in a coil, and some of this voltage is rectified to make the extremely high voltage (~20kV) which pulls electrons from the filament in the neck of the tube.

I don't quite understand how this applies to a 2VDC lead-acid cell.

"Flyback" is the brief time during which the little moving dot is dark and flying back

CRT's use Flyback transformers to create a High voltage source. Flyback refers to how energy stored in a transformer core is transferred from the Primary coil to the secondary coil. In a flyback configuration, the Primary is energized (using a switching transistor). When the core is fully charged, the primary is shutoff, and the energy stored in the core is transferred into the secondary coil. The stored energy in the core is permitted to "flyback" into the secondary (output) coil.

"I don't quite understand how this applies to a 2VDC lead-acid cell.


A flyback power supply can be configured to operate at low voltages. The advantage is high voltage isolation between the primary power source and the secondary (output) winding. Its also has a low part count (one switching transistor and one output diode).

Redundancy and good practices consistently applied are key.

There's something fundamental that seems to stop business from achieving this.

In my field -- IT systems design -- for years and years I've believed that the right way to build something was to give it a solid infrastructure, build it once, build it solid, look after it properly and it is possible to achieve quality with a good return on investment as well.

However, if one fails to deploy (invest in) a solid enough infrastructure, often you get the worst of both worlds - big system instability and big system costs - and the poor designer [hello] gets whipped by the same managers who were looking for places to cut corners at the outset.

Fundamentally, good managers look to trim 'excess' costs, in design, construction or operation. Managers rarely have the architectural systems-level view required to see why the design elements or 'overengineered' operational processes are actually a long term net-cost-saver, rather than just a short term net-cost.

And so in any sufficiently complex organisation, that would apparently achieve the best results from a properly designed and operated, integrated, fully-redundant in design-and-operation system; is incapable of deploying such a system, because someone, somewhere along the line, is gonna be blind to the big picture, and get seen in a good light (and promoted or bonused) by trimming budget to realise short-term benefits.

QED: At the age of thirty nine I've finally come to realise small really is beautiful - and advising big organisations how to do big IT well is a fools game, no matter how much it pays.

I imagine their are highly paid highly respected power grid designers who know exactly what needs doing banging their heads against steel pylons in every place where there is a highly important power grid. My advice to them - buy a farm and n+1 wind turbines plus parts...

Costs are already quite staggering.

German electric rates are some of the highest in Europe, as are those in Denmark where they also use a lot of wind power.

The man behind the nuclear power shift - Times Online

If they tried charging still more to back-up properly or build a bigger grid to even out variability more, then the basic idea of using windturbines for a substantial amount of your power would be shown up as the wholly impractical scheme it is.

Costs in some areas of the States may make some generation by this means affordable, but economic penetration rates are limited unless you want your grid to become very unreliable.

HT Odum discusses the Maximum Power Principal. The idea that the faster you try to do something, the less efficient you are at doing it, and that somewhere in the middle is a trade off between efficiency and rate that delivers the maximum amount.

As a software engineer myself, I have wondered if this isn't why long term planning tends to get derailed. And it is clear that just jumping in and coding also leads to little delivered code. Perhaps the Agile method of development, which just accepts the need to rewrite (refactor) areas of code, but delivers quickly is closer to the Maximum Rate.

Software is gas - I had the same experiences when I was developing in a large organization. Enterprise IT infrastructure was better as they couldn't just pitch a year's worth of work without the finance types noticing. The carrier side is nirvana - they do it right or the FCC will spank. The power guys I've worked with are even more disciplined than that. I think the grid problems come to do with the fact that its multiple interconnected systems and its large enough/complex enough that it can't be simulated properly or put through a failure test. I suspect the individual administrative domains would all run just fine on their own, but they get themselves into trouble when they operate as a flock due to unforeseen situations.

And we are going to get a chance to find out where the soft spots are as peak oil/peak gas keep rolling forward ...

This is similar to the relationship between our system of totalitarian, industrialized agriculture and the incidence of famine.

On a day to day basis, our system of agriculture produces food supplies that are regular and that seem reliable. Then, every few decades or so, entire crops fail due to a confluence of factors (climate, pests, land misuse).

We look at the problem in hindsight, and think that we weren't efficient enough, and then we squeeze more resiliency out of the system. So at the next unforeseen circumstance, we crash again, and likely harder.

A grid which has its connectivity co-evolved with the rough power-law distribution of human population concentrations could not be made completely stable, and in such a system the frequency and magnitude of outages will follow a similar power law. So building them this way is one of many compromises of efficiency vs. resilience and makes large blackouts inherently unpredictable except statistically, I think.

"...which happens due to the electric lines being more stressed."

The Unruly Power Grid.

The crash is as inevitable as forest fire.

And just like forest fire prevention, the key is controlled burning.

Rolling brown outs/blackouts are the only way to save the system.

The blackout was caused by a fire in a transducer (according to Karlsruher Stadtwerke).
But it is really interesting how more and more often wind energy is blamed for blackouts (remember the Europe wide blackout 2006). This kind of incident seems always welcome for certain propaganda (same way as minor fires in nuclear reactors).

That's kind of shallow.

The real question is whether the more frequent failures are not at least partially causes by the added complexity to the grid. Then another question which arises is why a breakdown of one generator causes a major blackout (they are supposed to have stand-by capacity for such failures aren't they?). It seems clear to me that the system is operating more and more on the limits of its capacity, which will be making handling even minor failures much harder.

In this context deregulation is a separate disaster. History has shown that deregulated utilities are moving investments in reliability to the bottom of their priority list.

Are there statistics kept on black outs? For example, can once compare the number of electrical blackouts greater than some threshold for the years 2005, 2006, and 2007 for the United States? Other countries?

At the same time, data needed to predict and react to system stress—such as basic information on the quantity of energy flows—began disappearing, treated by utilities as competitive information and kept secret. "Starting in 1998, the utilities stopped reporting on blackout statistics as well," says Ben Carreras of Oak Ridge National Laboratory, so system reliability could no longer be accurately assessed.

(emphasis added)

The Industrial Physicist

I'm sure they still keep the statistics, they just no longer report them. Trade secret, just like Saudi Arabia's reserves.

Here's an interesting finding from "Complex Systems Analysis from Series of Blackouts: Cascading Failure, Criticality, and Self-Organization" (PDF warning):

"Our simulation results show that these complex dynamics can self-organize the system to be near criticality."

It also suggests that our very efforts to mitigate and prevent small blackouts are what make large blackouts more likely.


I don't think it is impossible to achieve higher penetrations of wind/intermittent renewables it's just way too costly and the costs naturally rise with higher penetration. When calculating the additional cost of integrating wind it is usually the case that only the costs of the standby capacity and additional transmission lines are included. I have not seen estimates what is the systematic cost of the additional stress to the system, caused by the more frequent upping and downing of generation and transmission infrastructure. It is inevitable that this will compromise reliability unless additional investments are made. The trouble is that utilities are reluctant to make these investments unless absolutely necessary - which is understandable because in competitive or regulated environment such investments are a pure loss (since their "conventional" competitors do not need to make them and they can't simply pass it on consumers).

A major part of the problem seems to be that in Germany wind producers are subsidized via the feed-in tarrifs, while grid operators are simply required to take it, whilst noone is covering their additional costs. Another significant part of the problem is that unlike Texas of the Dakotas Germany does not seem to have good wind resources (EON Netz reports just 18.5% capacity factor in their area for 2005).

The bottom line is that if Germany insists on integrating more wind while maintaining a reliable grid, all related costs need to be covered and the electricity tarrifs should probably get much higher.

A good description of the troubles integrating more wind power from the point of view of the grid operators is the EON Netz wind report.

Utilities are already used to quite large variations in demand, changes that dwarf wind ! I strongly suspect that the speed and magnitude of demand changes exceed wind changes in Germany by MORE than an order of magnitude.

You are hypothesizing (and perhaps wishing). Absorbing the sudden trip of two 1.6 GW new EPR nukes in the German grid would be a MUCH bigger expense, and an expense not fully paid for by the nuke owner. So let us build no more German nukes (by your logic).

I do know that when 4 nukes were added to the isolated Texas grid, other (non-nuke owning) operators complained about the added risk and expense but, due to fractional ownership of the nukes, the nuke owners had a majority of ERCOT and imposed the costs on the grid and all electrical utilities.

If variability is your argument, unscheduled outages from nukes DWARF wind.

BTW, Eon hates wind. Referencing Greenpeace as an authority on nuke would be comparable.

Happy Lundi Gras !


There is huge difference between anticipated swings in demand and unanticipated ones. Peaking and baseload power plants are scheduled well in advance, while wind forecast for the most part has proven too unreliable. It is the discrepancies between forecast and actual generation that cause stand-by capacity to be frequently activated and are generally destabilizing the grid.

According to the EON Netz report wind feed in in their area in 2004 has been between 0.2 and 38% of daily peak grid load. Which means that almost 40% of the grid capacity has a huge probability of going offline on a daily or even hourly basis. For example on Christmas Eve - 24.12.2004 wind power went from 6,000 MW to 2,000MW in just six hours - the equivalent of 4 nukes switching off one after the other! You need much more to convince me that this is the same as nuke outages happening once or twice per year per unit.

"Eon hates wind".

You never went further to explain why a purely commercial enterprise would love or hate anything on grounds other than economics. This is not a soap opera for Gods sake. You never addressed the report anyway and are always resorting to this ad-hominem(?) argument. I recommend reading it, I find it quite well balanced.

Six hours is a large, almost excessive, amount of of time for a utility to react. This is the time between the 6 PM peak (AFAIK often the daily highest peak in Germany) and the start of baseload demand at midnight. Adding or shedding 40% of generation in that time frame is done daily, as part of routine.

This specific decline mentioned was also a "once a year" extreme taken and I simply cannot believe that a drop of that magnitude it was NOT forecast ! Your case that this is a "problem" is simply not proven by the example given.

OTOH, nukes (and coal & NG as well) can disappear off the grid in 1/50th of a second and extreme precautions are required for these potential disasters. The trend towards larger nukes (1.6 GW EPR, 1.7 GW Mitsubishi) and the tendency to build two or more side by side means that the existing extreme measures will have to be amplified.

EoN does not like wind because they do not own much of it. And I understand that they want to build more coal plants. They need to debunk wind as an alternative so they can get permission to build more coal plants. IMHO, they would like to be vertically integrated and control as much as possible.

I care nothing for EoN profits (which all they care about as a commercial enterprise) so our two POVs have nothing in common (GreenPeace and you probably have more in common than EoN and public policy).

Happy Lundi Gras !


I will read the paper on Ash Wednesday.

Pumped storage isn't a particularly expensive way to firm renewables and ammonia production not only firms but produces multiple outputs in the process. I am aware of two efforts in this area that are moving to commercialization even as we speak ...


Not to put too fine a point on it, but pumped storage 'isn't particularly expensive' only if you ALREADY have a significantly higher elevation to pump the water to. And the higher that elevation is and the less construction you have to do to build the pumped storage reservoir, the more attactive the economics. But, by the same token, the reverse is also true.

Thus, for example, if your power plant happens to be located in the valley of a mountainous area, such as parts of Appalachia, it might not be too difficult to carve out a lake that would provide a elevation differential of several hundred feet. The higher the head, the less water needs to be pumped for a given amount of energy storage. On the other hand, if your power plant is located in most parts of the Midwest or Plains states, you are largely out of luck regarding pumped storage. (Building your own mountain is hardly an economically attractive alternative.)

Now, pumped storage can also include pumping compressed air into a suitably confined underground formation, but that method entails more energy losses due to compression/expansion thermodynamics than just moving water uphill.

The feasibility of pumped storage is highly location specific.

Another alternative is to take an abandoned (non-toxic, stable) mine. Install the hydropower/pump equipment near the bottom (I would sink a new shaft and put everything a couple hundred meters away from old mine) and build a shallow lake on the surface and recycle water between old mine and new lake.

It is a bit more expensive (mostly for installed mechanical stuff at bottom of shaft) but not exorbitant in theory.

I would operate it unmanned most of the time, and have a pit/shaft underneath for first leaks to go to (and be pumped out).

Best Hopes for Pumped Storage,


AlanfromBigEasy -

Yeah, that might work.

But how many power plants are conveniently located near abandoned mines, and ones with the right holding capacity, depth, and structural stability?

Pumped storage could also be water pumped back up to the reservoir side of a hydro plant, evaporation losses must be considered. When flying over Lake Mead it seemed to me solar electricity could be used for this, the reservoir becoming a giant battery, the water used over and over.

Another alternative is to take an abandoned (non-toxic, stable) mine. Install the hydropower/pump equipment near the bottom (I would sink a new shaft and put everything a couple hundred meters away from old mine) and build a shallow lake on the surface and recycle water between old mine and new lake.

1. You still need a large topside foot print to maintain a reservor. The shallow reservors must make volume with much larger square footage. V = HXWXD.
2. Mines are held up with steel rods or even wooden supports, these will corrode and eventually cause shafts to collapse.
3. No such thing as a toxic free mine. Even rock quaries contains lots of toxic materials. The water will become highly containmented. Especially mines used to extract metals. Salt mines would also be out of the question becuase the water would become very salty and highly corrosive.
4. Only the very largest and very deepest mines will have sufficient capacity. There are all PM, or Uranium mines, since these metals have very high return on investment that make it profitable to dig large and deep.
5. If the Pumps are located near the bottom of the mine, they will have endure constant attack from gritty water as the mines are full of loose material, as well as sharp fractured particles created during blasting. On the top side, you'll need the turbine feed to be several meters above the bottom of the reservor to avoid slit.

The only underground pumped storage that is reasonably feasible is compressed air, but this isn't very efficient because compressed air wastes a lot of energy by creating heat which can't be recovered.

Several points.

Turbines operate in "dirty" (sediment) water today, generally a soluble problem. Install a filter for water coming out of the mine.

100 to 150 m is a common delta between upper and lower reservoirs for pumped storage, and well within the depth of a number of mines. Using a "Glory Hole" open pit mine that is deep enough for pumped storage is entirely doable. (Copper mines come to mind).

A mile deep gold mile in South Dakota is too deep to be usable.

Minor collapses will have little effect as long as water can flow around and the open volume changes little.

Since the water will be generally recycled, it need not be potable quality. Some minerals are problematic (iron pyrites + water & air > sulferic acid) but concentrations of heavy metals less so.

The depth vs. area of the upper reservoir is an economic, engineering & environmental decision.

I am aware of pumped storage plans for mines, but never built.

Pumped air is a non-starter and likely to remain infeasible (as than as an adjunct to a NG fired plant).

I don't think it is impossible to achieve higher penetrations of wind/intermittent renewables it's just way too costly and the costs naturally rise with higher penetration.

Stand-alone solar systems are the way to go for a sustainable society - http://www.self.org/what_solarvision.asp. They're not too costly as the proponents of the centralized grid want you to believe.

Anyone got good sources which would enable me to calculate the costs incurred by connection to the grid for the projected 33GW of new off-shore wind power in the UK?

And for upgrading to provide back-up for such a high level of penetration?

I have calculated the basic cost of the build, and it is already stupendous:


For the sake of completeness though it would be nice to calculate out the rest of the costs.

Germany does not seem to have good wind resources

Yeah, lack of wind resources made Germany world leader in installed wind power capacity, no doubt. Ever been in north west Germany? It's the second best place (after England) in the world, and it's full with wind turbines (which are replaced by 3-fold more effective turbines in many places at this time.)

None of which addresses the point made that average wind speeds in Germany are lower than in some of the UK, and that severely affects costs.

No-one doubts that you can generate power by wind. It just costs a fortune, and if you want to use it for a very large part of your power would cost even more for back-in, and when you use that back-up you still emit loads of CO2 - you have in effect built fossil fuel emissions into your system by the need for such back-up.

18.5% average load factor is an incredibly poor performance. For comparison Texas wind farms achieve above 30% on average, while offshore wind turbines are said to go above 40%.

It is easy to show that without the enormous subsidies (euro 2.5 bln. only for 2004, and rising) nobody would have considered covering every possible (good or bad!) place in Germany with wind turbines. Subsidies are a feasible as a way to support emerging technologies, but if applied blindly are creating atrocious market inefficiencies. To show how inefficient subsidies can be let's make the following calculation:

1) Take the 2004 subsidy and instead of giving it off to wind, build one of the 1600MW EPR nuclear reactors. At 90% typical capacity factor it would produce 1440MW on average
2) In 2004 Germany had 16,700MW of wind turbines times 18.5% ~ 3089MW on average

So this only one reactor would have produced half the energy of the whole wind industry! Given that nuclear reactors operating for 50-60 years, this is 25-30 times better investment of that money, at least if your goal is to obtain emission free electricity.

The theoretical maximum on turbines is 59%, so that 40% number is very, very high. Entirely believable, but lets not have people wandering around thinking there is a 2.5X improvement in wind turbine efficiency waiting to happen.

I live near Karlsruhe, and can share a bit of information -
1. The power outage here was the first since 1980 or therabouts, according to SWR1 radio news
2. The first power was restored after about 20 minutes, and the longest outage was around 1 hour and 20 minutes. Though apparently, a lot of cafes and restaurants kept the lights off longer.
3. Apparently, at least at Karstadt, store security blocked the exits as soon as the power went off - seems to be part of the planning. Strangely, I have never experienced this while living in the U.S.
4. The traffic was bad when the traffic lights stopped working.
5. The cause was immediately known - the smoke from the transformer station was pretty obvious, as it occurred on the generating station's grounds. Putting the fire out took a bit, since the power had to be cut before hosing it down.

In general, most people seem to have treated it as a break in routine, a minor adventure to enjoy.

The cause was utterly mundane, bringing the system back up equally so. And a lot less dramatic than the thunderstorm outages I grew up with in Northern Virginia.

Don't take every event as a symptom of the end being nigh. Sometimes, the power goes off. It has been happening my whole life. In a few months, no one will remember it much.

Unsurprisingly, it's all about money.

The wind bloweth when it listeth, or something!

Anyway, it's a highly variable resource, which needs backing up both for it's short term variability, in seconds, minutes and hours, and for it's longer term variability, when it might not be windy for days.

The alternative is to build a truly massive grid, to even out the variability.

All that costs money, so the guys operating the grid are simply saying that they have not been given enough money to do so fully.

That is not surprising, since German electric rates are already some of the highest in Europe, whilst CO2 emissions are also amongst the highest.

In effect, you need to have massive back-up for the wind power, although less than 1 for 1.

That is why Germany is looking to build huge amounts of new coal power.

Germany has a truly lousy wind resource, as costs rise per watt generated the lower the average wind speed, and German average wind speeds are a lot lower than in parts of the UK or US.

Costs therefore per watt generated would be higher than in the UK, and the costs there are fantastically high.

Here is an analysis of UK wind resource costs, simply substitute £0.9 million per MW for on-shore wind as against the £1.4 million MW I have used here for off-shore, then divide by the 30% availability I have used for the UK and multiply by the (lower) figure of average availability in Germany - at a guess, around 25%, so in reality my original off-shore figures for the UK are possibly not so far off for on-shore in Germany.

You come out to massive figures for cost - and that is before paying for back-up, or bigger grids.

Here are the calculations:

The German Government has simply been throwing your money down the toilet on renewables, whilst having little effect on carbon emissions:

'“Germany has spent billions of euros subsidising wind and solar, marching to the greens’ drum. They have not succeeded in reducing their CO2 emissions from fossil fuels, which remain among the highest per capita in Europe [10.4 tonnes/capita/ year, up from 9.5 in 2,000. That is because wind and solar are intermittent and unreliable. Every solar panel and every wind machine must be backed up by reliable power for when the sun is not shining and the wind is not blowing,” he said.

Moore said Sweden had the lowest per capita CO2 emissions in Europe (6.3 tonnes/capita/year) and France had the second lowest (6.8 tonnes/ person/year). Sweden is 50% hydroelectric and 50% nuclear. France is 80% nuclear, 10% hydroelectric and uses only 10% fossil fuel. Denmark has the highest CO2 per capita at 11.0 tonnes/capita/year “because their mix is 18% wind and 82% fossil fuel. It is clear to see that the more hydroelectric and nuclear in the mix the lower the carbon emissions will be. Wind has a minor role to play and solar is not even worth the investment,” said Moore.'


The effort to reduce carbon emissions by solar energy in Germany are also a fantasy at present or any reasonable projection of likely future costs - it just is not that sunny in Germany in the winter when you need it:

However. Germany, unlike the UK has been doing a relatively good job in conservation, which is the answer in the short term:

Longer term, nuclear is the only technology which we know how to do which can reduce CO2 emissions.

It is expensive, but nothing like as dear as renewables.

It also has millions of hours of operating experience behind it, and has successfully been powering most French electricity consumption for decades without fatalities, which is more than can be said for coal.

At some stage the German voters should get back in touch with reality, and enable their politicians to have a nuclear build program.

Well, you did manage to point out that Germany's efforts in conservation are reasonable, but some of your other points are not as accurate as they could be.

The German government has been forcing people that use electricity to pay for the build out of wind and solar power - we can certainly argue about how economically efficient that is, however, Germans remain consistent. Especially in opposing nuclear power - it factored into the SPD gaining in Hessen, apparently. When a SPD party figure, who just coincidentally worked for a major energy company, said that the SPD candidate's support for alternative energy was stupid and likely to cost the SPD votes, the reaction was a surprise - for those that thought that nuclear was the future. Voters in Germany seem to support alternative energy, even while recognizing that neither solar nor wind would be as 'effective' as nuclear or coal.

And you left out solar hot water heating - a simple and effective long term way to cut fossil fuel use. There are more solar water heaters where I live than PV arrays, though the arrays are about poised to become more common.

That Germans are choosing the less 'efficient' technologies should provide a certain hint about something. They aren't using these less efficient methods because they are less efficient, they are using them because they don't have much in the way of choice, at least when viewed in a framework not dominated by the idea that a future of growth is the only way to live. Energy from Russia is a geopolitical problem (though I guess the British are hoping that Russian gas will heat their homes in the future), invading other countries for oil is not a German alternative (been there, done that - got hung for it), and quite honestly, nuclear still has a couple of unsolved problems, one being related to war. Designs for reactors that don't also produce bomb material seem to never win contracts from energy hungry countries like North Korea, or Pakistan, or even energy rich countries like Iran.

Germany tends to be very sensitive to issues relating to war. One of the things forgotten about the German Greens is that their policies are as much about peace as they are about the environment. Changing society so that waging war remains unattractive remains a core goal of German, and to a certain extent, EU perspective. Yes, I know that both France and the UK don't really share much in this idealistic framework, but then, both are major arms exporters, aren't they? With interests in Africa and the Middle East? Interests that often, just coincidentally, have something to do with energy or mineral resources?

Of course the Greens are as fallible as anyone - but no one in Germany regrets having improved their home insulation over the last decade, or having installed solar water heaters, using CFLs, or buying a more fuel efficient car. And only the Greens have consistently supported such ideas, since their founding.

Unfortunately, it is so much easier to mis-represent what the Greens say or do - or to simply lack accurate information. The Greens in Germany want to reduce electrical demand to the point that turning off nuclear power is possible. The energy companies, obviously, are going to fight that - after all, the Greens are demanding that the energy companies actually watch their profits decline, which is the end of the world as they know it. And in the case of solar or wind, the energy companies get to watch their monopoly shrink before their eyes, without being able to use their monopoly power to ruin competition.

I fully accept that it is the German people who have opposed nuclear power, which is why I said that until public opinion changed German politicians could not introduce it.

Outages from the grid may influence that, as will the fact that present plans save for conservation and increasing cola burn are wholly unrealistic.

Your substantive point of criticism is that I omitted solar thermal, which I agree is far more economic and practicable than PV.

My reasoning is as follows:
'In the meantime anything we can do to reduce peak load helps, and at a later date when we have more nuclear we need not be very concerned even if we increase base load towards peak, as the marginal costs of a kwh in nuclear are very low. the more closely matched base-load and peak load are, the better the economics of nuclear.

For that reason I would suggest that subsidy should not be applied to solar thermal panels, as although they are an exciting technology and very useful where annual variation is not so great, they make their biggest contribution in the summer, and aren't much help in the middle of the winter.'


Essentially I feel that if CO2 emissions are important, then by using solar thermal at the latitude of Germany you lock in the use of coal and gas, as they are the best sources for peak load which you can't cater for with solar in the mid-winter.

This is of course a far weaker case than that against solar PV at those latitudes which is far costlier.

Many of the rest of the measures for conservation in my blog are in fact drawn from German practise, who have led the way in that respect.

It is just difficult or impossible to see how they can power themselves in a low-carbon way without the use of nuclear energy.

I except break-through technology, which shouldn't be counted on.

One such technology would be hot-rock geothermal energy, which is being tested but is at a very early stage of development, and sounds fairly costly to me - although nothing like as dear as giant grids and so on for wind power.

Another would be high altitude wind power, which blows constantly and is much more powerful than at the height of windmills - it would be cheap too, if it can be made to work.

Investment in energy research has been tiny, and in my view would money better spent than in subsidising hopelessly uneconomic windfarms.

I omitted solar thermal, which I agree is far more economic and practicable than PV

Not for any existing power plant.

hot-rock geothermal energy, which is being tested but is at a very early stage of development, and sounds fairly costly to me - although nothing like as dear as giant grids and so on for wind power.

Not for any existing power plant.

Another would be high altitude wind power,...

Not for any existing power plant.

Too little time this Mardi Gras morning (where is my chapeau ?), but your prejudice is against stuff that works (and has reasonable costs) and in favor of hypothetical fantasy technologies decades away from significant commercialization.

Meanwhile, lets burn more natural gas and coal while waiting decades for enough nuclear plants to be built.

Happy Mardi Gras,


I was referring to residential solar thermal panels, not utility scale installations.

They are fully tested and a lot more economic than PV.

My own immediate preference is for conservation, as I have made clear on numerous occasions and would save far more carbon emissions than windmills.


Far from being a prejudice, I have provided detailed costings for nuclear energy versus wind:


Since you do not provide any figures, it is perhaps better to describe your preference for windtubines as being a prejudice, and plans to make them responsible for a larger share of the energy market than is currently the case in Germany and Denmark as a fantasy, at any reasonable cost.

So lets conserve and have a Good Mardi Gras!

Actually, I should make it clear that out of the renewables residential solar thermal panels seem to me to be by far the best alternative.

The reason that I do not advocate them is that they do not mesh well with nuclear energy, my preferred long-term option, as they save the most power when energy use is lowest in the summer, and the least in the winter when it is highest.

That makes nuclear power less economic as it is best at delivering base load power, so the nearer that is to peak load the better.

Effectively then you are locking in fossil fuel burn, as it is the only practical means of generating peak power.

If you are not prepared to have any nuclear power under any circumstances then solar panels could reduce CO2 emissions and reduce power needs in a hugely more cost-effective way than wind turbines, but you would still be stuck with fossil fuel burn for a lot of your needs in the winter.

If you live somewhere where there is not such a peak in winter, then residential solar thermal should be being installed like crazy, as it is in Israel.

I have been told that the vacuum style and other advanced solar heating panels will generate usable quantities of heated water even in the winter, when cloudy - obviously not under fog or rain, and equally obviously not at night.

It was surprising to hear, admittedly, and the amount of energy is much less than in the summer.

As for grid discussions - the power outage in Karlsruhe, which is the nearest city to where I live, was simply caused by piece of minor monitoring equipment catching on fire, which then caused two failure cascades - the first being the spreading fire, the second being the lack of information from the monitoring equipment leading to transformer shutdown.

It was all very local, had nothing to do with any peak consumption concerns (it could have just as easily happened at 4am, though the outage likely would have lasted a bit longer - people would have to have woken up to deal with it), and was news because it was the first widespread outage here in 27 or so years. Even during a major hurricane in 1999, the power stayed on.

I have no idea where the connection to wind came from, though parts of the debate are reasonable enough.

As for your claim as to wind not helping CO2 that much - according to a northern German utility reported in the Spiegel a few years ago, they had to burn seven tons of coal an hour just to keep the pressure up for the generators in case the wind suddenly dropped - regardless of whether it did or didn't.

There is no question that managing wind power is a technical challenge, and one that should not be ignored, as is too often the case. On the other hand, technical challenge is not the same as impractical or unwise. Assuming the challenge can be met, of course.

I'll have to look into the performance of solar thermal panels more closely. I don't doubt that they give some hot water, the question is, how much?
Solar incidence in most of the non-equatorial parts of the world varies between around four times less for the average day and night for a 24hour period in areas like the Mohave and six times less in Germany due to cloud cover.

It might be that we could still get a substantial proportion of hot water in the winter by oversizing the system without the cost being ruinous.

The problem would really be if you wanted to use it for heating the home;

'What makes things worse for cool climates is that peak use is in winter - for the UK at the lowest point on a summers day we might only need 20GW of power - we don't use air conditioning much.

At peak in the winter we use around 75GW.
That's roughly a four-fold increase in use.

This means that if we were to provide for all our needs with solar, we would need an installed capacity 4*6 of what we would actually use in the summer - as I said, not all areas are as cloudy, so to make our case for less cloudy areas in the north as well lets use four times as the generating difference.'

From my blog on solar energy for northern climates here:

If all houses were insulated to Passivhaus standards you might be OK, but that would take some doing , and many years of effort.

You said:
'There is no question that managing wind power is a technical challenge, and one that should not be ignored, as is too often the case. On the other hand, technical challenge is not the same as impractical or unwise. Assuming the challenge can be met, of course.'

I never meant to imply that on a purely technical level it could not be done.
The problem is that the basic cost of windturbine power is so high even for basic generation, and just counting construction costs and not allowing for grid connection, that the extra expense of building giant grids or more back-up becomes untenable.

Here is my analysis based on UK Government figures of UK costs for off-shore wind, which they intend building 33GW of, they tell us.

Substitute £0.9 millions MW for onshore for my £1.4 millions MW, but you need to allow for the lower average windspeed in Germany rather than the UK.
I allowed a generous 30% capacity to give a cost for actual power generated of £4.6 millions MW.
For Germany, perhaps 25% would be similarly generous, so you come out with a cost of £3.6 millions MW

That is still just under twice the price of nuclear based on costs at the Finnish reactor actually under construction and with no allowance for future reactors getting cheaper due to experience when you build a series.

It costs around £2 millions MW.

Wind power is outrageously expensive even at low rates of penetration, even without fully costing for connection to the grid and even without allowing for back-up or building a much more extended grid to reduce intermittency.

For solar thermal, especially for heating buildings, it's most important to insulate far beyond the standards typical in the U.S. Of course, there are days with little or no sunlight available, so there would be the need for backup. That does not necessarily imply that the backup must be from some central power source, especially electric. The best choice would be some sort of on site storage, either large thermal storage or some fuel, such as propane or wood. There are wood pellet systems that are relatively easy to use, unlike the more traditional wood stoves that require some effort to cut, split, dry and move the wood.

Wind power may be expensive up front, but there is no fuel cost either. You consider only cost per kW installed, not cost per kWh, which is the proper comparison and which includes the capacity factor. Again, storage would be the preferred method to meet the problem of variation in output, not some large spinning reserve that requires lots of energy to maintain and costs a lot per kWh, do to the low capacity factor.

When we use fossil fuel, we tend to ignore how and where it comes from. The fuel is already energy stored in a useful form. Solving the storage problem of renewable energy is going to be the key to the transition away from FF's.

E. Swanson

From uptop:

Still, Rogers made a point of saying he doesn’t think this is the end of the world. There should be pockets of prosperity in the U.S. even during the hard times, he said, adding that farmers in Iowa and oilmen in Oklahoma likely will fare well. While the owner of a lake house in Massachusetts will be hurting, he added, the owner of a lake house in Iowa won’t be.

This is basically a variation on the ELM argument, but on a regional basis within a country, or as I have put it, compare Midland, Texas to Midland, Michigan, but more broadly it highlights the difference between being a net producer of essential goods and services--especially food & energy--versus being a net consumer of essential goods and services.

Soybeans are up 38 cents today for a new closing high. We sold about 20% last fall at what seemed like a high price at the time at around 8.20 to 8.60. Soybeans have been better than gold lately IMO. The local price is about $12.00 now. Love it. Korean tofu makers are complaining they may go out of business because they have to pay $21.00/bu. for soybeans. Local seed prices for this spring are in the area of $35.00/bushel or more.

What is that $9+ differential in SKorea due to ($21-12). Transport?, taxes, distributor margin?
Or they paying higher than spot?

Compare Midland, Michigan and Midland, Texas. According to wiki median household income in 2000: Midland, MI $48,444 Midland, TX $39,320. Midland, MI is home to Dow Chemical due to bromine rich saline wells in the area. I know this data is old and if you have more up to date info please show it. Has the 23% income advantage for Michigan changed and in which direction.

For what this is worth, there is also oil production [not a lot but maybe some] in Midland County Michigan.

who except for a bozo like gwb would want to live in midland, tx(the tall city of the plains). the water is foul, the air is foul, the scenery consists of miles and miles of miles and miles(covered mainly with mesquite)..................but the wind does blow.

disclaimer: 0.0000000001 % of my assets reside in midland, tx

Luckily there will be pockets of prosperity. Too bad about all the other poor sods...

Russian economy succumbs to the oil curse

A taxi from Domodedovo airport to the Kremlin costs $170 (£86)

It actually cost about $17.

Ambrose Evans-Pritchard has covered world politics and economics for a quarter of a century. He is essential reading for anyone interested in how shifts in the world economy are changing the balance of political power.

I wonder how people who are apparently unable to hire a taxi manage to get published in "Britain's No.1 quality newspaper" and discuss things they haven't got a clue about???

"We can no longer afford to buy Russian equipment," said Yevgeny Ivanov, head of Polyus Gold.

"The prices here are one and a half times higher than abroad so we're having to break our rigid rule and turn to foreign-made machinery. It is bad news for Russian firms. The commodity super-cycle is catching up with us through higher prices. It is a disheartening picture," he said.

"There's no infrastructure, no power, no roads. Electricity costs twice what they pay in Alaska and Canada. We face a Soviet bureaucracy passing decrees that make you weep," he said.

Polyus Gold translates as Polar Gold - apparently a gold mine 8000km from Moscow. Ambrose failed to mention that the British (citizens of a rip-off country) are paying $0.25 per kwh - more than Yevgeny Ivanov in a permafrost region without infrastructure and power stations.
I found a tariff in Central Russia - $26 per 1000kwh.

Yeah, he's another one who's always good for a laugh.

We'll be burning beef tallow to light our caves before the propaganda machine stops telling us how lucky we are and how terrible it is in all those "oil-cursed" countries.

Inflation = Money Supply / Fuel Use

I know some here have been doubting the government reported Consumer Price Index values and I came across another way to predict the correct value.

Hall and Cleveland found that variations in the Consumer Price Index could be 99% predicted by changes in Money Supply (M2) divided by Fuel Use (all fuels) over a time period from 1890 to 1982.

I found this quite remarkable. Here we have a 90 year trend. If it has changed recently, then you know the government is fudging the statistics.

They set the CPI of 1967 to equal 100, and then track all changes relative to that year. I cannot find a copy of the graph online or I would link it. You can see the original and discussion in

"Energy and Resource Quality" Charles A.S. Hall, Cutler J. Cleveland, Robert Kaufmann, 1986 (reprinted 1992)

Central banks trying to encourage economic growth by printing more money while the economy contracts from lack of energy are going to cause rampant inflation.

Very helpful. Thank you.

This is at the top of the current ASPO Monthly Newsletter I got this morning:

"Rising oil prices passed $100 a barrel early in the New Year, attracting much media comment. There is of course nothing particularly magic about this round number, but the move into three digits did highlight the rising trend. Another way of looking at it is to compare salaries in oil terms. Someone earning say $20,000 a year in 1970, when oil was trading at $3.18 a barrel, could have bought 63,000 barrels. Today, he would have to be earning $6,300,000 to acquire the same amount. This sounds like inflation."


$20,000/$3.18 = 6,289 barrels

Even so, the salary today would have to be about $600,000. Still quite a difference.

JFK's last budget was under 100 billion, this year, 3.1 trillion, how's that for inflation.

Both are a factor of 30. huh

Here's the link (PDF)

Forgive me if this is ignorant, but when you say divide by Fuel Use, what exactly are you dividing by? The cost of all the fuel used or some volumetric measure of fuel used?

fuel used, volumetric measure or energy content, should be some kind of inverse function of fuel cost. it perhaps is better expressed as

inflation = money supply X fuel cost

obviously, unless there is a new or unlimited source of cheap fuel available, the money supply will drive up the fuel cost and, hence, inflation at a power greater than one.

Fuel use is energy consumption in joules. Or you could use any energy measure like BOE from the BP statistical review.

As far as price of fuel, they find that price is set by the total energy required to produce a good. Meaning if you add up all the energy burned as fuel or used in the manufacture of capital, that you can predict the dollar value to within 0.85 r^2. Cost = total energy required to make, train, or educate the good or service.

They basically validate Jeff Vail's position on EROI to within a few percent. (I need to send him an email on this topic).

"The government says it has pushed the rebels out of the city but they say they withdrew to give civilians the chance to evacuate."

Let's see a show of hands for who believes this:


More like it:

"Aid workers report that fighting is continuing outside the city, while dead bodies litter the streets."

This is all so confusing - the article doesn't say which ones are the terrorists! How is one to know who the bad guys are? Say, don't they have oil there?

Programs! Get your programs! You can't tell the players
without your programs!

" France has a long-term military presence in Chad, one of its former colonies, giving the government intelligence and logistic support."

The French and US governments, Deby's main Western backers, told their citizens to assemble in secure locations and await evacuation.

The pipeline represents the biggest ever single investment project in Africa. Chad, until recently ranked one of the five poorest states on Earth, is currently enjoying a 55% annual increase in GDP. Nevertheless, more than seven million of the country's nine million people live on less than $1 a day.

Most of the oil proceeds never see Chad. They go into the coffers of US oil companies, their Malaysian partners and into the offshore bank accounts of President Deby, and his relatives and ministers."

Most of the oil proceeds never see (fill in the blank of the next
nation to fail).

Just another bit of "blowback". Seems the Empire's strategies are running into trouble everywhere and their allies (Chad in this case) have to take it on the chin as a result.

About time the French forces did some butt kicking. We don't want the Chinese taking over more oil.

Regarding the story uptop about OPEC's plans to increase output by 3 mbpd, even if it occurred, at their 2006 rate of increase in consumption, the top five net exporters alone would boost their domestic consumption by about 2 mbpd from 2008 to 2012, inclusive.

And regarding Russia, a missive from one of my corespondents:

Russian Oil Output Falls 0.7 Percent in January, Ministry Says
2008-02-04 04:00 (New York)
By Torrey Clark

Feb. 4 (Bloomberg) -- Russia, the world's second-largest oil
supplier, pumped 0.7 percent less crude oil in January from the
same month last year as output fell at four of the country's five
biggest producers, the Energy Ministry said. . .

. . . Compared with December last year, both Russia's total output
and Rosneft's production slid 0.6 percent. . . .

. . . Total exports declined 2.7 percent compared with December to
5.23 million barrels a day as producers shipped less crude to the
Commonwealth of Independent States. . .

Recall the story about some Russian billionaires, who were in on the Rosneft IPO, selling large portions of their Rosneft holdings?

BTW, at their current rate of increase in car sales, Russia is on track to be the #1 car market in Europe within two years--surpassing Germany in new car sales.

How much increased production from OPEC was CERA counting on? What will be the depletion in existing oil fields by 2017?

Rhetorical questions, of course.


Were you looking for Canadian oil production and export numbers the other day?


Oil and equivalent hydrocarbons production up during the first eleven months of 2007 by 5.3%, exports up by 4.1%, imports up .7% (see notes at link).

Significantly, natural gas production during the same period is down 2.3%, while exports are up 6.8%. (The export numbers do not, of course, include all the natural gas used to upgrade tar pit production).

I know Moe was recently suggesting that people might want to go long on oil, but if I had a pot to piss in I would convert a good chunk of it into natural gas futures.

It would be interesting to look at a chart of total net exports from Canada in terms of net liquids equivalent (with net natural gas exports converted to barrels of oil equivalent).

Do you have a link to this article? I'm having trouble finding it. Seems like huge news unless it was some planned maintenance. Thanks-
Dennis at Princeton U WWS

I can't find this link (Bloomberg does not have it). Everything else I've seen said that Russian output has increased last year. Are you sure this is not fake?

Can you post a link to this article?

I didn't get a link. I think that there is a separate Bloomberg service where stories are posted before they are publicly released.

In any case, the data pertain to January, 2008, not to 2007. There was a prior article about projected February production being down also.

There's this on Reuters


MOSCOW, Feb 4 (Reuters) - Russian oil output fell to 9.78 million barrels per day in January from 9.87 million bpd in December and exports also edged down to 4.28 million from 4.30 million bpd, Energy Ministry data showed on Monday.

This is completely different (comparing Dec - Jan) vs year on year number... I think the original one has been a fake.

Both reports reference Russian Energy Ministry data just released for January. It should be possible to compare the Reuters figure for January 2008 with the previously reported figure for January 2007 and then compare with the supposed Bloomberg report.

After a bit of hunting...

The original article claims to have been written by Torrey Clark.

A quick search finds that Torrey Clark is a Moscow correspondent for Bloomberg and the email address for them can be found at http://www.bloomberg.com/apps/news?pid=20601087&sid=a5aFRfGhR4vo&refer=home
and is listed as

To contact the reporter on this story: Torrey Clark in Moscow at
tclark8 (at) bloomberg . net (spam protection added by me)

So if anyone really wants to know if he wrote it then they can email him and ask. Why would anyone want to fake it?

As a side note about energy companies -
my cheap 'Yello' electric company (just a front for EnBW, who itself is just a front for EdF) just sent me a coupon for 4 Osram 'Halogen Energy Saver' bulbs - if I buy 4 at Karstadt (a German department store chain), I only pay for 2, for a total cost of 5.39 euros. And these bulbs can save as much as 30% over a normal light bulb, and last twice as long. In 28 or 42 watt versions, replacing 40 or 60 watt bulbs.

What a fantastic deal.

Considering that I use CFLs which easily use 80% percent less electricity, and last 6 times as long - admittedly, at the quoted price, I would likely only be able to afford two CFLs. BUt at 19.42 cents a kilowatt hour, I'll let someone else do the math to figure out how long those two CFLs will save enough on the electric bill compared to the halogens to pay for another two CFLs.

And we aren't even talking about LEDs, which have turned up a few times in places like Lidl, a German discount chain.

Now why would an electric company be offering such a fantastic deal? I mean, look at how they are going the extra mile - to help increase consumption. And these light bulbs can be screwed into a normal socket, and act just like a normal bulb - and they save energy to boot.

Anybody believing that a company which profits from consumption is interested in reducing consumption simply hasn't been paying attention.

However, there is no question that Yello/EnBW/EdF are doing their best to prove that Germans will have to turn off the lights if nuclear power stations are shut down. Even if the power company hands out such energy saving device liberally, there is just no way to avoid the necessity of keeping those reactors humming - the company's balance sheet depends on it, after all.

Otherwise, the lights go out. Even the Osram 'Halogen Energy Saver' ones.

Hope the European version of a CFL lasts longer than the USA version. The longest I have had them last is about 20 months. Lots of expense and not the life that is touted. John

My experience has been the same. :-(

About 20 months for the Chinese-made Westinghouse and "MaxLite" brands I could buy at the hardware store. About 10 years for the US-made 27W units. There's a message in there somewhere....

Mine are Sylvania. I have no idea where they were made.

CFLs don't like to be turned on and off. The cheap Chinese ones are nice because the light comes on right away. And they burn out quick. The expensive GEs come on slowly, which is irritating because you start with a dim room. However, they last.

I installed about 50 CFLs in- and outside our house when it was built. It's been almost 4 years now, and I've only replaced bulbs in one specific recepticle that is outside and subject to conditions different from every other location. I even have CFLs that I bought in the late 1990s in lamps that I use daily. Every one was made in China, but have different labels. I shake my head in disbelief when I read/hear stories of CFL experiences that go so contrary to mine.

I'm trying to remember to put the date on a CFL bulb whenever installing one, so I really know.. but we're almost 100% cfl, and the replacements seem to be focused on certain fixtures..


We have been using CFLs for a lot of years. Our experience is that bulbs that a horizontal (we use "globe" fixtures in our bathrooms) and ones that are upside down (we use them in suspended fixtures above our kitchen sinks) don't last nearly as long as ones that are "upright."


Mine are Sylvania and they are crap. I am putting back in all of the incandecents I took out to replace with the CFL's. I can't get rid of the dim 130V bulbs the previous owner of my house installed, I don't think I have had one of them burn out.

We have a "thing" around here about not buying anything made in China, so our CFLs are the US made GEs for sure. And they last years. They are dim until up to operating temperature - the outside one over the front door will be REALLY dim if it's down around 20F outside! Then it warms up.......

Hate to say it but all of our GE CFLs also say they are made in China. But truly they seem to last longer. There must be design differences.

That's weird...I've had some CFLs since 1996; back when they were really expensive. I packed them up and took them with when I left Nevada. I finally moved them to the garage because they were slow to brighten and somewhat pink. They refuse to die. The only CFLs I've had issues with are Feit and Light of America(made in China); they were crap and rarely lasted a year.

I wonder what accounts for the performance disparity between you and I? The on/off frequency might be something, but my CFLs don't seem to care...bathroom CFLs that go on and off all the time last about like kitchen CFLs which tend to come on and stay on.

BTW, thank you very much for your work on the Drumbeat every day.

I wonder what accounts for the performance disparity between you and I?

I honestly don't know, but I suspect voltage steadiness. I live in an old building with an electrical system from a bygone age. Also, we get a lot of summer thunderstorms around here. I've been using CFLs for a lot longer than most people (because I keep planted fishtanks, that need more light per square inch than incandescents or regular flourescents can provide). And I've noticed that they tend to burn out very quickly after a voltage drop.

I have one CFL that is easily older than 10 years - it is our outdoor light, and lacks the quick starting circuitry found in almost all current CFLs.

Other CFLs, mainly name brand from Osram and Philips, seem to last - at least none of the ones with the six year warranty have been sent back to be replaced yet. (Though some are reaching the end of that warranty.)

However, there is one ceiling light fixture which gets the cheapest bulbs, and is somewhat covered - there, the bulbs last around two years. On the other hand, I think the CFL in an Ikea box fixture last 4 or more years - better quality bulb, though being wood and non-reflective, and not used for hours at a stretch, the heat is probably less.

I really think heat is a major problem, along with quality. As most American fixtures aren't very open in my experience (apart from lamps), that could be a source of short life.

Of course, the real trick, carefully hidden, is to buy the socket and the bulbs separately - generally, it is the tube which dies, not the electronics, and by buying the two together in a single unit, you are generating a fair amount of toxic waste, along with profit for the CFL manufacturer.

This point was raised when CFLs first became big in Germany, and most businesses continue to use the 'industrial' version, keeping a number of tubes on hand. Where I work, most sockets are easily 12 years old - they sit in recessed, reflective fixtures. Generally, the tubes last years and years.

Sadly, the idea of actually reducing the amount of electronics required for CFLs never caught on, even if the Greens did try for a while. My first quick start CFL was a Swiss socket/replaceable tube combination - the tube has been replaced several times, but it still works after more than 12 years.

We live in a system based on consumption, and reducing consumption is the moral equivalent of killing that system - which is why the Greens are to blame for such things as the need for more nuclear and coal fired generator stations, since they are obviously unrealistic in demanding less consumption. Or worse, attempting to make it mandatory.

Stick to quality European products such as Osram amd Phillips. My Osram CFL's in the dining room were installed in 1994 and still working perfectly, after an estimated 16,000 hours of use.

Can BP repair its holes?

Has BP's done more than repair the holes?

By Russell Hotten

Last Updated: 8:40am GMT 04/02/2008

Tony Hayward has been busy in his first year running BP, but the City has yet to be convinced, writes Russell Hotten

When Tony Hayward was appointed chief executive of BP, one of his first decisions was to remove paintings of flowers and landscapes from the walls and replace them with pictures of workers and oil rigs. Real men, doing real jobs.

Retired Shell Man: (Global Warming? Or does he know something wicked this way comes…)


Ban gas-guzzling cars, says ex-Shell boss

By Stephen Adams

Last Updated: 8:01am GMT 03/02/2008

New 'gas guzzling' cars should be banned across the European Union, the former head of Shell has said. ·

Sir Mark Moody-Stuart said the sale of new cars which do less than 35 miles per gallon (mpg) should be outlawed for environmental reasons.
A ban on gas guzzling cars would include the 13.7mpg Bentley Arnage
The former oil giant boss said taking such cars off the road was an ethical issue and a responsibility of society at large.Such a move, which would be heavily resisted by the motor industry, would risk virtually eliminating the sports and luxury car markets.Top British brands such as Jaguar, Rolls Royce and Aston Martin would have to radically re-engineer their vehicles and their business models if they were to survive. But Sir Mark, 67, who was chairman of Royal Dutch Shell between 1998 and 2001, and retired from the board in 2005, said a total ban on inefficient cars was necessary

Interesting comment in the article about widespread reports of lenders not sending default notices, apparently trying to hold down the reported default rate.

Higher loan limits will lead to Fannie Mae, Freddie Mac bailout
Sean Olender
Sunday, February 3, 2008

Congress is about to sell us the biggest fraud in American history.

It's been highly touted as an economic stimulus bill that will help millions of Americans - and has the backing of both President Bush and House Speaker Nancy Pelosi. In the coming year, individuals would receive rebates of up to $600 and families up to $1,200. There are other goodies, too, including tax write-offs for small businesses and an expansion of the child tax credit.

But, as the old adage goes, nothing comes for free. As part of the bill, Congress is set to rush through an increase in the mortgage loan limits for Fannie Mae and Freddie Mac (and Federal Housing Administration insurance, too) - from $417,000 to $729,750 - the first step toward a massive financial disaster in which taxpayers will end up paying through the nose.

But, as the old adage goes, nothing comes for free.

What I'm waiting for is legislation that criminalizes the growing practice of 'walking away' from an 'upside down' mortgage. I'm sure something along these lines will happen. Can't let the common citizen get away with the kinds of skulduggery that bigwigs in the financial world practice as a daily regimen.

If that happens there will just be a boom of people incorporating themselves so that their corporations can buy the house instead of them personally.

Netflix was kind enough to deliver A Crude Awakening this Saturday, thanks to my girlfriend asking me a few weeks back to "put some interesting stuff in my movie queue". I had mentioned it was on the way and I did actually get a commitment to watch it with me. It was pretty easy when I said I'd also throw something on the bbq and cook dinner.

She kind of "gets" peak oil in a very basic way, but until she watched the movie, she never had any idea of how interconnected oil is in our society. Over the last year as I got rid of my 4x4 and bought a high mileage diesel VW and made other changes, she's realized this isn't a "fad" and that I may be on to something here.

One of the big turning points in the discussion was when milk went from $4.39/2 gal to $6.50/2 gal at Safeway. As a single mom for quite some time, she was in tune to the prices for staples. We have a friend with cows and I mentioned he's not getting paid any more for milk, and the cows aren't charging any more then they used to. Higher oil meant higher transport and processing costs for everything.

Saturday night she sat with rapt attention for the ENTIRE movie and "got it". It was like a light bulb turned on, to borrow a bad analogy. Now she "gets" why I'm looking into biodiesel, why I read the Oil Drum, why i recommended a smaller car instead of a big sedan, why I'd rather go kayaking on the coast than jet off to Vegas for a weekend. (Hey SCT, come join me sometime if you're in the SF Bay area!)

She even invited her kids (17 & 18) and her daughter's boyfriend, 19 (who until recently said there was NO SUCH THING as a DIESEL CAR) over Sunday to watch A Crude Awakening with us again. She thought it was that important. None of us cared that much about the Superbowl anyway, and the kids like my cooking. I don't think the kids got as much out of it as their mom, but they did find it interesting and asked some intelligent questions which was more than I expected.

Browsing book sales for the post-oil library this past week yielded some interesting stuff:

Minor Surgery (1909) 750pp, 450 pictures $8

and since man/woman can't live on prep books alone:

giant 18" steel wok at goodwill for $2
4 huge volumes of sci-fi short stories $2/ea
Sierra Club Omnibus of Mountaineering Fiction $1

That cow is eating more expensive corn.

If life takes me to the Bay area again I would love a chance to stick a paddle in the water there :-)

Nice one :)

(No, it's not a global warming story...)

Is Iceland headed for meltdown?

A Northern Rock style crisis is threatening Iceland's entire banking system.

A good 4 week chart to keep track of Tapis crude and Singapore products

Ladies & Gentlemen,

I'm scribbling a bit tonight on peak oil, peak gas, and the effects on ammonia. Some time over the last two weeks someone posted a link to a site that tracked ammonia plant closings on a global basis. I don't recall who and I neglected to bookmark it. Does someone more organized than I have this right under their fingertips?



BP efficiency overhaul to involve heavy cuts of North Sea workforce
Steve Hawkes

BP sent a shudder through the UK’s oil and gas industry yesterday by unveiling plans to cut 10 per cent of its North Sea workforce.
About 350 jobs will go over the next six months in Aberdeen as part of the second round of cuts announced by the energy giant since Tony Hayward, the new chief executive, outlined a radical restructuring two weeks ago.
Nearly 1,000 exploration and production staff in Chicago, Illinois, were told last week they would have to move to Houston, Texas, as Mr Hayward looks to slash costs and rejuvenate BP’s operations worldwide.
The group’s third-quarter results on Tuesday revealed a 27 per cent fall in underlying profits after refinery shut-downs in the United States and delays to the start of production at two oil-fields in the Gulf of Mexico.
• BP boss vows to lead oil industry
• Thousands of jobs to go as BP cuts overheads
• Pressure rising on BP chief as estimates fall
The job cuts in Britain will fall among office-based staff and contractors at BP’s control centre in Dyce, Aberdeen, where the Queen officially opened the Forties pipeline in 1975. This brought the first ever oil onshore from a North Sea discovery.
In a statement yesterday, Andy Inglis, chief executive of BP’s Exploration and Production business, said that the cuts were “an important step in delivering BP’s agenda for simplifying how the company is run and ensuring resources are focused on front-line delivery”. He added that the move was essential to “secure our continuing presence in the North Sea”, given rising costs and declining production.
Trade union leaders said that the move was “devastating” and called on BP to set up a workers forum to help the affected staff to find new employment. Graham Tran, regional officer at Unite, said: “We all knew the restructuring was coming, the new chief executive had already said as much when he talked about how BP was being mismanaged.
“But no one thought it would be of the scale of 350. It’s shocked us and people throughout the industry.”
BP employs a total of 2,100 onshore staff in its North Sea business and 97,000 worldwide. Nearly 10 per cent of its total global production still comes from fields off the east coast of Scotland, but output has fallen from 550,000 barrels of oil and gas day to 330,000 barrels in the past three years.