http://www.csmonitor.com/2005/1129/p01s02-usec.html

If winter is bitter, brace for a natural-gas crunch
Mark Clayton, The Christian Science Monitor

Excerpt:

From Maine to Florida, from Virginia to Missouri, as much as half the United States confronts the possibility that harshly cold weather will lead to restrictions of natural-gas supplies. In some places - areas heavily dependent on natural gas to produce electricity - the prospect of "rolling blackouts," or controlled power outages, is much higher than in previous winters.

Any natural-gas cutoffs would primarily affect electric-power plants and factories fueled by gas, not homes, and be most likely in the Northeast.

If cold deepens for prolonged periods, the likelihood of interrupted natural-gas supplies rises to 30 percent in the Northeast and to 10 percent as far south as Florida and as far west as Missouri, according to a recent report by the Interstate Natural Gas Association of America (INGAA), a trade association representing gas pipeline companies. In a "worst-case" scenario, chances of interrupted gas rise to 40 percent for the Northeast and 25 percent across the eastern seaboard.
(29 November 2005)

The overall sentiment of the presenting professors was that the public is "panic" driven and the concern over depletion is somewhat overblown.

Prof. Graham started the lecture with a quick paced survey on how oil is formed, discovered and extracted; focusing on the idea that there are still many areas of the planet (Antartica) that have never been explored and which could hold vast reserves.

Two more professors, Nur and Gorelick played good cop/ bad cop regarding Hubbert's predictions for world wide oil shortage.

Prof. Amos Nur warned that he believes the world is on the brink of war due to perhaps-overblown "panic" over oil. He pointed out that there is still an unsettled debate between demand-oriented economists on one side and resource-availability oriented geologists on the other as to whether the world is truly running out of oil. The big problem, as Nur presented it, is the fact that China and India want to move up a graphed line he presented as representing "standard of living" with the USA at the top in terms of per capita income and per capita oil consumption (26 barrels per year per person). If China and India move straight up, global oil production will have to triple (up 200%). That was a shocking number. [While not promising it, the geology dept. indicated they may later post Nur's slides on their web site in the future.]

Prof. Steven Gorelick attacked the Hubbert model on a number of fronts. His weakest attack (IMHO) was arguing that just because Hubbert was right for US lower 48 does not mean Hubbert will be correct in predicting global production and consumption. His strongest attack (again IMHO) was arguing that the world is getting more efficient at using oil and will continue to improve efficiency at a sufficiently rapid pace such that oil depletion will become a don't care by the time (he says it's always 40 years into the future) the oil starts to run out. As to Nur's "standard of living" graph, Goelick argued that China and India will not move straight up that line but will instead find a more efficient line to climb up so that they can reach same standard of living without consuming as much oil per capita.

Most surprising was how many members of the public came to the lecture. It was standing room only in a big lecture auditorium. I'd say there were easily 500 people there if not more. I guess Silicon Valley folk are already well atuned to the Peak Oil problem.

BP's Browne Sees Energy Prices Stabilizing and Even Falling Long Term
"World energy demand will continue to grow, but new oil and natural gas discoveries ramping up across the globe will likely lead to stabilized prices and perhaps even a dip in the long term, the CEO of BP plc said Tuesday.

John Browne spoke to the Brookings Institute in Washington, DC, to tout BP Alternative Energy, a low-carbon power business that was launched on Monday. However, the BP chief touched on a lot of energy subjects at the luncheon. The energy industry needs to plan for the future, he said, but added there remained plenty of new opportunities for exploration and production, pointing to recently discovered oil and gas deposits in the Caspian Sea, Angola, Russia and "here in the U.S. from the deepwater of the Gulf of Mexico," he added.
(...)

Today's high oil prices "are unlikely to be sustainable and should drop to average $40/bbl in the medium term," and longer term, prices could return to a range of $20-25/bbl, he said. (...)"

(The Gulf Stream delivers something like 27,000 times the amount of energy to the U.K. that all of the UK's power plants put out.  During the last Little Ice Age, there are documented reports of glaciers on the continent moving out of the Alps at the rate of a "musket shot per day," destroying villages along the way.  As the article notes, temperatures were low enough that the River Thames froze (the U.K. is on the same latitude as Siberia).  Today, this would have profound effects on energy demand, food supplies and ultimately, on population in Europe.  The Pentagon has been so concerned about this that they have been war-gaming various scenarios.  The winter is not off to a promising start since natural gas prices in the UK have already spiked once to the equivalent of $160 to $180 per barrel of oil--because European utilities on the continent refused to deliver gas to the U.K., despite the U.K. offering prices four times higher than continental prices, in other words, no energy available at any price.)

From the Drudge Report:

http://www.newscientist.com/article.ns?id=dn8398

Failing ocean current raises fears of mini ice age

     *     18:00 30 November 2005
     *     NewScientist.com news service
     *     Fred Pearce

The ocean current that gives western Europe its relatively balmy climate is stuttering, raising fears that it might fail entirely and plunge the continent into a mini ice age.
The dramatic finding comes from a study of ocean circulation in the North Atlantic, which found a 30% reduction in the warm currents that carry water north from the Gulf Stream.

The slow-down, which has long been predicted as a possible consequence of global warming, will give renewed urgency to intergovernmental talks in Montreal, Canada, this week on a successor to the Kyoto Protocol.

Harry Bryden at the Southampton Oceanography Centre in the UK, whose group carried out the analysis, says he is not yet sure if the change is temporary or signals a long-term trend. "We don't want to say the circulation will shut down," he told New Scientist. "But we are nervous about our findings. They have come as quite a surprise."

No one-off

The North Atlantic is dominated by the Gulf Stream - currents that bring warm water north from the tropics. At around 40° north - the latitude of Portugal and New York - the current divides. Some water heads southwards in a surface current known as the subtropical gyre, while the rest continues north, leading to warming winds that raise European temperatures by 5°C to 10°C.

But when Bryden's team measured north-south heat flow last year, using a set of instruments strung across the Atlantic from the Canary Islands to the Bahamas, they found that the division of the waters appeared to have changed since previous surveys in 1957, 1981 and 1992. From the amount of water in the subtropical gyre and the flow southwards at depth, they calculate that the quantity of warm water flowing north had fallen by around 30%.

When Bryden added previously unanalysed data - collected in the same region by the US government's National Oceanic and Atmospheric Administration - he found a similar pattern. This suggests that his 2004 measurements are not a one-off, and that most of the slow-down happened between 1992 and 1998.

The changes are too big to be explained by chance, co-author Stuart Cunningham told New Scientist from a research ship off the Canary Islands, where he is collecting more data. "We think the findings are robust."

Hot and cold

But Richard Wood, chief oceanographer at the UK Met Office's Hadley Centre for climate research in Exeter, says the Southampton team's findings leave a lot unexplained. The changes are so big they should have cut oceanic heating of Europe by about one-fifth - enough to cool the British Isles by 1°C and Scandinavia by 2°C. "We haven't seen it yet," he points out.

Though unseasonably cold weather last month briefly blanketed parts of the UK in snow, average European temperatures have been rising, Wood says. Measurements of surface temperatures in the North Atlantic indicate a strong warming trend during the 1990s, which seems now to have halted.

Bryden speculates that the warming may have been part of a global temperature increase brought about by man-made greenhouse warming, and that this is now being counteracted by a decrease in the northward flow of warm water.

After warming Europe, this flow comes to a halt in the waters off Greenland, sinks to the ocean floor and returns south. The water arriving from the south is already more saline and so more dense than Arctic seas, and is made more so as ice forms.

Predicted shutdown

But Bryden's study has revealed that while one area of sinking water, on the Canadian side of Greenland, still seems to be functioning as normal, a second area on the European side has partially shut down and is sending only half as much deep water south as before. The two southward flows can be distinguished because they travel at different depths.

Nobody is clear on what has gone wrong. Suggestions for blame include the melting of sea ice or increased flow from Siberian rivers into the Arctic. Both would load fresh water into the surface ocean, making it less dense and so preventing it from sinking, which in turn would slow the flow of tropical water from the south. And either could be triggered by man-made climate change. Some climate models predict that global warming could lead to such a shutdown later this century.

The last shutdown, which prompted a temperature drop of 5°C to 10°C in western Europe, was probably at the end of the last ice age, 12,000 years ago. There may also have been a slowing of Atlantic circulation during the Little Ice Age, which lasted sporadically from 1300 to about 1850 and created temperatures low enough to freeze the River Thames in London.
Journal reference: Nature (vol 655, p 438).

Related Articles

     *     Post Kyoto talks start in tough climate
     *     http://www.newscientist.com/article.ns?id=dn7385
     *     17 May 2005
     *     Climate change: Awaking the sleeping giants
     *     http://www.newscientist.com/article.ns?id=mg18524864.400
     *     12 February 2005
     *     Climatologists pursue greenhouse gas danger levels
     *     http://www.newscientist.com/article.ns?id=dn6959
     *     01 February 2005

Weblinks

     *     Southampton Oceanography Centre
     *     http://www.noc.soton.ac.uk/
     *     NOAA
     *     http://www.noaa.gov/
     *     United Nations Framework Convention on Climate Change
     *     http://unfccc.int/2860.php
     *     Met Office
     *     http://www.metoffice.gov.uk/

"Domestic output is expected to climb 3.3 percent to 181 million tonnes this year as China seeks to curb its growing dependence on imports. But next year that will rise only slightly more to 184 million tonnes, the report said.

Declining production at key mature fields and complicated conditions in some new fields could make it harder to crank up output so fast, and imports will likely account for around 44 percent of the country's oil needs in 2006."

http://www.chinadaily.com.cn/english/doc/2005-11/30/content_499209.htm

Mr. Cartwright built an impressive company (for awhile) using technical advances in power generation technology (combined cycle gas turbine plants), favorable commodity market conditions (low gas prices), and government environmental and economic initiatives (deregulation).

People make money only during changes in conditions - they play the differentials and the unstatic.  Same with Calpine.  It was obvious to us "big picture" guys that this was a short-term phase in the energy business (10 years is the basic investment cycle).

As a nuclear guy, my first impulse is schadenfreude - delight in the misery of others.  My competitor has bitten the dust.... crushed, crashed. and burning....I hear the lamentations of their women and their bondholders....

Calpine has made a lot of megawatt-hours with less pollution than coal, for which they deserve praise.  On the other hand, they've wasted a LOT of natural gas when an alternative (nuclear) existed.  Wish most of that gas had stayed in the ground.

Due to the "dark spread" (cost of gas vs. cost of coal), they're pretty much out of business.  If and when LNG comes onshore, their investments might once again be useful.

Mr. Cartwright's mistake was not quiting when he was ahead - plants paid for - and riding the long tail.  With amortized CCGTs, many of his fleet could cover their operating costs and overhead even with reduced operating hours even with expensive gas.

No, Calpine continued an aggressive expansion plan until it was too late.

Watch for the hedge funds to cherry pick his plants in bankruptcy courts.  Many will be disassembled and shipped to China or Russia - much of the cost is in equipment rather than concrete.

I noticed that Texas Pacific did a nuclear flip in Texas and got a 500% return!

How the worm turns.