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Posts Tagged ‘Natural Gas’

Distilling Differences between Hydrocarbons

29 January 2013 1 comment

Coal, Oil, and Natural Gas are all resources of high energy density and have fueled various revolutions in disparate industries. While they’re often lumped together as hydrocarbons, they have widely different characteristics. Here is a brief overview of  some of those differences:

Formation: All hydrocarbons require vast periods of time for their creation. They begin by dead organic matter being buried and heated until they crack and form a particular hydrocarbon. While they are all chains of Carbon and Hydrogen (hence hydrocarbon) of various lengths, they are not simply the 3 phases of the same substance.  Coal is generated from the slow burial of ancient  forests, wetlands, swamps, and bogs. Oil and Gas are generated in lake or marine environments where plankton and other organisms are buried under water. Over the millions of years or heat and pressure transform this organic material into energy rich hydrocarbons that we extract and burn for energy.

Use: The 3 general physical states each type resides in naturally predisposes them to specific uses. Coal is a heavy, solid combustible rock; a good energy source, but not easily moved. This was the dominate fuel source of the Industrial Revolution As a result, industries developed near coal sources to minimize the transport costs associated with using the fuel. England and Eastern US, both rich in coal, prospered as industry roared to life powered by coal. Coal-fueled, steam-powered trains were the revolutionary mode of transport during the 1800s.  Coal is still the dominant source for electricity generation around the world. Later, oil became the dominant fuel type providing a wider range of transport options as well as many alternative uses such as plastic production, fertilizers, and lubricants. Natural gas is generally used for electricity and heat production.

Distribution: Due to the specific environmental conditions necessary for hydrocarbon formation, their distribution is not even across the Earth. Coal is a entirely viewed as a terrestrial resource as marine mining is excessively difficult and given the abundance of coal, there is no need to exploit marginal reserves. Also, being a terrestrial resource, the countries with large land holdings having the largest reserves (Top 3: US, Russia, China).  Oil and Gas are less abundant and distributed much more unevenly across the globe. While great reserves reside in the Middle East, Venezuela, Russia, and Canada are also among the 10 oil laden countries in the world. Also, given their liquid nature, off shore reserves are capture-able, making distribution even more complex.

Grades: Given the range of environments for formation, the quality of hydrocarbons varies widely between sources. Purest coal, anthracite, contains more energy and burns more cleanly that other, less pure types (bituminous, sub-bituminous, peat). Higher grade coals are mined preferentially over others so as coal use continues, the average coal being burned will become dirtier. Oil can form in various lengths of hydrocarbons  and has a more complex range of types because its liquid nature allows for the incorporation of other impurities. The highest caliber of oil is generally considered light, sweet crude or Brent Crude.  As the level of impurities increase, the value decreases, as is the case with Venezuela’s oil which has considerable sulfur content (referred to as Sour Crude). Additionally, longer chained oils are more difficult to mine and refine, as is the case with the Oil Sands of Alberta Canada. Gas, being light in weight is easily refined into pure forms of methane, ethane, and propane.

Transport: Given its heavy, solid nature, coal is usually transported by rail or ship and is traded on local markets due to the high cost of transport. Natural Gas, on the other end of the spectrum, is light and difficult to contain. It is usually moved via pipelines, though it can be converted to a more transportable state called Liquefied Natural Gas (LNG). Oil is the most useful and transportable hydrocarbon and  is generally moved via ship or pipeline.

Geopolitics: The varying characteristics and uses of hydrocarbons create dynamic geopolitical implications. The concentration of oil in unstable regions of the world has been of concern for decades. Every US president since L.B. Johnson has called for lessening our dependence on foreign oil. This has resulted in increased US production and deeper exploration into marginally located reserves such as in the Arctic. It has also brought alternative sources into production such as the Tar Sands. This brings to light infrastructure needs, and refining capacity. Very few refineries in the world are capable of handling “dirty oil”. The much-debated Keystone XL pipeline would connect the dirty oil of Alberta, CA directly to Houston and one of those few refineries that can handle it. Now with the delays from environmental concerns, China is making investments to increase its refining capacity for dirty oil in hopes to tap into Canadian sources. Similarly, Venezuela’s sour oil has limited markets due to refinery requirements. The US is the primary market due to demand but also current refining capabilities. China is not only increasing its refining capabilities, but also infrastructure investments in Africa in hopes of earning goodwill from oil rich nations. The easy transport of oil makes it a truly global commodity and unilateral maneuvering is unlikely to have great impacts on either supply or demand.

Coal will continue to be the dominant electricity source for decades still. China is increasing its coal consumption daily to meet the growing demands of its population. It’s also looking to neighboring countries for additional reserves to meet its demand. Even environmentally conscience nations are having trouble escaping the need for coal generated electricity with its dirty emissions.

Natural gas differs here too. Due to its reliance on pipelines and long term infrastructure costs, gas is sold in contract blocks between countries over decade long agreements.  The Russia-Europe connection highlights this fact and is exacerbated by soviet-era tensions of sovereignty mixed with needs for energy. LNG trading seems to be following the Contract-Block model thus keeping it from achieving global commodity status equal to that of oil. Japan is likely to become increasingly dependent on foreign natural gas, most likely Russian LNG, as it aims to reduce its reliance on nuclear power with few domestic power options to replace it. Additionally, natural gas booms in North America have depressed the price of natural gas over the last 5 years further altering energy calculations.

The diverse characteristics of hydrocarbons and variations therein create a complex environment for energy policy and decision making.  Understanding the nuance of different energy types will facilitate better utilization of hydrocarbon resources as well as more comprehensive solutions for moving beyond hydrocarbons.

Energy Consumption by Type

Categories: Energy Tags: , , ,

Struggles in Arctic: Risk is the Price

28 January 2013 1 comment

Development plans for the Shtokman natural gas field were put on hold this last summer as agreements expired between Gazprom, Statoil, and Total. The Shtokman Development AG, the corporation formed by these 3 players to explore the field, had a 5 year charter that expired in July with no further plans for cooperation.  During the most open Arctic sea ice season in history, the challenges posed by Arctic ocean drilling remain daunting and are still prohibitory.  The Development AG was created to share the risk of Arctic operations among the 3 participants. Not only are the costs of operations, risks, and precautions extraordinary in the Arctic, but the unimaginable cost of cleanup of an accident in this harsh, remote, offshore environment remains staggering and damning.

The Shtokman natural gas field has been a viewed as one of the most feasible gems in Arctic Hydrocarbon exploration. Several factors make this play so enticing, including it’s promising reserves, but more importantly its location.  Located in the Barents Sea approximately 600km north of Murmansk, RU, the Shtokman Field is relatively close to the largest city in the Arctic. This means it has (relatively) easy access to the drilling infrastructure and equipment. It also means that in the case of an emergency, rescue and spill response teams  will be better able to assist in support and clean up. Location is also a crucial factor in that it is located near some of the warmest (again relatively) waters within the Arctic Ocean.  This corner of the Arctic is home to the 10 biggest cities in the Arctic because of the warm waters brought to this area at the tail end of Gulf Stream which keeps waters warm and ice-free.

While exploration of this play will certainly continue, this breakdown in cooperation shows hesitation in response to the great uncertainty present in this last frontier.  Risk is inherent in Arctic operations. A unquantifiable risk poses a difficult question of when to proceed in increasingly difficult plays, especially in the recent volatile global natural gas market.

Categories: Energy Tags: ,

Carbon Calculation: Natural Gas vs Coal

7 February 2012 Leave a comment

If you follow the media, especially in PA, you’d be led to assume Natual Gas is the energy source of the future. That may very well be so, at least the near future. Many have proffered that we are in the “Natural Gas Century”, though how long this “Century” lasts may be up for some debate. Natural gas does indeed provide cleaner combustion than coal (38%) and oil (32%), but how much difference do these improvements make in the long run? Or asked another way, how long will using alternative fossil fuels delay crossing certain thresholds?

Mauna Loa CO2 Measured data (red), extrapolated to 2050

The atmospheric CO2 dataset collected from atop Mauna Loa Observatory suggests that we will cross the 450ppm threshold in early 2037, if we maintain our current energy portfolio. This little experiment calculates the change in atmospheric CO2 if we were to alter the energy portfolio by replacing coal with natural gas. To do this, I create 3 scenarios increasing natural gas use by 50%, 100%, and 200%.  There are a few basic assumptions in this calculation. 1) Natural Gas will only be used to  replace the dirtiest fuels: coal first, then oil. 2) The current energy portfolio is the same energy portfolio that’s been used for the last 50 years, and is responsible for the measured increase in CO2. 3) The change from our energy portfolio will happen instantaneously at 2025. There may be additional benefits achieved from ramping up to these goals, but substantial change takes time, here approximated as a 13 year implementation plan. 4) 450 ppm atmospheric CO2 is a threshold that is desirable to avoid. Many have suggested that 450 ppm will equate to ~2C degree warming.  450 will serve as the threshold for evaluating the different scenarios.

https://thevandegraph.files.wordpress.com/2012/01/energy-panel.jpg?w=1024

Scenario 1 increases our current natural gas use by 50%, moving from the current 25% to 37%. If implemented in the year 2025, this will delay us crossing the 450ppm threshold by 15 months.  Scenario 2 increases natural gas use by 100%, making it responsible for 50% of all energy. This would reduce our CO2 emissions enough to offset the threshold by 2 1/2 years.  In the maximum 200% increase scenario, the threshold is delayed by 5 years.

While at first this delay of only a few years seems insignificant, it would represent a substantial change in energy tastes and/or policy, which we have only seen in a limited expanses. Additionally, even the minimum scenario 1 calculation shows that the threshold is delayed by more than a year, after only 12 years of implementation.  That equates to an 8% delay. These carbon savings would continue to accumulate and have larger impacts over longer time horizons.

There are a few caveats, however. 1) This calculation assumes that natural gas will directly compete with only the dirtiest coal and oil, when in fact it will compete with all energy sources.  2) Natural gas is still a fossil fuel and does not get around the fundamental limitation of fossil fuels, which is that they are finite. 3) Natural gas production has the potential for direct release of methane, which is a 12x more efficient greenhouse gas than CO2, though it has a much shorter residence time (~10-12 years). While natural gas will not be the end-all energy savior, the interest in it does represent a first step away from coal and oil and does have the potential to buy us more time while we work toward a more comprehensive solution to our energy concerns. While increased natural gas use  provides a rather minimal change,  it is a change nonetheless, and showing that we can change our energy use will help ease the fears associated with the massive energy overhaul that will be required to fuel our future.

Categories: Climate, Energy Tags: , , ,