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Eamon Keane

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  • Peak Oil Investments I'm Putting My Money On: Part IX, The Methadone Economy [View article]
    Current prices don't cover the all-in shale gas costs. So to the extent that natural gas prices stay at this level, there will be capital destruction at natural gas companies. Given the high decline rates in shale gas, falling supply will push prices back up to where they incentivise new drilling in due course.

    There are those who claim current prices are sustainable, however, but this FT article sums the counter argument up quite nicely (www.ft.com/cms/s/0/625...).

    Some quotes:

    "You might think the buzz-killers at the shale party would have been refuted by the raft of multi-billion dollar shale property buy-outs and joint ventures announced in recent months. I don’t agree. If the future of the industry is that good, why are the principals selling out? Can’t they finance themselves from operating cash flow?

    Answer: no."

    "So I worked people in the energy service industry, and gas producers to try and refute Ben Dell’s numbers. I couldn’t. My industry sources’ numbers all converged close to $8 per mcf. They do not believe the producers are covering their all-in costs."

    “There is a ton of sleight of hand going on here,” he alleges. “The ‘costs’ don’t include the cost of the land, the seismic survey, the operating costs, and other expenses.” Remember, though, that no one with a competent securities lawyer ever needs to tell a lie."
    Apr 27 03:47 PM | 5 Likes Like |Link to Comment
  • Why Rising Oil Prices Will Not Choke Off Recovery [View article]
    This guy is obviously constrained by the straitjacket of economic doctrine. This article is symbolic of the casual, condescending analysis among many (most?) economists regarding energy in general and oil in particular.

    If the energy challenge is to seriously tackled, it must be framed in the appropriate manner. This wall of economic dogma has to be torn down first.
    Apr 15 10:39 AM | 5 Likes Like |Link to Comment
  • The 100 Year Natural Gas Myth [View article]
    So you won't be extending me a job offer, then?
    Mar 12 12:28 PM | 5 Likes Like |Link to Comment
  • Why Natural Gas Vehicles Won't Decrease Oil Dependence, Part VI [View article]
    Thanks Hillsfar. I've recently learned to stop worrying and let the market determine what the energy future should hold.

    Higher taxes should definitely be levied on oil. Governments should show some leadership and warn the population about the coming peak oil crisis. How each individual decides to react to higher oil prices is up to them. The government picking the winner is a recipe for unintended consequences.
    Feb 28 08:00 AM | 5 Likes Like |Link to Comment
  • Outlook for a New Generation of Biofuels [View article]
    First generation biofuels are unsustainable, I don't think many would disagree with that. They're also ethically dubious. The world is heading for three interacting crises by 2030 - energy, water & food.

    The case of Sao Paulo state - where most of the sugarcane comes from - is discussed in the excellent McKinsey report 'Charting our Water Future' (www.mckinsey.com/clien...).

    They project a 14% water demand gap by 2030 in the BAU scenario. However if Brazil goes all-in on ethanol:

    "An ethanol boom in Brazil would double the demand for water
    for agriculture in São Paulo state, and increase the size of the state’s supply-demand gap from 2.6 to 6.7 billion m3."

    The marginal solar energy obtained from biofuels exacerbates the water & food equation. Just today you have the Chinese government warning that soil deterioration may lead to a food crisis (www.guardian.co.uk/env...). They're buying up land tracts in Africa & former soviet countries.

    Saudi Arabia abandoned its food self-sufficiency plans because of its rapidly depleting reservoir - they're using water at 7 times the rate it replenishes at. They are now turning oil into water by desalination. They are also buying up land tracts in Africa.

    When Daewoo Logistics tried to buy a huge area of land in Madagascar to export to South Korea, it led to the downfall of the Madagascar government.

    London hedge funds have also bought up land tracts in Africa.

    If you do GIS mapping, it's clear that most of the fertile soil on earth is being used for agriculture at the moment. This all points to a future where food prices will become volatile.

    There is a strong case to be made that biofuels will collapse under their own weight before too long.

    Just for a kicker, I'll add these two quotes about 'advanced' biofuels:

    “From our cellulose waste products we can get, by present known methods, enough alcohol to run our automotive equipment in the United States.”
    Thomas Midgeley, Society of Automotive Engineers, 1921

    “It is also said that algae may become a source of oil. However, algae culture is still in its infancy and many problems remain to be solved.”
    The Milwaukee Journal, 1952
    Feb 23 06:45 PM | 5 Likes Like |Link to Comment
  • Why Natural Gas Vehicles Won't Decrease Oil Dependence, Part V [View article]
    Very insightful comments, Cap'n.

    Your suggestion of a carbon tax was what I advocated in part III & IV to account for the energy security externality. But for goodness sake, don't call it a carbon tax! Patriot tax, my good man, is how you message it!
    Feb 21 09:16 AM | 5 Likes Like |Link to Comment
  • Why Natural Gas Vehicles Won't Decrease Oil Dependence, Part III [View article]
    I don't think conspiracies are helpful to the debate. There's no need for conspiracies, it can be taken for granted that all interested parties will hire former legislators and contribute to congressmen to push their side of the debate.

    Besides, because the oil majors can't get too much easy oil, they are grasping for reserves growth. Natural gas allows them to do that. BP, Shell, and now probably Exxon are major players in the gas field too.
    Feb 11 05:02 PM | 5 Likes Like |Link to Comment
  • Why Natural Gas Vehicles Won't Decrease Oil Dependence, Part I [View article]
    Your intuition is correct. Corn ethanol is an unmitigated tragedy, foisted upon the US by expedient politicians because Iowa is where the first presidential caucus state.

    It was recently given the all clear by the EPA that it results in carbon savings, despite the overwhelming evidence that it actually results in up to twice the CO2 emissions of gasoline.

    The ultimate irony is that ethanol also decreases air quality - per the EPA's own information! - yet it is still a political necessity to support corn ethanol.

    This disaster will now probably avoid economic gravity for a couple more years.
    Feb 8 04:02 PM | 5 Likes Like |Link to Comment
  • Why Natural Gas Vehicles Won't Decrease Oil Dependence, Part II [View article]
    In an ideal, world, gilariverman.

    The example of the UK is instructive. In the 1980s under Thatcher, they completely liberalised all aspects of energy supply. That has now led to substantial problems in all three pillars of energy policy: price, security & sustainability.

    So much so, that the energy regulator, ofgem, in a recent report gave as one remedy: The complete nationalisation of all aspects of the British energy supply. Here's a link (www.guardian.co.uk/bus...).
    Feb 8 01:59 PM | 5 Likes Like |Link to Comment
  • Why Natural Gas Vehicles Won't Decrease Oil Dependence, Part I [View article]
    I know you're experienced in the energy debate, longoil, but you surely must agree that resources - oil or natural gas - are largely irrelevent, it is the required capital, time lags & technical constraints of developing these huge unconventional sources that is the primary impediment.
    Feb 8 01:20 PM | 5 Likes Like |Link to Comment
  • Why Natural Gas Vehicles Won't Decrease Oil Dependence, Part I [View article]
    Thanks for your rhetoric, David, I apologise if my ignorance offends you.

    I did an undergrad in mechanical engineering, including a thesis which looking at hydrogen for mobility. I'm currently doing an energy systems engineering masters degree, and by this point I've looked at the majority of proposed solutions to the oil for mobility problem.

    None of them add up.

    So perhaps you're leaving out that scenario which dares not be uttered: lifestyle change.
    Feb 8 01:14 PM | 5 Likes Like |Link to Comment
  • Why Natural Gas Vehicles Won't Decrease Oil Dependence, Part I [View article]
    Sorry, reading it back it is quite difficult to understand. So the average barrel of crude yields:

    15% transport diesel
    46% gasoline
    39% other

    If we convert all diesel vehicles (basically all trucks & buses) to LNG, then we still have to supply the 46% gasoline to regular passenger vehicles. That still requires the same number of barrels of crude, because the refineries aren't flexible enough to convert the diesel to gasoline.

    If, however, for every gallon of diesel converted to natural gas, you eliminate the need for three gallons of gasoline, then you eliminate the barrel of crude completely (ignoring the other uses of the crude). Does that make any more snese?
    Feb 7 01:05 PM | 5 Likes Like |Link to Comment
  • Notes from Davos: World Energy Outlook [View article]
    There's a good 3 page summary (dated October 2009) of the benefits and challenges to using LNG from the American Trucking Associations (www.truckline.com/AdvI...). It conlcudes by saying:

    • Natural gas vehicles are a safe alternative with a proven track record.
    • Engine durability is equivalent to diesel fuel engines.
    • Natural gas vehicles run quieter than their diesel counterparts.
    • Natural gas is a plentiful, domestically-produced energy source that could help to reduce our dependence on petroleum imports.

    It seems to say that the main obstacle is the dearth of refueling stations. If Boone's bill (S 1408 - (frwebgate.access.gpo.g...)) gets through it would effectively neutralize the $50k or so extra cost for heavy duty trucks. It would also give a tax credit for about 20% of the cost of refueling stations. He reckons it would achieve 850k of the nation's 8.5m heavy duty trucks in 5 years.

    He's bullish that it'll be passed by May, and appears to have some backers (www.bloomberg.com/apps...). I don't know if the incentives would be enough to spur the refueling stations, or if the nat gas pipelines are in the required locations, but it's still interesting.
    Jan 31 06:04 PM | 5 Likes Like |Link to Comment
  • Nuclear Power: Too Costly to Revive [View article]
    Natural gas actually has half the CO2 emissions of coal. People living near these new hydro-frac natural gas wells are also concerned about leakage into the local water supply. Water mixed with 296 chemicals is pumped at very high pressures underground to fracture the rock to allow the natural gas to flow.

    Natural gas might have potential, and I know Dr. Chu has commissioned a report on its use for transport. Is there any existing reports/discussion you could point me toward?
    Jan 22 10:21 AM | 5 Likes Like |Link to Comment
  • Energy Myths for the 21st Century [View article]
    Firstly, I see no clarification as to whether that is recoverable barrels or just barrels in the ground. There's a big difference. If barrels in the ground, then recoverable barrels would be more like 13-50bn barrels.

    In 2008 the world used 27bn barrels of oil (www.eia.doe.gov/aer/tx...). An extra year or two is nice but does not discredit peak oil.
    Sep 30 02:29 PM | 5 Likes Like |Link to Comment
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