Oilprice's  Instablog

On 28 October Air China conducted its first trial flight of a passenger jet powered by a mix of biofuel and traditional aviation fuel.

The Jet A-1 biofuel kerosene used in the flight was derived from the seeds of tung trees, more commonly known as japtropha.

Air China’s Boeing 747-400 landed safely at Beijing Capital International Airport at 9:30 a.m. after burning more than 10 tons of the biofuel, a 50-50 mixture of traditional Jet A-1 derived from oil and Jet A-1 processed from the japtropha seeds. The jatproha Jet A-1 is what’s known as a drop-in, simply being admixed in a 50-50 ratio with conventional Jet A-1, and requires no engine modifications.

Air China Vice President He Li said the composition and the burning efficiency of the biofuel admixture had been tested along with its impact on the Boeing 747’s four Pratt and Whitney JT9D high-bypass turbofan engines.

The Hydro-treated Renewable Jet Fuel (HRJ) used Honeywell/ Universal Oil Products’ process to produce the biofuel. According to Jennifer Holmgren , UOP’s former director for renewable energy and chemicals, UOP licenses the process “nonexclusively.” UOP said in a statement, "The flight is a result of a broader effort kicked-off in 2010 by China's National Energy Administration and the U.S. Trade and Development Agency to address the technical, economic and institutional factors required for the development of a new biofuels industry in China."

Air China is the People's Republic of China flag carrier and one of the country’s major airlines, the world’s tenth largest airline company according to fleet size, operating nine Boeing 747s scheduled to be phased out. Air China has already retired five Boeing 747s.

According to the International Energy Agency, China will lead the world in “demand growth” for jet fuel through 2012, reaching 5.6 percent. Total worldwide demand for Jet A-1 is forecast to reach 239.4 million gallons per day during the same period, compared 214.2 million gallons in 2007, a demand-growth rate of 2.3 percent. A 2007 422-page National Petroleum Council study, Facing the Hard Truths About Energy, reports that global demand for energy, including jet fuel - will grow by as much as 60 percent by 2030. It is China’s growing civilian air capacity that makes the test significant, as China Civil Aviation Administration official Zhang Hongying said following the test that the jatropha-derived biofuel was now ready to be used for commercial flights.

The Air China test flight is the world’s sixth such demonstration flight using Jet A-1 derived from jatropha.

The success was long in coming. PetroChina vice president Shen Diancheng remarked that it had taken PetroChina a decade to overcome the technical barriers of converting jatropha oil into Jet A-1 aircraft, but now that tests have proven its viability, PetroChina expects to ramp up production to 60,000 tons of jatropha Jet A-1 annually by 2014.

China’s interest in developing biofuels for industrial use is growing rapidly. In late 2009 Boeing and China signed a biofuel agreement with the Chinese Academy of Sciences and Chinese universities calling for research and development that potentially could support commercialization of jatropha. China has been proactive in the biofuel area for a number of years, with jatropha planted in 2007, and the plant - either wild or cultivated - can be found in Sichuan, Yunnan and Guizhou provinces as well as the Guangxi Zhuang autonomous

region. Yunnan currently has 33,000 hectares under cultivation and the Xinhua news agency reports that the country will have 13 million hectares of biofuel plantations by 2020 that will produce 6 million tons of biodiesel annually.

But commercial jatropha production has its bottlenecks. While jatropha grows wild in tropical regions and can be cultivated on land not suitable for crops, it produces a lot more on cropland, suggesting that if it becomes popular, airlines will have to be careful that it is not squeezing out crop production. Initial field tests of jatropha cultivation suggest that high oil yields require that the plant receive water, nutrients, and soil conditions that are comparable to many food crops.

A substantial drawback to jatropha is that it is currently harvested manually and commercial producers have found that the plant is more labor intensive than originally thought, especially for harvesting.

Despite these setbacks, commercial jatropha production is underway or being established abroad. Abundant Biofuels Corporation, which is headquartered in California, has jatropha cultivation projects underway in the Philippines, Columbia, Peru, and the Dominican Republic. D1 Oils plc of London, United Kingdom, has announced large projects in India, Malawi, and Zambia. A number of companies are reported to have recently acquired rights to cultivate jatropha in Ghana. The central and some state governments of India are promoting jatropha production on tens of millions of acres, although these efforts have been criticized for potential adverse impacts on forested areas, biodiversity, and food production. Early yields in India have been below expectations.

Accordingly, commercial firms growing jatproha and airlines worldwide will be watching events in China with great interest. Fuel and oil comprise 25 percent of airlines’ operating costs and when the price of jet fuel rises one cent, it increases the global cost of aviation $195 million.

Given the fiscal resources available in China, it therefore seems most likely that jatropha commercial aviation biofuel production will arise their first, if sufficient land not impacting the nation’s food production can be found.

Perhaps in the future the East will not be so red as green.

Source: http://oilprice.com/Alternative-Energy/Biofuels/China-Completes-First-Biofuel-Jet-Test-Flight.html

By. John C.K. Daly of http://oilprice.com

First, the good news…

U.S. oil company ExxonMobil is reporting a “potentially significant” gas discovery off the coast of Vietnam, stating in a press release, "We can confirm ExxonMobil Exploration and Production Vietnam Limited drilled its second exploration well offshore Danang in August 2011 and encountered hydrocarbons."

ExxonMobil is the world's largest publicly traded oil company by market value. While Vietnam, an oil exporter and the third-largest oil producer in South Asia, began offshore exploration of its reserves in the 1970s, Hanoi only started in 2004 awarding offshore exploration concessions to a plethora of foreign companies, including those from the U.S., Canada and India with  ExxonMobil receiving concessions from the Vietnamese government allowing it to explore blocks 117, 118 and 119 off Danang, an area that Vietnam insists is well within its 200-mile exclusive economic zone under international maritime law.

The bad news?

The South China Sea’s offshore resources are currently claimed by six countries – China, Vietnam, Taiwan, Malaysia, Brunei and the Philippines, with competing claims overlapping in a crazy quilt pattern. Given the billions of dollars at stake for exploiting the undersea energy resources, it is unlikely that the contradictory claims will be resolved anytime soon, making Southeast Asian waters a potential flash point for conflict.

The devil is in the details and in this case the United Nations unwittingly played the role of Lucifer when in 1982, the United Nations Convention on the Law of the Sea Part V, Article 55 defined an “exclusive economic zone” (EEZ) for countries with maritime frontiers  as extending 200 nautical miles from a nation’s coastline.  Needless to say, in congested waters this clause was a subject of dispute, as nations raced to define their new offshore parameters, a contest only heightened by the world’s increasing addiction to hydrocarbons.

Like Pontius Pilate, the UN washed its hands of bilateral and regional disputes arising from the convention and devolved negotiations to the parties involved, which account for the current impasse in the South China Sea, as the 1982 UNCLOS agreement did not establish any adjudication mechanism for resolving disputes.

According to Hanoi, Vietnam’s exploration efforts in what it maintains are incontestably within its EEZ waters have come under increasing harassment from Chinese naval units. In May Vietnam’s state oil and gas monopoly PetroVietnam claimed that Chinese ships had harassed and damaged its oil exploration ships.

As ExxonMobil has a license from the Vietnamese government to explore blocks 117, 118 and 119 off the coast of Danang, an area that Hanoi claims falls well within its 200-mile exclusive economic zone under international maritime law, will/can ExxonMobil apply its influence in Washington to safeguard its interests?

The future?

The founder of the modern Vietnamese state, Ho Chi Minh, reportedly said before his death in 1969, “Colonialism is dying. The white man is finished in Asia. But if the Chinese stay now, they will never go. As for me, I prefer to sniff French shit for five years than to eat Chinese shit for the rest of my life.”

It is essential that China shut down Vietnam’s uppity attitude now, as a number of other international companies besides ExxonMobil have recently found oil in the region, including Malaysia's Petroliam Nasional Bhd., Britain’s Premier Oil PLC, Russia's state-owned Gazprom OAO and France's Total SA, and Beijing will hardly want to take on the governments behind them.

As for Hanoi’s obstreperous attitude, those with an historical memory might recall that China and Vietnam fought a brief but bloody border war in 1979, four year after the country was unified. The Chinese Global Times newspaper recently editorialized that nations involved in territorial disputes with Beijing in the South China Seas should "mentally prepare for the sounds of cannons" if they remain in conflict with Chinese policy.

At present ExxonMobil is adopting a low profile approach. ExxonMobil Upstream Media Relations official Patrick McGinn said only of the discovery, "Data from the well are being analyzed. Our first well offshore Vietnam did not encounter hydrocarbons."

The issue is not minor for Vietnam, as its fossil-fuel production and exports have recently declined.

The final wild card if diplomacy fails is power projection, and China’s recent commissioning of its first aircraft carrier, the Soviet-era Varyag bought from the Ukraine, began sea trials in July. Chinese sources have said Beijing is also building two indigenous carriers.

For those interested in history, which has rather more resonance in Asia than the West, it might be noted that the Varyag has been renamed the Shi Lang.

Shi Lang was a Chinese admiral who served the Ming and Qing dynasties, revered for leading the amphibious assault and conquest of the Kingdom of Tungning in 1681. Tungning is now known as Taiwan.

So, given the competing claims in the South China Sea, will international law or force prevail?

Place your bets, but remember your history - and hold your nose..

Source: http://oilprice.com/Energy/Natural-Gas/Apocalypse-Redux-U.S.-Natural-Gas-Find-off-Vietnam-Could-Raise-Tensions-with-China.html

By. John C.K. Daly of http://oilprice.com

In any country, at the end of the proverbial day, both energy utilities and consumers are finally interested in the technologies that generate a kilowatt of electricity most inexpensively, all other considerations aside.

Accordingly, all countries involved in solar energy are optimists, but nascent industrial efforts to generate power on a commercial scale from the sun are without exception dependent upon current government subsidies to enter the market, which is littered with optimism, the failure of U.S. federally subsidized company Solyndra being Exhibit A.

But countries worldwide are seeking government support to shield their embryonic solar industries from market realities until conditions improve, and few countries are more caught between the realities of the “free market” and national priorities in developing energy alternatives than Israel, whose energy imports remain a major topic of concern to the government. Subsidies are viewed as critical worldwide by solar producers, especially in a recession market, but fiscal realities are asserting themselves, which alternative energy companies warn could kill their efforts.

Israel’s government is now reconsidering its alternative energy policies due to fiscal constraints, to cut the incentives price for mid-sized photovoltaic power plants.

Association of Renewable Energy of Israel CEO Eitan Parnass bluntly told Public Utilities Authority (Electricity) acting chairman Orit Farkash-Hacohen, "People will avoid private power production in Israel if the rates the entire industry relied on are changed.”

As a consequence of the global recession that began in 2008 prices for photovoltaic solar panels worldwide have receded. Quite aside from substantial economic recessionary pressures, Chinese manufacturers of photovoltaic solar panels are now facing a substantial inventory backlog of unsold panels. Electricity market sources say that several Western countries that are prominent in the solar energy industry, such as Germany, Italy, and Spain, have reduced their subsidies and tariffs to solar energy producers, because of the global crisis.

In Israel however, the steep decline in prices for photovoltaic solar panels initially generated unexpected profits for solar power companies, as national electricity rates were set two years ago, but Israeli solar companies are now threatened by the proposed government reduction in subsidies.

Accordingly, the Public Utilities Authority plenum decision is awaited by Israel’s solar community. In seeking to advance their arguments, solar companies aver that the Public Utilities Authority is not considering their expenses since 2009, when almost no power production licenses were issued, due to bureaucratic delays.

All is not bleak on the Israeli solar front, however – on 24 October SolarEdge Technologies Inc., a firm that developed a power harvesting and monitoring system for photovoltaic panels capable of improving the performance of solar energy systems, raised $37 million in venture capital, primarily from California-based Norwest Venture Partners.

Despite issues of funding of solar panels electrical production, in July Arava Power inaugurated its 4.95-megawatt solar power field. In the future, Arava Power projects launching 40 solar energy fields in the Negev desert region, assisted by tariffs for investors supported and guaranteed by the government. 

Interestingly, despite Israel’s renowned high technology base, Arava Power has partnered with Chinese-produced Suntech photovoltaic solar panels because Israel's nascent solar energy is currently unable to compete. Arava Power CEO Jonathan Cohen CEO said, "The technology needs to be time-proven to prove its bankability. When the means are made available to ensure Israeli novel technologies are included in Israel's solar drive, we and others will be looking to employ them as much as possible."

Cohen has reason to be sunny, as on 21 October Israel’s Public Utilities Authority awarded Arava Power the country’s first permanent solar license in the aftermath of Arava Power interconnecting its 4.95 megawatt Ketura sun field to the national grid by the Israel Electric Corporation.

So, Israeli solar power – glass half-empty or half-full? Given Arava Power’s experience, should the troubling issue of government support be resolved, it would seem that the container could soon be overflowing, with the only problem being what happens after twilight.

Just a question of government grants to tide companies over the rough patches.

Source: http://oilprice.com/Alternative-Energy/Solar-Energy/Even-Israels-High-Tech-Sector-Struggles-to-Make-Solar-Power-Cost-Effective.html

By. John C.K. Daly of http://oilprice.com