Brahm

The Pickens Plan Changes Its Strategy

The cylinder or space issues for CNG is not a significant issue in the case of CNG fired trucks.. The author's suggestions on liquid fuels, also advocated by many others and Mr. Pickens himself, is in my view a foolish intellectual contribution to the whole idea of global warming or energy independence due to the following reasons and others.

Synthesis of liquid fuels (diesel) involves a thermal efficiency of about 50%. That means it takes about 2 MM BTU of CNG to produce one MM BTU of diesel! This chips off significantly the advasntage for a tacit objective of putting out less carbon to contain global warming. The author should not forget that rather than the volume of the tank it is the weight of the fuel and its BTU density which determines the overall performance (mpg) of the engine, if other issues such as engine burn characteristics, etc remain equivalent for the two fuels. BTU to BTU diesel is much more weighty than CNG!

There is an economic dimension to the issues I have raised. The fuel material input costs, i.e. the cost of natural gas input for diesel, is double that of CNG as a direct firing fuel (low synthesis efficiency!). In other words, the present $6 per MM BTU CNG becomes a $12 per MMBTU input cost for diesel. Add to this plant capital, depreciation, interest on capital borrowed, ROR, etc, you have $16 per MM BTU cost. Quite a lot more than $6 CNG!!! A massive shift to the use of this kind of diesel will roil gas markets, bring gas supply concerns, etc, etc and etc. MY guess is there would be no advantage vis-a-vis oil, especially if OPEC or other oil intersts turn themselves as upsetters of the apple-cart. Competition!!!

There are other profound issues which I will leave you, MR. Pickens and others to think and browse about. But there are there. Without good thinking we may go down a sticky wcket again. Please! Us, little people, and OBAMA does not need another mess on our hands through shoddy thinking and slickness. Please continue the good work with my blessings! And, if you have the energy to do it check it out with me. I am "retired", though, but would not mind giving my inputs

Natural Gas: Clean Fuel with a Dirty Little Secret

With regard to decreases in imported gas, perhaps, the explanation is not oversupply in the US. NG markets are very healthy abroad, and there is actually a shortage of supplies in the Persian Gulf (lower transportation costs due to contiguity). Many projects on the board or desired to be implemented in the near term in the Gulf region cannot find the gas feedstock required for them. Production is way behind demand and market needs. India, for example, has difficulties finding gas for near term needs (2 or 3 years ahead) of LNG from the Gulf. Not very successful. Power projects appear to be stalled in some of the emirates due to a lack of projected supplies.in the near and intermediate term. Drilling has not kept pace with burgeoning needs for power supply feeds. Prices are also very healthy for spot marker supplies in the Eastern region, and it perhaps does not make much sense to send ships laden with LNG over long distances to the US where prices are not that attrative.

So please be careful regarding the gift of your analystical powers!

While Natural Gas Production Increases, Company Stock Prices May Not

Here are a few caviets to this excellent 'shale' story. Shale is not really a new territory, and many companies have been engaged in exploration/production from shale for more than a decade or two. It has recently become more attractive because alternative new NG supplies/discoveries involve high costs due to more difficult and deep terraine, especially in the Gulf of Mexico. So, it is always going to be a "competition" between the two alternatives as the older supplies from easier terrains are depleted. Shale exploration and devleopment for gas production involve high capital investments, production expenses, and relatively specialized manpower experienced resources which are not availablein great abundance. Lower prices for NG derived from shale will have a some floor which will be influenced by alternatives as well as the depletion rate ofNG from the old wells. Barring a serious slowdown in the economy, the depressed NG prices prevalent now may just be a six month or a year's episode. Perhaps, also Alaska may just become less and less attractive and iffy, due to pipeline costs and uncertaintieson the feasibility of financing the proposed pieplines contemplated.

Implementing Pickens' Plan for Public Energy Policy

Did you or did I make a mistake? As I said I had been kind of scandalized by those TV ads I am fairly sure that what T. Boone has been pushing is diesel derived from NG. There were news interview/program which I saw where he appeared to advocate such an apprroach. Or perhaps, even I read about also. Perhaps, my mind is playing tricks. I will check again.

On the subject of private cars and natural gas, I am afraid that it has been sort of dismissed as being impractical . It presents a lot of safety issues as well. Ever thought about basements and houses blowing up when piped gas (at even low pressure) is used for heating? How about mass public places blowing up, where natural gas is filled up for cars or cylinders installed, if such a model were to be adopted? Or cars blowing up in crowded public places when a car has been fitted with malfunctioniong gas cylinders/controls/gad... which may be leaking. Expect every car-driving American to become an expert in handling gas at moderate or high pressure? Did T Boone say anything about this? I bet not, whether I am mistaken on what he meant on natural gas use for transportation.

As I have said, mass public or commercial transportation (trucking, buses, perhaps trains, etc) are excellent candidates for natural gas susbtitution. And, the infra-structure for these would not be expensive because we don't have to put up a filling station in every locality.

We actually have a tough time to set up pipelines for natural gas transmission across the country. If all private (cars) transportation were to be switched on to it, it would perhaps be a formidable 100 year problem to evolve an adequate infrastructure.

The $2/gallon equivalent for gas is speculative. It probably does not include transmission, distribution and marketing costs. (Current gas price (bulk does not include transmission, distribution, etc) is about $11 to $13 per 1000 cu ft (or per $7 million Btu). The equivalent for gasoline is about $23 on the East Coast at the gas station. Still think $2 dollar equivalent for gas is possible! How about if OPEC drives the price of the barrel to $100. Or, the market in gas gets so tight because of mass demand that it kicks up the price of gas to a current equivalent of about, le's say, $17 at the hub in Kansas(?)/Louisiana?

The intermediate term solution for private automobiles, in my most thought-out view, is more small cars, hybrids, electric cars with much highher mpg average standards thyan prevalent now. We can cut consumption 30 to 40% using this approach within 10 years. Of course, we need to bring this to start immediately, using incentives/disincentiv... including severe tax implications if necessary.

I will check again! I don't know how to reach you beyond today.

Implementing Pickens' Plan for Public Energy Policy

When I was in elementary or middle school, our teachers, while teaching us hand-writing made us write "patern" sentences over and over again, sometimes more than a 100 times or more to teach us to write well. (Yes at that time in history, they actually taught us hand-writing by making us write on a "patern-notebooks" filled with sample hand-writing!)

The sentences used to be mostly wise sayings or homilies. One of them which I still remember was: NECESSITY IS THE MOTHER OF INVENTION. Quite cute and true! But only till yesterday. Today invention usually runs against economics and economists, sometimes of the phony sort. This species called economist will justify anything, even, however bad, using his science of economics. Fequently hidden personal benefit often at the cost of others, the environment and even global warming is the real hidden agenda behind these economic analyses.

Our celebrated author of this piece has thrown us a very marvellous opportunity to hash out some ideas (if possible!) by propounding the wisdom of T Boone Pickens on the use of natural gas. Of course, being myself always somewhat on the weird-side, I can't help thinking that perhaps the middle name for the gentleman should be changed to Bonehead. However, I did not and shouild not do such a thing, even though I have been brutalized by those sellf-serving ads on TV for the last several days. Only for the sake of civility I shall not!

Now, about the wind thing. It is being done in many parts of the world, and, of course, should continue despite the distraction introduced by T. Boone. Even when it is somewhat (not too much more!) costly, it should be done. Why? Because among many phony obstacles, justified mostly on economic grounds by those who are gung-ho for fossil (coal, oil and even gas) based power/energy, hidden fraud appears to be the bias on the use oif fossil fuels. The votaries of economics almost always assume that apples and oranges are the same. Coal, oil and gas based power (or other uses) appear to be assumed as having the same effectiveness so long as they can satisfy the same end, or have similar economics. This kind of economic analysis is actually nonsense! For example, there are health costs associated in the use of each of these fossil fuels. In the case of electricity production, these costs may not be borne by the utility company or the investor, but nonetheless they are real costs. They are borne by the individual (in terms of disease and personal costs), or the government or society at large.

How about the costs (in future mostly) on global warming induced by fossil fuel use?

Now coming to the use of natural gas for diesel and transportation as proposed by T. Boone. Should we be adopting this model, even if economics can justify it? The efficiency of conversion of natural gas to diesel is only about 50%. Are we forfeiting a large part of the advantage (in terms of global warming) on the use of natural gas through such a model vs use of natural gas in pother situations without injvolving conversion to diesel? Why not a natrual gas engine for use in trucking, heavy vehicles, and other public transportation needs? It has been done and is being done in some parts of the world with excellent results. Good economics and improved environment in central cities. And also not tough to set-up a network of stations to provide compressed LNG to the commercial transportation industry. Excellent concurrent benefits in terms of public health. Granted, it is not practical for private small transportation vehicles (i.e. our cars). However, use of such an approach in heavy public transportation would save us lots foreign exchange. And the economics would be excellent compared to that on the use of natural gas based diesel or oil per se.

What do we do with coal? Forget about power plants run on combustion technology. Wherever suitable coal supply is available, use integrated gasification combined cycle (IGCC) technology. For base-load plants, we can get 45% efficiency now using IGCC (vs. 42% for coal combustion). 2 or 3% improvement in efficiency translates to 5 to 7% better over combustion technology! Nothing to sneeze at when you look at it in termsof the modest Kyoto proposals.

Many analyses performed in the past show that costs are actually better for IGCC if you factor in health costs. Almost zero pollution in the case of IGCC, and this technology can also spur the use of CO2 isolation and storage (sequestration) in future. Of course, this will have to await feasibility of undergrouind storage for CO2 in future.

Can gas be used in a better way as such without resorting to conversion? Yes and no. The subject is broad and it would be confusing at this point to cloud our contention that T. Boone Pickens doesn't have much to his proposals or contribution at this time. Perhaps, he wants to make a fast buck or two more before he leaves. Serious approaches to solve real problems in credible real ways take a long time. It takes more serious and perceptive minds and souls to do so. But first there must be a national will and a strong public consensus on the need to do so. The time is not right yet! Otherwise, nobody would be side-tracked by light-weights like T. Boone Picken.

I have some of the natural gas stocks mentioned above in my portfolio. However, I have no desire to make more gains with ideas like diesel!

Peak Oil Stocks for the Future

This article is well-intentioned, and the primary thesis behind it that price should determine supply and demand and hence solve the energy conundrum is sound. However, the problem comes up when the author points to some directions and potential solutions of which he does not know enough. This actually is one of the primary problems why an expeditious solution to the problem is not going to be easy. There are too many amateurs around, though having good foundations in economic and financial analysis, are not sophisticated enough about the sciences and the engineering. Even scientists and engineers per se fail on these issues very frequently because they often lack the wide range of knowledge and experience they shouild have for making an apt contribution. One only has one life-time to live and contribute. Often it takes more than that to genrate the right approaches!

The author mentions CTL from coal. Well, he is right that this could have been intiated long ago (I was a manager of some Federal programs relating to this area in the distant past!) However, in the context of global warming threatening us, this would be one of the most misguided and horrible approaches to solve our energy problem. The efficiency of converting coal through CTL is only about 50%. Petroleum cracking to yield the spectrum of products we use (diesel, gasoline, and chemicals, etc) has an efficiency of about 90%. Think about doubling CO2 when anyone mentions CTL from coal, and also efficiency! Perhaps, more than doubling CO2, if bureaucrats, engineers and other less sophisticated persons are willing to consider that it takes a lot more to mine coal (think diesel powered heavy equipment, electricity, etc) , transport it by rail/truck, etc. I would not be surprised if someone comes up with an overall efficiency of less than 40%, after factoring these issues. Pumping petroleum or gas out of the ground and transporting it by pipe and/or ships is far more efficient, and hence less CO2 polluting. Petroleum has far more hydrogen in it than coal, and unit energy per unit energy generates significantly less CO2 than the use of liquids derived through CTL from coal.

Most of the public discussions now on the subject of CO2 is dominated be politicians, public policy "experts"/do-gooders , bureaucrats and so-called environmentalists who do not have enouch knowledge at their command. Sadly, they do not want to seek out the few well-grounded people available(such as your's truely) who shun the public limelight or the rough and tumble of that come from swollen egos. Quite often they don't have the time and patience for acquiring the deep real knowledge required. That is how we have gotten into the wrong tracks like producing alcohol from grain which is ruining our planet and is going to increase poverty around!

There are other statements in the article which cannot be supported by rigorous scientific analysis, though the ideas seem to bew current wisdom in the public domain. In a nut-shell, without going through the sophisticated reasons like the above and others relating to gas, power, etc., the approach of producing CTL from natural gas is also not a good idea. It should be used in other ways to meet our energy needs, and at the same time enhance our global warming interests. But this is a very sophisticated discussion which has not even been touched yet, as far as I know.