Brahm

Natural Gas from Shale: Emerging Plays

Natural gas is perhaps the new frontier now, more than any other form of fossil energy. As you note extensively, shale is going to be too big soon -- almost unimaginable five years ago! Perhaps. has tremendous global warming solution potential in the intermediate term. However, Governments including our US Dept of Energy, appears to be too lethargic about it. Perhaps, the ideology and lack of imagination of Dr. Chu and the likes of others in this present Administration, are the main hurdles in the immediate term.

Excellent brief review! Brahm

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!

Barron's Banks on $100 Oil

Oil bulls, or should I say radicals, should not forget that even an average size recession will topple consumption of oil substantially, if prices remain at current levels. I bet uncle Ben and others in Wall Street are fudging economic numbers and conditions to avoid the R tag. To all intents and purposes, the US economy is mosgt probably in mild recession at this time. If you exclude the increase in energy related spending of the typical consumer from the GDP numbers over that of '07, you may well find that the numbers representing i2nd quarter '08 GDP are probably about even or somewhat lower than those for 2nd quarter '07.

Last week,for example, the EIA reported that gasoline consumption was lower by 1.8% from last year (?). Nobody can make a rational case that the massive inceease in the price of energy has not or will not change behaviour of American consumers or drivers, especially those at the lower end of the middle class. I have seen changes in behaviour of drivers in the middle and upper middle class on the street I live on. SUV's. common on this street formerly, have been traded away or quite often are found to remain parked for very long periods. The formerly shunned and lowly small cars are becoming fashinable to drive!

So oil bulls, in my view Barrons has something to its argument for at least the immediate period for the short or intermediate term. A 2% drop in consumption over a couple of months in the US will do wonders for the price of oil. Long term though the price of oil is still going to be on uptrend.

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.