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A scary strategic problem - no oil

While the article seems to have been written by an acolyte of the Church of Global Warming, the takeaway is there is lots of high quality hydrocarbon energy which is relatively easy to access. Generating methane underground and then piping it to customers or liquifying it (or using the FT process to convert it to a diesel fuel substitute) will keep the lights on for generations to come.

http://nextbigfuture.com/2014/02/underground-coal-gasification-must-also.html#more

Underground coal gasification must also have carbon capture and storage

Trials of UCG (Underground Coal Gasification) under way globally from China to Queensland, and South Africa to Canada, the stakes are high. Not least for the atmosphere. Without a way to capture all the carbon and store it out of harm's way, it could raise the world's temperature by 10 degrees or more.

In the past decade, the focus has been on shale gas: methane tightly trapped in tiny pores and fractures in shale, a sedimentary rock made up of mud and clay mixed with minerals such as quartz. Capturing that gas required two crucial new technologies. Horizontal drilling launched from conventional vertical wells can penetrate for up to 3 kilometres along shale beds. And hydraulic fracturing, or fracking, blasts high-pressure water into the shale to fracture the rock and release the gas. As well as opening up the shale, these technologies open the door to a wide range of alternative sources of methane. They can release methane trapped within coal seams, for example, notably in the coalfields of Wyoming and Montana. Methane is often produced as seams develop, as the coal becomes compacted and heated deep underground. The gas has always been the bane of coal mining, but if collected and pumped to the surface, it becomes an asset.

According to the International Energy Agency's latest estimates, some 400 trillion cubic metres of economically recoverable methane lies trapped in coal and shale beds around the world. It roughly doubles estimates of how much gas miners may be able to get their hands on. But that is just the start. There might be even more gas down there in different rock strata, much of which has migrated from coal seams over millions of years. And why limit the plan to existing gas? The real prize, the miners say, is to create yet more methane by setting fire to the huge amount of unmineable coal lurking underground.

An assessment by the World Energy Council puts the proportion of global coal that is readily recoverable at 15 to 20 per cent of the total, which Gordon Couch of the International Energy Agency's Clean Coal Centre puts at 18 trillion tonnes. Potentially, UCG could unleash the energy from the other 80 to 85 per cent – enough to supply the world, at current requirements, for 1000 years.

Industrialists may salivate at the idea of burning all that coal, but for the climate the prospect is truly terrifying. The Intergovernmental Panel on Climate Change recently reckoned that the world needs to limit total emissions of carbon, from now on, to less than half a trillion tonnes just to keep global warming below 2 °C. Most climate analysts agree even burning a large fraction of conventional fossil fuel reserves would produce unacceptable warming, let alone what could be released by UCG.

Burning dilemma

What to do? Either we have to leave the fuel in the ground, or develop a global industry for capturing CO2 at the source and storing it out of harm's way. In the case of UCG that would mean capturing the CO2 produced both when the coal is burned underground and when the resulting methane is burned in power stations. Climate scientists such as Myles Allen at the University of Oxford argue that carbon capture and storage (CCS) is the only practical way forward. And this is where UCG has something to offer. Burning coal in situ leaves huge voids that are ideal places for burying captured CO2. And the infrastructure created to bring coal gas to the surface, purify it and deliver it to power stations would be ideal for carrying the CO2 away again.
 
Thucydides said:
No oil indeed. Using natural gas (methane) as a low cost feedstock to create synthetic fuels has another benefit not mentioned in the article: it is sulphur free, reducing a huge source of emissions and also extending the life of catalytic converters:

http://www.technologyreview.com/news/523146/chasing-the-dream-of-half-price-gasoline-from-natural-gas/?utm_campaign=newsletters&utm_source=newsletter-daily-all&utm_medium=email&utm_content=20140115
The technology to develop GTL or LNG is not cheap. Methane has great potential to be a key energy source of the future but to convert it into a form that can be used to replace gasoline and oil based petroleum products is not going to make it a cheap source of energy.

The people that want to convert gas to liquids are doing so because of the huge price differential that currently exists between gas and oil. By converting cheap gas into high value oil-like products, they would sell that product at or close to the value of the oil products. It would not result in cheap energy products. If the gas to oil price differential decreases substantially, these ideas will likely be even lower on the priority list.
 
Given the current situation in Europe and Ukraine, this is a development which should be pushed so *we* can step in and provide lots of inexpensive oil whenever the Russians or the Iranians decide to throw their weight around. Taking away the oil weapon and depressing the oil income of hostile states is a good long term political and strategic goal that Canada should be pursuing.

http://nextbigfuture.com/2014/03/terrestrial-energy-integral-molten-salt.html

Terrestrial Energy Integral Molten Salt Reactor Developers is Working with an Oil Sands Partner

  Dr. David LeBlanc and Chris Popoff of Terrestrial Energy conducted an in-car interview regarding the use of nuclear power to make oilsands production more environmentally friendly. LeBlanc sees little obstacle in the development of his Integral Molten Salt Reactor (IMSR), now that he has funding from a partner ‘who can pay the development of IMSR with the spare change in his pocket’

Their reactor is a Denatured Molten Salt Reactor called the "Integral Molten Salt Reactor", drawing on the single fluid MSR research conducted at Oak Ridge National Laboratory.

There is an important difference between the Canadian and the US regulatory authorities. The US is rule-based and Canada nuclear regulations are output-based. In the USA, anyone wanting to develop a new type of reactor will have to prove its safety before it exists. All of the US rules are based on light water reactors. In Canada, you will have to prove the safety of your concept while it is operating. Terrestrial IMSR seems to moving ahead very quickly. Canada's nuclear regulators could allow a molten salt reactor to be built and operating in 6 years.

The oilsands and molten salt reactors are a good energy transition with an overlap. Molten salt reactors can produce the steam to get oil from the oilsands. The economics work where more oil from the oilsands pays for the the development and the first few hundred molten salt reactors.

Molten salt reactors would create "green" bitumin production. It would bring oilsand oil production to be equal or better environmentally than other oil production. Currently oilsand oil is less environmentally friendly than other oil sources.

73 minute video explains details of the Molten Salt reactor and SAGD oil extraction from the oilsands
 
A Canadian company moves closer to the goal of nuclear fusion. While the reactor itself is wonderfully steampunk in concept and design, the fact that this company is "bending metal" puts it well ahead of many larger efforts (and it is interesting to see the reactions of many conventional "fusion workers" in the article). Good luck to General Fusion:

http://www.canadianbusiness.com/technology-news/crazy-genius/

How a Canadian fusion reactor could revolutionize the energy sector
For years no one took them seriously. Now it looks like their idea is just crazy enough to work

Apr 11, 2014 Michael McCullough

Russ Ivanov, a Russian immigrant living in Vancouver, was surfing the web for news from his homeland back in 2009 when he first read about the crazy plan. According to a news article that caught his eye, a ragtag group of Canadian physicists was planning to build a working commercial thermonuclear reactor. A further search led Ivanov, then teaching math at a private school, to a story in a local community newspaper. It confirmed that a startup in the neighbouring municipality of Burnaby had set itself an ambitious goal: to be the first commercial enterprise in the history of the world to generate usable energy from fusion.

Ivanov immediately cold-called General Fusion’s then CEO, Doug Richardson. He had a lot of questions. What kind of technology were they using? What massive temperatures and densities were they trying to create, and for how many millionths of a second?

A few days later he called back again. Ivanov had worked on fusion research in Russia and Germany. He ended up joining the company, among the first of the dozen-odd PhDs that populate the 65-member staff.

Ivanov’s story is just one example of the serendipity involved in this small Canadian company’s rise to the forefront of a worldwide race to harness nuclear fusion, a race that has been going on fitfully, consuming tens of billions of mostly public dollars, for more than half a century. (All existing reactors operate using nuclear fission, rather than fusion, which is a very different process.) Started in 2002 by a successful corporate scientist in the throes of a midlife crisis, General Fusion has already outlasted past private-sector attempts to commercialize fusion energy. Instead of petering out, it’s garnered the attention and respect of a small but growing cadre of scientists, energy executives and adventurous investors around the world.

Fusion research is now moving from the whiteboard and academic papers to working reactors. In the south of France, a consortium of the world’s major nations (with the notable exception of Canada) is building a US$23-billion facility known as ITER (International Thermonuclear Experimental Reactor). It is scheduled to begin operation in 2020.

Meanwhile in February the U.S.-government funded National Ignition Facility (NIF) in California, known for housing the world’s most powerful laser, reported experiments indicating they were close to achieving “net gain,” where more total energy comes out than was put in—a goal that has eluded scientists for six decades.

If being the first to net gain was all that mattered, General Fusion might as well pack up its plasma injector and go home. But instead, possibly as early as this year, the company will begin work on a full-size prototype reactor. At the centre will be a sphere, three metres in diameter, inside which molten lead swirls at high speed creating a vacuum, or vortex, in the middle. Arrayed around it will be 200 to 300 pistons, each the size of a cannon. Firing in perfect harmony, they will create an acoustic wave that collapses the vortex at the very moment a plasma injector shoots hydrogen isotopes, the nuclear fuel, into it. If General Fusion has its physics right, the heat and pressure will ignite a fusion reaction that spins off countless neutrons which will heat the lead even more. Pumped through a heat exchanger, that hot lead will help generate steam just like a conventional thermal power plant.

Getting the reactor to work once is the easy part. Getting it to work repeatedly and cost effectively for power production, that’s harder. And that explains why, as the fusion age dawns, there is ever more interest in what this small, slightly dishevelled Canadian company is doing. In a scientific community that is starting to talk about fusion in terms of pennies per kilowatt-hour, General Fusion aims to build a cheaper alternative to the multi-billion-dollar reactor designs. It wants to solve the world’s energy dilemma on a practical level, not just a theoretical one.

Still, one can’t help but ask: Is there any profit to be had trying to create a man-made sun in a Vancouver-area industrial park? Nathan Gilliland, who was hired in February as General Fusion’s new CEO, thinks the company can outperform the government-funded efforts. He previously founded biomass energy company Harvest Power and worked as an entrepreneur-in-residence at venture capital giant Kleiner Perkins Caulfield & Byers. Gilliland notes private company Solara bested the government-funded Human Genome Project by hitting important milestones first, and Elon Musk’s SpaceX found a way to send rockets into space for a fifth the cost of a NASA launch. “Speed and practicality are what private innovation does best,” he says. “We’ve started to create something that might just have a breakthrough here.”

To understand fusion is to understand where most of the energy we use here on earth originates. The sun is mostly composed of hydrogen. More precisely, it’s composed of plasma, super-heated gas made up of hydrogen’s constituent isotopes, deuterium and tritium—the smallest and most basic atoms. Under the sun’s conditions of extreme heat and density, deuterium and tritium fuse together to form helium atoms, giving off still more heat in the process.

So, scientists have been asking for six decades, what if we could spark up fusion on command? We’ve already done that with the opposite reaction, fission—the breaking of large atoms into smaller particles—which leaves us with the troublesome byproduct of radioactive waste. By contrast, fusion would produce no waste, just inert helium, and its fuel can be extracted from seawater. Moreover, it should take even less fuel than a fission reactor does to produce a lot of energy.

Solar fusion, though, happens in space, where there’s nothing to contaminate the reaction. The fundamental challenge to replicating and sustaining it on earth is containment of the plasma: how can you get it that hot without vaporizing the reactor walls and having that foreign matter snuff the sunburst like rain on a campfire?

Over six decades, scientific consensus has coalesced around two answers: magnetic and inertial confinement. The magnetic camp, which includes ITER, aims to suspend the plasma in a magnetic field within a doughnut-shaped chamber known as a tokamak. The inertial confinement experts, such as those at NIF, are attempting to ignite a fusion reaction by firing powerful lasers at plasma contained in a pellet the size of a pea.

The magnetized target fusion that General Fusion is attempting is what’s known as an “alternate concept,” which shares elements from both other concepts, explains Stephen Dean, president of Fusion Power Associates, a Washington, D.C.–based non-profit aimed at sharing knowledge and furthering the global research effort. Stacked as most fusion scientists are in favour of one mainstream technology or the other, they struggle to keep an open mind with regard to the opposite side’s ideas. “I can’t tell you that people are all excited about [General Fusion’s] program in the fusion community, but they are a credible group in this smaller niche,” says Dean, who has invited the company to present at his association’s past three annual meetings. Indeed, the invitations are coming ever more frequently. Last fall General Fusion made presentations at the World Energy Congress in Daegu, South Korea, and at workshops hosted by the Chinese Academy of Physics and the U.S. government’s Advanced Research Projects Agency-Energy (ARPA-E). Still, there are naysayers. In the pages of the scientific journal Physics in Canada in 2010, Eric Vogt, director emeritus of the TRIUMF nuclear accelerator at the University of British Columbia, described General Fusion as “unproven science masquerading as achievable technology.”

Occupying two nondescript buildings at the end of a light-industrial cul-de-sac, General Fusion’s headquarters bring to mind a super-sized tinkerer’s garage. One building houses the plasma injector, resembling a lunar capsule, swathed in tubes and wires and shielded from the offices nearby by steel dividers decked in blast-proof tiles. The other contains a one-metre-wide model of the spherical reactor core, studded with 14 pistons like a pincushion.

The company chose its current location in part because it’s built on solid bedrock at the foot of Burnaby Mountain, capable of withstanding the pulses from the pistons. The landlord nearly fainted, Richardson recalls, on the day he walked in to see excavators digging a trench in the floor to contain the pipes and pumps handling the liquid lead that spins within the core.

The reception area is undergoing a facelift, at the insistence of the board of directors. The rest of the facility is the domain of woolly-headed scientists, engineers and technicians who place little stock in appearances.

Chief among them is Dr. Michel Laberge who, upon turning 40 in 2001, quit his job as a senior physicist and principal engineer at Creo Inc., a printing technology company. He wanted to apply his talents toward something more ambitious, more meaningful. Given that his PhD from UBC was in plasma physics, nuclear fusion—potentially a solution to mankind’s damaging dependence on fossil fuels—was a natural choice. He chose to investigate magnetized target fusion, a branch of research abandoned in the 1980s. Part of the problem at that time was the lack of diagnostic and synchronization technology available then to build a working reactor. That technology, he noted, had improved since.

He raised money from family, friends and the federal government and built a rudimentary reactor, no bigger than a kitchen range. It was nothing much, but something happened with the plasma reactions he generated therein. Sensors detected excess neutrons, suggesting at least a few hydrogen atoms had fused. “I called them my marketing neutrons,” Laberge later joked.

It was then, in 2006, that Laberge persuaded Richardson, his team leader and partner on a number of projects at Creo, to join the venture. The pair brought on Michael Brown, a sort of godfather of tech finance in B.C,, and his Chrysalix venture capital firm. Brown would serve as chairman until 2012. They also lured a handful of serious scientists away from comfortable, tenured jobs at universities and big companies. The attraction: the chance to stop studying and modelling fusion, and actually make the machine go.

The cultural chasm between General Fusion and competing government labs could not be more stark. Some of the potential hires Richardson interviewed had worked in fusion for 15 years without ever once turning a screw. Others he’s come across will say, “I could never work here. I don’t have anybody expecting results. I just have to publish some papers.”

Even less like a public research lab, Laberge and Richardson set themselves a deadline, as they had done developing products for Creo: four years to net gain. They would get more energy out of a fusion reaction than they put in by the summer of 2013. Unfortunately, plasma would prove more stubborn than designing a new thermal printing head. In 2011 General Fusion had what at first looked like a successful test of its plasma injector, a funnel-shaped machine where plasma is created from super-heated hydrogen gas. “The plasma looked beautiful,” Richardson recalls. It was the temperature sensors that the scientists were beginning to suspect. Sure enough, the plasma was cooling down too quickly as it travelled the length of the injector. They knew that they would need to get a better handle on plasma before building a full-size prototype.

“That’s where we’ve had our ups and downs, getting the plasma where it’s hot enough and dense enough and lasts long enough…before we compress it,” concedes Michael Delage, General Fusion’s vice-president, strategy and corporate development. As for the deadline to net gain, “We’re a little more humble in terms of exact dates these days.”

Fortunately, the company has grown and evolved on the corporate front too, which has given it more wiggle room. In 2011 a new round of financing brought the total raised up to $50 million. In addition to earlier investors, who anted up again, some notable new money joined the group. One was Bezos Expeditions, the venture capital arm of Amazon founder Jeff Bezos. The other was Cenovus Energy, a major player in Canada’s oilsands. “Cenovus is impressed by General Fusion’s innovative, pragmatic approach,” executive vice-president Judy Fairburn explained in a release announcing the $3.8-million investment from the oil company’s Environmental Opportunity Fund. “As world energy demand increases, we’ll need all types of energy to meet those needs. Fusion technology has the potential to revolutionize energy production.”

No longer this quirky startup from La-la Land, General Fusion was attracting international attention. Along with that came a new chairman, Rick Wills, the chair and CEO of measurement equipment maker Tektronix, out of Portland, Ore. General Fusion also established an advisory board of experts in various aspects of commercializing fusion power and added impressive figures to its board like Jacques Besnainou, the former president and CEO of Areva Group North America, and Frederick Buckman, who held executive positions with various utilities as well as the Shaw Power Group, an engineering and construction outfit. They all bring expertise that will be useful to the company as it plots its long-term strategy. “This kind of technology does not come out of one company on its own,” says Delage. It will require a consortium of power companies, turbine manufacturers, plant designers and builders to make it competitive with existing sources of energy. Moreso than either government-funded labs or venture-capital-backed rivals, General Fusion has reached out to create a community of partners.

The approach is a shrewd one in the opinion of Dallas Kachan, head of Kachan & Co., a San Francisco–based clean-tech research and consulting firm. Not only does it spread around the risks of commercialization, but also ensures continued funding in the increasingly bearish VC market for green energy. “As the company runs out of reasons why the technology won’t work, and gets closer and closer to illustrating that it will work, I think it’s entirely possible that they will raise the billions of dollars they will need to prove this concept out,” he says, noting that it was Cenovus’s investment, more than that of Bezos, that turned heads among investors.

Another guiding principle that General Fusion has kept despite its growing credibility and business focus is frugality. Only the cheapest, most readily available materials go into the machine. Technicians working there have been known to obtain supplies from the Costco store around the block. “You can study plasma-facing surfaces for 10 years or you can go to your local coating supplier and say, ‘Make me five of these and do this, this, this and this,” says Richardson. “Before long you’re an expert in how these things perform.”

For example, General Fusion turned to a local dry-ice company to help clean microscopic carbon soot from its plasma injector. An array of spectrometers used to measure what’s happening with the plasma came from Photon Control, a nearby company managers had spotted while driving past.

A bigger venue will be needed when the time comes to build the full-size prototype, featuring a three-metre-diameter sphere, between 200 and 300 pistons and plasma injector all connected together. It’s expected to take at least three years to build. Ideally, that process will begin before this year is out. The mechanical aspect—getting pistons to fire synchronously within 10 microseconds of each other—is pretty much ready. So is the computer modelling, an essential leg up in the effort to make the reaction work in the real world. What continues to bedevil General Fusion’s efforts is the damned plasma. The team has to get the combination of energy and confinement to a level that sustains, even for a fraction of a second, the conditions in which fusion energy is released.

And the clock is ticking, faster than for its public-sector rivals. “We’re a privately funded fusion company. Private money is not necessarily patient money, especially if it’s a VC. We are always in a rush,” Richardson says.

Fusion Power Associates’ Dean, a 50-year veteran of the research effort, believes there is a role for private companies in fusion research. Even if the big public-sector research projects succeed in sparking up a fusion fire first, the cost of actually building power plants would be prohibitive. Therefore the private firms’ search for a cheaper, faster shortcut is essential, if less assured of success. Other private ventures have set out to master fusion, made some initial progress, but run out of capital and investors’ patience when it came time to scale up to the next level. Rigatron, a San Diego company, fizzled this way. So did a collaboration between Phillips Petroleum and General Atomics.

But does a VC-backed, for-profit company stand any chance of making money while attempting to solve the world’s energy problems? “There will be multiple winners as this thing matures, and we certainly hope we’re one of them,” says Gilliland.

It’s impossible to say whether a company like General Fusion can contribute anything important to this global energy quest, Dean confesses. “You’ll only know when success proves the point.”
 
Toyota brings an evolved type of engine to the table. This type of engine is already in the Prius series of vehicles, and once you get rid of the batteries, control electronics and electric motor, a lighter car should get pretty impressive fuel economy. I do wonder about scaleability, would it be possible to make larger V6 or even V8 engines for the larger vehicles in the Toyota lineup, like minivans, SUVs and the Tundra pickup truck?

http://www.engineering.com/DesignerEdge/DesignerEdgeArticles/ArticleID/7458/Toyotas-Awesome-Atkinson-Cycle-Engine.aspx

Toyota’s Awesome Atkinson Cycle Engine

Kyle Maxey posted on April 15, 2014

With fuel efficiency becoming a prominent factor driving car purchases; Toyota has gone on the offensive by launching two new small-displacement, Atkinson cycle engines.

Built to power the Japanese-automaker’s Aygo commuter and the 2015 Lexus RC F, respectively, the new Atkinson-cycle engines will come in 1.0 and 1.3L versions. While neither engine will generate frame-crunching torque, their higher compression ratios, improved combustion chamber design, weight reduction and reduced frictional energy loses will mean major gas savings for drivers.

While this isn’t Toyota’s first attempt at using an Atkinson cycle engine in a vehicle (they’re used in the company’s Prius hybrid), it does represent the company’s first attempt at using the Atkinson design as a standalone power plant.

Featuring a number of innovations including a redesigned intake port, an idle stop function, a cooled exhaust gas recirculation system, plastic coated bearings and Toyota’s Variable Valve Timing intelligent Electric technology, the independent Atkinson will best its predecessor’s fuel efficiency by approximately 30 percent. Put into performance terms, Toyota’s new 1.0L Atkinson will get an estimated 78mpg. While some of that efficiency will be lost in the Lexus RC F’s 1.3L model, Toyota insists the larger Atkinson model is also a world-beater. Still, no concrete numbers have been released for that incarnation of the engine.

According to Toyota, the newly announced engines will be incorporated in at least 14-vehicle variations by 2015, giving consumers many more options for hyper-efficient commuting.

Whether a standalone 1.0L Atkinson cycle engine can climb the steep slopes of San Francisco’s streets or endure a trip through West Virginia’s hills is still a mystery to me. However, if you’re looking for a fuel-efficient, flatland commuter, you might do well to look for one armed with this amazing engine.

Not entirely sure if this sort of technology could be transferred to diesel engines, a 30% boost in fuel economy for military vehicles would be a huge boost to the logistics system in many cascading steps (less fuel, fewer fuel trucks, smaller convoys, or alternatively longer ranges or times between refuelling).
 
Interesting example of how rent seeking and crony capitalism distort the markets for oil and energy (and directly affecting Canada's interests as well) Long article part 1:

http://www.powerlineblog.com/archives/2014/04/the-epic-hypocrisy-of-tom-steyer.php

THE EPIC HYPOCRISY OF TOM STEYER

Billionaire hedge fund operator and “green” energy magnate Tom Steyer has pledged $100 million in the 2014 election cycle to help Democratic candidates who oppose the Keystone pipeline and who favor “green” energy over fossil fuels. Steyer claims to be a man of principle who has no financial interest in the causes he supports, but acts only for the public good. That is a ridiculous claim: Steyer is the ultimate rent-seeker who depends on government connections to produce subsidies and mandates that make his “green” energy investments profitable. He also is, or was until recently, a major investor in Kinder Morgan, which is building a competitor to the Keystone pipeline. Go here, here, here, here, here and here for more information about how Steyer uses his political donations and consequent connections to enhance his already vast fortune.

But Steyer’s hypocrisy goes still deeper. Today, he is a bitter opponent of fossil fuels, especially coal. That fits with his current economic interests: banning coal-fired power plants will boost the value of his solar projects. But it was not always thus. In fact, Steyer owes his fortune in large part to the fact that he has been one of the world’s largest financers of coal projects. Tom Steyer was for coal before he was against it.

A reader with first-hand knowledge of the relevant Asian and Australian markets sent us this detailed report on how Steyer got rich on coal. He titled his report “Hypocrisy & Hedge Funds: Climate Change Warrior Tom Steyer’s Secret Life as Coal Investment Kingpin.” Here it is, in full:

Tom Steyer founded Farallon Capital Management L.L.C. (“Farallon”) in 1986. Farallon has grown to become one of the largest and most successful hedge funds in the United States with over $20bn in funds under management.1 Mr. Steyer’s net worth is reported to be $1.6bn.2

Mr. Steyer left Farallon in 2012 to focus on political and environmental causes and potentially to position himself for public office. He has been described in the press as the “liberals’ answer to the Koch Brothers”3 due to his wealth and his opposition to the Keystone XL pipeline and carbon-based energy in general. He has dedicated some $50 million of his personal fortune to back political candidates who support his position on climate change – and punish those who don’t. Mr. Steyer has led recent campaigns with Bill McKibben to encourage university endowments to divest coal equities.

In his recent letter to the Middlebury College and Brown University Boards of Trustees, investment professional Mr. Steyer wrote:

I believe a coal free portfolio is a good investment strategy…4

In a recent interview, Mr. Steyer was quoted referring to “coal-industry baron David Koch”:

[Koch is] taking the most incredible risk that I’ve ever seen someone take, of going down in history as just an evil – just a famously evil – person!5

By their nature, hedge funds are shadowy organizations and Farallon is no exception. Farallon staff do not talk to the press. Their website provides virtually no information and, because it is a private fund, Farallon is not required to report details of its investments.

Essentially all the public knows about Farallon’s investment activities is what the fund is forced to file; for example when their ownership stake in a publicly listed company rises above a disclosable threshold, or when they are compelled to disclose information pursuant to a lawsuit.

While a few bits of information on Farallon’s investments in carbon energy have seeped into the North American press via these disclosures, this information doesn’t begin to scratch the surface. The North American press’s lack of awareness of Mr Steyer’s activities in the coal sector is due to the fact that all of Farallon’s investments in coal have been made outside of North America, and wherever possible through opaque structures which mask their direct involvement.

In order to gain an appreciation of the extent of Farallon’s epic involvement in the coal sector under Mr. Steyer’s tenure one needs to spend time in Jakarta and Sydney, and in the regional financing centers in Hong Kong and Singapore, and speak to professionals (bankers, lawyers, mining consultants and principals) who were directly involved in these Farallon-sponsored coal transactions. With a modicum of effort one discovers that since 2003 Farallon has played the pivotal role in financing the tremendous restructuring and growth in thermal coal production in the region. All of this took place under Mr. Steyer’s tenure as founder and senior partner of Farallon.

Steyer0027

Farallon_Capital_Management,_L.L.C

Buried in his recent missive to the Middlebury College and Brown University trustees on the evils of investing in coal, Mr. Steyer added this statement:

…I have directed my financial team to divest my holdings of coal investments so that I will have a coal free portfolio…

Perhaps he is being disingenuous and wishes people to believe that some low level employee at Farallon bought a few shares in coal companies without his permission. It is possible that he is trying to inoculate himself against the inevitable perceptions of hypocrisy that he knew would arise when the scale of his involvement in the coal sector came to light, as eventually it must.

The facts, summarized below, might lead one to conclude that:

• Mr. Steyer has had a direct, personal involvement in assembling, through Farallon, a portfolio of strategic investments in overseas coal miners and coal fired power plants which is unprecedented in scale. The total quantum of Farallon’s investments in these transactions is not publicly disclosed, but reasonable estimates suggest that it could be between US$1 and $2 billion in total.6 Taken collectively, the coal producers in which his fund has amassed these investment interests represent one of the largest sources of thermal coal in the world;

• The financing provided by Mr. Steyer’s fund enabled these coal producers to restructure and recapitalize thereby freeing them to grow rapidly during a period of rapidly rising coal prices, leading to one of the largest expansions of thermal coal production in modern times7;

• Made during a period of ever rising coal prices, these investments were almost certainly extremely profitable for Mr. Steyer’s fund overall, and my extension Mr. Steyer personally. It stands to reason that few people in American history have made more money from investment in thermal coal than Mr. Steyer.

Some facts:

• As casual conversation with professionals involved in the regional coal sector will confirm, over the past decade Farallon has become, without question, the pre-eminent financier of coal transactions in Asia and Australia.

• Under Mr. Steyer’s tenure as senior partner, Farallon has been responsible for providing acquisition and expansion funding to about a half dozen of the largest coal mine and coal power plant buyouts in Australia and Asia since 2003. In each case the funding provided by Farallon was pivotal to the success of the transaction.

• Without the leading role played by Farallon many of these transactions, and the subsequent leaps in production (often necessary to repay Farallon’s high interest rate debt facilities), would not have occurred.

• The half dozen Indonesian and Australian coal producers in Farallon’s investment stable produced about 80 mtpa of coal collectively prior to Farallon’s involvement. By 2012 these companies produced 150 mtpa (see table below). In other words, the capital provided by Mr. Steyer’s Farallon group was pivotal in enabling incremental coal production of about 70 million tonnes of thermal coal production per year.

• Looked at another way, the coal mines that Mr. Steyer has funded through Farallon produce an amount of CO2 each year that which is equivalent to about 28% of the amount of CO2 produced in the US each year by coal burned for electricity generation.8

• As above, the companies in which Farallon has made these huge strategic investments produced about 150 mt of coal in 2012. On a combined basis this would make them one of the largest private coal sector companies in the world9 (by comparison the “famously evil” Koch brothers appear to own a grand total of … wait for it ….one coal mine which, at its peak, produced 6 mtpa and is no longer in operation).10

• The quantum of Farallon’s profits on these investments over the past 10 years is not publicly available. Based on the estimated investment quantums6, typical hedge fund returns of 20% and an assumed average holding period of two years per investment, total profit to Farallon from coal investments of $400 million is a reasonable estimate. As the founding and senior partner of Farallon, Mr. Steyer would have received a sizeable share of this profit personally.

Partial History of Farallon’s Overseas Coal & Related Investments:11

This data is based on public information and in a few instances information available from professional sources. All of these investments took place during the period of Mr. Steyer’s tenure as senior partner of Farallon.

2003 – PT Kaltim Prima Coal

In October 2003 Indonesia’s Bakrie Group, through listed vehicle PT Bumi Resources, purchased PT Kaltim Prima Coal from Rio and BP in a transaction valued at $500 million. Around $200 mn of the financing was technically underwritten by an investment bank but Farallon is understood to have been the actual provider of funds. At the time of the transaction Kaltim Prima Coal produced 18 mtpa. As a result of the buyout the mine has been able to lift production of to 41 mtpa by 2012.

This transaction initiated a long standing relationship between Farallon and the Bakrie group, one of Indonesia’s leading business groups and largest coal mine owners. This relationship led to a series of refinancings of their coal operations including the PT Arutmin coal mine.

Farallon has also been a substantial lender to other Bakrie Group assets. They have recently been identified in the press as a leading member of a consortium which lent $1.4 billion to Long Haul Holdings12, which owns various Bakrie-linked investments including stakes in listed PT Berau Coal (subsequently sold) and the Bakrie’s stake in PT Bumi Resources (which in turn controls the PT Kaltim Prima Coal and PT Arutmin coal mines).

2004 – PT Berau Coal

Farallon provided significant financial backing to the Indonesia buyout consortium for their ~$279 m
buyout of a 90% stake in Berau Coal (conducted in two stages in 2004 and 2006).13

PT Berau Coal was subsequently sold to another Indonesian investor which was then sued by Farallon in 2010 in order to obtain a 3% equity stake in PT Berau Coal that Farallon said they were entitled to (these were most likely “equity kickers” which Farallon was given for providing debt financing for the buyout).14

PT Berau Coal is an Indonesian thermal coal producer which mines and sells around 21 mtpa today.
 
Part 2:

2005 – PT Adaro Coal

Farallon played a leading role in an investment consortium which purchased the 41% equity stake in Indonesian coal producer PT Adaro Coal from New Hope Corporation of Australia for $378 million.15 PT Adaro is one of the world’s largest thermal coal producers with annual production of 50 mtpa.

2010 – Maules Creek Acquisition

In a transaction initiated personally by Steyer16, Farallon took the lead in providing $455 m of debt and equity linked acquisition financing to back Australian entrepreneur Nathan Tinkler in his A$480 m acquisition from Rio of the Maules Creek coal mine in Australia’s Hunter Valley. Maules Creek was not in production at the time of the acquisition, but with Farallon’s support it was able to complete an initial public offering on the ASX (as Aston Resources) with a completed feasibility study to reach 10 mtpa of annual coal sales.

2011 – Aston Resources – Whitehaven Coal Merger and Restructuring

Aston Resources and ASX listed coal producer Whitehaven Coal merged in March 2012. Mr. Tinkler emerged as the largest single shareholder of the combined entity. It is widely reported16 that Farallon is one of Mr. Tinkler’s leading financiers (with the lion’s share of a reported A$600 m financing facility to Mr. Tinkler backed by his shares in, among other entities, Whitehaven Coal). Pursuant to a restructuring of the facility to Mr. Tinkler, Farallon acquired a direct stake in Whitehaven in June 2013, buying 9.9% for A$300 million. At that time a representative from Farallon took a position on Whitehaven Coal’s Board of Directors. Farallon is now listed as one of Whitehaven’s single largest shareholders with 16.6%.17

Data on growth in coal production from Farallon-invested coal companies is provided below:17

FarallonChart01

Farallon’s Strategic Investments in Coal Fired Power Plants

In addition to strategic investments in major coal producers, under Mr. Steyer’s direction Farallon became a major investor in coal fired power plants, all made offshore and with barely a ripple of publicity.

In late 2012 Mr. Steyer said: “We immediately get off coal. We move to something …where we are not causing massive destruction.”18 More recently his NexGen Climate Action group was stirring up concern about sinister Chinese investment in Canadian tar sands.19

Shortly before these statements Mr. Steyer’s fund was, in fact, banking the check from the sale of their investment in a major Chinese coal fired power producer, Meiya Power, to China Guangdong Nuclear Power Company. Farallon and another fund had purchased Meiya Power a few years earlier. Meiya Power is one of the leading foreign invested independent power producers in China (founded by PSEG), with ownership stakes in six major coal fired power stations in China which provide more than 2,400 MW of electricity per year.20

In 2008 Farallon purchased an 18% stake in India Bulls Power, one of India’s top power developers, for approximately $158 m.21 At the time of the investment India Bulls Power had 11,400 MW of power developments underway in India – the two most active are 2,700 MW of coal fired power at the Amravati and Nasik projects.

The foregoing suggests that there is a significant gap between Mr. Steyer’s words and deeds with respect to carbon based energy. Since he has chosen to inject himself into the national dialogue in such a high profile fashion it is reasonable for the public to ask Mr. Steyer to clarify his personal history regarding fossil fuel investments.

Whatever the merits of his message, it would be unfortunate if it was clouded by the perception that he might be saying one thing (offering unsolicited investment advice to major educational foundations urging them to sell coal investments) while at the same time doing another (profiting massively from coal investments).

A complete declaration by Mr. Steyer of the following items might clear the air:

i) information on all of coal-related investments made by Farallon during Mr. Steyer’s tenure as senior partner (amount, date made, date sold, return);

ii) if he was on the Investment Committee when these investments were made, a record of whether he for or against the investment;

iii) a list of Farallon’s current holdings of coal investments (to the extent that Mr. Steyer has an ongoing financial interest in them);

iv) to the extent he does, a commitment on an absolute date by which they will be sold;

v) information on how much of his personal fortune comes from these coal investments (and out
of curiosity, is it more than the $50 million he intends to invest in the anti-coal message?)

Notes:

1. Regulatory Assets Under Management US Securities & Exchange Commission website, ADV filings, April 2014

2. Forbes on-line, April 19th, 2014

3. LA Times, December 21, 2013

4. Message to Middlebury College’s Board of Trustees, January 22nd 2013

5. Men’s Journal, March 2013

6. Estimated as follows:

FarallonChart02

7. Statistics from Barlow Jonker and the Indonesian Government suggest that Indonesian coal production rose from about 175 mtpa in 2004 to over 400 mt in 2013, an average growth rate of about 9% pa over ten years.

8. 150 mtpa x ~2.86 tonnes of CO2 from one tonne of coal / 1,514 mtpa CO2 from coal burned in US to produce electricity. Data for 2012. Source http://www.eia.gov/tools/faqs/faq.cfm?id=77&t=11

9. As reference, Peabody Energy, the largest coal producers in the US, mined 184 mt of coal in the US in 2013. The next largest was Arch Coal which produced 137 mt of coal in the US in the same year.

10. A brief, good faith scan of the internet to understand the Koch brothers’ coal mining interests suggests that the only coal mine they own is through William Koch’s company Oxbow Mining LLC which operated the Elk Creek underground coal mine in Colorado. Elk Creek reached peak production of 6 mtpa in 2008 and subsequently closed due to seismic issues.

11. Farallon’s investment activities in Asia were completed under the “Farallon” name until about 2004. At that time the Asian activities of Farallon were restyled as Noonday Asset Management (“Farallon” and “Noonday” are the names of a group of rocks about 30 km off the coast of San Francisco). In 2013 Noonday Asset Management announced that it would once again use the name Farallon. In this note “Farallon” and “Noonday” are used interchangeably.

12. Financial Times, Oct. 4th, 2012. “Bakries Under Pressure Over Bumi Resources” ” …For example, a $1.4bn financing in February 2011 to Bakrie and Brothers and another affiliate, Long Haul Holdings, was ultimately placed with several hedge funds including affiliates of San Francisco-based Farallon, DE Shaw and an Austrian bank, according to one hedge fund manager who was part of the lending group…”

13. Reuters, June29th, 2010. “Ownership Claim Casts Pall on Berau’s IPO.”

14. Euroweek, June 16, 2006. “…Merrill Lynch had been marketing a refinancing and recapitalisation that would allowinvestors in the mine–which include Farallon Capital, the US fund–to recoup some of their investment in Berau by adding more leverage to the company…”

15. New York Times, April 5th, 2005.

16. Sydney Morning Herald, October 30, 2011 “How Singo Made Tinkler Rich”

17. Listed company public filings.

18. CleanTechnica and Reuters, October 10, 2012.

19. See National Journal, Feb 20th, 2014, “Tom Steyer’s China Syndrome” and, in view of Farallon’s investments in coalfired power plants, view the link to the Youtube video from Mr. Steyer’s NGO which attempts to malign Chinese investment in North American hydrocarbon resources.

20. Meiya Power website (www.meiya.com);”Electricity privatisation and restructuring in Asia-Pacific” by Steve Thomas, David Hall and Violeta Corral, December 2004; and Enipedia.tudeflt.nl.

21. The Financial Express, Feb 15, 2008.

Hypocrisy is not in short supply in the political world, but Tom Steyer is in a class by himself. Now that he is enriching himself through “green” cronyism, coal is evil. Sure: like all hydrocarbons, it competes with the solar energy boondoggles on which he is making millions, with the aid of the Obama administration. But where was Steyer’s alleged social conscience when he was one of the world’s biggest investors in coal? And how substantial are his current holdings in coal projects? Is Steyer financing his anti-fossil fuel campaign on profits from past or, perhaps, ongoing investments in Asian and Australian coal? Inquiring minds want to know! Tom Steyer appears to have elevated political hypocrisy to an entirely new level.
 
In this article, which is reproduced under the Fair Dealing provisions of the Copyright Act from the Globe and Mail, financial journalist Carl Mortished speculates that a combination of technology advances in solar power and batteries will disrupt the current (oil powered) mobility model ... parts of it, anyway:

http://www.theglobeandmail.com/report-on-business/rob-commentary/rob-insight/get-set-for-the-great-energy-disruption/article20320257/#dashboard/follows/
gam-masthead.png

Get set for the great energy disruption

SUBSCRIBERS ONLY

LONDON — Special to The Globe and Mail

Last updated Saturday, Sep. 06 2014

On good days, your car is a glorious speed machine, but most of the time it’s just an overpriced shopping cart. But consider the possibility that within a decade, that lump of steel, plastic and rubber in your garage could become a vital component of the national electricity grid. We are approaching a tipping point at which the falling cost of solar energy and improving battery technology will transform the way we power our lives, turning homes into generators and cars into moving power storage units. It will hugely disrupt the business of producing and distributing electricity and it will bring about the gradual eclipse of the age of oil.

The know-how is already here, says UBS, and the cost, which once seemed prohibitive, now looks manageable. The investment bank has developed an economic model to show how solar panels and batteries will within this decade become competitive and disruptive technologies. The cost of solar panels has collapsed, falling by 85 per cent in the last seven years and UBS expects the cost of lithium batteries to halve by 2020. Driven by the availability of cheaper and more efficient energy storage and inexpensive solar power, electric vehicles will begin to attain cost parity with cars driven by internal combustion engines.

According to UBS, in a market with high road fuel prices, such as Germany, the total cost of ownership of an electric vehicle such as the Tesla S is already comparable with a gasoline-powered car, such as the Audi A7. By 2020, the UBS analysts reckon that in Europe, the all-in cost of electric vehicles will be lower than conventional ones.

The key to the UBS model and its interest is not in the projections of falling technology costs , but in the combination of three technologies – solar panels, batteries and electric cars – which behave in a symbiotic way, each providing a boost to the economic opportunity created by the other. Batteries provide the solution to the problem of solar intermittency; inexpensive solar power lowers the cost of charging an electric car. The three pillars of the system solve the problem of fluctuating demand on the grid, including the excess demand created by the charging of electric cars.

For example, a stationary battery in your home, apartment block or neighbourhood might store power from domestic solar panels during peak daylight for discharge at night. Grid electricity would fill the remaining night or early morning supply gap. Meanwhile your car’s battery could fulfill an additional storage function and the cost of recharging your car at your place of work would be offset by the value of the power generated by your solar panels at home.

In UBS’s model, by 2025, power will no longer be something we buy exclusively from big centralized utilities; everyone will generate and store power. It will be a world of smart, local grids linked to each other, mutually interdependent and maximizing the utility of locally-generated solar power while at the same time connected to larger commercial generators. Your home and your car will be an integral part of the grid – consuming, generating, storing and discharging power.

The UBS vision is not fantastic; it is entirely plausible in parts of the world, such as the U.S. Southwest and Australia, where there is ample sunlight and the potential for large economies of scale in the creation of microgrids. If it is to happen, we need to acknowledge and accept a major disruption to the current electricity model. This will require not just aggressive carbon pricing but a shift by incumbent utilities to a new business model of local grid management. It may also require legislative intervention to unbundle those utilities unwilling to invest in microgrids.

There will be corporate casualties. In Europe, the business of manufacturing and distributing road fuels is contracting every year. The automotive market is saturated; French oil giant Total is even threatening to shut the doors on its French refineries. Electric vehicles linked to smart grids could be the final nail in the coffin. But it would also be a strange new world for individuals in which most activities would be monitored, metered, costed, and ultimately controlled by an integrated grid. It sounds like a scary Hollywood movie but then, again, the prospect is economically compelling and quite plausible.

 
That is great. So where are all the nuclear, hydro, natural gas and coal power plants being constructed to provide the base load for hundreds of thousands, if not millions of electric cars? I am sceptical that solar power has anywhere near the efficiency or energy density to work well outside of perpetually sunny areas like the US Southwest or Australia.  There is also the small matter of of the exotic rare earth metals that must be mined to make all these things.  Makes the oil sands look positively benign.

I have no problem with electric cars (except outside big cities in Canada, they are not very practical. Oh yes, they tend not to hold a charge well at-40C, either), if that is what people want to spend their money on.

TANSTAAFL.
 
I agree regarding Canada, outside of Toronto and, maybe, Vancouver. But: I can see this sort of disruption in a significant share of the gas powered market; let's say, just for argument, that (maybe even autonomous) electric cars can replace 25% of gas cars in many (most?) high density urban centres,* maybe 5% of the gas market overall, and, maybe, and even greater share in trucking which might be massively changed with new technologies, say 10% of the gas market, in total. That is a HUGE shift, it postpones the threat of "peak oil" with all it implies.

-----
* I can imagine that e.g. Shanghai, Guangzhou, Hong Kong, Hangzhou Mexico City, Madrid, Rome, Cairo, Mumbai and Manila (really big, densely populated, cities, unlike Toronto or Chicago) might convert much more than 25% of cars to electrical power (and, in many cases, build new coal fired power plants to power them)
 
Edward, my point (which I should have made clearer) is that there has not been a nuclear power plant constructed in Canada since the 70s- blocked by environmentalists of all stripes. In fact, virtually all new power generation proposals (much less, power transmission proposals) run afoul of environmentalists of one stripe or another.

Yet, we have a proposal to vastly increase the load on our electrical system, by also having it power our transportation network. All without building new power generation possibilities- except solar, I guess.

To me, the numbers just do not add up and tell me that we are headed for rolling blackouts in 5 years.  Maybe no big deal in Coastal BC in the winter, but it sure can suck in Ontario at -40C...
 
More and more oil can be recovered from the oilsands using solvents, steam or even electrical energy. If you have an online subscription you can read about it here: http://www.economist.com/news/science-and-technology/21615488-new-technologies-are-being-used-extract-bitumen-oil-sands-steam

or

http://nextbigfuture.com/2014/09/solvents-and-microwaves-to-lower-energy.html

Solvents and microwaves to lower energy and cost of oilsand oil recovery and increase the oil recoverabe



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  Using steam extraction for the oilsands means that nine-tenths of the land above a reservoir can be left intact. There is no need for waste ponds because the sand is left underground and most of the water recovered from the bitumen can be cleaned with distillation for reuse. Steam can also produce bitumen from a reservoir half-a-kilometre underground, whereas strip mining is only economical for deposits less than 70 metres or so from the surface.

The proportion of bitumen produced with steam now stands at 53% and will continue to grow in Canada's oilsands.

The Alberta Energy Regulator (AER) estimates the total bitumen resource-in-place in Alberta to be approximately 1.8 trillion barrels (which would be greater than all of the world’s known conventional reserves). Of this amount, 315 billion barrels are considered potentially recoverable using future technologies and economic conditions, and of that amount, 167.9 billion barrels are considered to be established or proved reserves that can be recovered using current, known technology.

Of the estimated 1.8 trillion barrels of total bitumen resource-in-place, roughly 536 billion barrels are attributed to carbonate formations. At 406 billion barrels, the Grosmont Formation is by far the largest carbonate reservoir in Alberta






Steam-assisted gravity drainage (SAGD), has proved particularly effective, says Ken Schuldhaus of the AER. SAGD involves drilling two horizontal wells through an oil-sands reservoir, one about five metres below the other. Steam is then released from the top well and over a few weeks can melt bitumen as far as 50 metres above and to the sides of the bore. The bitumen then percolates down and into the lower well, from which it is pumped to the surface.

In a trial last year, Suncor, an Alberta firm, found that adding oil-based solvents to steam increases recovery while reducing the amount of water that has to be heated by 15%. Suncor will begin commercial production within a year using solvents that include butane, propane and a proprietary substance that weakens the surface tension between liquids and solids.

Another Alberta firm, Laricina Energy, reckons it can cut the amount of water that needs to be heated by 25% or more. Such reductions promise to reduce break-even costs.

Laricina Energy solvent with SAGD test

The 1,800 barrel-per-day capacity Laricina Energy Saleski pilot consists of a central processing facility (CPF) with diluent treating and an adjacent well pad. The CPF consists of two 50MM BTU steam generators, associated water treating train, and a solvent injection / recovery system.

The Germain Commercial Demonstra on Project (CDP) is an in situ oil sands project. The CDP is Laricina Energy Ltd.’s first full-scale commercial development in the Grand Rapids Forma on, located in the western Athabasca region of northern Alberta. Laricina will use steam-assisted gravity drainage (SAGD) and incorporate solvent opera ons into its recovery process referred to as solvent-cyclic SAGD (SC-SAGD). The use of solvents is expected to reduce the amount of steam needed and as a result, reduce carbon emission intensity. Surface water is not used to create steam.

Imperial Oil, based in Calgary, has replaced steam altogether by injecting solvents under high pressure but at much lower temperatures. This will undergo a $100 million test this year.

This year Suncor began building facilities in Alberta to test melting bitumen with microwaves. It will insert a microwave-transmitting antenna into a horizontal borehole with the circumference of an arm but the length of a football pitch. The idea is to melt bitumen without wasting energy heating sand and rock—just as domestic microwave ovens heat moist food but not its glass or ceramic container. Laboratory tests suggest this could slash energy costs by 80%.

N-solv uses the injection of a pure heated solvent vapor into and oilsand reservoir where it condenses and eventually dissolves the bitumen.

Nsolv has the potential for the following :

* Extraction Rate: ≥ SAGD extraction rates at 40°C with zero water usage
* Oil Quality:
Upgrade in-situ bitumen from ~8 °API to ~13 °API
* Nickel and vanadium less than 150 ppm
* Carbon residue at ~5%
* Recovery Factor: 65% or higher
* Solvent / Oil Ratio: 5 or less
* Solvent Hold-up: 0.2 bbl/bbl extracted or less
* GHG Emissions: Reduction of ≥ 80% relative to SAGD


Germany’s Siemens is developing a system that floods a thick copper cable with an electrical current to create an alternating magnetic field to melt bitumen. Tests could begin in a few years.
 
No oil indeed:

http://nextbigfuture.com/2014/09/montney-oil-and-gas-could-soon-be-one.html#more

Montney Oil and Gas could soon be one of the largest commercially viable plays in the world

The Montney (oil and gas formation in BC and Alberta Canada) is estimated to hold 2,200 trillion Cubic feet of gas, Almost 29 billion barrels of natural gas liquids and over 136 billion barrels of oil. But it is the tight liquids rich fairway (approximately 15-20 miles wide) that contains high concentrations of both free condensate and natural gas liquids that everyone is pursuing in what may very soon be one of the largest commercially viable plays in the world.

Initially, companies targeted the Upper Montney, and the entire formation was viewed more as a dry gas play with high productivity and immense gas in place. Through the Technological Advances That have Begun to Move up to Canada and A General de-Risking of the play, the Middle Montney is proving That there is A very large liquids-rich fairway available with A Potential for incredible returns and economics.

Canadian supermajor Encana (NYSE: ECA) -a Montney shale heavyweight-is focusing its drilling to the east of the formation. Last year, Encana announced it would spend over 25 percent of ITS capex for 2014 on the Montney, and the liquids-rich Plays in the eastern area will Get the lion's Share of this, with 80-85 New wells Planned for this year alone
 
Saudi Arabia may be using the fall in oil prices as a means of leveraging Iran and potentially other members of the OPEC cartel. How long the Saudis can do this can be questioned, but they are sitting on a vast reserve of cash, so it is possible they may be able to ride out a drop in crude prices better than many of their rivals:

http://www.the-american-interest.com/blog/2014/10/09/saudis-do-nothing-while-crude-prices-plunge/

Saudis Do Nothing While Crude Prices Plunge

It’s a good time to buy a barrel of oil. Prices have dropped precipitously in recent weeks for a host of reasons, including slackening demand in Europe and Asia and a gush of new production from North America (thank you shale) and Libya. But low oil prices pose a threat to the world’s petrostates, which rely on the sales of crude to keep their governments afloat. The specific price these nations require—called the breakeven price—varies, but rest assured that OPEC is not anxious to see oil lapse into a bear market.

The cartel’s usual play in these situations is to constrict supply. Saudi Arabia, the largest OPEC producer, typically leads these cuts in production, but thus far hasn’t done so—rather, it has discounted the price at which it sells its crude to Asia. While it’s difficult to say why, exactly, Saudi Arabia hasn’t reduced production, analysts believe it has to do with intra-cartel posturing ahead of a November meeting. The FT reports:

“[The Saudis] are making a statement by cutting prices. Market share is more important than the price of Brent right now. If prices fall too low, they may decide to cut, but it is not yet a panic moment” [said Laura El-Katiri, a research fellow at the Oxford Institute for Energy Studies]. “This is a commercial decision they are making.”

But, as Bloomberg reports, some still expect Saudi Arabia to resume its traditional role as the cartel’s chief crude curtailer soon, in order to stave off further price drops:

“I don’t think there’s any rush on the Saudis’ side to bring the market lower” when disappointing demand could do that anyway, Francisco Blanch, head of commodities research at Bank of America Corp., said by phone from New York on Oct. 7. “…Saudi Arabia will cut if needed.”

In the meantime, the Saudis get to keep up pressure on Iran, which has a much higher breakeven price. Next month’s OPEC meeting will attract plenty of global attention—the price of oil is that important—so stay tuned.

This also hurts Russia, which has been supporting Syria and Iran, so the Sauds may be thinking very strategically indeed.
 
Questions that enter my mind start with the falling price of oil perhaps being a reaction to the sale of oil by ISIS/ISIL to fund their activities and procurements.  Why the oil is being permitted to leave territory controlled by ISIS/ISIL is the next question.  Once the pipelines exit the ISIS/ISIL controlled territory, it should be a simple matter of shutting them down.  Same with any tanker trucks leaving ISIS/ISIL controlled territory, or for that matter tanker ships.  Stop the trucks at the borders, blockade the seaports and their supplying of contraband crude is stopped. 

Admittedly, I look forward to the drop of the price of crude as not only will my gas be cheaper (eventually) but the costs of all the food and other products that I buy will also drop due to lower transportation costs.  It becoming too expensive to exploit the Tar Sands will not be the first time that we have found it too expensive to draw natural resources out of the ground.  We have many mineral deposits that currently are too expensive to mine and refine.  The Tar Sands, if the price of crude drops much more, will turn into another such case.
 
I thought I throw this in here, this LNG Canada that is proposing to use the old Kitimat Methenx and Eurocan sites to export LNG

http://youtu.be/FbwHhsuI684
 
I have been seeing rumours on the Internet recently suggesting Apple Inc. is planig to compete against Tesla, GM and Nissan in the production of an electric car. While it is cool to contemplate electric cars, and of course a private corporation like Apple can invest in whatever they want, there are some basic physics that mean electric cars in their present form will never be practical. XKCD has perhaps the clearest explanation that I have come across; remember that a ham sandwich has about the same amount of energy as a fully charged car battery:

http://what-if.xkcd.com/128/

Zippo Phone

What in my pocket actually contains more energy, my Zippo or my smartphone? What would be the best way of getting the energy from one to the other? And since I am already feeling like Bilbo in this one, is there anything else in my pocket that would have unexpected amounts of stored energy?
—Ian Cummings

The Zippo lighter easily beats the phone, even though its fuel tank is barely half the size of a large phone's battery, because hydrocarbons are fantastic at storing energy. Gasoline, butane, alcohol, and fat contain a lot of chemical energy, which is why our bodies run on them.[1]​[2]​[3]​[4]
How much energy do they contain? Well, let's put it this way: A fully-charged car battery holds barely as much energy as a sandwich.
Solve for x.

A container of butane the size of a phone battery could, in principle, power the phone about 13 times longer than the battery itself could.[5] The obvious question, then, is "why doesn't my phone run on propane?"

The obvious answer is "because your phone would catch fire," but that's not quite it. See, lithium-ion batteries are also extremely flammable, and a huge amount of effort has gone into making Michael Bay scenarios less common.

The truth is more complicated. People have wanted to build various kinds of "fuel cell" batteries for almost as long as we've had portable electronics. The allure of hydrocarbon energy storage continues to this day—if you do a Google search for fuel cell phone charger, you'll find news stories about new products announced every year. Many of them are no longer available.

If you really want to power your phone with butane, the current hot project—as far as I can tell from a cursory search—seems to be the kraftwerk portable USB generator, which has made over a million dollars on Kickstarter with several weeks left in its campaign. Of course, a portable battery of the same size could do a lot of the same things, but there are certainly some use cases where the butane charger offers advantages. If you place a premium on reducing weight, or have to go a long time without contact with the power grid, it could be a good option. Let's put it this way: If the phrase "power your phone on butane", makes you think, "hey, that would solve a problem I have!" then go for it.

This gives us the answer to Ian's second question. The Zippo lighter has more energy, but getting it into the phone is a little difficult and requires the overhead of a fuel cell or generator. Getting the phone to start a fire, on the other hand, is quite reasonable, although it may require doing bad things to the battery.

Ian's third question was "what else in my pocket might contain more energy?" Like Gollum, I have no idea what's in your pocket,[6] but I can guess that it might contain one thing with more energy than a battery: Your hand.

An adult man's hand weighs about a pound.[7] The hand isn't the fattiest part of the body, but if burned completely, it would probably give off about 500 watt-hours of energy, give or take. That's 50 times the energy content of the phone battery, and almost 10 times that of the Zippo. It's also about as much as a car battery.

And, for that matter, about as much as a sandwich.
 
While General Fusion's plan seems hilariously improbable (repeatedly whacking a huge steel sphere with steam pistons to collapse the plasma inside to initiate the fusion reactions...), enough people who know the physics have been investing in it. Now we have a new investor coming aboard:

http://nextbigfuture.com/2015/05/malaysia-invests-27-million-in-canadas.html

May 19, 2015

Malaysia invests $27-million in Canada's General Fusion startup to bring total funding over $100 million

A Malaysian state-owned company invested $27 million in General Fusion.

Malaysia's sovereign wealth fund, the Khazanah Nasional Berhad, made an investment with current investors Growthworks and Jeff Bezos's personal venture capital fund. The funds will go to commercializing the company's key technology—a metal sphere pumped full of molten lead-lithium that spews out quantities of energy. The Burnaby-based company has raised over $100 million to date.

General Fusion is nearing significant milestones. General Fusion’s Approach is Magnetized target fusion (MTF). Magnetized target fusion is a hybrid between magnetic fusion and inertial confinement fusion. In MTF, a compact toroid, or donut-shaped magnetized plasma, is compressed mechanically by an imploding conductive shell, heating the plasma to fusion conditions.

General Fusion has a full-scale prototype [of the injectors and other subsystems], twin plasma injectors resembling five-metre-long cones, each attached to opposite ends of a three-metre-diameter sphere, would pulse a few milligrams of hydrogen gas, heat it until it becomes a plasma, and inject it into a vortex of swirling liquid metal. Electricity circulating in the plasma would create magnetic fields that bind the plasma together and confine the heat.

From there, an array of as many as 300 huge pistons attached to the sphere’s shell would act like synchronized jackhammers, ramming it at 200 km/hr. This would send shockwaves into the very centre of the chamber, compressing the hydrogen isotopes to 100 million degrees celsius — hot enough for fusion to occur, and good enough to generate clean electricity from steam turbines.

General Fusion reached its milestones on the piston timing about two years ago. Technicians are now perfecting functionality of the plasma injectors.

The nearly 200 capacitors that send 10-gigawatt bursts into General Fusion’s machine were “recycled” from an old laser fusion experiment in Los Alamos, California.



Here is 2013 paper on the progress on the driver timing and the injector work.

General Fusion, which shares investors with D-Wave, is about two to three years out from creating its own power plant. Today, the pistons work well, and the plasma is hot enough and dense enough. Within the last month, the gas donut has started lasting long enough for the system to work, so now the company is turning its focus to compression and timing, according to Michael Delage, VP of strategy and corporate development.

General Fusion thinks it can provide power at a cost of seven cents per kilowatt hour, comparable to the cost of coal.

General fusion also wants to heat the spheromak to 500 eV before injection. They have reached 200 eV, while they would want to reach 500 eV and expect actually to exceed 600 eV.

31 page presentation on General Fusion from mid-2013

In the TEDX talk of 2014 - there is the offhand mention that the plasma lifttime issue of getting to 100 microseconds had good progress

The Plan from 2012

In a 2014 Nature paper, there is the statement that the General Fusion "beefier" prototype will be built perhaps by the end of 2016.

General Fusion has demonstrated the idea with a small-scale device, using pistons driven by explosives, and has raised about $50 million from venture capitalists and the Canadian government. If the company can win another $25 million or so, Laberge says, it will build a beefier implosion system that can compress the plasma to the levels needed for fusion — perhaps within the next two years.

Not sure if the beefier prototype would be the net gain prototype since previously that was $80-100 million.

General Fusion is developing full scale subsystems to demonstrate that they can meet their performance targets. This includes full scale plasma injectors and acoustic drivers, and liquid metal vortex compression tests. Every step is matched with simulation to guide ongoing development work.

Author: brian wang on 5/19/2015
 
If this is true, then the UK can throw the Russians and ME oil barons under the bus, causing an endless amount of consternation to our enemies as their revenue sources shrivel even more. This could also (under some circumstances) help the UK as well, buy providing some relief to the Exchequer and allow them to pay off their debt (but how likely is that?):

http://www.the-american-interest.com/2015/06/05/britains-underground-elephant-gets-bigger/

Britain’s Underground Elephant Gets Bigger
Two months ago, a small British oil exploration firm shocked the world when it announced a massive new oil discovery in southeast England, describing the site underneath Gatwick airport as a “world class potential resource.” The lucky firm, UK Oil & Gas Investments, estimated that the region’s Weald basin held as many as 158 million barrels of oil per square mile, which extrapolated out could mean a grand total of more than 100 billion barrels. Now, an outside assessment estimates the basin to contain 271 million barrels per square mile—72 percent more oil than was initially reported. Bloomberg reports:

An independent assessment of the Horse Hill well has estimated there could be about 271 million barrels of oil per square mile. That compares with a prior estimate in April of 158 million.

UK Oil & Gas, which has a 20% interest in the well, was up as much as 53% today. The company’s CEO said the study “adds further weight to the potential significance of the HH-1 well and the potential of the Horse Hill licences.”
The Gatwick discovery received plenty of pushback for being “wildly optimistic,” but UK Oil & Gas echoed these calls for caution when it warned that the recovery rate was somewhere between 3 and 15 percent, deflating the relevance of that estimate of 100 billion barrels.

Still, this new corroboration of the play’s promise, and more importantly this upgrade of its actual potential, should come as welcome news for Britain, which is currently seeing production from its important North Sea oil reserves decline rapidly. Getting that oil out of the ground won’t be an easy thing, especially given the virulent Not-In-My-Backyard protests it’s sure to face (which have already scuppered attempts to tap British shale). But for British energy security, the difficulty will be worth it.
['/quote]
 
The dramatic drop in oil prices also means a dramatic drop in tax revenues. This puts the pressure on renewables, which only thrive when insulated from competition by govenment (i.e. taxpayer funded) subsidies:

http://www.the-american-interest.com/2016/01/13/solar-stocks-plunge-alongside-oil-prices/

Solar Stocks Plunge Alongside Oil Prices

After a downright dismal 2015 for producers, oil prices are finding new lows this year over fears about a Chinese economic slowdown and a global glut of crude. And, as Reuters reports, solar stocks have fallen right along with oil prices over the past two weeks:


The [MAC Global Solar Energy Stock index] has dropped 16 percent so far in January, due in no small part to oil’s 20 percent slide so far this year. Oil briefly fell below $30 a barrel on Tuesday for the first time in 12 years, [O/R] and the solar index tumbled 2.75 percent [. . .]
“They are not substitutes,” Raymond James research associate Angelica Jarvenpaa said of crude oil and solar energy. “However there is probably an impact on market psychology.” Some investment funds, Jarvenpaa said, have sold off their energy holdings altogether as the oil market carnage has intensified and caused financial pain to oil producers across the world. Solar and renewables, as energy stocks, are often dumped along with other energy shares even though solar installations are expected to log a 30 percent increase for 2015 and the cost of solar has come down so much that it remains cost competitive with traditional energy sources in many places.

Renewables don’t directly compete with fossil fuels. If they did, we would have hardly any wind or solar farms. Those green energy sources simply can’t beat their dirtier cousins on price, and so they survive on the grace of heavy government subsidies, not consumer demand. Therefore, the reason why solar stocks have plunged alongside oil prices is not because lower prices help oil beat out renewables in the marketplace.

But just because renewables might be insulated from market forces by government support doesn’t mean falling oil prices can’t still pose a threat. As we’ve noted before, cheap oil can change the political calculus underpinning these subsidies if policymakers are no longer willing to pay what amounts to increasing premiums for renewables.

Subsidizing current generation renewables has never made much sense, but it’s looking downright foolish now as natural gas and oil prices plummet in a world swimming in hydrocarbons. This kind of government support often isn’t sustainable (just look at the mess in which Germany has found itself), but it also carries with it an opportunity cost: The hundreds of millions of dollars spent propping up today’s relatively inefficient solar panels and wind turbines could be better spent on the research and development of technologies that might one day be a cheaper option than fossil fuels. That’s the path towards a greener global energy mix, and the sooner global greens wake up to that reality, the better off the planet will be.
 
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