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23 March 2013

Press review 23-03-2013

Amateurish. Of all the adjectives used to describe the "aid" package proposed by the EE/ECB/IMF triumvirat to Cyrpus this is probably the sharpest one. Beyond the legal question it raises and the social harm it can inflict, it is a huge strategic blunder. A bank run in Cyprus is now a certainty, rest is to know if it will percolate to other members of the Eurozone. I don't have a particular hunch, but the probability of contagion happening is now much higher than what it was a week ago. And above all, what I don't really get is why was this made without Russia and to a good extent against Russia. It seems like the folk inside the Eurogroup are completely unaware of what's going on outside their offices Unaware that the Russian Government and Gazprom have complete control over our energy system; if they get angry enough to close the gas tap we'll be back to the dark ages in days. I'll expect further developments before a deeper reflection on this mess (time permitting).

And it is precisely gas the inner page story that is important to highlight this week, yet again. Below the fold you'll find a presentation by Alistair Buchanan, head of Ofgem, the UK energy watchdog. Although a few months old, it is well worth the time it takes to listen, describing in great detail how perilous Britain's dependence on gas has become.

The week started off with fresh record prices, although most media outlets were leaving it for the background with the Cyprus story.
U.K. Week-Ahead Gas Jumps to Seven-Year High on Weather, Storage
Matthew Brown, 20-03-2013

U.K. natural gas prices for next- week delivery rose to the highest in more than seven years as forecasters predicted temperatures 8 degrees Celsius below normal and storage inventories approached record-low levels.

Within-day, next-day and month-ahead gas prices also advanced, according to Marex Spectron Group Ltd. data compiled by Bloomberg. The average U.K temperature will be 0.2 degrees Celsius (32 Fahrenheit) next week, compared with a 10-year average of 8.2 degrees, MetraWeather data using the ECMWF model show. Inventories at Rough, the U.K.’s largest gas-storage facility, fell to 3,029 gigawatt-hours yesterday, approaching a record 2,924 gigawatt-hours reached March 19, 2010, National Grid Plc (NG/) data show.

The weather in the U.K. next week will be “breezy and very cold for the time of year,” the Met Office said on its website. There will be “a lot of dry weather with a mixture of variable cloud, snow showers in northern parts especially, and sunny intervals. Temperatures are likely to be well below normal in all areas.”
But gas was on the radar for other reasons. Presenting the 2013 budget, Chancellor Osborne is putting forth a series of policies to speed up shale gas extraction in the big island. Although not a measure with sustainability in mid, it is actually positive to see the UK government doing something about the energy predicament of the country. It seems now clear that the UK will be the first EU member state to produce shale gas in commercial volumes.
Power Engineering International
UK unveils tax breaks to kickstart shale gas industry
Kelvin Ross, 20-03-2013

The UK Chancellor George Osborne today unveiled a generous new tax regime for shale gas.

Delivering his annual Budget in the House of Commons, Osborne – a well-known and vocal advocate of natural gas and shale gas – told MPs: “Shale gas is part of out future and we can make it happen.”

The government is to introduce a new shale gas field allowance and extend the ring-fence expenditure supplement from six to ten years for shale gas projects to promote investment in the industry.
But that gas is needed now, not in ten years time. Finally on Friday the media went from 8 to 80 and woke Britons with cries of an imminent shortage. This is unlikely at the moment, but the cold weather and the snow are set to continue well into April. The UK will be importing record amounts of gas the following days, likely at record prices. I believe March 2013 marks the end of cheap gas in Europe.
The Week
Britain's running out of gas: just how critical is it?

With only two days' supply in reserve and more cold weather on the way, gas bills are certain to rise

AS BRITAIN braces for another cold spell, The Times reveals the country has only two days supply of gas left in reserve. Are householders facing sharp price rises or something even worse?

Why are we using so much gas? People around the UK have been turning up their heating systems to cope with the coldest March weather in 50 years. Demand for gas has been "20 per cent higher" than usual, says The Times, and with snow and flooding again disrupting large areas of the country demand isn’t going to fall soon. Parts of the UK have been hit by blizzard conditions today and higher areas have been blanketed by up to 16 inches of snow.
Daily Mail
British gas reserves could run dry in 36 HOURS after freezing householders turn the heating up
Peter Campbell and Matt Chorley, 22-03-2013

Britain's gas reserves could run out in 36 hours – leaving the country dependent on costly foreign imports.

The UK’s gas stores have less than two days’ supplies remaining after plunging temperatures forced millions of householders to turn up their heating.

And today there were warnings from energy giant SSE of the 'very real risk' of the lights going out in Britain.
The problem right now is that in the continent strategic gas reserves are also at record lows. If operators agree to feed Britain with record volumes, they are simply passing the problem upstream, later on requiring record volumes from Russia to refill their own reserves. Will the Market solve it?

Still on the gas theme, there was a mini hype last week about a successful test methane hydrate well drilled off Japan. As usual no information on volumes was passed to the press, much less well logs. Days ago I found an article clearly stating that whatever volumes of gas were produced, they are not commercial. "Success" in this story means something completely different from what most may think.
Oil & Gas Journal
Methane hydrate flow established off Japan
OGJ editors, 12-03-2013

Japan Oil, Gas & Metals National Corp. (Jogmec), Tokyo, said it has produced methane from methane hydrates during tests of a well drilled in about 1,000 m of water offshore the Atsumi and Shima peninsulas of Japan.

The well, operated by Japan Petroleum Exploration Co., produced methane by depressurization of hydrates in a layer 270-330 m below the seabed. [...]

It didn’t specify the production rate, which it called noncommercial. The test was part of a second phase of methane hydrate research, the first phase of which was conducted during 2001-08.
And coming back to shale gas, I was forwarded an interesting and accessible article on the issues the treatment of chemicals used in rock fracturation can pose. Yet again the technicalities of shale seem to border on the environmentally acceptable in Europe, bringing into question its realisation in many member states; this of course beyond the broader questions of cost and EROEI.
Chemical and Engineering News
Sewage Plants Struggle To Treat Wastewater Produced By Fracking Operations
Leigh Krietsch Boerner, 18-03-2013

Environment: Water used in natural gas production may still contain high levels of contaminants, even after going through wastewater treatment plants

When energy companies extract natural gas trapped deep underground, they’re left with water containing high levels of pollutants, including benzene and barium. Sometimes the gas producers dispose of this contaminated water by sending it to wastewater treatment plants that deal with sewage and water from other industrial sources. But a new study suggests that the plants can’t handle this water’s high levels of contaminants: Water flowing out of the plants into the environment still has elevated levels of the chemicals from natural gas production (Environ. Sci. Technol., DOI: 10.1021/es301411q).
Last weekend the Washington Post published a remarkable article on the deteriorating Geopolitical setting in the Near East. It is quite precise and manages to condensate all the major points in a single article. Just to prove that good journalism is still out there, my cap off to Rajiv Chandrasekaran. Iraq, Lebanon, Jordan, Israel and even Iran risk to be drawn into this religious conflict if it scales beyond the stalemate it is in now.
Washington Post
Five myths about Iraq
Rajiv Chandrasekaran, 15-03-2013

Forget about all the blood and treasure the United States has poured into Iraq. Iran is Iraq’s most strategically significant ally. Maliki owes his second term in large part to the pressure that Tehran exerted on rival Shiite political parties in Iraq, many of which received substantial financial support from the Iranian government. And there’s plenty of evidence to indicate quid for the quo: Despite objections from Washington, Maliki’s government has allowed Iranian cargo airplanes, allegedly filled with munitions, to fly to Syria through Iraqi airspace, enabling Tehran to prop up Syrian dictator Bashar al-Assad.

But it would be wrong to assume that Maliki is permitting the flights only because of Iranian pressure. Even though Assad shares much of the Baathist ideology that Hussein espoused, he and his fellow Alawites are Shiites. It’s more than kinship, however, that drives Maliki to favor the status quo in Syria. He and other leaders of Iraq’s Shiite majority worry that if the Free Syrian Army overthrows Assad, the rebels will establish a radical Sunni government that will collaborate with Iraq’s Sunni minority to topple the Baghdad government. “If the opposition is victorious, there will be a civil war in Lebanon, divisions in Jordan and a sectarian war in Iraq,” Maliki warned in an interview with the Associated Press last month.
On a more positive note is a blog post detailing how Germany has grown the share of renewable energy in electricity generation up to 23%. Over there they have so far taken energy policy a tad more serious than in Britain, although, well is not so fantastic after all.
2012 German Nuclear & Gas-Fired Generation Falls Further While Renewables Grow
Paul Gipe, 17-03-2013

Apparently my article last October documenting the growth of renewables in Germany while nuclear generation continues to decline got under the skin of pro-nuclear bloggers.

So at the request of a reader, I am updating my charts on the electricity mix in Germany from 1990 through 2012. These charts are from public information, easily accessible with rudimentary German.
To finish off the sad news of the death of Clive Burr. He played drums with Iron Maiden for 3 years, during which time he recorded three LP: Iron Maiden, Killers and Number of the Beast. He was the great responsible for the high tempo style the band employed at the time, which would become an hallmark of the genre. Especially in the The Number of the Beast Clive displayed a good of innovation that is still influential today. A proper homage for one of these days, again, other duties allowing. For now here's Gangland, Clive in all his Glory.

Have a nice weekend and stay home out of the cold.

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