George Monbiot discusses Nigeria gas flaring and related topics with CEO of Shell
Environmentalist George Monbiot recently interviewed Jeroen van de Veer, CEO of Shell, on ethics, greenwash advertising, renewable energy investments and gas-flaring in Nigeria.
Natural gas is a by-product of oil extraction, but Nigeria doesn’t have the pipeline infrastructure to sell natural gas, so the crude oil is extracted and sold, while the gas is flared. Many oil workers are kidnapped every year in the Niger Delta, so safety is obviously one of the problems facing development of pipelines. However, it would have been interesting had Mr. Monbiot asked the CEO to explain the problems more clearly. Why does gas continues to flare across the Delta in 2008, and what are Shell’s plans for future development in the region?
Nigeria produces over 2 million barrels of oil per day (United States is a major importer). That’s 100 million dollars of oil every day (selling at $50 per barrel), yet Nigeria ranks as one of the most corrupt countries in the world. 70 percent of the country’s population lives on $1 a day or less, and life expectancy is 47 years.
According to this NY Times article, oil companies typically keep 7 percent of the profits from oil sales, and the government gets 93 percent. So what does the Nigerian government do with the oil field royalties and leasing fees collected from developers like Shell? Are there any plans to build pipelines to pump the gas to areas where it can be used for efficient cooking and electric power production?
It would have been interesting too had Mr. Monbiot asked the CEO what kind of role Shell plays in dealing with the corrupt government of Nigeria and whether Shell sees itself as a sustainable business in the region.
The oil industry has a legacy of environmental destruction in the Delta region, causing unrest amongst fishermen and communities. But Nigeria still has a lot of oil to sell (and presumably a lot of natural gas as well to either flare, or distribute to African communities in need, via gas pipeline or electric power grid). There are 36 billion barrels of proved oil reserves in Nigeria. Compare that to 22 billion barrels in the U.S., 80 billion barrels in Venezuela, 12 billion barrels in Mexico, or 179 billion barrels in Canada.
More on Nigeria’s oil industry:
NY Times: Growing Unrest Posing a Threat to Nigerian Oil
NPR: Gas Flaring Disrupts Life in Oil-Producing Niger Delta
How to shop for lower-priced natural gas
You’ve weatherized your home or apartment but your gas bills still seem high. What else can you do? Yes you can always put on an extra sweater and pair of socks and lower your thermostat a couple degrees. However, you can also shop for lower-priced natural gas…
For information on the status of natural gas residential choice programs in your State, check the EIA’s Status of Natural Gas Residential Choice Programs by State as of December 2007. Click on the link and then click on your state for details.
You may live in a state that has “unbundled” the natural gas commodity from the distribution service. In states with unbundled prices, the sale of the natural gas commodity is deregulated, which means that you can refer to a list of suplliers in your area and find the best deal. It just takes a couple phone calls to check on competitors’ rates, and then you can lock-in to a fixed rate for a year (e.g. $11.99 per thousand cubic feet or MCF of gas).
It’s easy to do. Your local distribution company (LDC) or public utility commission representatives can help you do it. You will save money and rest assured that you are getting the best deal in your area.
In states with complete unbundling, once you choose a gas supplier, your local distribution company will continue to provide local distribution services, as well as a unified billing service for you.
Lies, Damn Lies, and… Henry Gifford critical of LEED study
Henry Gifford, a maverick NYC mechanical systems designer, has written a highly critical objection to the first broad study done by the US Green Building Coucil (USGBC). The study intended to determine how much energy LEED rated buildings actually used.
USGBC commissioned the New Buildings Institute (NBI) of Vancouver, Washington, to conduct the study, Energy Performance of LEED for New Construction Buildings, which claimed that “On average, LEED buildings are 25-30% more efficient than non-LEED buildings.”
Gifford has presented a different analysis, critical of the USGBC / NBI study. Gifford suggests that in reality the LEED rated buildings are, on average, 29% less efficient than average U.S. buildings. If you haven’t seen Gifford’s presentation, it’s worth a watch (youtube clip below). The full critique, “A Better Way to Rate Green Buildings“, is also available on his website, along with the US Green Building Council’s response to Gifford’s criticique in an e-mail that USGBC sent to its chapter leaders, and Gifford’s rebuttal to the USGBC response.
Gifford points out a few flaws in the study…
Natural Gas Should Remain Less Expensive than Fuel Oil
According to FERC’s Winter 2008/2009 Energy Market Assessment, while both oil and gas prices have fallen from their mid-year highs, natural gas prices remain well below heating oil prices on a per MMBtu basis.
Residential natural gas prices are expected to be higher this winter.
Average household expenditures for all space-heating fuels are projected to be $1,137 this winter (October 1 to March 31), a 15-percent increase over the estimated $986 spent last winter, according to EIA’s Short-Term Energy and Winter Fuels Outlook released on October 7. The largest increases, 18 percent, will be in households using natural gas. About 52 percent of all households nationwide depend on natural gas as their primary heating fuel. The projected expenditure increases primarily reflect higher prices, although colder weather than last winter also is expected to contribute to higher fuel use in many areas.
House of Representatives approves offshore-drilling bill…
What’s in the House offshore-drilling bill?
(Christian Science Monitor)
The House of Representatives approved a bill on Tuesday September 16th, 2008 that would relax the federal ban on offshore drilling and try to expand renewable energy.
The bill, which was adopted by a vote of 236 to 189, was backed by Democrats, who long fought the lifting of the 26-year ban but have been under intense political pressure to look as though they are taking steps to ease high gas prices. Republicans, whose vociferous calls for expanded offshore drilling have been met with widespread public approval, opposed the bill, claiming that it did not offer enough financial incentives to coastal states. On the final roll call, 221 Democrats and 15 Republicans voted for the bill; 176 Republicans and 13 Democrats voted against it.
The 290-page Comprehensive American Energy Security and Consumer Protection Act, as the bill is known, contains a number of important provisions. Here’s a succinct breakdown from Christian Science Monitor.
Impacts of Increased Access to U.S. Offshore Oil and Natural Gas Resources
I recently looked into the prospect of additional offshore U.S. oil and natural gas resources. Lifting the moratorium would increase access to oil and gas fields in the Outer Continental Shelf (OCS) of the Pacific, the Atlantic, and the eastern Gulf of Mexico. President Bush recently lifted the executive moratorium, which was set to expire in 2012. The Congressional moratorium comes in the form of an annual appropriations rider. It must be renewed year to year by a vote in the Congress. The current 2008 ban is set to expire on September 30th, 2008 - the end of the federal government’s fiscal year – unless Congress approves a bill extending the ban and the president signs it into law. This post looks at the impact of increased access to offshore areas, based on estimates made by the U.S. Energy Information Administration and the Minerals Management Service.
The first thing that jumped out at me in Table 10 is that most of the technically recoverable, undiscovered offshore oil and natural gas resources are currently open to oil and gas companies for leasing and drilling. These areas are located mostly in the western and central Gulf of Mexico.
The Outer Continental Shelf (OCS) leasing program is administered by the Minerals Management Service (MMS), an agency within the US Department of the Interior responsible for oil and gas leasing in the US offshore. MMS estimates that there are currently 85.9 billion barrels of oil and 419.9 trillion cubic feet of natural gas that are technically recoverable from all federal offshore areas, including 26.6 billion barrels of oil and 132 trillion cubic feet of gas offshore Alaska.
The oil and gas offshore Alaska is available for leasing and development. Therefore, the total portion of technically recoverable, undiscovered, offshore oil and natural gas that is available for leasing and development from all federal offshore areas, including offshore Alaska, is 67.5 billion barrels oil (79%) and 342.4 trillion cubic feet gas (82%). The offshore moratorium denies access to the other 21% of oil and 18% of gas from federal offshore areas.
In addition to the technically recoverable, undiscovered oil and natural gas resources estimated in Table 10, as of October 2, 2006 there were 3,911 active oil and natural gas production platforms on the Gulf of Mexico’s Federal OCS as illustrated in the following figures.
Active Oil & Gas Platforms in Western Gulf of Mexico
Active Oil & Gas Platforms in Eastern Gulf of Mexico
In the U.S. EIA’s Annual Energy Outlook 2007, an “OCS access case” was prepared to examine the potential impacts of lifting Federal restrictions on access to OCS oil and natural gas resources in the Pacific, the Atlantic, and the eastern Gulf of Mexico. The OCS access case assumes that the current moratoria will expire in 2012, leasing will begin by 2012, and oil and natural gas production will begin by 2017.
Offshore oil production (Figure 20) is projected at 2.4 million barrels per day by 2030 in the OCS access case compared with 2.2 million barrels per day (mmbpd) in the reference case. EIA notes that oil prices are determined on the international market, so any impact on average oil wellhead prices would be insignificant in the OCS access case.
Offshore natural gas production (Figure 21) is projected to increase 18% (0.6 trillion ft^3 per year) in the OCS access case by 2030, and the average wellhead price of natural gas is projected to decrease slightly: $0.13 / MCF (2005 dollars per thousand cubic feet) by 2030.
One precaution, the OCS access case in Figure 20 and Figure 21 only account for off-shore production in the U.S. However, domestic on-shore production is more predominant than offshore — over 3/4 of the natural gas and over 1/2 of the oil produced in the U.S. are projected to come from onshore fields even in the OCS access case.
Total domestic production in the U.S. (i.e. offshore and onshore) is projected at 6 million barrels per day of oil, and 19 trillion ft^3 per year of natural gas, by 2030; so the overall projected increase in domestic production — 0.2 mmbpd more oil and 0.6 trillion ft^3 more gas — would only provide the U.S. with approximately 3% more oil and 3% more natural gas by 2030.
One other precaution according to the EIA summary, the average field size in the Pacific and Atlantic regions tends to be smaller than the average in the Gulf of Mexico. This implies that a significanct portion of the newly available fields in the OCS access case would provide less attractive return on investments than fields that are already available for exploration in the western and central Gulf of Mexico.
Where Are Oil Prices Headed?
A recent presentation by EIA looks at oil prices and market conditions such as surplus capacity, increasing demand, and dollar depreciation, behind a six year 500% increase in oil prices. The forecast for ongoing demand growth is quite clear, while the forecast for oil production growth is mostly cloudy, and the only certainty about the price of oil is that it will change.
Diesel & Gasoline Prices Slip: First Time Since March 08
The average price of gasoline and diesel fuel in the U.S. has started to slip in recent weeks. Last week the average price of gasoline was $4.10 per gallon, and diesel fuel was $4.65 per gallon.
How Much Oil in ANWR and U.S. Strategic Petroleum Reserve?
Arctic National Wildlife Refuge
USGS optimistically estimates 10.3 billion barrels (10,300 million barrels) of recoverable oil in ANWR, with projected ANWR peak production rates of approximately 1.3 million barrels per day (1.3 mmbpd). Assuming peak production from ANWR, this 10,300 mmb supply would last us about 22 years (10,300 mmb ANWR oil / 1.3 mmbpd = about 7,923 days = 22 years).
1.3 mmbpd peak production from ANWR would offset a fraction of the 12 mmbpd net U.S. imports (total U.S. demand is 21 mmbpd). But when would we see this oil from ANWR and how much would it affect gasoline and diesel prices at the pump?
7 to 12 years would be needed for leasing, permitting, construction, and so forth before oil from ANWR could hit the market. If Congress voted today to allow drilling in ANWR, we would probably see oil by 2017, meeting roughly 6% of total U.S. demand (1.3 mmbpd / 21 mmbpd = 6%). If U.S. demand increases by 20% in 10 years, ANWR oil would meet roughly 5% of demand.
U.S. Strategic Petroleum Reserve
The U.S. Strategic Petroleum Reserve, an emergency petroleum store maintained by the DOE, peaked at around 700 million total barrels in 2005 and 2007. At its maximum drawdown rate, the Reserve could offset roughly 4.4 mmbpd net oil imports (though U.S. net imports = 12 mmbpd) in the event of an embargo or other emergency. At its maximum drawdown rate, the Reserve would last about 159 days (700 mmb / 4.4 mmbpd = 159 days).
Drawdown capability of U.S. Strategic Petroleum Reserve:
- Maximum drawdown capability: 4.4 million barrels per day
- Time for oil to enter U.S. market: 13 days from Presidential decision
- Full drawdown: The President can order a full drawdown of the Reserve to counter a “severe energy supply interruption” or national energy supply shortage as determined by the President.
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NYMEX: Light, Sweet Crude Oil (CL)
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NYMEX: Natural Gas (NG)
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NYMEX: Heating Oil (HO)
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EIA: Retail Prices
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Bloomberg: Wind Energy Index
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MAC: Global Solar Energy Index