Oil Fired Power Stations In The Desert  

The Wall Street Journal is getting in on the "export land" theory now, with an article looking at Saudi Arabia's rapidly rising oil consumption - "Industrial Drive Strains Oil-Export Role".

Long the biggest spigot for crude oil, Saudi Arabia now has broader ambitions. It wants to become a big exporter of chemicals, aluminum and plastic, and in the process to create jobs. So Saudi Arabia is on a building binge. In the works are new seaports, an extended railroad system, a series of new industrial cities and a score of refineries, power stations and smelters. Over the next dozen years, such Saudi investments are expected to consume $600 billion. But they'll also consume something else: large quantities of Saudi oil -- oil that otherwise could help slake other countries' growing thirst. ...

The problem is that with output slumping in places like the North Sea and Mexico, the world is counting on increased oil supplies from the Middle East, and above all from Saudi Arabia. Global oil demand, now just over 85 million barrels a day, is expected to exceed 100 million barrels a day within 10 years. So the question arises: Can the kingdom continue to satisfy the world's growing oil needs at the same time as its own economic engine demands ever more crude?

Within Saudi Arabia, there's heated debate over the wisdom of staking development on industries that use so much energy. A big aluminum smelter being built on the Persian Gulf coast, for instance, will consume upwards of 60,000 barrels of oil a day -- because the Saudis are turning to crude oil to make electricity. Yet the smelter will create fewer than 10,000 jobs. Some boosters want to build 10 smelters. They'd devour nearly 7% of the Saudis' current oil production.

Abdallah Dabbagh is a proponent of the industrialization push, as head of Saudi Arabian Mining Co., which is building the east coast smelter. Yet even he says, "I think the Saudi government will have to stop and think at some point if this is the best utilization of Saudi's crude." ...

Saudis also are guzzling oil in more traditional ways. They're clogging highways with shiny Hummers and Chevy Suburbans. Saudis are now the world's biggest oil consumers per capita, at more than 32 barrels a year per person. That's twice the rate of South Korea and well ahead of the U.S., which consumes 25 barrels a year per person.

The result is that 22 barrels of every 100 the Saudis produce stay at home, compared with under 16 of 100 seven years ago. Forecasts from the U.S. Energy Department and the International Energy Agency say that by 2020, Saudi Arabia will be consuming more than a third of its own oil -- leaving a lesser share for American cars, Indian airliners and Chinese factories. ...

Saudi leaders had a different model in mind when they launched their bid to remake their economy a decade ago. The plan was to fuel the industrial boom -- from new power stations to petrochemical plants -- with fresh stocks of natural gas. Saudi Arabia is thought to sit on the world's fourth-largest gas reserves, after Russia, Iran and Qatar. Geologists spent years in the mid-1990s identifying deep pockets of gas below giant oil fields.

But Aramco has been slow in bringing this gas on line. Saudi Arabia broke with longstanding practice starting in 2003 by signing deals with foreign oil companies to prospect for gas in the Empty Quarter. Despite more than $1 billion spent, the companies haven't found commercial quantities of gas.

So the Saudis switched course. Last year, King Abdullah mandated that crude oil be used to fire nearly all of the kingdom's soaring electricity needs. Natural gas, the government said, would be reserved increasingly for the booming petrochemical sector. ...

Thirty years ago, Saudi Arabia had fewer than eight million people. Now it has over 24 million. In 2000, the national power company had capacity to generate 21,000 megawatts of power. That's now up to 31,000. Over seven years, Mr. Barrak says, the company will have to build six huge power plants to raise generating capacity to 55,000 megawatts -- roughly that of the far more industrialized United Kingdom. "By any standard, that is an unnatural growth rate," he laments.

Saudis consume vast quantities of electricity because the government holds the price unusually low to keep the populace happy, as it does with gasoline. Nearly two-thirds of power goes to air conditioning. Saudis routinely keep their air conditioners on full blast even when on vacation. The average Saudi power bill, Mr. Barrak says, weighs in at one-fifth the cheapest tab in the U.S. "You try getting people to conserve at that cost," he says. "It's impossible."

Even oil-rich countries normally scramble to avoid burning oil in their power plants, because oil is so easily sold and transported on the international market, while gas isn't. But Mr. Barrak estimates that by 2012, petroleum will fire nearly 60% of Saudi's mounting electricity needs.

This has made him a vocal proponent of nuclear power. That's a notion gaining momentum across the Middle East as countries wrestle with the wisdom of burning oil to generate power to make cement or cool offices. "Nuclear is definitely the future," Mr. Barrak says. "Future generations are going to think we were stupid to burn oil for power when we could have done it by other means."

The natural-gas crunch is creating bizarre scenarios in the region. Cement makers in the UAE, lacking sufficient gas this summer, began firing their furnaces with South African coal. Building booms in the UAE and Oman have led both states to turn to Qatar for extra gas. Bahrain, home to a gigantic aluminum smelter that drains more than a third of the country's electricity supply, is relying increasingly on Saudi oil for its refineries.

Hmmm - middle eastern country, history of supporting terrorism and Islamic fundamentalism, wants to build nuclear reactors. I hope no one has told Cheney yet - he'll be opening a fourth front before we know it...

TED Talks has posted a video of Amory Lovins talking about his book "Winning the Oil Endgame".

Energy guru Amory Lovins lays out his plan for weaning the US off oil and revitalizing the economy in the process. It's the subject of his book Winning the Oil Endgame, and he makes it sound fairly simple: On one hand, the deadly risks of continued dependency, and on the other, some win-win solutions.

David Strahan has an interview with Henry Groppe at Energy Bulletin - "Henry Groppe: IEA to blame for $100 oil spike".

When the oil price soared to over $99 per barrel earlier this year, the cause was not surging demand, nor speculation, nor even impending peak oil, but a forecasting error by the International Energy Agency. That's according to a presentation by veteran analyst Henry Groppe, one of the most independent thinkers in the oil patch, at an investment conference organized by 13D Research in New York last week.

groppe120.jpg In an interview for GPM and lastoilshock.com, Mr Groppe went on to argue that Saudi Arabia can maintain current production for up to two decades, global peak oil will come in 2008, but that prices will nevertheless remain between $65 and $85 per barrel until around 2015.

The IEA was inadvertently responsible for record oil prices this autumn because of its bullish forecast – issued in September 2006 - that non-OPEC oil supply would grow by 1.8 million barrels per day the following year. According to Groppe, it was this that prompted the cartel to forestall an expected glut by cutting quotas by 1.7 mb/d in late 2006. However the IEA forecast proved wildly over-optimistic and the Agency now says non-OPEC output is likely to grow by just 500 thousand barrels per day. So when seasonal demand picked up this autumn "there wasn't enough oil" and prices soared.

The IEA has a history of over-estimating non-OPEC supply, but this time the predicted increase was the largest since 1984, a time when massive over-supply forced Saudi Arabia to slash output from 10 mb/d to 2.25 mb/d. This, says Groppe, "got the Saudis' attention".

Groppe's analysis challenges the growing belief that Saudi Arabian production cuts in recent years have been driven by geological constraints. The Houston-based consultant is convinced that the kingdom can maintain 8-9.5 mb/d for as long as two decades, and that it will also build a cushion of spare capacity. However he also believes global oil production will peak in 2008 because of steep declines elsewhere.

But in another challenge to conventional wisdom, Groppe insists that global peak oil is consistent with an oil price of $65-$85 until around the middle of the next decade – barring geopolitical spasms. That's because around 15 mb/d of oil consumption in the developing world is still used for electricity generation and other non-transport purposes for which there are much cheaper alternatives such as coal. The substitution of such fuel oil is already under way, particularly in China, and will allow oil consumption in the transport sector to keep rising despite the cap on overall production. It was the elimination of this kind of oil use in the US and Europe that led global oil consumption to drop by 8 mb/d between 1980 and 1985.

Stuart Staniford has an "Update on Megaproject Megaproject" up at The Oil Drum. I'm glad the Oil Drum team (particularly Stuart, Khebab and Ace) has kicked this initiative off - I've long been dubious about many oil depletion models because of the incomplete and suspect data they are based on - trying to get as much transparency into the data as possible via open source data gathering will enable peak oil models to be evaluated a lot more seriously. That said, I still don't particularly care when the peak is - the problem (and solutions) are clear enough now, and one thing I've learned over the years is that "admiring the problem" doesn't really get you very far.

The Wikipedia Oil Megaprojects task force (Khebab, Ace, and I) has been busy over the last few weeks. With some assistance from helpful strangers, we have been ploughing through press releases and annual reports, adding projects to the Wikipedia page on Oil Megaprojects. I introduced this project two weeks ago, and today I want to give an interim progress report.

As of now, we've reached about 350 citations used in collating the information. I have mainly been working on the past - the years 2003-2006 - while the years from 2007 onwards have mainly been handled by Ace and Khebab (though there is some crossover both ways). The 2003-2006 projects, of which there are currently 108, depend on about 140 citations. In attempting to assure completeness and quality of the list, I have reviewed the 2003-2006 annual reports, and/or all press releases, for the following companies ...

Jospeh Romm has some interesting futurism up at Gristmill - "What will we look like in 2050? America's climate and energy future".

2010: As the first decade of the 21st century came to a close, the American people turned a historic corner. The growing number of droughts, wildfires, violent storms and other problems persuaded even the deniers that we were experiencing the first dangerous symptoms of global warming. Resource conflicts were growing worldwide as developing and developed nations competed for oil and other finite resources. Now, in wry acknowledgment of the world's deteriorating condition, a song recorded by the Kingston Trio 50 years ago -- "The Merry Minuet" -- has climbed to the top of the charts again. Voters are demanding that the president and Congress chart a new course in which economic and ecological security are recognized as interconnected, and continued reliance on nuclear and fossil fuels are regarded as "threat multipliers" for national security.

2020: America's transition to a clean energy economy is well underway. More than 20 percent of the nation's electricity now is generated from renewable resources. Due to breakthrough technologies and pressure from Washington, the passenger vehicle fleet averages 50 miles per gallon, on the way to a goal of 200 mpg by mid-century. America has reduced its oil consumption by half and no longer imports petroleum from the Persian Gulf. Because conventional coal-fired power plants were banned 10 years ago, urban air quality and public health -- particularly asthma in children -- have improved dramatically. Americans have reduced their per capita carbon emissions by half, and greenhouse-gas emissions nationwide have declined 30 percent from their 2010 level.

Everyone now regards energy efficiency and renewable energy technologies as tools of national security. Photovoltaic panels are as critical as M-16s; plug-in hybrids are as important as Hummers. International defense organizations like NATO have become international climate-action collaborations.

On the international scene, the United States has led the development of a "grand deal" in which wealthy nations no longer subsidize fossil energy projects in developing countries -- a practice that was motivated by not by altruism but by the desire of rich nations to gain access to energy resources in poorer nation (PDF). Today, international loans and trade policies support energy efficiency and diversified, decentralized renewable energy systems to raise quality of life with simple, decentralized renewable technologies that have democratized energy production.

After the ugly deterioration of its international reputation in the first decade of the century, the United States has earned back enormous good will for using its wealth and talent to help the people of all nations attain decent living standards. Foreign aid for clean energy and water projects is far bigger business than weapons sales. The United States has joined an international "race to the bottom" -- i.e., a competition to become virtually carbon-free economies. Terrorist organizations, starved for sanctuary, money and recruits, will not attack the United States, which is regarded as the leading global force for dignity, health and prosperity for the world's poorest people.

Young people are required to give at least two years to some type of national service in the United States or overseas, and they do so enthusiastically. They are helping communities adapt to climate change, teaching in inner-city schools, setting up emergency response systems, helping build clean energy systems in developing communities. In exchange, the federal government, in partnership with private philanthropies, grants graduates of the program funds for college tuition, home ownership, vocational training, or small business creation.

2030: Rural farms and communities are enjoying unprecedented wealth as the nation's primary energy suppliers. America has grown, rather than drilled, its way out of energy insecurity. Farms are growing food, fiber, and fuels; practicing conservation tillage to see carbon offsets by keeping carbon sequestered in the soil; and managing forests for carbon sequestration. Solar and wind farms dot the countryside. Bio-refineries are common in rural communities, providing high-quality jobs that have increased the rural tax base and reversed the out-migration of youth.

...2050: Our cities are composed of compact "urban villages", each a community in its own right with schools, churches, libraries, stores, and other necessary services within a 15-minute walk. Roofs, roads and other paved surfaces are light in color to reduce the "urban heat island" effect. Parks and green spaces are sprinkled throughout the urban villages, further reducing the need for cooling and providing people with places to enjoy natural beauty. Public transit has become so safe, efficient, and appealing that few urban residents own cars. America no longer imports any petroleum and uses virtually no oil.

Links:

* China Daily - Cities told to keep food, oil reserves
* The Oil Drum - Rising Oil Prices Hit Papua New Guinea
* Tom Whipple - Peak Oil Review - December 11th, 2007
* SMH - Prisoners of the coal industry
* Peak Oil Debunked - Electric Trucks. Remember - its polemic.
* Middle Earth Journal - Iraq - Reduced Violence
* Scoop - Pentagon Poised To Resume Open-Air Testing Of Biological Weapons