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The Forum > Article Comments > The questions we don’t ask: a review of the Australian Energy Resource Assessment > Comments

The questions we don’t ask: a review of the Australian Energy Resource Assessment : Comments

By Cameron Leckie, published 9/3/2010

Energy and oil: we are deluding ourselves into believing that business as usual can continue indefinitely.

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A thoughtful paper, Cameron, deserving of considered response by the authors of AERA.

Thank you for the reference to Gagnon, Hall and Brinker's paper on EROI/net energy. It's intersting that they rely increasingly on average energy intensity, AEI (MJ/$) because full input-output data on value-chain and life-cycle process energy use are not available. I used this methodology in my OLO paper www.onlineopinion.com.au/author.asp?id=5695, which suggests that following the money trail might be the same as following the energy trail. I discussed this issue with Hall a couple of years ago- he rejected AEI methodology then, but seems to have relented.

Unfortunately a lot of this data has been distorted because of the oil price bubble of the mid '00s (remember those $150/barrel days?) and prices of about $75-$80/barrel seem to represent the present market position.

Nonetheless, EROI needs more serious attention by both researchers and policymakers. Even if the price remains stable because of copious tar sands and oil shale, reduced EROI means that there is more CO2 produced per useable MJ of energy. In other words, our end-use energy consumption might decline with new energy efficient consumer technologies while atmospheric CO2 increases as more energy is used in initial energy production.

As I have mentioned elsewhere, this issue is not confined to oil, gas, tar sands and oil shale- nuclear and solar and wind are also subject to EROI implications.

Who is going to do these analyses?
Posted by Jedimaster, Tuesday, 9 March 2010 10:41:30 AM
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We have 42 years left at current rates. Pity that China and india are just about to embark on their own love affairs with the motor car - this will bring that 42 years back by quite a few degrees.
Of course there are those who are pinning their hopes on hydrogen cell technology. But there is a catch - current technology relies on platinum and that too is beginning to run out. Perhaps we can go for all electric cars - but battery techonology is still stitting in the stone age and of course renewables are a possibility but for those you still need to have the eneregy to manufactire them and transport then ot wherever they are needed.
Increasingly we are beginning to look like those Easter Islanders who cheerfully continued to chop down what little remained of their forests until it was all gone.
Posted by BAYGON, Tuesday, 9 March 2010 10:54:59 AM
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Chapter 6 of the Australian Energy Resource Assessment (AERA) is about uranium mining. Its conclusions include:

"• Australia has the world’s largest Reasonably Assured Resources of uranium and identified recoverable thorium resources.
• Currently Australia has three uranium mines operating, with two additional operations scheduled to begin production in 2010.
• Australia’s uranium production is forecast to more than double by 2030."

THE NEXT IS MOST SIGNIFICANT

"• There are currently no plans for Australia to have a domestic nuclear power industry by 2030."

That last conclusion is not automatic. It stems from a current political ideology that is present in Australia but not shared by most countries in the developed world - including (non nuclear weapon owning) Japan, Canada and Sweden. These three countries have established and safe nuclear power industries.

One wonders why Labor Party policy on nuclear as a part energy solution for Australia can be summarised as "don't touch it, never ever"?

Pete
Posted by plantagenet, Tuesday, 9 March 2010 11:29:24 AM
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Australia's growing oil import dependence is a curious omission from the report. Arguably China sees the writing on the wall for global oil supply and has invested in plug-in electric cars. Sinopec and Shell are jointly buying Queensland liquefied coal seam gas assets. China is also building 100 nuclear reactors no doubt to be largely fuelled by Australian uranium. The day must come when we have sold ourselves short. For the premium fuels gas and uranium others will enjoy most of the benefit. In the case of coal it will come back to haunt us in the form of global warming. It may also raise domestic coal prices far more than any ETS.

It would be interesting to see a rewrite of the resource assessment that factors in a nuclear start by 2020. It could also model a scenario whereby natural gas is used heavily in the transport sector, either as compressed gas or gas derived liquids. For gas derived products such as urea it is simply inefficient to export LNG when more of the value added solid fertiliser could be made here. Thus the report should be regarded as a first draft.
Posted by Taswegian, Tuesday, 9 March 2010 12:55:06 PM
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Pete,

You might be interested in Beyond Zero Emissions, who are developing a detailed report on a 100% renewable stationary energy grid by 2020- including costs, materials, potential locations etc that does not rely on nuclear energy or the invention of new technologies.

An executive summary of the report can be found here-

http://www.beyondzeroemissions.org/
Posted by Movingpast, Tuesday, 9 March 2010 1:23:48 PM
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Cameron - the oil debate has moved far beyond any of this stuff. You don't want to believe BP but cite the peak oil people as gospel. In fact a careful examination of the literature reveals a different story. I've put in a few points below.
1) What would have good is a discussion of the recent pre-salt layer oil discoveries, some of which are very substantial. There are quite a few of them.
2) One of the themes of recent years has been OPEC under-investing in oil production. This is the main reason production has levelled off, and prices have generally increased. Nothing really to do with peak oil. Commentators have suggested that the reason OPEC hasn't bothered to invest is that its easier to control the flow of oil that way, rather than try quotas which don't work. So a disproportionate amount of investment has gone into non-OPEC oil, including unconventional and pre-salt layer oil which is far more expensive to get at than OPEC oil.
3) Previous forecasts were that OPEC fields should have stopped pumping a while back, but haven't done so. So how come?
Leave it with you
Posted by Curmudgeon, Tuesday, 9 March 2010 5:25:16 PM
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Thanks Movingpast for the link.

If man made wind power and solar electicity structures can be described as "zero emission" then so can nuclear. Although I see "zero" as a lazy oversimplification.

They each have their place in Australia's post Labor energy future.

Pete
Posted by plantagenet, Wednesday, 10 March 2010 12:44:53 AM
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Curmudgeon,
I agree that the oil debate has moved far past the items mentioned. If there was a peak oil 101 course, all of these concepts would be covered in the first few classes. I guess that is the point, despite this, the AERA does not mention or consider them and I can think of a number of reasons why, none of which paint the Government in a very good light.

1. I assume you are talking about the discoveries off Brazil and some in the Gulf of Mexico. When these are reported in the media, there is much fanfare, but if you look at the raw numbers, compared to the quantities of oil discovered in the 1960s and 1970s, these finds are small fry. The IEA suggests we need four new Saudi Arabia's over the next decade or so to offset depletion/meet rising demand. Iraq might be one of these, but I have seen no forecast that would suggest that Central Asia, Brazil, Angola etc will come anywhere near making up the rest.

2. The IEA has consistently said there has been insufficient investment, not helped by the GFC. However if I was an OPEC nation, who derived the majority of my wealth from oil, I would wan't that oil to last as long as possible so producing it as quickly as possible doesn't make sense. Indeed the King of Saudi Arabia has publicly stated that this is the approach that Saudi Arabia is taking. However there are signs that Ghawar (world's largest oil field) is tiring, such as CO2 injection project and an increased number of wells to maintain production levels. This is a function of depletion not investment.

3. What previous forecasts? By whom
Posted by leckos, Wednesday, 10 March 2010 5:51:16 AM
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Cameron;
I will read the report with interest.
The failure of the report to consider net energy and other factors
may well be deliberate. It would seem to continue a consistent attitude
of government to the subject. The government never denies the overall
problem, but it just never addresses it. If unavoidable it just
changes the subject.
It also seems to be a bipartisan policy.

Curmudgeon;
OPEC is not that solid a group that they can all decide to slow down
investment. It can be seen in their cheating on each other by ramping
their production above quota. To keep some for their camel riding
grandchildren seems a more likely reason.

The real puzzle is the attitude of not just our government but almost
all governments. The UK in particular is in determined denial,
although there seems to be cracks appearing in the UK public service.

The governments have so much invested in political policy that even
the thought of decline in globalisation will strike terror into their hearts.
Yet, the implication of a decline in oil production and rising price
for bunker oil rings the bell of doom for globalisation.

Anyone really interested in this subject I would suggest the book
written by Jeff Rubin "Your World is About to Get a Whole Lot Smaller".
Search on Utbe for some of his talks on the subject. He is a Canadian economist.
Posted by Bazz, Wednesday, 10 March 2010 7:25:58 AM
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Cameron-Bazz
sorry fellas, I didn't make myself clear before.. the peak oil concept died some time back. There is a good rule of thumb to adopt if you want to know when we are passed the peak. When they start seriously exploiting the shale oil deposits in Queensland, then you'll know cheap oil is running out, but that won't mean the end of oil.
At no point have any of the serious peak oil forecasters ever said that oil would run out. They were talking about the end of easy-lift oil.
As for the pre-salt stuff true they are smaller that the mega fields, although collectively they add up to quite a bit, but that is to miss the point. The point is that these fields are being exploited when they are more expensive than the OPEC fields, because the OPEC countries aren't investing in facilities like they should, for the previously mentioned reasons (yes, that is what they have been doing). And because those fields were not forecast. No-one expected them a few years back.
But while the non-OPEC oil industry has been looking deep under water, the OPEC countries have not bothered to look for new fields at all. It seesm they just don't need to.
So the expensive oil is being exploited and the cheap oil isn't.. wierd but there it is. There may well be price shocks to come, because of this disconnect, but not through any peak oil concept. Time to chuck the concept over and take a good look at the oil industry.
The forecast I'm thinking of in particular is Simmons?? Twilight in the Desert. Often cited by Peak oilers.
Posted by Curmudgeon, Wednesday, 10 March 2010 11:03:16 AM
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I dont understand people who are concerned about both peak oil and climate change. Peak Oil will solve climate change.

A few hundred years ago it looked like the increasing use of horses would result in London being covered by 10 metres of horse manure. I think technologies will adapt to post- fossil fuel conditions.
Posted by DigDoug, Wednesday, 10 March 2010 2:08:40 PM
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Ah yes Dig Dog, we will adapt.
The way that science and technology will help is to enable us to breed
up the number of horses we will need quickly enough !

Hirsch said we need 20 years to make an organised transition to a new
energy regime. We would have considerable economic problems with very
high unemployment if we started only 10 years before peak.
If we wait till it happens then we will really be in the manure.

So make sure you have stock of shovels.
Posted by Bazz, Wednesday, 10 March 2010 2:24:49 PM
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Yes Curmudgeon I am aware that peak does not mean we have run out of oil.
There will probably, if we are wise enough, to have oil for plastics and fertilisers for a few hundred years.
That will mean we will have to stop burning it and the quickest way to achieve that will be
to get the price up too high for it to be used in transportation.

Well crude peaked in May 2005 and crude + condensates in June 2008.
I guess we can expect a few little peaks on the plateau.
The GFC was caused by the peaking of the oil price in 2008 when money
was paid out for food and petrol instead of mortgages.

It will be interesting to watch what happens later this year.
Posted by Bazz, Wednesday, 10 March 2010 2:35:49 PM
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@Bazz

You might enjoy this paper on peak oil:

http://j.mp/aBq9ut

p.s: I gave up engaging Curmudgeon some time ago. I guess it isn't a bad idea to post corrections to his fallacies so they are the record, but trying to have a meaningful debate with him is a waste of time.

@DigDoug: Peak Oil will solve climate change.

No, it won't. There is about 500 giga tons of oil left in the ground including shale. (The figures are very approximate. The number of 0's is all that matters.) Turns out that is not enough to appreciably effect the climate. It is the 5000 giga tons of coal that will do the damage.
Posted by rstuart, Thursday, 11 March 2010 10:11:55 AM
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Rstuart is correct in that peak oil will not solve the climate problem.
We have already passed a number of tipping points, but the main one is political and ecomomic.
Too many vested interests want us to ignore the evidence that mitigation would not be a huge economic cost. For every job lost in oil and coal, 2 would be created in renewables. The issue is that instead of investors getting huge returns for their cash, workers would instead get some wages. One thing the Right has been very successful at is fooling people into believing high corporate profits at the expense of wages is a Good Thing.
Investment is required, and currently the only "investment" the Oligarchs are willing to make is in lobbying governments to protect their God given rights to profits from their parents technology. The "Base load myth", which assumes 20th century technology will still be used is alive and well too.
BTW. When nuclear is costed properly it doesn't compete with renewables, not by a long shot! Military "black" budgets are required to get all the expensive stuff so the "cost/benefit" can subsequently appear rational. Given that we don't have a nuclear cycle *anywhere* in the world that has actually costed the waste problem, it is simply not a good idea. (Hopefully China will get "Gen 5" reactors sussed, but we cannot afford to do the R&D). The preoccupation with nuclear is more North Korea style "we are a world power", and hence usually pushed by the power mongers (for whom "sending messages" is more important than thinking straight).
Nuclear can be justified by defence strategy... (big)maybe, but economically, not in any honest way.
Peak oil will arrive when alternatives are cheaper, but the industry will strive to protect itself well beyond that point. This explains the sheer rubbish that the media is reporting in the name of "balance".
Posted by Ozandy, Thursday, 11 March 2010 11:38:44 AM
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Cstuart;
I just read the synopsis and 2014 looks pretty reasonable.
What is sometimes missed is that crude in May 2005 stopped increasing
and five years later is still about the same.
The crude + everything will continue around current levels for a while dragged out by the recession and
when people talk of the peak they are
thinking of the start down of depletion.
The peak looks like being 10 years long.
So the middle of the peak would be 2010. Exactly what Colin Campbell calculated.
Your figure of 5000 Gton of coal is not I think accurate at all.
The info I have here from Richards Heinberg's book Blackout is 963 Gton for the world.
Aus and NZ 79 Gton.
and of course a lot of that is poorer quality coal with a lot lower energy content.
For a long time there was no accurate measure of reserves.
I don't know if lower quality coal produces the same CO2 for BTU rating as anthracite.

I think things will get interesting around the end of this year.
Posted by Bazz, Thursday, 11 March 2010 2:29:11 PM
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@Bazz: Your figure of 5000 Gton of coal is not I think accurate at all. The info I have here from Richards Heinberg's book Blackout is 963 Gton for the world. Aus and NZ 79 Gton.

Well, I did a quick google of "world coal reserves", and guess what? Your 963 figure looks about right. I'll use that from now on.

If Wikipedia is right, that well know bunch of doomsayers, the EIA, is saying world coal production will hit a maximum in 2030. http://en.wikipedia.org/wiki/Peak_coal#World_peak_coal If the EIA is true to form, that would be an optimistic estimate.

And if that is right, you would have to think AGW is a non-issue. Strangely, the ETS might be the right solution for peak coal. Its major effect will be to pushing us towards non-carbon based energy sources. You have buckley's chance of getting if implemented if everybody decides AGW is a non-issue though.
Posted by rstuart, Thursday, 11 March 2010 3:02:25 PM
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Perhaps the simplest and clearest introduction to the idea of peak oil, and indeed peak everything can be found here. http://www.youtube.com/watch?v=F-QA2rkpBSY
Posted by BAYGON, Thursday, 11 March 2010 3:22:42 PM
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There is much research in progress, from the catalysed pyrolytic conversion of solid organic waste to high quality liquid fuel, to numerous investigations of new solar cell and battery technologies, and numerous little tested options like ocean fertilization. Any of these technologies would change things dramatically. If nothing happens in the next ten years there might be cause for concern, but the current rate of scientific progress leaves me little reason not to be optimistic.
Posted by Fester, Thursday, 11 March 2010 10:36:54 PM
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Actually coal gets to be a very complicated calculation.
As the higher BTU rated coals get depleted an increasing tonnage has to
be mined and transported to produce the same amount of electricity.
The increased production costs more and uses greater amounts of diesel
to transport.
So a calculation of peak moves nearer as you move to lower grade coals.
This is the situation in Europe and the USA.
Currently the US is well past peak on the highest grades.
There have been a number of studies on coal and it does seem that
world peak will occur somewhere around 2025 to 2030
Just to stand still greater rate of production will be needed.
This will result in higher electricity costs.
The whole problem will be magnified with the introduction of electric cars.
Perhaps each electric car should be a package with a set of solar
cells with mains connection so a credit can be obtained to enable
recharging overnight.

If we leave it too late to start work on alternative energy systems
we will not have the money or resources to build them.
Those pushing for drastic reductions in emissions now do not realise
that we need the current energy sources to manufacture the alternative
energy production system whatever that may turn out to be.
The scale of the present system is so large that glib statements that
we can use solar and wind are laughable.

If geothermal does not work to scale then nuclear is the only alternative.
Natural gas will give more time, but we will need to husband our
stocks or we will cut our own throats.
Posted by Bazz, Friday, 12 March 2010 7:03:16 AM
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I do not know if anyone has information on this but I have a recollection that about 20 years ago the Swiss developed an electric car that was recharged through the use of solar panels its range was about 300K.
Posted by BAYGON, Friday, 12 March 2010 8:57:55 AM
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Any electric car can be charged from solar cells, but the commuter
arrives home at sunset or after dark, so you need a storage system or
a mains connection so you can pump juice into the mains while the sun
is out, build up a credit and then use that credit to charge over night.
If you meant solar cells mounted on a car, no car can have enough roof
and bonnet space to mount enough cells to drive the car.
You might be referring to the ones used in the Darwin Adelaide run,
well they are hardly a practical car.
Posted by Bazz, Friday, 12 March 2010 2:32:43 PM
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The way boiler technology is advancing, it shouldn't be too long before we have effective, & convenient coal fired steam cars.

We should then be able to go back to steam trains, as well.

Should be fun listening to the greenies spin that lot.

Save a lot of imports of hydrocarbons.
Posted by Hasbeen, Friday, 12 March 2010 3:59:11 PM
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@rstuart
@Bazz

The US Energy Information Agency figure of 930 billion short tons for world coal reserves that you have spoken of is as of 2006. See: http://en.wikipedia.org/wiki/Coal#World_coal_reserves

Since then there has been confirmation of very significant reserves of coal in the Pedirka Basin, a geological province beneath the Simpson Desert in central Australia. Exploratory drilling to the end of 2009 had confirmed the existence of seams at depth having aggregate thickness of 100m, with some individual seams of 30 - 40m thickness. These seams are indicated as extending over some thousands of square kilometres of the basin, and are estimated to contain in the order of several trillions of tons of coal. See: http://www.scandoil.com/moxie-bm2/news/central-petroleum-to-drill-five-coal-seam-gas-well.shtml and http://www.mineweb.com/mineweb/view/mineweb/en/page38?oid=78720&sn=Detail

It is not mentioned within the links I have just posted, but in my surfing around on this subject I recall seeing a figure of 1.8 trillion tons for reserves above 1000m in depth. A comparable, but perhaps not so fully determined, amount of reserves exists below this level.

A trillion is one thousand billion, if I am not mistaken. You thus have a tripling of the 2006 world coal reserves figure when account is taken of just the above-1000-metres-depth Pedirka deposit reserves. A possible quintupling if the reserves at greater depth are included.

Isn't it interesting how little has been said about the Pedirka Basin discoveries, at least here in Australia? Isn't it also interesting how, to all accounts, AGW and the evils of coal has been a topical subject more so in Australia than anywhere else in the world?

In the light of the concerns expressed earlier in the thread as to whether or not proximity to peak coal is of likely relevance to coal's contribution to future AGW, you may be interested in the implications of the form of carbon sequestration outlined in this post made to another thread: http://forum.onlineopinion.com.au/thread.asp?article=10104#163615

The prospect would appear to exist for not only offsetting future CO2 emissions, but of removing anthropogenic ones to date!
Posted by Forrest Gumpp, Friday, 12 March 2010 4:37:18 PM
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@Forrest Gumpp: Isn't it interesting how little has been said about the Pedirka Basin discoveries, at least here in Australia?

We have a _lot_ of coal Forrest. If you look at the green map here: http://peakenergy.blogspot.com/2008/10/coal-seam-gas-producers-new-masters-of.html you will see the coal basins in yellow. The bit in SA, which looks to be the Pedirka, is but a small chunk.

@: A trillion is one thousand billion, if I am not mistaken.

Yep. And that is a good point. We simply don't know where to find more oil. We do know where there is lots of coal. The problem is it being economically viable in getting to it. Eg, China has lots of coal, but it is so expensive to mine they buy it from us and pay to ship it a few mega meters. China's coal reserves are described here: http://gcep.stanford.edu/pdfs/wR5MezrJ2SJ6NfFl5sb5Jg/10_china_pankexi.pdf

In that document China says coal below 1200m simply isn't economically viable. There are numerous problems. It gets too hot for humans. The pressures get so big you can't remove much coal before the roof collapses. If there is water around, it is not unheard of to have to remove 6 units of water for every unit of coal. If the coal is 1000m down, the you have to pump that water 1km up. It costs a lot of energy to do that.

@Forrest Gumpp: the implications of the form of carbon sequestration outlined in this post made to another thread

Am I missing something? The word sequestration doesn't appear anywhere in that thread. That aside, carbon sequestration from coal fired plants looks to be to be as as speculative as any other clean energy at this stage. It is only practical if you get a pure CO2 stream from the plant, which means you have to burn the coal in an entirely different way. See http://en.wikipedia.org/wiki/Integrated_gasification_combined_cycle What the means is you can't bolt it onto existing coal fired power stations. They have to be replaced. A quote from the linked article: "The main problem for IGCC is its extremely high capital cost."
Posted by rstuart, Friday, 12 March 2010 6:12:54 PM
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It will be interesting to see if the deposits mentioned by Forest can
be extracted economically.
Linc Energy has a trial plant in Queensland where they burn the coal
in situ bring the gases up and produce a very clean diesel or aviation
fuel at the surface.
They are now preparing a site in Sth Australia to install a commercial
sized plant.
I think the commercial plant will produce 100,000 barrels a day.
Posted by Bazz, Saturday, 13 March 2010 7:42:40 AM
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Bazz, is Linc Energy actually producing any liquid fuels at the moment? The last I heard was that all they had produced was a small quantity of a waxy type substance, a long way from a viable, commercially viable, synthetic fuel.

Any links/references would be handy.
Posted by leckos, Saturday, 13 March 2010 8:28:59 PM
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No I think they are producing fuel. I am pretty certain I saw a photo
of them filling a ute from the plant.
Not that proves anything, but they could be in big trouble if it was staged.
I would have to check that, but I believed it to be so.
Posted by Bazz, Sunday, 14 March 2010 8:08:41 AM
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@rstuart posted on Friday, 12 March 2010 at 6:12:54 PM:

"Am I missing something? The word sequestration
doesn't appear anywhere in that thread."

You are quite correct, the word doesn't, but my post to the 'Carbon dioxide, mass extinction of species and climate change' comments thread, to which I provided a link, does contain an outline description of one pathway to the sequestration of carbon. That pathway is the conversion of biomass to charcoal, and its subsequent incorporation into the soil, particularly in tropical and sub-tropical regions. Perhaps, because of its low-technology features, it was not recognised for the potentially total solution it offers to what is contended to be the post-industrial-revolution atmospheric carbon dioxide level problem.

Continuing, rstuart says:

"..., carbon sequestration from coal fired plants
looks to be to be as as speculative as any other
clean energy at this stage."

Agreed. The biochar pathway to carbon, as opposed to carbon dioxide, sequestration, is a low technology dispersed and separate activity worth pursuing in its own right for the alleviation of what is spoken of as 'peak soil', an activity that has the happy coincidence of being able to reduce existing atmospheric CO2 levels over time, not just offset additional emissions from the continued burning of fossil fuels necessary to tide the world over while bringing on stream a lower emissions sustainable energy regime.

Those promoting, and those subsidising, the 'bolt on' CO2 sequestration schemes of so-called 'clean energy' should be recognised for the oxygen-thieves that in truth they largely are.

@leckos

Linc Energy's GTL Chinchilla Demonstration Facility is already producing test runs of ultra-clean diesel and jet fuel. That company intends to use its GTL technology to produce 20,000 barrels per day commercially as stage three of its Orroroo project in South Australia. Stages one and two of this project involve operation of a pre-production UCG generator at its lignite deposit, followed by production UCG generators fuelling a 250 Mw gas powered electricity generation plant feeding into the national grid. See: http://www.ecplaza.net/news/0/37207/linc_energy_limited_asxlnc.html
Posted by Forrest Gumpp, Tuesday, 16 March 2010 8:39:32 AM
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It is, on the face of it, a little disturbing to see poster 'leckos' reveal a seeming lack of familiarity with the current status of projects of the like of Linc Energy's Underground Coal Gasification (UCG) and Gas to Liquids (GTL) that demonstrate emergent technologies that it appears will have significant effects with respect to Peak Oil, at least so far as Australian energy security is concerned, given that he wrote the article.

The author, Cameron Leckie (OLO userID 'leckos' in this comments thread), concludes with the paragraph:

"This leaves us in the rather uncomfortable position
of having a plan A, business as usual, which is not viable
and no plan B. How, in a country as advanced as ours,
does this occur? Maybe if we could, as a society,
resolve that question we would be much better off
both now and into the future."

I do not believe, however, that the display of this seeming lack of currency of understanding where potentially major developments are concerned really undermines the credibility of his article. He is, after all, commenting upon the seeming failure of the Australian Energy Resource Assessment (AERA) itself to take into account such developments. To wit his observation:

"Thousands of hours of time and taxpayers money
invested into a product that is incomplete,
misleading and fails to grasp some fairly simple
concepts. This results in an assessment of Australia’s
future oil and liquid fuel situation that is not only
unduly optimistic but also fails to provide the basis
upon which a plan B can be developed for our nation
as we enter the second half of the age of oil."

I can only question as to whether such a claimedly incomplete and misleading publication (the AERA) was not deliberately designed to be so.

The development of UCG technologies, and Pedirka Basin coal, have potentially moved Australia into a position of world significance with respect to ongoing availability of liquid fuels.

Is the idea to cripple investment in these enormous resources until Big Oil can tie it all up? If so, who's in on it?
Posted by Forrest Gumpp, Wednesday, 17 March 2010 8:57:32 AM
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<<< Is the idea to cripple investment in these enormous resources until Big Oil can tie it all up? If so, who's in on it? >>>

Ssssshhhhh... someone might hear you.
Posted by Severin, Wednesday, 17 March 2010 9:23:59 AM
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@Forrest Gumpp: Is the idea to cripple investment in these enormous resources until Big Oil can tie it all up?

Nah, surely not. You are ignoring the downsides, and there are several.

As far as I can tell Underground coal gasification (UCG) is strictly experimental at this stage. If Linc pull it off on a commercial scale, they will be the first. Seeing Australian miners do this sort of thing makes you proud to be an Ozzie, and explains why we dominate world mining companies. Still, it could hardly be called be painted as business or government ignoring a sure fire winner.

Secondly, it is inefficient energy wise. From what I can tell about 1/2 the energy available is wasted compared to burning the coal in a conventional power station. If the coal is below 1000m, that doesn't matter as we could not get at it any other way, so you could hardly say the energy was "lost". But equally, if you are trying to get the most from a finite resource, you would not do it unless there is no other choice. And up till now, we have had a choice.

Thirdly, when hydrocarbons are produced in this way, the CO2 emissions from well to wheel are doubled. If you are worried about AGW this isn't good. Particularly as you have now increased the amount of available coal from the 1000 G ton figure Bazz and I were talking about earlier.
Posted by rstuart, Wednesday, 17 March 2010 7:44:18 PM
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Hello Forrest Gumpp and thank you for your comments.

The view I have formed, like everyone's, is based upon a number of assumptions, and it is a healthy pursuit to regularly review the validity of those assumptions. I am more than happy to change my view if there is a valid reason to do so.

Firstly, I have no investments in the energy sector. Indeed I sold all of my shares and managed funds some years ago after concluding that our economic system was dysfunctional and heading for some long term re-adjustments on the downward side. I believe the next few decades have the potential to be rather nasty if we continue on with BAU. As my young children will live through this, I would rather that we approach this in a manner vastly different to how we currently are, namely denial.

Secondly, I had a good look at Linc Energy's website and the ASX today. From my reading, it does not appear that they have passed the development stage as yet. Hopefully they will, but like so many alternative energy projects, delays or performance less than expected is the norm.

Thirdly, if there 20kbpd plant is successful, that does not solve our liquid fuel problems, although of course it is a help. If we rely upon imports for say 60 or 70% of our liquid fuel demand in 2030, that will equate to 600 - 700 kbpd of imports, which I don't think on current trends will be available. This leaves a large shortfall.

Finally, Big Oil is not so big as it used to be. The National Oil Companies, the Saudi Aramco's and PEMEXs of the world, hold 90% of the worlds oil reserves. The NOCs are big oil these days.

Regards

Cameron Leckie
Posted by leckos, Thursday, 18 March 2010 7:19:32 PM
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Cameron,
From what I have been reading just this morning, they have been
making changes to the process to improve the efficiency and it has
to be adjusted to the make up of the gas that comes up.
They are also together with a UK fuel cell manufacturer going to
install a 50KW fuel cell to use the hydrogen by product.

So all in an interesting exercise.

I too have largely bailed out of everything except energy related
investments.
The underground gassification process has been used in Russia for many
years and Linc bought the Russian company and aquired their technology
and I believe some of their engineers.
I think they still operate the Russian company.
Posted by Bazz, Friday, 19 March 2010 9:30:41 AM
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Central Petroleum's 'The Good Oil', a 2.6 MB PDF file, is downloadable here:
http://www.centralpetroleum.com.au/files/Sep%202009%20Good%20Oil.pdf

Page 24 of the PDF document shows Central Petroleum's outline break-even analysis for both Pedirka Basin coal-to-liquids and gas-to-liquids conversion, if I interpret it correctly. It seems CTL and/or GTL commences to become viable for Central Petroleum at a crude oil price of around US $ 58 per barrel. The current price for crude is around US $ 83 per barrel.

Both Central Petroleum and Linc Energy in their respective projects envisage Fischer-Tropsch conversion of UCG synthesis gas (CO+H2) to liquid hydrocarbons. The catalysed Fischer-Tropsch reaction is exothermic. It is interesting that there seems to have been no mention of any proposal for recovery of this 'waste heat' in conjunction with GTL or CTL operations. On the face of it it appears as if such heat could be used in Organic Rankine Cycle powered electricity generation, or in desalination. Linc Energy, at least, clearly already sees UCG integrated with both CTL and quick response gas turbine driven electricity generation.

Given the linkage between potential Australian self-sufficiency in liquid fuels offered by CTL, and foreseen need to invest in electricity supply infrastructure to cope with increased demand, the AERA focus upon the need for increased imports of liquid fuels is doubly puzzling. Surely the Australian government can see that there is a plan B for liquid fuel security, if not for major export of value-added already refined liquid fuels to what, to all accounts, will be a short-supplied world. A plan B that could crystallise at any time now in terms of crude oil price levels making it viable.

Why is the Australian public being kept in the dark about liquid fuel supply security by its own government?



Other useful links:

Central Petroleum Ltd's home page: http://www.centralpetroleum.com.au/

Central Petroleum Ltd's helium prospects: http://www.abnnewswire.net/press/en/59986/Central_Petroleum_Limited_(ASX:CTP)_Potential_As_Global_Supplier_Of_Helium_Gas

http://www.centralpetroleum.com.au/files/newsroom/20060523%20Can%20GTL%20help%20Australia%20reach%20its%20fuel%20potential.pdf

The Central Petroleum Ltd newsroom: http://www.centralpetroleum.com.au/newsroom.php
Posted by Forrest Gumpp, Saturday, 20 March 2010 4:20:07 PM
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