Daily Archives: October 25, 2011

Gas is ‘a Threat, Not a Bridge’ to Renewables

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Natural gas, once seen as a useful bridge between the eras of coal and renewables, poses one of the biggest threats to the wind-energy business, if not the whole future clean-tech revolution, according to experts.

“We’ve talked over the last decade of gas as a bridging technology, but we’re now seeing what I would call the threat of gas,” James Leape, director-general of WWF International, told the European Future Energy Forum in Geneva, Switzerland.

“Maybe gas does have a role as a bridging fuel. But now you have people like the chief executive of Shell [Peter Voser] talking about gas as a destination fuel.

“Frankly, if we build the future economy on shale gas, we will have lost the fight to control ­climate change.”

The US energy sector has been transformed by the ability to tap huge reserves of shale gas economically, employing a controversial technique known as hydraulic fracturing — or fracking — in which subterranean layers of impermeable rock are cracked open using pressurised fluids.

Shale-gas fever has spread to Europe, with drilling companies claiming that Poland, Romania, the UK and other countries have large, accessible deposits.

While many observers — including the Obama administration and the International Energy Agency (IEA) — believe the shale-gas boom will have useful medium-term environmental consequences compared to the high carbon emissions of coal, others believe it is more harmful once its extraction methods are taken into account.

Fracking has been banned in France, Switzerland and several US states. The intense water demands imposed by the technique are also a concern.

Markus Wråke, head of the IEA’s Energy Technologies Perspective group, says the shale-gas boom — rather than the explosion of renewables — has proved the most disruptive change to the energy industry in recent years.

“In some settings, gas is an enormous improvement over coal,” he says. “The question is: when does gas go from being part of the solution to part of the problem?

“We could see significant synergies with other fuels we believe are important over the longer term, like biogas and hydrogen. But the fact remains that if we have really low gas prices, it could threaten the development of some of the clean technologies that we need.”

Anders Eldrup, chief executive of Danish utility Dong, describes the future of shale gas in Europe as “still very much a question mark”.

But far from being an enemy of renewables, natural gas is “not only a companion, but a very necessary one”, he tells Recharge.

“The beauty of gas as a complement to fluctuating renewables is it’s so fast: you press a button and the gas-fired power station starts up. It’s much more flexible in that respect than coal, and it’s not as polluting,” Eldrup adds.

“From our perspective, wind, biomass and gas form the basis of our future energy mix — you can’t do without any of them.”

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Hess to spend $2.3 billion to develop Gulf of Mexico oil field

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Hess Corp., the New York-based oil company, will develop its Tubular Bells deep-water field in the Gulf of Mexico at an estimated cost of $2.3 billion.

Production is expected to begin in 2014 and may peak at the equivalent of 45,000 barrels of oil a day, Hess said in a statement today. Subject to U.S. approval, Hess said it will own 57 percent of the field, with Chevron Corp. holding the remainder. BP Plc no longer owns a stake in the project.

Tubular Bells holds an estimated 120 million barrels of oil, Hess said. Plans call for three wells in the field, which lies as much as 4,600 feet (1,400 meters) below the surface about 135 miles southeast of New Orleans, the company said.

The field will be predominantly oil with “good, attractive returns, even though the costs per well have gone up a little bit with the new government regulations,” John Hess, chairman and chief executive officer of the company, said in a Sept. 8 speech.

The U.S. government imposed new drilling rules after a BP well in the Gulf last year had the biggest offshore oil spill in the nation’s history.

Hess fell 2 percent to $59.81 at 11:21 a.m. in New York. The shares have declined 22 percent this year.?

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USA: Environmental Groups Challenge EPA’s Permits for Shell’s Drillships

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On October 21, the U.S. Environmental Protection Agency issued an air pollution permit for the Kulluk drill ship that Shell Offshore Inc. plans to use in offshore oil drilling efforts that could begin as early as next summer.

Yesterday, on behalf of the Native Village of Point Hope, Resisting Environmental Destruction of Indigenous Lands (“REDOIL”), Alaska Wilderness League, Center for Biological Diversity, Natural Resources Defense Council (“NRDC”), Northern Alaska Environmental Center, Ocean Conservancy, Oceana, Pacific Environment, Sierra Club, and The Wilderness Society, Earthjustice filed an appeal with the EPA’s Environmental Appeals Board challenging a similar EPA permit for the Discoverer drill ship that the agency approved last month.

The following statement is from Earthjustice attorney Colin O’Brien:

“The EPA essentially is green-lighting dangerous Arctic Ocean oil drilling by approving the air permit for the Kulluk drill ship. Shell Oil​ has proposed a massive drilling operation in one of the most remote places on the planet. Each year, this fleet of ships could emit 30 tons of particulate matter, 240 tons of nitrogen oxides and 80,000 tons of carbon dioxide. Not only is oil drilling risky, these ships would double the amount of global warming pollution produced by roughly all of the North Slope Borough households.

“This permit for the Kulluk marks the beginning of a wave of potential offshore industrial activity in the Arctic. Unfortunately, on the eve of a potentially massive influx of oil company development, the EPA has turned a blind eye to the cumulative impacts that would be harmful to the health of Alaska Natives and the environment for years to come.

“The EPA unfortunately has already approved another drill ship permit, for the Discoverer. That permit ignored the impacts these drill ships will have on air quality in the region and we filed an appeal today with the EPA’s Environmental Appeals Board challenging the Discoverer permit.

“Arctic Ocean oil drilling is simply a bad idea. In an area with 20-foot sea swells, walls of ice 6 feet thick, and complete darkness two months out of every year, the thought of cleaning up an oil spill is ludicrous. The EPA’s decisions on these air permits moves us closer to the inevitable disaster that would be a large oil spill in the Arctic Ocean.”

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Feds approve Murphy drilling project using Helix emergency equipment

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Cameron Wallace, left, and Eric Poller, a subsea engineer for Helix Well Ops, look at a new oil spill-containment system developed by Houston’s Helix Energy Solutions. (Michael Paulsen/Houston Chronicle)

by Jennifer A. Dlouhy

Federal regulators on Monday issued a permit to the first offshore drilling operation planning to rely on a Houston company’s cap-and-flow containment system in case of a disaster.

The Bureau of Safety and Environmental Enforcement gave the permit to Murphy Exploration & Production Co., allowing the firm to drill a sidetrack well at its Thunder Hawk field about 150 miles southeast of New Orleans.

Other companies have successfully submitted oil spill response plans that would rely on the capping stack developed by Helix Well Containment Group or a separate system devised by the Marine Well Containment Co. But Murphy is the first firm to win regulators’ sign off for an emergency response plan involving Helix’s full flowback system.

The cap-and-flow system caps the well and contains any additional flowing oil in case it is out of control. The entire system involves a capping stack installed on the well head and a flowback system designed to direct the crude to vessels floating overhead.

Although some wells require only the containment system, the cap-and-flow equipment is geared toward operations with higher pressure. Regulators say the cap-and-flow program can help maintain the integrity of an underwater well in cases where the capping stack alone might not do the trick.

The Helix cap-and-flow system is capable of sending 55,000 barrels of oil and 95 million cubic feet of gas per day to the floating ships.

Separately, Helix is asking the Obama administration for a license to provide its containment equipment in case of a spill from offshore drilling in Cuban waters. The Spanish company Repsol is set to begin drilling a deep-water exploratory well north of the island nation — just 50 miles from south Florida — in December or January.

Helix spokesman Cameron Wallace said the ultimate scope of services that would be offered is still under consideration “and no firm commitments have yet been made.”

The U.S. trade embargo against Cuba generally bars U.S. companies from exporting equipment and services to it, but American firms can get special approval from the Treasury Department.

“We believe that it is important to make proven solutions, similar to our Helix Fast Response System, available for any drilling project that could potentially impact the nation’s coastlines,” Wallace said. “Helix’s goal is to make some of these spill containment technologies available while fully complying with federal trade regulations.”

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US Embargo Hampers Cuba’s Quest for Offshore Oil

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Cuba is blaming the 49-year-old U.S. economic embargo for delaying the start of oil exploration efforts in the Communist-ruled island’s territorial waters.  An article published Monday in the official weekly Trabajadores refers to “countless” cases over the past two decades in which the United States obstructed Cuba’s quest for a domestic oil industry.

The embargo makes it harder and more expensive for Cuba to obtain needed equipment, the magazine said, while also accusing Washington of pressuring and “blackmailing” foreign energy companies interested in doing business on the island.

Cuba needs the latest technology for deepwater exploration in the Gulf of Mexico, but, because of the embargo, cannot use any equipment that has more than 10 percent U.S. content.

Finding gear that meets both of those requirements is difficult “in a world where the transnationals of that country (the United States) have wide predominance,” Trabajadores said.

An offshore platform commissioned by Spanish oil major Repsol-YPF from companies in China and Singapore is expected to arrive in Cuba at year’s end to begin drilling in the island’s Exclusive Economic Zone of the southeastern Gulf of Mexico.

The zone, which is estimated to hold up to 9 billion barrels of petroleum, covers some 112,000 sq. kilometers (43,240 sq. miles) and is divided into 59 blocks of 2,000 sq. kilometers (772 sq. miles) each.

Repsol is one of several foreign oil companies, including Venezuelan state-owned giant PDVSA, Norway’s Statoil-Hyrdo and PetroVietnam, that have obtained concessions to drill in the zone.

A group of 34 Democratic and Republican lawmakers in Washington recently sent a letter to Repsol Chairman Antonio Brufau warning that the company could face legal action in the United States if it does not abandon its offshore drilling plans.

Repsol-YPF responded by saying that its activities would strictly comply with U.S. laws governing the Cuban embargo.

The article in Trabajadores also criticized Washington for its refusal to engage in “constructive conversations” with Havana on the safety aspects of offshore oil projects.

William Reilly, a former head of the Environmental Protection Agency who co-headed an investigative commission that probed the April 2010 BP oil spill in the Gulf of Mexico, last month led a delegation of U.S. oil and environmental experts to Cuba to advise on how to avoid accidents during deepwater drilling.

Source: Latin American Herald Tribune

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