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The president has praised the country’s economic performance in his annual address

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World Oil

(WO) – National Ocean Industries Association (NOIA) President Erik Milito issued a statement on the non-binding pact signed at the conclusion of the two-week-long COP28 climate summit in Dubai:

“The goals set by COP28 underscore the pivotal role of the American offshore industry in achieving the objectives of mitigating climate change while enhancing global living conditions.

“As global energy demand continues to rise, the reality is the necessity for all energy sources to remain into the foreseeable future in order to effectively meet the energy security needs of a growing global society. The U.S. offshore region is uniquely situated to provide the energy sources Americans rely upon for a high quality of life, while also providing a roadmap for addressing emissions.

“The U.S. Gulf of Mexico stands out for consistently demonstrating the ability to produce oil and natural gas with lower greenhouse gas emission intensity than almost all other regions. Encouraging increased production in the Gulf of Mexico is not only in the national interest but also globally advantageous, preventing a shift to higher-emission sources to meet energy demands.

“Moreover, the rapid expansion of the American offshore wind sector and the advancements in offshore carbon sequestration provide potent tools to address global emissions. While the strategic benefits of U.S. offshore wind are widely acknowledged, the Gulf of Mexico presents substantial potential for offshore carbon sequestration.

“As recognized by global authorities, widespread adoption of carbon capture and storage is a key tool for achieving global climate change ambitions. The Gulf of Mexico, with its abundant geological prospects for carbon storage, well-established energy infrastructure, proximity to industrial centers for emissions capture, and a readily available engineering and energy knowledge base, stands as a key player in this effort. This technology has been proven globally but federal policy has delayed the U.S. build-out.

“An American-led energy transition offers vast advantages. It allows significant strides against climate change while ensuring global access to reliable, affordable, and responsible energy production and boosting our national security.”

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Shell agrees to sell stake in two U.S.-based renewable energy projects

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Video Transcription edited for grammar. We disavow any errors unless they make us look better or smarter.

Michael Tanner: [00:00:15] What is going on, everybody? Welcome to another edition of the Daily Energy News Beat Standup here on this gorgeous Thursday, December 14th, 2023. As always, I’m your humble correspondent, Michael Tanner. Coming to you from an undisclosed location here in Dallas, Texas, joined by the executive producer of the show, the purveyor of the show, and the director and publisher of the world’s greatest website, energy news beat, Stuart Turley, my man. How are we doing today? [00:00:38][23.5]

Stuart Turley: [00:00:39] Well, it’s a beautiful day in the neighborhood. And I’ll tell you what, it’s wild out there, man. [00:00:43][3.9]

Michael Tanner: [00:00:43] You’ve got an excellent menu for us lined up. First up, we’re going to cover today on the show, Shell agrees to sell a stake in two U.S. based renewable energy projects. Next up, this is an interesting opinion piece from my. I’m trying to find the article here from reason.com. Yes, Heavy regulation hurts the economy. Just look at France. Probably one of the great cover images of all time. We’ll make sure the YouTube audience gets the i e get that. Another opinion piece is up next from our friends over at the what’s this place? [00:01:16][32.8]

Stuart Turley: [00:01:16] C3 solutions Drew bonds class act. [00:01:21][4.7]

Michael Tanner: [00:01:21] We love them when climate ambitions meet energy realities. He will be on the podcast later next week. So we wanted to tee up a great opinion piece. And then finally, another friend of the show over at BOE report, Terry Etam Bitumen Beyond Combustion How to Triple Oil Sands Value, Reduce emissions and create substantial advanced material industry for 2% or a battery plant subsidies. Very interesting article. We absolutely love Terry over there for BOE reports as do will cover all that. And then finally, missiles from Gucci controlled Yemen target commercial tanker. That was one part of kind of the two part or really three part news that drove oil prices up. Stu’s going to kick it over to me and I will cover that price increase along with the CIA’s massive cut relative to what the AP saw. And then we’ll quickly kind of opine. The Fed did come out and announced today that they’re going to hold rates steady, but they did drop that. They indicate three rate cuts coming in 2020 forces do. And I will go back and forth on what we think that means for the broader economy and then we will let you get out of here, finish up your day, Finish up your week. Will bill will be off Friday. You’ll be able to hear an interview with Congressman who again. [00:02:29][67.2]

Stuart Turley: [00:02:29] Zach Nunn. He is out of District three in Iowa and he is a class act. You know, I’m I’m not too fond of too many politicians. And he’s a class act. [00:02:41][11.4]

Michael Tanner: [00:02:41] Absolutely. We appreciate the congressman for coming on. So you’ll hear that Friday and then you will get all of the weekly recap on Saturday. Before we dive into the show. Guys, as always, the news and analysis you are about to hear is brought to you by world’s greatest website. www.energynewsbeat.com. The best place for all of your energy and oil and gas news. Stu and the team do a tremendous job of keeping that website up to speed with everything you need to know to be the tip of the spear when it comes to the oil and gas and energy business. You can email the show [email protected] you can hit the description below whether you’re on Spotify, Apple, Podcasts, YouTube. If you’re watching us there, hit the description below. Find all the links and timestamps to the articles and pop ahead to all of the different segments. You can hit us up Dashboard.energynewsbeat.com The best place for all your data and energy news combo. We’re really trying to push that as kind of a product. We got some great stuff in Q one lined up for that one, so appreciate the feedback we get on that. I’m out of breath though. Stu. Where do you want to begin? [00:03:38][56.5]

Stuart Turley: [00:03:38] Hey, let’s run off here to Shell. Shell agrees to sell stake in to US based renewable energy projects. My goal, you know, we’re doing that deal. Spotlight I always wonder if combo curve and well database would have anything on a renewable project. [00:03:57][19.0]

Michael Tanner: [00:03:58] Probably not. And B, but we could we you know, it’d be nice. [00:04:02][4.2]

Stuart Turley: [00:04:03] I’m the reason I bring this up in a little silly way is it might be good to go through their financials. So let’s take a look at this deal first. Shell Wind Energy and Salmon Equity, LLC subsidiaries of Shell PLC have agreed to sell a partial ownership stake in two renewable projects to Infrared Capital Partners. They’ll sell 60% in their Brazos wind holdings, 182 megawatt onshore wind farm in Slovenia. Texarkana Live, Louisiana and 50% interest in Madison Fields. Class B member LLC. Madison Fields a one 80 megawatt solar development in Madison County, Ohio. Hmm. Let’s see. Shell retain 100% of the offtake. Oh, I wonder how that. I was wondering how that would handle. Shell will retain 100% of the offtake. [00:05:01][57.9]

Michael Tanner: [00:05:02] Yeah. They got to sneak in there. That shell will be the asset manager of both these fields and projects will benefit from the Inflation Reduction Act tax credits. It just goes to show you we don’t know the financials on this transaction. So it. Goes to show there’s not that there’s something afoot, but there’s clearly some losses in here. The only reason I know of flu Varna is, is is I’ve done some and I’ve done some work for an oil and gas job very close to move on. And there’s some interesting stuff. There is a lot of wind out. There’s I wonder if some of the stuff I’ve driven by is actually those fields. But. But now there’s there’s clearly going to be some losses being hide here or there would have been a really fat dollar sign on this you know, on this agreement. [00:05:41][39.3]

Stuart Turley: [00:05:42] Well, you know, you are such a financial beast that I think that with all of our request for a deal spotlight, this would be kind of interesting. I would love to dig through these numbers somehow. So let’s. Before you raise your hook arm, let’s go over here. I would love to have producer Andy, if you can slide in for our YouTube pictures. This man is he’s one of the most rugged looking dudes I’ve ever seen on the planet. Got some good look in here, got a good dark thing, and he’s holding up a gas nozzle that is of European. And it looks like it’s French on Roma’s Pompei, a shell gas pump. And this. And he’s in a John Belushi toga party outfit in that fun. [00:06:33][50.7]

Michael Tanner: [00:06:34] It is funny. It is funny. [00:06:35][1.1]

Stuart Turley: [00:06:36] So can you imagine going trick or treating, holding that? Think of that thing that looks like a gun to your head. [00:06:41][5.3]

Michael Tanner: [00:06:41] No, don’t dilute us. Brutus just died. [00:06:44][2.7]

Stuart Turley: [00:06:49] Heavy regulations urge the economy. Just look at France and the free markets of Nobel Laureate economist Milton Friedman have failed the country. And Joe Biden declared that Milton Friedman isn’t running the show anymore. No kidding. Our regulations legislation through regulation is absolutely abysmal. Branch regulatory process is also covering many aspects of employment, business operations and environmental protection. That’s what’s killing their nuclear. They’re trying to bring back is there and they just slaughtered it. Look at this. The paragraph we’re under. It says right under. Let’s see how it’s doing. Look at the US. GDP per capita is now 76,003 98. France is 40,009 64. The US unemployment is 3.9, France’s was 7.2. [00:07:47][58.1]

Michael Tanner: [00:07:48] But that’s insane to me. It’s insane to me that the under that the millennial unemployment rate is 17.2%. We think it’s bad here. It you know, we’re at 4 or 5, 6%. We think the numbers are skewed. They’re not pulling any punches. [00:08:01][13.1]

Stuart Turley: [00:08:01] 17.2%. Exactly. And it’s showing an average of 20% in 1983. Why do you think there’s so much social disruption over there? The youth have nowhere to go. They were sitting there and they have no upward mobility. They are definitely not going to lose. They have the open border and then they have the youth not being able to get a job. It is regulatory issues out the wazoo. No wonder that guy looks like that. [00:08:30][28.1]

Michael Tanner: [00:08:31] Yeah, he’s also 15 years old. So that’s the other thing you have to realize. He’s only 15 years old. [00:08:36][5.8]

Stuart Turley: [00:08:37] So I swear that was a tanner funny. And I know you got the hook arm going there. [00:08:44][7.0]

Michael Tanner: [00:08:44] I’m here to get us. [00:08:45][0.5]

Stuart Turley: [00:08:45] What’s next that we got Captain Hook here. Wing climate. If you call me Tinker Bell, I am absolutely going to go nuts when climate bill climate ambitions meet energy realities. Okay. I want to give a shout out to Drew Edmonds. He is absolutely a class act. He’s over there at Three Seas Solutions and he’s over at Comp 28 and he just got back today. We’re going to record next week after he gets some sleep. Anyway, this article says any transition in the world’s energy system will not come from a language hammered out on the 11th hour in Dubai. I agree on Kerry, who was wound up because he thought nothing was going to get happened in the way the oil as the language in the communique says the transition must occur in a just and orderly and equitable manner. After all, may look bad to have sessions at camp on environmentally sustainable yachts while yelling at people at developing in country. It’s okay if their refrigeration is lost for days at a time. [00:09:53][67.7]

Michael Tanner: [00:09:55] Yeah, we don’t need refrigerators. It’s all good. [00:09:57][1.9]

Stuart Turley: [00:09:58] It’s all good. But you know. [00:10:00][1.4]

Michael Tanner: [00:10:00] The guys over at C three Solutions, I love them. They’re one of they’re a policy focused energy website, which I think is a little bit you know, I’m always big on find your niche that you’re good at and you love. They’ve found a good niche. [00:10:12][12.2]

Stuart Turley: [00:10:13] I’ll tell you, I learned so much on my last podcast with Drew. He is a class act and following on, you can find his news articles on C three news mag.com. Cool cool guy and is going to be just an outstanding podcast. So let’s go to the next one as I’m raising my arm up for him. Okay. We both got an arm. All those in favor going to the next show? Okay. So, Bitumen, beyond combustion, how to triple oilsands value, reduce emissions and create advanced material industry for 2% of battery subsidies? This is crazy. First, let me give Terry Itam a shout. Michael, if you’ll scroll down to the bottom of the article and Andy, producer Andy, if you could roll the picture out. Terry sent me a book and he says he signed it. Stu you are the best podcast host in the industry. Grumpy. Terry Eat him. That was so nice of him to sign that book that it was really, really pretty cool, you know, say I was the best podcast host. Notice he didn’t put your name on there. Okay, so let’s go up here to this article. What is some phenomenally large energy material breakthroughs? We’re right in front of us, dude, I don’t care. I’m energy agnostic. I’d love to say let’s do it Beyond combustion. How to triple the let’s see here. We might get more comfortable on nuclear energy. The world seems hell bent on carbon free energy, and the only way that’s going to happen is if we make up a billion is nuclear power. I agree that nuclear has got to happen. Let’s go where he is talking about this. Okay. So coming out of the oil sands, just a real quick update on the oil sands, oil sands, when they get done with that. It is the cleanest land on the planet. So, I mean, Canadians do a great job regulatory issues up there on that. So the barrel bitumen as a whole, the BBC white paper estimates the following benefits If 1 million barrels per day measurement is sold to refineries at $50 per barrel after diluent removal, the revenue is 18 billion per year. If the same volume was used to create BBC products, the potential revenue is 42 billion. The number includes the value is plus the value of the light ends remaining at 14. Unbelievable. If you take a look at how all of this could come back around and. [00:13:03][169.5]

Michael Tanner: [00:13:03] It seems like they’re they’re funding it at just 30 million a year, that’s how much is coming in the Canadian government. They could they could have 40 billion on the table. And instead they’re like, we’re just going to invest 30 million. It’s insane. [00:13:16][12.9]

Stuart Turley: [00:13:16] It is it Terry item. I just want to give you a shout out. Don’t tell him that was my Biden imitation. Again, don’t tell Terry that he’s a good guy. I mean, it doesn’t make sense. Here’s some energy technology that makes sense. Yeah. [00:13:34][17.3]

Michael Tanner: [00:13:34] And it’s a way to sustainably make sure. I mean, if we’re all about ESG folks, this is stuff that can help. So we love Terry bringing that up. Let’s do this last one because this really moved oil. This helped move oil prices today. Oh, you. [00:13:47][12.3]

Stuart Turley: [00:13:47] Bet. Missiles from the hoody controlled Yemen Target commercial tanker says the report. I’ll tell you, there are several choke points. Let’s start with just a couple of them. Everybody knows the Suez Canal in the Gulf of Suez is up at the other end going into the Mediterranean. We have the Red Sea going along. And then Yemen is in the Bab el Mandeb Strait between the booty and Yemen. The Swabi Islands and the Yemen’s permanent island is in the middle of it. That’s where this happened. And it’s a very short strait to go through That is extremely small. [00:14:30][43.4]

Michael Tanner: [00:14:30] Yeah, it really is. That ship was carrying Indian manufactured jet fuel that was most likely headed to Rotterdam, which is in the Netherlands or Sweden by the AMA, the Amador Shipping Corporation. That’s what they said in a statement. And if you want to hear something funny. [00:14:44][14.0]

Stuart Turley: [00:14:45] Yeah, it came out. It came from Mangalore in southern India and had an armed crew on board. That was Russian crude coming from India because that’s there in order for roach athletes. [00:14:59][14.1]

Michael Tanner: [00:14:59] Yeah, luckily nobody was injured in this, according to the shipping company. But still, you know, that’s it’s something that that, you know came out of the Houthi official Muhammad Ali Al howdy warned cargo ships in the Red Sea to avoid. Traveling towards Israel and who promptly respond to any who she attempts or who the attempts to contact them. So, you know what’s funny is prices were only up slightly today off the fact this and another piece of data that we’re coming to. So the geopolitical I think risk that’s out there right now is really never been higher. The problem is, is it really being priced into where the market is right now? I don’t. [00:15:36][36.8]

Stuart Turley: [00:15:36] Know. Well, let me throw that one. You hit on one paragraph that I want to talk about is because as they’re coming out of the Gulf of Aden and they’re going into the Red Sea to where they were attacked, you could go up to the Suez Canal and off to the Mediterranean. How do you how did they call up ahead of time and go, hey, are you going to Israel? Well, yeah, I’m going to the Suez Canal and I’m going to the Mediterranean. Boom. You know, they may not have even been going to Israel and they got attacked. Does that make sense now. [00:16:09][32.3]

Michael Tanner: [00:16:10] Guys? Markets rallied pretty heavy today. S&P 500 up 1.37 percentage points. Nasdaq up 1.2 percentage points, mainly off the back of the Fed deciding to hold interest rates steady through 2023. Also indicating three rate cuts come in in 2024. I had to give you guys an idea. They went ahead and kept the benchmark overnight borrowing rate at at the targeted range between five and a quarter percentage points and five and a half. That’s via the Federal Open Market Committee, which is made up of the board of Fed Governors and some rotating members. What’s interesting is that markets rallied off this, even though we were pricing already in for rate cuts in 2024. So kind of shows you where that sentiment lies. Anything of value is going to help that actually rose The Dow Jones Industrial average more than 400 points, surpassing 37,000 for the first time ever in history. To give you guys an idea, you know, this this you know, the market is sort of widely anticipated, this decision to stay put. We are already at the highest level in 22 years. So nothing, nothing decision there. You know, the famous dot plot of all the individual members expectations indicates for rate cuts in 2025 or another hope of full percentage point. And those reductions in 20 of those three more reductions that they’ve also pegged for 2026 theoretically would take that fence fund Fed funds rate down to 2 to 2 and a quarter percentage point through the final two years of what they’ve anticipated. And it could be even more aggressive, as Jerome Powell said, in an aggressive you know, you know, he’ll you know, the quote really they got everybody was inflation is eased from at highs and has come without significant increase in unemployment. That’s very good news. I don’t know what world Jerome Powell is living in, but I think inflation is still pretty high, even though he did go on to say that prices were still elevated. So he’s fed speaking out of both sides of his mouth. That did drive oil prices up a little bit. We did end up the day about a percent and a half off the lows as we currently sit here. About 530 on the 13th, oil sits at about 69, 95. Hopefully we can roll over to 70 in kind of that overnight trading session. And we also did see the EIA drop a 4.3 million barrel draw from the Strategic Petroleum Reserve. That again, in concert with that tanker off of Yemen getting fired. And they go ahead and braise. Those are the big two sentiment movers, but again, only up about 1%. Again, traders were also elated that Jerome Powell is going to go ahead and hopefully cut rates in 2024. So all leads were where do you see you know, it’s clear Jerome Powell speaking out of both sides of his mouth. It’s what he’s got to do Is the Fed, as the Federal Reserve chair, where do you see what do you see the Fed doing in 2024 QE2? [00:18:54][163.9]

Stuart Turley: [00:18:54] I don’t think the Fed knows what they are going to do. I don’t think they ding. Here’s the thing. I think they they can’t fix inflation. Inflation is beyond repair with their skill set, with their tools. I think that you will see by March them lowering the interest rate to try to help the election. That is my opinion. I think January they’ll hold. I think February you’ll start seeing them down, down turning in order to try to do anything they can to help Biden get reelected. Oh. [00:19:28][34.3]

Michael Tanner: [00:19:30] Nothing. Yeah, no kidding. So, well, we’ll follow that conspiracy all the way to just my opinion. I know. I know. Why show the weakness, too? Why should people be worried about this weekend? Oh, I’ll tell you. [00:19:41][11.4]

Stuart Turley: [00:19:41] It is so great that cop is over with, and I’m d analyzing and interviewing folks and my production staff. And your production stab is absolutely going to be thrilled out of their mind. They’re going to have a little bit of a break before nap next year. [00:19:59][17.7]

Michael Tanner: [00:19:59] Oh yeah, they better they better buckle up for an It’ll be fun guys. Well, we appreciate you guys sticking with us this week. We have our Eye a podcast with what’s this Congress? Adam Nunn. [00:20:09][10.4]

Stuart Turley: [00:20:10] Zach Nunn. [00:20:11][0.5]

Michael Tanner: [00:20:11] Zach Nunn We’ve got. Bless you, Zach. Nine District one out there in Iowa. He’ll be on the podcast Friday. District three or 4 or 5, whatever. Whatever. It’s all good. [00:20:21][9.7]

Stuart Turley: [00:20:21] He’s cool and I salute. [00:20:23][1.5]

Michael Tanner: [00:20:23] He beat me up. I’m sure. [00:20:24][0.9]

Stuart Turley: [00:20:25] He would. [00:20:26][0.1]

Michael Tanner: [00:20:26] You would put me in a corn fed chokehold. [00:20:28][2.2]

Stuart Turley: [00:20:29] Yeah, he’s military. [00:20:30][0.6]

Michael Tanner: [00:20:31] Yeah, he’d be. They’d take me out. The point of the matter is, guys, we’ve got that interview coming on Friday. You’ll hear our weekly recap where we cover our top segments from the week on Saturday, and then we’ll be off Sunday. And we will see you back in your favorite podcast platform via Monday. With that, guys, have a great weekend for Stewart Turley on Michael Tanner and the entire energy news beat team. We’ll see you on Monday, folks. [00:20:31][0.0][1182.2]

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 Firm’s largest ever recall comes after two-year investigation by federal safety regulator focused on autopilot function. 

​  

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Lowers GDP growth projections and PCE inflation projections for 2024.

By Wolf Richter for WOLF STREET.

The FOMC voted unanimously today to keep its five policy rates unchanged, with the top of its policy rates at 5.50%. It was the third meeting in a row when the Fed held its policy rates, after the rate hike at its meeting in July. The decision had been widely telegraphed.

The infamous “dot plot,” where individual members of the FOMC jot down how they see the trajectory of policy rates in the future, indicated three 25-basis-point rate cuts in 2024, ending the year at 4.75% top of range.

Today, the Fed kept its policy rates at:

Federal funds rate target range between 5.25% and 5.5%.
Interest it pays the banks on reserves: 5.4%.
Interest it pays on overnight Reverse Repos (RRPs): 5.3%.
Interest it charges on overnight Repos: 5.5%.
Primary credit rate: 5.5% (what banks pay to borrow at the “Discount Window”).

The statement changed a tad, by adding “any” to the key sentence, thereby toning down the chance of additional rate hikes, but leaving the door cracked open, just in case:

“In determining the extent of any additional policy firming (changed from “extent of additional policy firming”) that may be appropriate to return inflation to 2 percent over time, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.”

QT continues, with the Treasury roll-off capped at $60 billion per month, and the MBS roll-off capped at $35 billion a month.

The “dot plot.” 

Three rate cuts in 2024. In its updated “Summary of Economic Projections” (SEP) today, which includes the “dot plot,” the median projection for the federal funds rate at the end of 2024 was 4.675%, or 4.75% top of range, so three 25-basis-point cuts by year end.

Of the 19 participants, 2 saw no rate cuts; 17 saw one or more rate cuts; 8 saw two or fewer cuts; 6 saw three cuts; and 5 saw four-plus cuts.

These are the projected mid-points of the target range by the end of 2024, compared to today’s mid-point of 5.375%:

2 expect: 5.375% (no cuts)
1 expects: 5.125% (1 cut)
5 expect: 4.875% (2 cuts)
6 expect: 4.625% (3 cuts) = median
4 expect 4.375% (4 cuts)
1 expects 3.875 (6 cut)

The median projection for GDP growth for 2024 dipped to 1.4%.

The median projection for “core PCE” inflation dipped to 2.4% by the end of 2024. The projections see core PCE inflation returning to the Fed’s 2% target in 2026.

QT continues, with the Treasury roll-off capped at $60 billion per month, and the MBS roll-off capped at $35 billion a month, as per plan. The Fed has already shed over $1.2 trillion in assets since it started QT in July 2022, and this will continue on autopilot.

I will cover Powell’s preconference in a little while.  Stay tuned.

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The post Fed Holds Rates at 5.50% Top of Range, Sees Three Rate Cuts in 2024, QT to Continue appeared first on Energy News Beat.

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What if some phenomenally large energy/materials breakthroughs were right here in front of us, vastly more accessible than experimental aspirations, but held back by an image problem?

To help ponder that question, it is necessary to share with you one of the best (meaning funniest), most explosive miscalculations in modern science; the reason for bringing it up is that it’s simply too good not to. But before that, some context.

It seems there are a number of energy paths ahead of us. One, there will be some sort of breakthrough in energy technology that ushers in a whole new way of powering things. But we can’t bank on that, for the same reason people can’t bank on lottery tickets for retirement. We don’t know if the breakthrough will actually happen, and even if one does, we don’t know what it would take to build it out – materials-wise, cost-wise, planning-wise, etc. (Please don’t send me a picture of what some team has working in the lab. Been far too dazzled by those things for decades now, call me when it’s on the market.)

We might get more comfortable societally with nuclear energy; the world seems hellbent on ‘carbon free energy’ and the only way that’s going to happen in a way that meets the needs of 8 billion people is nuclear power. But I get that some people get pretty rattled by nuclear energy, figuratively speaking, which I understand; nuclear fallout is probably not what you want to wake up and see dusting the patio furniture.

Far be it from me to add any negativity to the discussion however; I think nuclear is key to a low-emission future. Which brings me to the story mentioned at the outset.

By the 1950s, researchers had found that nuclear bombs were proficient at leveling cities, but there was much that was not known about them. To help answer questions, the US government launched the ominously goofily named Operation Plumbbob, a series of nuclear tests.

In 1956, a researcher named Dr. Robert Brownlee of the prestigious (before the experiment) Los Alamos National Laboratory in New Mexico was asked to examine whether nuclear explosions could be tested underground, and what would happen to the subterranean earth in such an event. He apparently said sure, why not, or some such.

To find out just what would happen, the researchers dutifully detonated a nuclear bomb named Pascal A 500 feet underground (the military had an odd habit of naming nuclear bombs; why they would want to humanize these things in any way whatsoever I have no clue). In the spirit of modern YouTubers, that attempt was a 1950s equivalent of hillbillies launching a claptrap Jeep across a creek and coming up 50 percent short. In other words, the Los Alamos scientists severely miscalculated. But the miscalculation was not due to insufficient energy, quite the opposite; the force of the blast was some 50,000 times higher than expected. As Dr. Brownlee, apparently a droll master of understatement, put it, “We figured you could keep everything in but for a few per cent by going underground. But Mother Nature can outwit you in a great variety of ways.” Dr. Brownlee described the resulting monstrous jet of fire as “the world’s finest Roman candle.”

They weren’t done there, however. With curious minds still wanting to know, the team stuffed Pascal B down a similar hole to detonate it similarly, but with a “fix” – the team welded a four-inch-thick metal and concrete cap weighing 900 kilograms/2,000 pounds, over the bomb to contain the explosion.

You just know this is gonna be good, right?

Dr. Brownlee suspected the weld wouldn’t hold and that the lid would be blown off, so to document the shenanigans, the team installed a high-speed camera nearby that would capture the action at a thousand frames per second. If the main force of the explosion did go upwards instead of downwards as hoped, all would be documented.

Mother Nature outwitted them again though, in a way. The cement/steel lid did blow off, and the camera did catch it doing so, but only for a fraction of an instant, a single millisecond, in a single frame. In other words, the massive slab was going like a rocket. Actually, far, far faster than a rocket – the scientists calculated the cement slab’s speed at 66 kilometers per second, or 150,000 miles per hour – six times the velocity required to escape earth’s orbit. “I have no idea what happened to that cap,” said Dr. Brownlee. There is a chance that the speed was such that it blasted into space and is sailing off to parts unknown as we speak (recent calculations suggest the lid simply vaporized, which is a pretty neat trick in its own right).

It is unfortunate for us humans with dark senses of humour that Dr. Brownlee’s team was never commissioned to design a ride at Disneyland.

Now, it stands to reason that significant technological developments won’t always have such colourful episodes, unfortunately, but that doesn’t mean they will go smoothly. We may grumble about our supply chains and the emissions thereof and the dominant reliance on hydrocarbons to make it all work, but look at the challenges of trying to ram any new energy system through rapidly. The existing system has been cobbled together over more than a century; people, cities, civilizations and our modern way of life have been wrapped around it. They exist because of it. Changing the fundamental system is not going to happen quickly, no matter what comes along as a new energy source.

If nuclear took off (no pun intended), it would be massively disruptive in its own way, as mining giant Robert Friedland recently pointed out in an interview (“If you have a nuclear reactor you can make hydrogen…Obviously if we were serious about this we’d immediately build two thousand or four thousand or five thousand one-thousand megawatt nuclear reactors. Now, how much metal do we need to weld those containment vessels? The United States has lost the capability to even build a nuclear plant… and so yeah we could build two, five thousand reactors, out of what? How much niobium in that containment vessel, how much vanadium in that specialty steel, how do you weld it, how much steel, concrete, rebar, how much raw materials do you need, how you going to organize it, how you going to mine it… how many nuclear engineers do you have to train to build that shit and to regulate it… do you think that’s actually going to happen?… You say definitely I say maybe… talk is cheap.”

People get excited about nuclear fusion and lithium metal batteries and heaven knows what dreams are going on in green brains, but any of them are going to be massively disruptive and a challenge to integrate, because it is hard to build any infrastructure anywhere, and our countless systems work because of that existing infrastructure. An energy transition is not like a transition from land lines to cell phones; it is more like moving every highway in the world a hundred meters to the east. Some fraction of that task would be easy, but much would be challenging beyond belief.

The world will be much, much better served if we leverage what we have and what we know to the full extent, without demonization, without vilification, in the full, purely scientific sense of curiosity.

Here then is a look at something we all should be excited about, particularly in Canada. The oil sands have been extensively vilified, and children around the world have been taught to loathe this inanimate natural oil deposit (a task made easier by giving a more repulsive name, tar sands – hey, in modern energy warfare, no strategy is too small).

It turns out that the bitumen – the heavy, thick oil component in the oil sands – has many potential uses beyond just burning it. Through decades of producing, processing, and refining it, we know a great deal about the goo. Combining the knowledge of bitumen itself with a view to other uses shows that there is staggering potential in the use of bitumen beyond combustion.

Logically enough then, there is a program called Bitumen Beyond Combustion (BBC), details of which can be found at the Alberta Innovates website. A fascinating white paper located there describes the program in detail. The concept is to divert produced bitumen from its use as a fuel towards using it to generate industrial products. Bitumen can generate a number of high value products including asphalt binder, carbon fibre, and numerous others.

Carbon fibre is my personal favourite, having been a Formula 1 fan for years. In a modern F1 car, as many components as possible are made from carbon fibre, including the basic chassis known as a monocoque, a weird name for what is sort of a tight bathtub that forms a shell around the driver and attaches to the engine. F1 designers call this carbon fibre structure “virtually indestructible”; doubters can check this picture of the wreckage of F1 driver Roman Grosjean’s car; the driver hit a track wall at close to 120 mph, and the carbon fibre tub and halo remained intact. The material is twice as strong as steel and five times lighter. An F1 car’s tub is usually made from 12 layers of carbon fibre mats. The whole thing weighs 35 kilograms, as much as a small goat but offering vastly better protection.

What makes these car parts interesting to all of you guys out there is that these fancy bath tubs cost an estimated US$700,000. It’s great stuff, but hideously expensive, which, for bitumen producers, spells opportunity. The BBC document shows a chart of value added to bitumen; as a combustible fuel the product is worth about $0.30-0.50/kilogram. As carbon fibre, the bitumen is worth $10-20/kilogram, and utilizes only about 20 percent of the barrel.

Those are staggering values to extract from a barrel of bitumen. As a whole, the BBC white paper estimates the following benefits. If one million barrels per day of bitumen is sold to refineries at $50/barrel after diluent removal, the revenue is $18 billion per year. If the same volume was used to create BBC products, the potential revenue is calculated at $42 billion. This number includes the value of BBC products ($28 billion) plus the value of the light ends remaining from the bitumen ($14 billion).

Of interest to the feds, and everyone with their Net Zero 20xx scorecard out, there are enormous emissions savings to be had here as well. For every million barrels of bitumen used for BBC, 480,000 barrels would be diverted to non-combustion BBC products. If used as a fuel that volume would generate 70 million tonnes of emissions per year. Furthermore, a study cited in the white paper estimates that carbon fibre derived from BBC would have a 52 percent lower life cycle GHG emissions intensity than conventionally produced carbon fibre.

Alberta Innovates estimates that total annual revenue from BBC could exceed $100 billion, yes that’s per year, by 2050.

Such great stuff! Imagine if this industry took off here in Alberta, and large quantities of oil sands output went into BBC manufacturing. This program should be a top priority if you ask me.

Oddly enough, it doesn’t seem to be. Certain groups like Alberta Innovates are working very hard on it and committing material sums. But the numbers devoted to BBC seem, relative to government largesse on virtually anything remotely considered ‘renewable’, kind of pathetic. Alberta Innovates notes some $20 million devoted to the program to date (feel free to correct if wrong, I may be missing some sums but not a lot). The federal government seems keen on the idea, having its own web page dedicated to bitumen beyond combustion, and it links to a bona fide research centre in Devon, Alberta, but that research centre’s website shows that most of the researchers are working on something else. All valid projects, it appears, and well worthwhile, but a focus on BBC there does not seem to be.

And that is ridiculous, in the context of the tens of billions being thrown around like confetti in the ‘energy transition’. The Alberta Innovates white paper outlines that it will take $300 million in total government investment over the next 10 years to recognize the full potential of BBC. Recall the prize: global-scale reductions in GHG emissions from utilizing bitumen rather than combustion, potential for $100 billion/year BBC revenues, backed by a 165-billion-barrel bitumen resource.

$300 million over 10 years. $30 million per year. The federal government recently contributed $150 million to the daffy plan to generate hydrogen in Newfoundland and ship it to Germany, and that amount is surely a tiny, tiny fraction of federal largesse that will be sent to the Rock for this plan that no one anywhere thinks makes sense. A CBC article noted how one of the participating companies is investing $160,000 in scholarships (wonder where that money came from) for students in new programs build on this hydrogen-to-Germany scheme (“While none of these wind hydrogen programs have gotten the provincial government’s green light, the College of the North Atlantic has launched two new programs to feed the industry”), though the article includes some appropriate head-scratching: “There are questions about where these students will go once they graduate  – because there won’t be any wind hydrogen programs up and running in the province yet.”

If we as a country can somehow accomplish that, what can/should we do about as huge a prize as BBC, a prize of immense benefit using a lot of existing infrastructure, at relatively low cost, to generate an incredibly valuable product? For $30 million per year? That can’t be much more than the travel budget of a couple dozen of Ottawa’s elite planet savers. To be less facetious, a CBC story pegs Ontario’s planned Stellantis battery plant as receiving $15 billion in subsidies; the entire program cost for BBC is two percent of that total.

Politicians, energy transitionists, Alberta business leaders: I suggest it is imperative you put your shoulder behind BBC, and you should all be kicking in a lot more than $300 million over ten years. Other countries will get there faster if you don’t.

We don’t need crazy new ideas that blow huge manhole covers into outer space, figuratively speaking, but which blow similar sized holes in governmental budgets. We just need to use what we have right in front of us.

Energy conversations should be positive and, most of all, grounded in reality. Life depends on it. Find out more in  “The End of Fossil Fuel Insanity” at Amazon.ca, Indigo.ca, or Amazon.com. Thanks!

Notice, He signed Stu’s Copy

Source: BOE Report

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Energy News Beat

 December 13, 2023

Data source: U.S. Energy Information Administration, Short-Term Energy Outlook, December 2023

In our Short-Term Energy Outlook, we forecast the lowest annual petroleum consumption in Japan in 2024 since at least 1980, in part due to its aging and declining population. Japan’s reduced consumption is already affecting its refining industry.

Japanese refiner ENEOS permanently closed a 120,000-barrel-per-day (b/d) refinery in western Japan in mid-October 2023, and another company, Idemitsu Kosan, plans to close a 120,000-b/d refinery in March 2024. These closures represent 7% of the country’s refinery capacity.

We forecast consumption of petroleum products in Japan will decline by 3% between 2023 and 2024 to 3.3 million b/d. Japan’s petroleum consumption declined by an average 2% per year through 2022 from its peak of 5.7 million b/d in 1996, largely because of demographic and economic changes. The oil intensity of Japan’s economy, measured as barrels of oil consumed per $1,000 of gross domestic product, has been declining.

Japan’s population peaked in 2009, and the country has seen some of the slowest economic growth among OECD countries since then. In addition, the share of Japan’s population aged 65 and older was 30% as of 2022, compared with 21% in the EU, 17% in the United States, and 14% in China, according to the World Bank.

Japan’s refineries were built mainly to serve its domestic fuel needs, and they have trouble competing in international markets. These refineries are smaller and less complex than newer refineries in Asia, including China, South Korea, and India. Complexity refers to a refinery’s secondary processing capacity, such as hydrocracking and coking, which upgrades low-value heavy fuel oil into valuable transportation fuels. More complex refineries can produce more high-value products from the crude oil they process.

Less complex refiners like those in Japan also process lighter and sweeter grades of crude oil, which are more expensive than heavier and more sour grades. Higher yields of lower-value products combined with using more expensive crude oils makes refiners in Japan less profitable and less competitive in world markets. Complex refinery margins in Asia can be 30%–50% higher than simple refinery margins.

In our recent International Energy Outlook, we project Japan’s petroleum consumption will continue to decline beyond 2024, suggesting that refiners in Japan will face additional competitive pressures.

Principal contributor: Jeff Barron

In our Short-Term Energy Outlook, we forecast the lowest annual petroleum consumption in Japan in 2024 since at least 1980, in part due to its aging and declining population. Japan’s reduced consumption is already affecting its refining industry. 

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