New Global Natgas Abundance Signals Loosening of Putin and Gazprom's Grip on Europe's Energy Security

Have written before several times (usually in the dead of winter) about Europe putting itself in danger by making energy deals with the devil, usually accompanied by a frighteningly cold picture of a frozen over European city or a sinister picture picture of Vlad Putin.

But now it seems like the tables have turned and we won't be discussing that topic any more. My own awareness of the game changing nature of unconventional natural gas began one year ago with this Daniel Yergin editorial in the Wall Street Journal describing massive new amounts of gas now becoming accessible in the US and elsewhere via new recovery techniques.

There is now so much of this new-found natural gas that it's no longer helpful to call it unconventional. Then came a briefing I was fortunate to attend last month at MIT with BP's chief economist, Christof Rühl. Describing the future of global oil and gas markets, and including projections for renewable energy and nuclear, he said the whopper that's changing everything is the recently realized super-abundance of natural gas ... everywhere.

Here then, is the take-away for Gazprom and its ardent admirers:

Seldom has a giant been hit by so many big blows in one year. First, by repeatedly cutting its deliveries without prior warning, Gazprom has acquired a solid reputation as an unreliable supplier. Second, after the United States has suddenly started mass-producing cheap shale gas and become the biggest gas producer in the world, the European market is flooded with new liquefied natural gas (LNG). Third, there is plenty of shale gas in Europe, and soon production is likely to start there as well. Steadily increased European demand for gas has been replaced by a gas glut, which the International Energy Agency predicts will last for 3-5 years. Fourth, the gas surplus is naturally depressing spot gas prices.

And it gets worse. But I'll leave that to you if you're interested. The full article in European Energy Review can be found here. Depending on where you're reading from, I think you may find it a rather pleasant change of pace.

Lovins addresses New Nuclear Power for DOD (Q&A 1 of 3)

In the energy biz, there's no one quite like Amory B. Lovins. I'll spare you further remarks on him, but suffice it to say, if his name is new to you, then you are but a mere toddler on the path of energy wisdom. We ran a post recently on the potential promise of new nuclear power generation approaches for powering DOD. Here is part of 1 of Amory Lovin's comprehensive three-part response to that post. Wait a second ... reading this article first will help, since Amory uses the term "micropower" as if you know exactly what he's talking about. It'll also give you a better intro to him than I have here.

Question 1 : Mr. Lovins, throughout your career as a thought leader on energy matters you've made it clear that nuclear power generation is a highly sub-optimal way to address our nation's energy challenges. Does the advent of new-design reactors alter your opinion in any way?

ABL: No. As a 40-year student of the empirical evidence on the cost and performance of nuclear power and its competitors, I see no prospect that any known form of nuclear fission (or for that matter, fusion) could become a cost-effective way of making new electricity. Even if the nuclear part of a GW-range power station were free, the other two-thirds of its capital cost would still be grossly uncompetitive with end-use efficiency and micropower (i.e., cogeneration plus renewables other than hydro dams over 10 MWe). The underlying analysis is published in "Nuclear Power: Climate Fix or Folly?" The results are summarized in the expanded version of my recent Foreign Policy paper "On Proliferation, Climate, and Oil: Solving for Pattern".

Despite 100+% subsidies, plus three years (Aug 05–Aug 08) of the most robust capital markets and nuclear politics in history, proposed new U.S. nuclear plants have been unable to raise any equity from the private capital markets—because they have no business case. Instead, the world in 2008 got 17% of its total electricity from micropower (vs. nuclear's 13%) and ~91% of its new electricity from micropower (vs. nuclear's less than 0). Micropower is walloping all central thermal plants in the global marketplace because it has lower levelized costs and lower financial risks, so it can better attract private investment. For example, in 2008, distributed renewables got $100 billion of private capital and added 40 GW of capacity, while nuclear power got and added zero; all renewables, including big hydro, even got more investment than all fossil-fueled generation did.

Of the 55 reactors listed by the IAEA as under construction, 12 have been so listed for over 20 years, 34 have no official startup date, most are late, 40 are in four centrally planned and nontransparent power systems (China, Russia, India, South Korea—China has 17 of the 21 starts in 2008–09), 55 were bought by central planners (nearly always with a draw on the public purse), and none were free-market purchases competed against or compared with their proper range of rivals. Thus new power reactors can be built only where and to the extent taxpayers can be forced to pay for them (as a few states now do—in advance, whatever they cost, whether they ever run or not, no questions asked...thus jettisoning all the bedrock principles of utility regulation, and creating the same moral hazard that just crashed the financial system). For those who reject a socialized electricity system and take market economics seriously, as I do, nuclear power is a nonstarter on economic grounds alone. Both conventional and "new" reactors and fuel cycles also have broadly similar proliferation, vulnerability, and waste issues, differing in many details but not in fundamentals. But those issues need not be addressed if the technology is clearly uncompetitive.

And he's not nearly done yet. Click HERE for Lovins' response to question #2.

New DOD Energy and Climate Report out from Pew

From the smart folks at the Pew Trust's project on National Security, Energy and Climate comes a new report titled: "Reenergizing America's Defense." It's got a bigger thrust on climate than I usually cover on this blog, but a well done piece that covers the intersection of climate and energy challenges and initiatives across the Department.

The report has a lot of helpful and current info, but as you might expect, it's going to lean towards the green side of things, including biofuels promotion. Of course, from an energy security point of view, I'm in favor of the development of every kind of new fuel and energy source we can pursue. But also want to make sure we don't trick ourselves into thinking we're killing many birds with one stone. Sometimes, we're just mitigating one problem but leaving other important ones un-addressed ... and sometimes causing new trouble along the way.

Really like this mind-sharpening summary note from the USAF's Ollie Fritz:

Fuel could be free of cost and free of emissions, and we would still have risks associated with our energy requirement. Reducing our need for energy (of any kind) is the sweet spot - [that] reduces operational risk and reduces emissions. Doesn't mean we shouldn't pursue alternative fuels, but alt fuels alone do not reduce operational risk for deployed operations.

See what I mean? You can download the PDF here and the Pew's Energy and Environment team can be found here.

Marines Expedite Expeditionary Energy Efforts

There's book knowledge and there's what you know by doing. And everyone knows the difference. While the Marines could surround themselves with academic experts and consultants from industry to improve their energy knowledge (and I'm not saying they're not!), their focus is on learning by doing. In the field. Where it counts. And it's all being driven from the top via the hard charging Commandant, General James T. Conway.

As is their mission (and fervent desire) in combat ops, the Marines are first in on expeditionary energy. It's no surprise; we've see it coming here on the blog with write-ups here, here, here, here, here here, and here.

The Marine strategy for transforming its energy management strategy is centered on five themes:

I. Technology is available today, but it is not focused on the Marine expeditionary problem. The Marine strategy must foster a pipeline of commercial solutions

II. Apply technology intelligently; take a systems approach

III. New behavior is key; technology alone won’t solve the problem

IV. Top level leadership and integration into Marine Corps strategy is essential

V. Leverage capabilities, solutions and lessons learned from across the Marine Corps, Navy, and the other Services, as well as the Department of Energy (DOE), CIA

These are all on target of course, but don't forget the reason we're really talking about it now is number IV - leadership. Energy management initiatives began in the field, but until folks like Conway picked up the ball and began running with it, we were still moving in slow motion. Now the crawl's become a walk and is showing signs of becoming a smart sprint very soon. There's a good deal of energy activity elsewhere in DOD, but OSD and the other services should scramble to keep up, learn, adapt and apply these concepts.

Click here for a fuller account from NDU's "Expeditionary Energy Roundtable" by NDU's Energy Security lead, Richard Andres. And for more, read about the USMC Experimental Forward Operating Base (exFOB) here.

Photo Credit: Flickr Creative Commons

Army Thinks Big re: Vehicular Energy Management

Apr 16 Update: remembered LTG Vane presented  great deck at MORS Power & Energy workshop and just found it.  Called "The Operational Energy Challenge; you can download it here.

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This ain't your grandpa's Jeep. A recent article in AviationWeek titled "Watt-Rich Vehicles Will Boost Capability" highlights some clear thinking by an Army energy leader I got to hear speak at a great MORS conference on DOD energy issues late 2009. We're well past more speculation on what might be; LTG Michael Vane and others in uniform and in industry are clearly moving out on tactical energy capabilities. I especially like the objective of using the vehicle's electrical capabilities to lighten the battery burden on the individual soldier as well as reduce the generator-hauling burdens on loggies:

The direction we want to go is twice as much power on a vehicle and half the weight on a soldier, to get us away from having to cart around 6-8 batteries. When it comes to vehicles, there is a critical need to get away from the logistical tail that dragging around extra generators brings to a mission. [Army Capabilities Integration Center] ARCIC wants to build that generating capability into a truck, as opposed to relying on external sources like generators.

Then there's this part re: new tactical energy management systems from BAE. I'd say you have to like the improvements you get with the application of these approaches and technologies:

Critical to the expeditionary nature of combat, as well as the multiple humanitarian and peacekeeping missions the military has been tasked with in recent years, the power-management system also has the ability to produce 30 kw. of export power. This is essential for operations in places like Haiti where, after the recent earthquake, infrastructure was destroyed and millions of people were left without electricity and clean water. By exporting so much power, one vehicle is able to perform tasks such as powering a command center, field hospital or water-purification system—all without having to haul around generators and the fuel needed to run them, which adds time, expense and complexity to the logistics chain.

There's more too. Recommend you read through to the end. Not sure whether present or future energy metrics are playing a role here, or whether it's just good common sense plus innovative engineering getting together to accomplish some big breakthrough things. Either way, this work by the Army (and also the Marines) is one of the best developments of the year so far. Let's watch it. And thanks again, Ollie.

Smaller Nuclear Power Plants may help US Achieve a More Resilient Energy Future

We touched on small nukes for DOD applications in late 2009 (see: here and here). Well, if anything, the pace has quickened. There's lots of talk inside and outside the Pentagon, the Department of Energy, and of course the NRC, on the development of new generations of advanced design reactors as well as the Bill Gates-fueled buzz surrounding their tiny cousins known as mini or "pocket nukes". IMHO, large, capital intensive nuclear power generation isn't going to get us where we need to go. But I like distributed energy gen, and the new, smaller, less expensive reactors could certainly be sited where needed, placing fewer demands on T&D infrastructure. Recently invigorated by a refresher talk last week via the MIT Energy Club on the current and future state of nuclear power in the US, I have the good fortune of introducing this new and comprehensive overview by the US Army’s Paul Roege on the nuclear power topic de jour: mini nukes.

Americans are just beginning to understand our energy vulnerabilities and their potential impacts to the military, especially with the help of people like Congressman Roscoe Bartlett (MD). Could this popular awareness create opportunities – not only to mitigate security concerns, but to rebuild US industrial capabilities and resilience?

The Department of Defense has been working on critical infrastructure protection (CIP) for several years, with a clear need to balance those efforts with the resource demands and necessary focus on operations in Iraq and Afghanistan. Congress is encouraging DOD to step up the pace on domestic CIP; for example Section 335 of the 2010 National Defense Authorization Act calls for a comprehensive assessment of DOD critical infrastructure vulnerability to disrupted power supply, and a mitigation plan.

The best way to ensure resilience of critical functions is through diversity of energy systems and supply sources and resilient designs. DOD has been pursuing diversity through various non-nuclear alternative energy technologies. Although the Army, especially, had experience in nuclear energy during the 1960s and 70s, it abandoned those efforts due to the relative convenience and low cost of fossil fuels. Since then, nuclear energy has been essentially off the table in terms of military energy options. Alternative energy goals explicitly excluded the nuclear option, and any mention of nuclear energy has met with immediate skepticism due to perceived negative public attitudes.

However, with broadening public awareness of grid vulnerability, climate change and now military operational energy challenges, many have proposed a re-look at military nuclear energy. It’s not a simple question; such an effort would require resources and leadership support to proceed. Recognizing this problem, Congressman Jim Marshall (GA) introduced legislation last summer to address this question. His efforts are visible in Section 2845 of NDAA 2010 which requires DOD to conduct a feasibility study of this option, reporting to Congress by 1 June 2010.

The timing could be fortuitous for the country if DOD can catalyze advancements in energy concepts and technologies, given the Department’s (as well as the nation’s) recognized need for secure energy. In the case of nuclear technology, engineers have been working on a new generation of reactors over the past three decades that would provide more affordable, safe and scalable alternatives to the large light water reactor designs that, today, provide the lowest cost source of power to the US grid, but which were built on obsolete assumptions about economies of scale, demand growth and power grid taxonomy.

These “next generation reactors” languished over the three decades lull in nuclear power construction. Now, these advanced concepts could be left behind in the “nuclear renaissance”, as the US energy industry, regulated by the extremely risk adverse Nuclear Regulatory Commission (NRC), scrambles to build dozens of reactors – choosing instead from incremental designs that can be licensed and built quickly to meet new demand and replace aging capacity.

Experts recognize the advantages that small reactors – sometimes called “grid appropriate reactors” - could bring to more resilient energy grid. The Department of Energy has established a small reactor program, and industry groups have held workshops on the topic. Foreign entities have embraced the idea; Toshiba has been marketing their “4S” reactor for a number of years.

While US utilities have mainly pursued fossil fuel generation options, which require less capital investment, the balance of nuclear expertise has shifted overseas. European nuclear generating capacity has been growing quietly and advances in Asia have been dramatic. Korea and China, in particular, have been building new plants, not only at home, but for exports throughout the developing world. US capabilities in nuclear power design, fabrication and construction have dwindled over recent decades, with the remnants of once-powerful US nuclear engineering companies, such as Westinghouse (Toshiba) and GE (Hitachi) being sold to foreign companies.

Venture capitalists are the latest entrant in the energy market. Bill Gates has announced his support for a “traveling wave” reactor concept, which would require much smaller quantities of enriched uranium and could potentially burn natural uranium or even more plentiful thorium. Gates recently spoke on TED video, making a compelling case that we need nuclear energy to address climate change. Google has also hosted discussions on advanced nuclear technologies including thorium and breeder reactors – discussion forums are abuzz with such possibilities.

This is an exciting time for those who recognize the fundamental role of reliable, resilient, affordable energy in social stability and national security. No longer is energy the sole realm of utilities – everyone is getting into the game. Americans have the opportunity to resume their historical leadership role in the energy industry, which was fundamental to helping us achieve our unprecedented level of stability and economic strength.

Scale Image Credit: Hyperion Power