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michaels

GreatApe wrote: »

More shale resulting in more consumption is mostly wrong or certainly not the primary factor

Co2 per Capita over the decade 2007-2017 from BP energy stats

Germany -6%
USA -20%

USA per capita over the 2007-2017 decade
CO2 -20%
Coal -45%
Oil -10%
NG +10%

If the EU had just 1/2th of the Shale output of the USA it would be enough to displace all gas imports and have plenty left over to have a large rapid switch from coal to NG

The $150 billion more economic activity and the 3 million additional jobs as a result would also mean a richer EU more able to afford to be more green

Shale would be a big net positive for the EU lets hope some EU nations are able to grow shale over the next decade.

So why is the EU still using coal rather than NG if NG is cheaper and greener?

[aside, aren't the figures above skewed by Germany prematurely retiring its nukes?]

GreatApe

Martyn1981 wrote: »

Conventional gas imports, the majority, mostly from Norway is lower CO2 than frack gas, but LNG is higher CO2 than frack gas as it may itself be frackgas, and also consumes a lot of energy being turned into a liquid.

As Nick points out, about 10% of our gas is LNG. We don't have a huge amount of gas storage, so LNG tends to come in when consumption is high and prices rise to meet its higher cost. Greater storage might help to remove the LNG element, or at least reduce it.

In an ideal world we'd remove that top 10%, be it LNG or frackgas, then get on with removing more of the conventional FF gas, as that has far too high CO2 emissions for us to meet medium/long term aims, so it has to go regardless. But in the short term has worked well for us as all gas is better than coal.

So the UK is doing well on leccy emissions, poorly on transport, but that door is opening up nicely now to electrification, and then the tough one - space heating, but as per recent posts, attention is now turning to that too.

Transport or oil if you will, is not yet solved nor are we close

EU vehicle sales are what? 15 million units a year of which only about 0.3 million were True EVs?

Even if EV sales were 10 x higher at 3 million units a year that is only 1% of the 300 million stock of cars in the EU so you would be displacing oil car stocks at just 1% for that year.

There is a very long road for electrification of transport. decades for production of EVs to overtake production of oil cars. And then another 2 decades once EV production is close to 100% to displace the existing stock of oil cars. You are probably looking at 40 years as a best case for EVs to be 90% and perhaps more realistic 50-60 years

A fully electrified transport and heating sector will also require somewhere around 10+ MWh / person so eletricity usage for a nation like the UK is going to have to go from ~330TWh to closer to 700+ TWh and perhaps as high as 1,000 TWh

GreatApe

michaels wrote: »

So why is the EU still using coal rather than NG if NG is cheaper and greener?

[aside, aren't the figures above skewed by Germany prematurely retiring its nukes?]

NG costs about twice as much in Germany/Poland than it does in the USA

Hentry hub prices are only ~1 cent / KWh but in some areas of the USA where pipeline capacity is limited the price is as much as half of that so 0.5 cents/KWh

The result has been a mass switch from coal to NG in many USA states so much so that nationally the per capia coal use is down nearly 50% (even more in some USA states)

The reason why it is not down even more?
Well coal mines and plants are large up front costs and low marginal costs until depletion so the result was coal companies had to write down the value of their assets and cut coal prices as much as they can. So not only is coal production down nearly 50% per capita but revenue is down even more

This would more or less be the result in the EU if we had similar shale output.
NG prices would go down especially in the areas close to the NG production and NG use would displace coal use. New coal mines would be abandoned and existing ones struggle and contract

Is this not more or less what happened with the dash for gas in the UK when uk offshore gas came online to displace a lot of UK coal in the 1990s and early 2000s?

The EU is also well interconnected with its gas grids so say the UK found a lot of economic shale gas and output of uk shale gas was 100BCM/Yr (sounds a ridiculously high amount but that is only 1/8th USA output) the result would indeed be a reduction in natural gas prices for the whole of the EU. They would not go as low as USA prices but they would go down relative to what they otherwise would be. The one big difference though is that the EU market is supplied more by monopoly players like Norway and Russia so they would reduce supply to try and maintain prices while in the USA the shale field is competitive and almost everyone wants to max their own output. But even this is good news why spend $$$ to russia when the $$$ could stay in the uk for uk jobs and wealth

GreatApe

michaels wrote: »

So why is the EU still using coal rather than NG if NG is cheaper and greener?

NG is greener, it is not cheaper in the EU. German NG prices are about twice that of USA NG prices and some areas of the USA NG prices are about half the benchmark prices due to limited pipeline capacity locally. Also if NG prices are reduced the German and polish coal miners have little choice but to reduce their own prices so they are still in business. They will keep doing that until the marginal cost of producing from an existing coal mine and firing it through and existing coal plant is higher than the marginal cost of running NG through an existing NG plant

Locally produced German and polish coal is favored over imported LNG which is the swing supplier. You can not just magic up a new pipeline to Russia and they can not magic up additional production instantly. But shale is 'magic' in that it really does seem to be able to 'magic up' +50BCM of additional production annually while a 50BCM/yr new pipeline within the EU might take a decade of planning and arguments before it is given permission to start building

[aside, aren't the figures above skewed by Germany prematurely retiring its nukes?]

Why would you use the word 'skew' its not like the Germans turned it off for just one year this is a permanent decision and the fossil burn and CO2 are real

Martyn1981

michaels wrote: »

So why is the EU still using coal rather than NG if NG is cheaper and greener?

[aside, aren't the figures above skewed by Germany prematurely retiring its nukes?]

Hiya, not sure gas is cheaper without including externalities, but of course we should include them, and then coal is the worst by miles.

Poland and Germany produce a lot of coal, and co-incidentally, burn a lot ...... hmmm!

Germany has actually made big improvements despite announcing the closure of nuclear plants, but, it has incredibly strong coal areas and unions, and political influence, so they've found ways to justify maintaining coal generation. The result has been increases in leccy export, so many of Germany's neighbours are effectively consuming the coal generation* which makes a mockery of many plans.

*If we assume that the export is excess, and the excess is coal/lignite generation that could, should, would otherwise be closed down.

Digging deep into my memory here, but I recall some news or articles a few years ago that some German lignite generation wanted to close down as they are not profitable, but they need government permission, and that was refused on the basis of energy security, which seemed not to make sense, so may have been pro-coal pressure on the government. Weird world.


I've no idea what will or won't happen in the UK, but several EU countries have banned or blocked fracking, off the top of my head France, Germany and someone else(?), as have Scotland, Ireland and Wales, and the industry has already failed in Spain and Poland.

But importantly RE, in its many forms is more labour intensive*, so we may see some push eventually based on the environmental benefits of reducing all forms of FF gas, and the economic benefits of enlarging the RE industry.


So, as always for me, the issue comes back round to cleaner and lower carbon alternatives to FF gas, and that's a big problem, we use a lot, but hopefully RE & bio-gas can do the job, but they will need national support.

Martyn1981

michaels wrote: »

So why is the EU still using coal rather than NG if NG is cheaper and greener?

BTW, this is an old article, but it was a big milestone, when RE overtook coal generation in the EU.

The EU got less electricity from coal than renewables in 2017

The graphs are quite interesting, and the rising generation from wind (and solar) is pretty impressive in the 2nd graph (3rd image).

Overall, we see coal is down nearly 25% from its 2012 peak, and whilst gas is up 40% from its 2014 low (helping to displace coal and nuclear), its still down 16% from 2010.

silverwhistle

Can't see this mentioned before, Martyn usual gets there first!:-)


https://www.theguardian.com/environment/2019/mar/25/coal-more-expensive-wind-solar-us-energy-study

michaels

GreatApe wrote: »

NG costs about twice as much in Germany/Poland than it does in the USA

Hentry hub prices are only ~1 cent / KWh but in some areas of the USA where pipeline capacity is limited the price is as much as half of that so 0.5 cents/KWh

The result has been a mass switch from coal to NG in many USA states so much so that nationally the per capia coal use is down nearly 50% (even more in some USA states)

The reason why it is not down even more?
Well coal mines and plants are large up front costs and low marginal costs until depletion so the result was coal companies had to write down the value of their assets and cut coal prices as much as they can. So not only is coal production down nearly 50% per capita but revenue is down even more

This would more or less be the result in the EU if we had similar shale output.
NG prices would go down especially in the areas close to the NG production and NG use would displace coal use. New coal mines would be abandoned and existing ones struggle and contract

Is this not more or less what happened with the dash for gas in the UK when uk offshore gas came online to displace a lot of UK coal in the 1990s and early 2000s?

The EU is also well interconnected with its gas grids so say the UK found a lot of economic shale gas and output of uk shale gas was 100BCM/Yr (sounds a ridiculously high amount but that is only 1/8th USA output) the result would indeed be a reduction in natural gas prices for the whole of the EU. They would not go as low as USA prices but they would go down relative to what they otherwise would be. The one big difference though is that the EU market is supplied more by monopoly players like Norway and Russia so they would reduce supply to try and maintain prices while in the USA the shale field is competitive and almost everyone wants to max their own output. But even this is good news why spend $$$ to russia when the $$$ could stay in the uk for uk jobs and wealth

If fracking can produce enough gas to impact prices then it will slow down the switch to renewables.

Martyn1981

silverwhistle wrote: »

Can't see this mentioned before, Martyn usual gets there first!:-)


https://www.theguardian.com/environment/2019/mar/25/coal-more-expensive-wind-solar-us-energy-study

That is incredible news and goes to show the speed of RE cost reductions. Reading comments on different forums from some American posters, they still complain about how RE will push bills up as it costs twice as much as 'normal' generation - these aren't trolls, they are simply ordinary people who just aren't aware of the rate of change this decade, especially since the middle of the decade. One US state recently passed a law to start subsidising coal generation to save the jobs in the generation and extraction industries - which sounds fair, till we consider RE generation is more labour intensive and cheaper for the bill payers. King Canute (I won't risk the correct spelling) springs to mind.

Since we've been talking about gas this week, other US news (I'll have to try to find an old article*) pointed out that whilst current gas generation capacity could compete against RE (at the moment), no new generation capacity would be able to make back the investment in the plant before RE went cheaper, so we may not see much (or any) new capital expenditure in FF gas generation capacity in the US.

* Edit - here you go, not what I was thinking of, but actually far more thorough:

The Doom Of Fossil Fuel Investments

Some extracts, not cherry picking, it's a big article that needs fuller reading:

Natural Gas is Mostly a Side Effect of Oil Drilling

The majority of natural gas is produced as a side-effect of oil drilling. The oil is the high-value product; the natural gas is a byproduct. As oil wells decline and are shut in, natural gas production will drop.

Lower-quality oil wells and oil wells in later stages of decline produce more gas (a higher “gas to oil ratio”), so as oil fields decline, gas production rises.

Drilling for “Dry” Gas is Not Profitable Without Really High Gas Prices

A temporary boom in gas production was caused by hydrofracturing shale. However, where hydrofracking only produced gas (dry gas), it appears to have been completely unprofitable, with the exception of one or two sweet spots (worldwide!).

Hydrofracked wells run out extremely quickly (1 to 5 years), so the gas from these wells will disappear fast.

Where hydrofracking produced oil, it was profitable but produced a huge amount of gas as a side effect, driving the price of gas down. These are very low-quality wells which run out extremely quickly (1 to 5 years) and have very high gas-to-oil ratios.

Estimates have been that almost all locations required $8 or higher gas to be profitable without the oil. Even the most grossly optimistic estimates from the height of the fracking boom suggested that some of the best dry gas wells might be profitable at $2.50. The liquids are where the money is.

Growth in Gas Demand in Recent Years Has Been for Electrical Generation; This Will End

The fracking, combined with the general decline of oil fields increasing the gas-to-oil ratio, has led to a surplus of gas and a very low price. This has meant that natural gas was so cheap that lots and lots of efficient combined cycle gas turbines were built for electrical generation.

However, the cost of new wind and solar is now below the cost of new gas turbines, as explained in the Lazard report cited earlier (new combined cycle gas turbines have LCOE of 4.8 cents/kWh to 7.8 cents/kWh; gas peaking plants have much worse LCOE). And as wind and solar prices keep dropping, it’s also heading below the cost of operating old gas turbines – even at current low gas prices.

This is going to take a few years, but not very many. The record low solar PPA is currently from Dubai at 2.99 cents/kWh. This is approaching the cost of operating an existing combined cycle gas turbine, which Lazard estimates at 2.6 to 2.7 cents per kWh if gas costs $3.44. (The latest Lazard report puts the range for the average gas combined cycle power plant at 4.1 to 7.4 cents per kWh.)

Martyn1981

michaels wrote: »

If fracking can produce enough gas to impact prices then it will slow down the switch to renewables.

Yes, and that's ironically the downside of fracking being successful. Even if we win the bet, we lose!

But, in reality, with national fracking attempts that have already failed, and a growing list of countries banning it, UK production simply couldn't significantly impact the average European gas price, even if (and this is the big question) it can be operated economically.

And then we need to consider carbon taxes. The UK decided to freeze it till 2025, but as we head towards the CO2 ppm cliff edge of potential run away AGW we will (hopefully) see the tax rate increase, which combined with the ever lower costs of RE, and hopefully storage, could be a perfect storm scenario for the FF industries as we get into the next decade.