2011: A bad year for UK energy production

DECC has just released it's latest Energy Trends publication, including statistics for 2011 as a whole, as well as for the fourth quarter of that year. It's not looking good....

Here's some lines form their summary page, and comments from me:

Total energy production was a record 13½ per cent lower than in 2010.

Note the word 'record' in there - and that's from DECC, not from me. It's a bit alarming that over a decade after the UK's peak in oil and gas production, that we're hitting new record percentage declines in energy output. Of course, there are other factors as well as the stuff simply running out, but we have to assume they'll come along every year anyway - like the leak at the Elgin platform right now.

Oil production was 17½ per cent lower than in 2010, the lowest level of production since the 1970s and part of a long downward trend.

Another shockingly steep decline in output...

Natural gas production was 21 per cent lower than in 2010. In 2011 gross imports of natural gas were greater than gross production for the first time since 1967, with Liquefied Natural Gas (LNG) accounting for 47 per cent of gas imports.

Just to underline this, as they don't spell it out very clearly. In 2011 the UK imported more gas than it produced. Half of these imports were LNG, which is traded globally and can easily be diverted to where the price is higher.

Coal production was ½ per cent lower than in 2010. Coal imports were 23 per cent higher.

Nothing new here, continuing the trend of growing imports.

Total primary energy consumption for energy uses fell by 7½ per cent from 2010. When adjusted to take account of weather differences between 2010 and 2011, primary consumption fell by 2 per cent.

We all remember how cold it was in both early and late 2010, so it's not surprising to see a fall in energy consumption in 2011. But after allowing for that, consumption still fell 2%, probably because the economy is still struggling here, and less money means spending less on stuff, including energy.

Low carbon electricity’s share of generation increased from 23 per cent in 2010 to 28½ per cent in 2011, due to higher renewables and nuclear generation. Renewables’ share of generation increased by 2½ percentage points on 2010 to a record 9½ per cent.

The one positive bit I could find in there... It's good to see renewable electricity climbing quickly here, though it's important to note that this includes landfill gas and co-firing with coal. Most of the increase came from wind and hydro though, as it was wetter and windier in 2011 than 2010.

I wonder what 2012 will bring? We already have the Elgin gas leak and RWE and E.On pulling out of new nuclear plants....

Mike

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Risk to UK gas supply in 2012?

There's an interesting article in the Telegraph today, looking at the future of LNG imports to the UK:

Britain has become increasingly dependent on shipments of LNG as domestic production of gas falls "precipitously", the analysts at Merrill Lynch Bank of America said. LNG imports accounted for about 25pc of UK supplies last year.

...

It is not implausible that UK LNG imports fall to zero by the end of 2012 especially if none of Japan's nuclear power plants are re-started this year.... With Asian demand resurging, UK and European gas prices will have to increase to stem the ongoing diversion of LNG cargoes to Asia.

full story

If you look back at an earlier post I wrote, DECC noted that gas supplies actually dropped 20% in 2011, not the 10% reported in the above article. Part of the reason for elevated gas prices last summer, which fed through into all of our bills, was the nuclear shutdowns in Japan (as I mentioned here). A story here, originally in the New York Times, says:

All but two of Japan's 54 commercial reactors have gone offline since the nuclear disaster a year ago, after the earthquake and tsunami, and it is not clear when they can be restarted. With the last operating reactor scheduled to be idled as soon as next month, Japan -- once one of the world's leaders in atomic energy -- will have at least temporarily shut down an industry that once generated a third of its electricity.

So perhaps these concerns about the LNG market, which the UK is depending on more every year, are valid. Thankfully we've just had a mild winter, but we can't count on that happening every year...

Mike

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Rising oil prices during a recession?

So somebody at the Telegraph has noticed that oil prices aren't doing what they should... Of course, back in 2008 it was all playing out as normal - prices reached a peak, most economies in the world went into recession, and the price plummeted back down again.

But look what's happened since 2002:

• 2002 - Jul 2006: run up from $20 to $76 
• Jan 2007: dropped to around $52 
• Jul 2008: up to $147 
• Dec 2008: drop to around $35 
• Apr 2010: up to $85 
• May 2010: drop to $65 
• Dec 2010: Brent and WTI start to diverge (around $85 at the time) 
• Apr 2011: Brent at $125, WTI at $110 
• Oct 2011: Brent at $105, WTI at $77 
• Feb 2012: Brent at $126, WTI at $108 

So right now many countries are back in recession, or close to it, but the price keeps heading upwards.  Also, from the UK point of view, note that $125 today is about £79.60, while $147 in July2008 was about £73.50 - so in £ sterling, the oil price is at a new high now.

Check out the average prices as well:

Year	WTI ($)	Brent ($)
2007 average	72.34	72.44
2008 average	99.67	96.94
2009 average	61.95	61.74
2010 average	79.48	79.61
2011 average	94.87	111.26
2012 average	101.09	114.82

So what the guy in the Telegraph has realised is:

The unpleasant fact we must all face is that the relentless supply crunch - call it `Peak Oil’ if you want, or `Plateau Oil’ - was briefly disguised during the Great Recession and is already back with a vengeance before the West has fully recovered.
...
So we have a remarkable situation. China alone will be adding 125m cars to its roads over the next five years, with auto production targets of 30m annually by 2016. India is spending $1 trillion on infrastructure projects over the next five years.
...
The West has the disquieting experience of watching crude soar even as we languish in stagnation. This never used to happen. If we faltered, energy costs would fall too, acting as a stabilizer. This harsh new reality is going to become uncomfortable when the emerging world enters a new cycle of growth, leaving us behind. Rising utility costs have already raised the numbers of UK households in poverty from a fifth to a quarter.

We should not be defeatist. Engineers and scientists are forever at work. A quantum-leap is possible in solar technology. The Chinese may crack cheap and safe nuclear power from thorium, abdicated by the British. But we should not be complacent either. Windmills anybody?

Read the full story here.

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Record drop in UK energy production in 2011

DECC has just released some preliminary information on UK energy statistics for 2011 (download here). Here's the headlines for you:

• primary energy production fell by a record 14 per cent on a year earlier
• petroleum [crude oil] was down by 17 per cent
• gas production down by 20 per cent
• nuclear output was up 11 per cent, due to increased availability following a number of outages in 2010
• wind output from major power producers was up by 59 per cent on additional capacity and higher wind speeds
• hydro up by 70 per cent following strong rainfall in Northern Scotland
• primary energy consumption was down by 7 per cent, and on a temperature adjusted basis, was down 2 per cent continuing the downward trend of the last five years.

The falling energy use (after temperature adjustment) is not really down to efficiency, though that may play a part, it's down to continuing low economic activity - it's no coincidence the trend's been going on since 2007, when the overhang of debt in the world economy finally started crumbling under the weight of high oil prices. But at least there's some good news on increasing renewable generation from wind and hydro, even if it did only contribute about 9% of electricity in Q3 2011, or about 1.25% of total energy (from here) Actually, the quarterly data for Q3 is more alarming than the year as a whole, so it'll be interesting to see the data for Q4 when it comes out in late March. For example:

• Total energy production was a record 19 per cent lower than in the third quarter of 2010... which resulted in net import dependency of 42 per cent, a record high.
• Oil production fell by 22½ per cent when compared with the third quarter of 2010. This is the largest annual quarterly decrease since quarterly reporting began in 1995, and reflects near record decreases in crude oil production and record decreases in NGL production.
• Natural gas production was 29½ per cent lower than the third quarter of 2010. This is the lowest quarterly production as well as the largest year-on-year quarterly decrease since quarterly reporting began in 1998. Gas imports increased by 33½ per cent, with shipped imports of LNG accounting for nearly half of all imports.
• Coal production in the third quarter of 2011 was 10½ per cent lower than the third quarter of 2010.

Good job we've had a mild winter, or we might have been in a bit of trouble...

Mike

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Has Petroleum Production Peaked, Ending the Era of Easy Oil?

An interesting summary of an article in Nature can be found in Scientific American:

Despite major oil finds off Brazil's coast, new fields in North Dakota and ongoing increases in the conversion of tar sands to oil in Canada, fresh supplies of petroleum are only just enough to offset the production decline from older fields. At best, the world is now living off an oil plateau—roughly 75 million barrels of oil produced each and every day—since at least 2005, according to a new comment published in Nature on January 26.

The article's by David King, who used to be chief scientific advisor to the UK government, and oceanographer James Murray (University of Washington, Seattle).

They point out that oil production from conventional resources (i.e. not the inefficient and polluting tar sands and NGLs) has been flat since 2005, despite wide swings in price. Basically, we now have 'inelastic supply', where the volume of oil that can be pumped is fixed, no matter what happens to the demand and price. Finding new oil reserves won't make any significant difference, because we already have a huge base of declining production - more than half the current production will have gone by 2030. This leaves a huge gap to be filled, so the chances of being able to actually increase production are zero.

They also state what has been obvious to many people:

Of the 11 recessions in the United States since the Second World War, 10, including the most recent, were preceded by a spike in oil prices. It seems clear that it wasn't just the 'credit crunch' that triggered the 2008 recession, but the rarely-talked-about 'oil-price crunch' as well. High energy prices erode family budgets and act as a head wind against economic recovery.

So although the banks and sub-prime lending were clearly a problem, it's the oil shock of 2005-08 that really set the whole thing off, and it's the current persistently high oil prices that are preventing a sustained recovery:

The global economy is severely knocked by oil prices of $100 per barrel or more, creating economic downturn and preventing economic recovery.

They also point out that economic growth requires a growth in energy supply, and say:

We need to decouple economic growth from fossil-fuel dependence... This is not happening due to industrial, infrastructural, political and human behavioral inertia. We are stuck in our ways.

The problem is that economic growth always results in more consumption of resources, both energy and material. Otherwise, what's the point of it? If you can't use your increased wealth to go somewhere, do something or buy something then you may as well not have it. Of course if prices go up, there can be notional 'growth', but because of inflation you're actually getting the same or less than you did before. This applies whether the source of energy is renewable or not.

So we're back to the problem of economic growth itself... time to watch money as Debt again I think...

Mike

UPDATE: the article from nature can be found here: 

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Solar judgement day: Friday 13th

Will Friday 13th be unlucky for the government or for the UK solar industry? Neither, as I'm not superstitious, but one of them's going to be suffering at the end of that day...

The long-running battle over the future of the UK's solar feed-in tariff incentives could finally be resolved on Friday 13 January.

Lawyers acting for Friends of the Earth, one of the organisations leading legal action against the coalition's handling of proposed cuts to solar incentives, have been told the government's appeal hearing against a High Court ruling declaring its proposed changes to the scheme as unlawful has been scheduled for the ominous date.

The hearing will be "rolled-up" so that the application for permission to appeal and – if it is granted – the appeal itself will be held on the same day.

The hearing will be held earlier than had been expected, with sources initially suggesting that the hearing was likely to be held during the week of 16 January.

read the full story

It's going to be very interesting to see what the outcome is...

Mike

UPDATE 27/01/2012
Well, the government got permission to appeal, but then lost the appeal. However, they can still go to the Supreme Court, so it's not over yet...

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Was ist das?

Guest post from Walter

If you cruise on the London Canals you may have noticed or you will notice something rather different looking either moored or cruising along. It’s not a crashed down satellite or not so secret special device tested by the MOD, neither will aliens jump out, so don’t worry you don’t have to abandon ship. What you see is a boat and I can even claim that the work was overseen by one of my big heroes Isambard Kingdom Brunel who’s RIP only a stone throw away. This boat, barge, vessel, flat/house, is a cruising houseboat called Bauhaus. Why Bauhaus? Well, boat will certainly not come to mind when you see it and there are plenty of other reasons why I named it Bauhaus. I like the Band and all design considerations are based on the principle or manifesto of the Bauhaus school. This principle dictates to use basic forms to create objects which are primarily functional, aesthetically pleasing, of high quality yet easily and cost-effectively mass produced. Bauhaus is made to cruise on canals and lakes and to be lived in wherever and whenever you like, add some sizeable rockets and you can start your own space station. Bauhaus could be called a ‘concept boat’ and is often referred to as such, but I don’t like using this terminology. Most people associate this with a concept which is untested or unproven, with lots of money having been spent and often nothing works as intended. Worse it’s something, a project showing what may be possible in the future, but on Bauhaus only well proven materials and well established technologies have been used. The use, setup and the combination of these materials and techniques is unique or indeed a ground-breaking concept. The future is here!

The boat is solar powered using a 1.7kw PV system which provide you in the current setup (London within zone 2) with enough energy to cruise or live pretty much carbon neutral throughout the year. Different to a sailing boat you have a choice to use the energy harnessed for motion/cruising or to eat hot turkey but not both, at least in the UK apart from a few very sunny periods. There is no gas on board and you cook with the energy the PV system generates. In cold winter months you heat with the wood burning ‘1930’s Bauhaus school stove’ or if a wind turbine is added, compensating for little energy the PV system produces in the winter months you will not even need carbon neutral wood to heat.

Bauhaus is a slow cruising houseboat and handles at its cruising speed (5km/h) as well as any other 4 by 15 meters Wide beam or 2.2 by 22 meter Narrow boat even so that Bauhaus looks like a brick. Is Bauhaus too slow or underpowered, too big or too heavy? Obviously this very much depends on how you intend using Bauhaus. Sorry to spell out the obvious but an ocean going oil tanker is a pretty bad choice for white-water-rafting similarly a 20 meter seagoing sailing yacht is a poor choice to sail the British canal system. When I thought of getting a boat built I asked myself how I would use the boat, how much and how fast I wanted to cruise, what cruising range I would need and of course where I would cruise. Consequently Bauhaus matches all my criteria and the lady does exactly what she should do. Paramount, above all were economical and ecological considerations for me, just like buying a car. Some buy an ecological car because they don’t want to waste money and others want to save the world. When you look into buying a new-built canal boat you will swiftly realise that you don’t have that choice. There is a great boat building tradition and in fact a very dynamic boat building industry in Britain providing jobs for thousands but the ecological or economic terminologies have not entered its vocabulary. In company descriptions, magazines or in tests, fuel or energy consumptions is not even mentioned, imagine that for cars - even the most luxurious ones give you that data. And even if the hourly fuel consumption and emissions of engines fitted in boats is stated it will still not tell you anything about fuel consumption at differed cruising speeds. Here the shape of the hull, size of propeller, kind of propeller and use of the boat i.e. canal or open water influences the performance tremendously. Of course the environmental impact of the leisure boating industry is not enormous but still... Even if we leave all environmental considerations out of the equation and just fancy a bit of cruising, is there a case for electric or even solar boating? How often have I waited on locks where everybody has their engine running to enable them to watch TV or I had to listen to somebody's engine at the most picturesque sites because a fellow boater is charging their battery and how often have I cruised along and been fumigated by my own engine. Is there a case for a hybrid? I always thought it’s a shame that Toyota don’t build boats, with their Hybrid they have shown the world that a economical hybrid can be comfortable, even luxurious and fun. Fortunately there is a company in the UK which manufactures an excellent hybrid engine, combine it with a sizeable PV solar system and you have the perfect cruising boat: www.hybridmarine.co.uk . Where do you put the solar panels or rather where do you put enough solar panels to enable you to cruise or live more or less carbon neutral. Now you know why Bauhaus is brick shaped. The boat is build around the solar panels!

What about other issues such as the insulation? Everybody who has been on a boat in the summer months knows how hot it can get. You open all windows and doors creating a draught that lifts your steak off the plate and still one struggles to cool the lady down. Equally in wintertime even if you heat well you got plenty of cold spots and water condensates not only on your windows and more often then not you wake up in the night freezing. Obviously the insulation has to fit the boat and I would not recommend using exactly the Bauhaus insulation (over 30cm thick) on a Narrow boat, but important aspects could be incorporated.

Bauhaus keep its habitants warm in the winter, cool in the summer and provides enough energy to cruise, cook and so on, and provides a very safe environment. With that steelwork you can cruise even under the biggest wind turbines safe in the knowledge that when the gearbox disintegrates and bits start raining down (this does happen...) you will have a better chance of survival then other boaters. Even if things go slightly pear shaped at your local nuclear power plant you will be much less affected than anybody else because the materials and the structure of the insulation shields very well against radiation. And noise, well you will not hear a great deal, WW3 could break out and if you don’t step out you want even notice it. Obviously using such thick steel on a substantial steel structure could well be considered as wasteful and is certainly not very carbon neutral in the production. But where does one start and where does one stop? I did not want to have a boat which I need to re-plate in the next few decades or something made of recycled milk bottles.

Finally, a few more thoughts regarding this project. I am hoping to encourage not just other boaters but the wider public to consider alternatives rather then just "buying off the shelf". We are very fortunate that today, more than ever before, we can choose from a catalogue of options and we have the means to live as individuals as well as a nation in a much more energy efficient and pretty much self sufficient way. We have to use and importantly share all resources available responsibly and economically, thus creating a self-sufficient and fairer society. Solar panels have gone down tremendously in price and some of them are as cheap as chips to produce, obviously we as end-users pay still quite dearly but this should not surprise us. How much does water from the tap cost and how much do we pay for bottled water? Soon energy producing paint can be painted onto anything, cars will probably be painted with such paint topping up the batteries whilst standing or driving around. These developments don’t just happen they need to be encouraged. Whilst we should all aim for perfection we have to remember that nothing is perfect. A small family car 25-30 years ago such as the Fiesta produced more CO2 and other toxic gases than a Bentley today. Car engines today still work on the same principle as over 100 years ago, are much more economical and ecological then only 10 years ago but nobody even dreamt of waiting. Cars with very primitive engines, measured by today’s standards, were mass produced and the improvements happened gradually. There is no magical solution, battery powered boats or cars do not suit everybody, and nobody should have a bad conscience for choosing a conventional engine, or an old smoky diesel. There is no room for finger pointing or criticism. Criticising is of course very easy, and there is also no room for Schadenfreude… we are all sitting in the same boat! The housing crisis is hitting the headlines on an almost daily basis and I can not understand why the UK waterway system is not used to ease that crisis. More boaters actually increases security and safety on the canal system, additionally this kind of lifestyle offers low impact affordable housing for many. In London there is a whole stretch of canal, starting south of the Kensal Green Cemetery to Park Royal which could be turned inexpensively into hundreds single berth residential moorings, turning industrial wasteland into a vibrant boating community. Something like Bauhaus offers additionally carbon neutral living, harnessing what’s given for free.

In Germany over 400,000 people work in the carbon neutral/renewable energy industry and this sector contributes in the last few years between 0.1-0.4% to the GDP. I do not advocate building oversized wind turbines next to housing developments or next to the motorway, it’s only a question of time before unfortunately somebody gets hurt or worse. Whereas we humans have used the wind and sun since the earliest times, the current form of use is pretty new and comes with risks, still none of them are as enormous as the risk of commercial nuclear power production. It is interesting however that even in the unfavourable conditions, in comparison to Germany the UK solar industry has gained tremendous momentum and even the extraordinary slashing of the feed in tariff has done little to stop the evolution.

The secret to self-sufficiency is economical use of resources as an individual as well as a nation.

For further info regarding Bauhaus go to www.bauhausbarge.com

Walter

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