The Oil Drum: Europe

The ABC recently had a report on plans to power north-west Queensland with low temperature geothermal power using hot water from the Great Artesian Basin.

A Brisbane-based company says it could supply geothermal power to all of north-west Queensland. Clean Energy Australasia wants to build a $50 million geothermal power station near Longreach. But it has now also revealed plans to build a pilot geothermal project near BHP's Cannington mine at McKinlay, south of Cloncurry. The company's Joe Reichman says the Mount Isa region needs about 500 megawatts of power a year and geothermal resources could easily provide that. "It'll change the region into a powerhouse," he said. Mr Reichman says the company has applied for federal and state government grants and has support from the major mining companies in the region. If the projects proceed they would be the first geothermal power plants in Australia.

Low temperature geothermal power is a relatively new (and very low profile) form of extracting energy from geothermal sources that provides yet another option for meeting our energy needs cleanly and sustainably.

Based on recent posts like "Will the UK Face a Natural Gas Shortage this Winter?" and "ASPO comments regarding Spain", it looks like Europe will be looking for additional sources of LNG supplies in the next few years. The question is whether there will be sufficient supply available.

One source of supply that may not have been considered is LNG from Australia. Australia has begun developing its unconventional natural gas production, and may in fact be able to ramp up its exports in the next few years — if not to Europe, to other countries in need, freeing up LNG exports from elsewhere for Europe.

There had been persistent concerns that the east coast of Australia would suffer a shortfall of gas supplies as the Cooper Basin and Bass Strait natural gas fields declined, with the possibility of constructing a pipeline from Papua New Guinea to meet demand being considered. These fears have subsided in recent years as large quantities of coal seam gas (CSG) have been discovered. The new gas production has not only proved sufficient to offset declines elsewhere, but quantities are large enough to result in a rush to export surplus gas in the form of LNG.

In recent months we've seen a surge in the stock market valuations of coal seam gas producers, triggered by a bid by BG for Origin Energy - one of the major players in the sector - a few months ago. The bid eventually failed, with Origin instead choosing to partner with Conoco Phillips in a CSG to LNG development, with Conoco paying $US9.6 billion ($12 billion) for a half-share of Origin Energy's CSG assets.

BG's interest was triggered by a desire to locate new sources of gas for their LNG export markets, particularly in Singapore - and they are just one of a number of players interested in turning Australian CSG into LNG and exporting it to markets in Asia and elsewhere.

In this post I'll look at recent events in the industry and what they mean for Australian gas production in future.

The ABC has a report today noting that Wilson "Ironbar" Tuckey is still promoting his vision of large scale tidal power generation in the Kimberly region in Western Australia.

The Federal Government expected to release their white paper on Australia's future energy needs next year and the use of tidal power in the Kimberley is expected to be one of the options under consideration.

There are renewed calls for the development of renewable energy in the Kimberley, with the federal Member for O'Connor spruiking the merits of tidal power. Wilson Tuckey wants the Commonwealth to spend $10 billion establishing the necessary infrastructure for a tidal power industry in the region.

Mr Tuckey says tidal energy could provide 10 times the country's current electrical capacity without producing any carbon emissions. He says the Commonwealth should fund start up infrastructure before commercial interests jump on board like the State Government did with the North West Shelf. "This will be the same. If the Australian Government puts in the original tidal generating capacity and the interconnecting transmission lines, which is probably the most important, the Kimberley will then see a rash of people charging in to produce that same electricity from other localities," he said.

Project Better Place founder Shai Agassi was in town last week announcing that Australia will become the third country, following Denmark and Israel, to implement the group's vision of electric vehicles powered by renewable energy.

Better Place and Macquarie Capital Group will raise $1 billion to build a network of 250,000 charging stations and battery exchange stations in key locations along the east coast by 2012. The network will be powered by wind turbines owned by AGL Energy.

Agassi has been promoting the plan as a way to reduce our dependence on oil (the starting premise for the project was "how do you run an entire country without oil") while creating jobs and boosting the local economy (see this interview on the Today Show for his explanation). Operating in Australia will also help the group prove it can work in large countries as well as the much smaller geographical areas covered in the first 2 rollouts. Agassi also noted that the Federal Government's $500 million Green Car Innovation Fund played a part in encouraging them to set up in Australia.

This is the executive summary of a briefing paper by Stewart Smith, published by the Research Service of the Library of the Parliament of NSW. The full paper can be found here (pdf).

The transport sector consumes 41 percent of final energy consumption in Australia, with the demand for transport energy growing at about 2.4 percent per year. Road vehicles moving passengers and freight account for 75 percent of transport fuel use. The Australian and international economy are deeply reliant on the supply of abundant petroleum resources at reasonable prices. However, significant challenges are confronting the petroleum and transport industry, both domestically and internationally. The first of these is tight supplies of crude oil, coupled with a growing market base of emerging economies. The second is the necessity to reduce greenhouse gas emissions to prevent dangerous climate change. This paper focuses on the former issue, and explores the factors contributing to the price of petrol in Australia.

The proven world oil reserves at the end of 2007 were 1,237.9 thousand million barrels, enough to supply the world at 2007 levels of consumption for 41.6 years. World distribution of proven oil reserves is heavily weighted to the Middle East (61%). The Asia Pacific region has the least, with just 3.3% of total proven reserves. At the end of 2007, Australia had proven reserves of 4.2 thousand million barrels of oil, which at present rates of production would last 20.3 years.

In my recent post on coal seam gas (CSG) I noted that BG's bid for Origin Energy was the event that kick-started the boom in interest in Australian CSG producers.

BG's bid for Origin eventually failed (with ConocoPhilips instead buying a share of Origin's CSG assets), but they have now returned to the fray - this time with a $5 billion bid for QGC (Queensland Gas Company).

BG already owns 9 per cent of QGC (and 20 per cent of QGC's CSG reserves) and is keen to secure supplies for planned LNG export plant at Gladstone.

Sydney Lord Mayor Clover Moore recently addressed the NSW State Parliament on the subject of peak oil (via Energy Bulletin).

Tonight I speak about a serious concern of my constituents about the consequences of peak oil, which will have grave local and global impacts. The term "peak oil" refers to the stage when global oil production peaks and future oil production begins to decline. With the global demand for oil increasing rapidly, production declines are predicted to result in severe petrol price increases as buyers compete for supplies. Given the dependence on oil, including for energy, food, travel and consumer products, disastrous impacts on the global economy are expected. While some say peak oil has already hit and others say it will occur in 2030, it is essential that we prepare. New South Wales and Sydney's over-reliance on petrol makes us extremely vulnerable to impacts, and we must protect current and future generations. Given the consequences of peak oil and the serious threat of global warming leading to climate change, governments have a responsibility to urgently reduce our dependence on fossil fuels.

This is a guest post from Garry Glazebrook of UTS (the University of Technology, Sydney).

After listening to Al Gore, Nicholas Stern, Ross Garnaut and Tim Flannery, it is now obvious to most thinking people that we have to address climate change, and soon. It is becoming equally clear that the fall in oil prices over the last few months is only a temporary respite, brought on by a faltering world economy, and that oil prices will likely surge again as soon as the economy recovers. The implication is a need for massive investment in renewable energy, energy efficiency and sustainable transport. But how to fund such investment without sacrificing our economy, jobs or lifestyles?

This is a guest post from Neil Howes. Neil is an Associate Professor at the University of Sydney. The post describes a response to the “Carbon Pollution Reduction Green Paper” (27 August 2008).

Executive Summary

We are proposing that the Government of Australia facilitates the replacement of 50% of Australia’s base-load coal fired electricity generation by financing the building of a high capacity National Electricity Grid (NEG) by 2020. This will interconnect high value renewable energy sites for wind, solar and geothermal energy to enhanced hydro electricity pumped storage capacity enabling these low CO2e energy sources to provide base-load power to major retail and industry consumers.

The objective of the plan is to :

(1) Link the East Coast and Tasmanian electricity grids (known as the NEM - National Electricity Market) to the Western Australian electricity grid via a 1500Km high voltage DC (HVDC) connection between Norseman, WA and Pt August SA,

(2) Build a new 1000 Km HVDC connection between Leigh Creek SA and Roma, QLD to link the SA and QLG regions within the NEM, in order to access solar and geothermal sites in WA, SA, VIC,NSW and QLD.

This would also require;

(3) A high voltage AC (HVAC) extension and upgrade of the WA grid north of Norseman, via Kalgoorlie, to the proposed Pilbara local grid to access stranded natural gas (NG) power in WA mining communities and solar thermal sites in the NW of WA

(4) A HVAC interconnection from Norseman to Esperance and Albany wind power sites with increased capacity HVAC connections along the SW coast of WA t4 Perth. This infrastructure project will assist the development of all renewable energy resources, starting with developing wind resources along the SW coast of WA, West Coast of Tasmania, and coastal and highland wind sites in SA, VIC, NSW and QLD with an installed capacity of 28GW by 2020.

Sorry about the lack of the weekend Bullroarer but I've been offline all weekend.

I will point to this story in "The Diplomat" though - Fighting On Empty - which looks at the Australian Defence Force's response to peak oil (one which has a very low profile).

The Australian Defence Force consumes annually 125 million litres of diesel and 200 million litres of aviation fuel, according to government statistics. The strategy and capabilities of the ADF are dependent on oil and they are exposed to the same price fluctuations that are wreaking havoc on business and household budgets. Considering the extensive lead time and lifespan for Defence capability acquisitions and the poor projections for oil, it is little surprise that there is a growing chorus of concern coming from within Defence ranks.

A number of serving officers and senior public servants have formed the independent Defence and Security Working Group under the umbrella of the Australian chapter of the Association for the Study of Peak Oil and Gas (ASPO). “The decline in global oil supplies will have profound consequences for the ADF and civil border protection agencies. Australia has recently embarked on several large military and civil national security projects involving the acquisition of aircraft, vessels and land transport. ...