January 08, 2011
Energy Production And Usage Graphs

The Oil Drum has a great set of many graphs showing energy production and usage from a variety of perspectives. That page has over 100 charts and graphs and it takes quite a while to load them from a number of sites.

The most sobering graph: World net oil exports peaked in 2005. A large and growing fraction of all oil extracted from the ground is used in the country of origin. So less is available to oil importing nations on international markets. Since oil demand is rising more rapidly in oil producer states than in oil importer states the fraction of extracted oil available for importers is declining. So for importers in a very real sense world oil production has already peaked.

You can see this trend with Saudi production versus Saudi exports. Their rapidly rising internal demand is typical of many oil exporting nations. It explains how the world has finally hit a new oil production record and yet oil prices are at $90 per barrel. Oil consumption in Western nations is below their 2006 peak as reduced oil exports combined with rising Asian demand drive prices up to levels that cut Western demand.

Before you take US Department of Energy, Energy Information Administration predictions of future oil production seriously take a look at their track record. For the last 10 years they've been excessively optimistic. Their 2001 prediction for 2010 is about 11 million barrels per day too high.

Our energy supply problem is primarily a transportation energy problem rather than broad energy supply problem.

U.S. Primary Energy Consumption by Source and Sector diagram image

Note the incredibly heavy reliance on oil for transportation. The diagram probably understates that reliance since the very thin renewable biomass energy line flowing into transportation is at least in part corn ethanol. Well, the oil used in corn ethanol production and transportation probably isn't accounted for in that diagram.

Lawrence Livermore National Labs has a similar US energy flows graph.

Fun fact: bicycle and car production were almost equal in 1970 but about 2 and a half times more bicycles are now made than cars. As those bike riders become more affluent hundreds of millions if not billions of them will buy cars. Electric bikes have a big future too.

Why high oil prices? A result of monetary policy? Probably not. Paul Krugman sees growing world demand for oil and other natural resources with the United States more as a bystander feeling the effects of this development in the form of higher natural resource demand. Menzie Chinn highlights the uncertainty about future rates of economic growth in China as a major unknown in attempts to project future oil prices. My take: Since the remaining oil has much higher extraction costs than the oil we were burning 10, 20 and more years ago we can at least be certain that oil prices will not drop below $60 per barrel for any extended period of time. The marginal cost of each additional barrel sets a floor on future oil prices.

The bumpy oil production plateau the world has been on since 2005 is not what most conventional peak oil theorists predicted. Yet it is not a case of Business As Usual either. That production plateau in the face of rising oil prices indicates the difficulty the oil producers have had in trying to boost production. If we are near Peak Oil (and I continue to think we are) then why the production plateau? Why not the declining slope after a short peak period as has been the case for oil production in dozens of countries in the past?

Here's my take on the production plateau: High oil prices are delaying the decline from global plateau. When individual countries peaked other countries were available to make up the production shortfalls. So oil prices could not go up and stay up in a sustained manner. But when the whole world reaches Peak Oil something different unfolds: oil prices rise to keep the oil coming. That's especially the case now due to rising oil demand as a result of Asian industrialization. So there's a big push now to extract oil from very expensive sources. These sources are coming online faster than would have been the case absent the high oil prices.

The longer time on the global plateau has pluses and minuses. The pluses include rising prices that encourage efficiency and innovation. The plateau gives us more time to develop substitutes and to change lifestyles in ways that reduce our need for oil. But the higher the world economy can push the price of oil the longer the plateau will last and therefore the faster we will use up the remaining oil. So when we finally come off the plateau the decline then will be faster.

As I've argued previously, the bigger the world economy gets and the more pieces of the economy reduce or eliminate their need for oil the higher the price of oil can go. If a couple of billion Asians can each develop enough buying power to find oil useful for operating scooters or doing cooking then the demand decreases in the West in response to higher prices will not cause a decline in prices.

What I expect to see: a cycle of oil price run-ups during economic expansions until oil prices get high enough to cause recession. In each cycle of expansion the Western countries will use less oil and Asia will use more. But once we come off the production plateau if the production decline is sharp enough even India and China will use less oil. The wild card: technological innovation. Cheap electric car batteries would be the biggest potential game changer.

Share |      Randall Parker, 2011 January 08 01:34 PM  Energy Peak Oil Adaptations


Comments
Russ said at January 8, 2011 2:50 PM:

This was a really great post. Very complete and a good summary.

th said at January 8, 2011 4:15 PM:

gee parker, if I didn't know better, I'd say you're trying to hide the incline.

Bruce said at January 9, 2011 9:39 AM:

Randall, the reason exports went down in the last few years is the economy and (to a lesser extent) oil is no longer an important fuel for electricity production.

In 2005 the USA produced 122,000 thousand megawatthours of electricity using oil, and that is now down to 38,000 thousand megawatthours ... 30% of what it used to be.

http://www.eia.doe.gov/cneaf/electricity/epa/epates.html

China is converting some of its oil/coal plants to run on NG. And I'm sure other countries are as well.

http://www.eia.doe.gov/cabs/China/Electricity.html

"For the reasons discussed , oil fired power stations have been converted to Coal in Europe and ASEAN region in the wake of oil crisis of 1973 , and the trend continues. Despite general environmental dislike and opposition to coal, for instance, Italy’s major power utility ENEL has gone for conversion of a 2500 MW oil fired capacity to coal, as reported by NYT. There are other examples as well."

http://wwwdevelopmentpkistan.blogspot.com/2010/10/converting-oil-fired-power-plants-to.html

Randall Parker said at January 9, 2011 10:37 AM:

th,

If supply was rising as fast as demand then the price of oil would not be over $90 per barrel.

This monthly supply peak over the July 2008 peak is less interesting than yearly consumption. US consumption peaked in 2005 or 2006. If we have to get thru 2011 to equal or surpass 2006 then that's a 5 year period needed to grow consumption. It used to be that consumption grew every year and didn't go down much in recessions. The US oil consumers have a hard time affording to buy more oil each year when prices are going up.

Bruce,

The amount of oil used for electricity in the United States was already very low in 2005. The bulk of the reduction of oil usage for electricity occurred in the 1970s and 1980s.

Look down in that chart where you will see oil usage for electric power generation dropped from about 1% of total oil usage to about a third of a percent (2009 back thru 2005):

Petroleum (thousand barrels)[2] 67,666 80,932 112,615 110,634 206,785

Most of that drop occurred in 2006 due to high oil prices before the recession (and the big drop in total consumption) began. Put that in context. Oil consumption in the US peaked at about 20.5 mbpd and dropped by about 3 mbpd. That drop in total consumption occurred after the bulk of the drop in usage of oil for electric power.

vikedawg said at January 9, 2011 11:30 AM:

The whole idea of peak oil is a little ridiculous. As the price of oil increases new sources will be developed. I know it has been said multiple times, but the amount of oil in oil shales/sands is enormous. Oil prices need only to maintain their current prices to make it economically viable to extract/process these sources. I would imagine that Oil prices will rise to $130-150 when the economy starts to really get humming in a couple years and then gradually pare back to around $100/barrel as new sources come on that can take advantage of the higher price to deal with the increased extraction price for these new sources.

Then there is coal liquefaction which is another giant source of liquid petroleum that currently isn't utilized because it costs too much, but with higher oil prices it also starts to make sense. If we start building nuke plants for electricity there is more than enough coal to make all the oil we need.

Note that I am not arguing the environmental impact of either of these technologies, both of which cause more CO2 to be released into the atmosphere than traditional oil production technologies.

We will have plenty of reasonably priced oil for decades to come.

Bruce said at January 9, 2011 12:01 PM:

Randall: "The amount of oil used for electricity in the United States was already very low in 2005."

Randall, in 1998 the USA used 251 million barrels and then dropped and it rose back up to 231 million barrels of oil for "for Electricity Generation and Useful Thermal Output" in 2005.

Thats about 3% (and it does not include home/industrial oil furnaces).

Then it suddenly dropped to 80 million barrels in 2009. I suspect it is even lower in 2010.

"That drop in total consumption occurred after the bulk of the drop in usage of oil for electric power."

Nope. They occurred about the same time ... 2005/2006.

As for fuel oil for furnaces, sales for residential use dropped 50% from 2003 to 2008, as did commercial uses.

They aren't trivial amounts either, home/building heating seems to 15% of oil usage

http://www.eia.gov/dnav/pet/pet_cons_821dst_dcu_nus_a.htm

Greg F said at January 9, 2011 12:55 PM:
If supply was rising as fast as demand then the price of oil would not be over $90 per barrel.
Inflation. How do you explain the increase in gold or other commodities for that matter?
Randall Parker said at January 9, 2011 1:00 PM:

Bruce,

The US oil consumption was running at 20 million barrels per day total across all uses at a time when it was using 206 thousand barrels per day for electricity. So that is 1%, not 3%.

US oil consumption started declining in in 2006 and 2007 but plunged in 2008 and 2009. See here and see page 47 Table 1.3 Primary Energy Consumption by Source, Selected Years, 1949-2009 (Quadrillion Btu). Note the small increase from 2004 to 2005 (the world entered the oil production plateau starting in late 2004 and Asian demand started taking away from US consumption) followed small declines in 2006 and 2007 followed by the large ones in 2008 (in the fall) and 2009.

So we see from 2003 thru 2009: 38.808, 40.292, 40.391, 39.955, 39.769, 37.279, 35.268.

Note the 37.279 quad BTU of oil for 2008 hides the biggest internal change across its average. The other years did not experience as big a change over the course of the year.

Parenthetically, our oil consumption in 2009 fell back to the 1997 rate of consumption. So it was like going back in a time machine 12 years.

Randall Parker said at January 9, 2011 1:24 PM:

Bruce,

BTW, the general pattern is that as oil prices rise non-transportation uses of oil cut back in order to make room for transportation uses. So, for example, in 2004 67% of US oil consumption was for transportation. Whereas as you can see from the diagram I include in my post in 2009 it was 72% for transportation.

So, yes, use of oil for heating and electric power continues to decline (a trend that started in the 1970s). But I suspect most of the decline in non-transportation uses of oil came from other uses such as petrochemicals. The decline seems to be too big for it to all come from heating and electric power. The drop from 33% (100-67) to 28% of total oil for non-transportation uses came while total oil usage dropped over 10%. So the real drop in non-transportation uses was probably on the order of 15% or more.

One thing though: The 2004 primary energy usage chart shows 3% of oil going to electric power. But the raw oil for electric power number for 2005 shows only enough oil to account for 1% of oil usage. What am I missing?

Okay, you are at least partially correct. On closer inspection your EIA chart for oil and other energy usage shows oil getting used for electric power generation 3 ways:

Consumption of Fossil Fuels for Electricity Generation
Consumption of Fossil Fuels for Thermal Output in Combined Heat and Power Facilities
Consumption of Fossil Fuels for Electricity Generation and Useful Thermal Output

I was only looking at the first category. Those latter 2 categories make it hard to analyze. I do not understand the difference between the latter 2 categories. The second sounds like co-generation. But what's the 3rd category?

Indy said at January 9, 2011 1:26 PM:

It'd be nice if we had a few dynamic, historic and forecast-time-series, global supply and demand curves to work with. We have a decent record of price and product-supplied, and folks like the EIA and IEA and others work on the short-term elasticities of supply and demand (even in an OPEC-dominated world).

Last time I checked, what we know is that the demand curve has been shifting right for the last decade, is expected to continue to shift right, and is highly inelastic, while the supply curve is not changing very much at all, even more inelastic, and, outside OPEC, is nearly vertical. This leads me to believe that we're living in Cambridge Energy Research Associate's (and Goldman Sachs') version of the world. Slow-or-flat world production for the next two decades, depletion of mature conventional fields, especially outside OPEC but 1:1: replacement by expensive new exploitation techniques (or alternative sources), but gradually increasing real-prices throughout the next several decades.

Whatever technological improvements come down the line in the medium term - keep in mind, as far as the aviation component of transportation goes - there simply is no substitute for kerosene-like liquid motor fuels. If real-prices of jet fuel keep increasing, the aviation industry will stop growing. It might not shrink - but rising aggregate demand will be balanced by rising prices - and jets will only need to be replaced, as opposed to being a net-addition, to the global fleet.

The only real question is whether the cost of capital is lower than the expected appreciation in oil. If it is, go borrow some cash and buy a small well somewhere and disconnect the pump-jack motor, turning it back on when to give you a nice steady inflation-proof cash-flow retirement.

Randall Parker said at January 9, 2011 1:44 PM:

Bruce,

Regards petroleum going to oil in 2004. I see in those 3 categories for oil usage for electric power:

for 2004:
203,494
25,870
229,364

At 458728 that's more like 2.3% of oil consumption rather than 3%. So why'd EIA say 3%?

for 2009:
67,666
13,164
80,830

So higher than the 1% I thought. But still not 3%. Also, the decline in oil for electric power occurred mostly before the overall decline in oil consumption.

Unfortunately, we are running out of easily substitutable use of oil. The ones that are easy to substitute are stationary uses that are not petrochemicals. But most of those stationary uses (e.g. heating, electricity) have been shifted to other power sources. We really need some great battery technology breakthrus.

De Monge said at January 9, 2011 2:06 PM:

As world liquid fuels production inexorably rises, the emphasis among peak oilers shifts from a "production peak" to an "export peak." Yes, well you see, we meant "exports" all along, not production.
It's a house of cards, fellas, and you're not getting any younger while y'all keep propping it up with spit and feces.

Bruce said at January 9, 2011 2:08 PM:

Randall, oil heating for residencial use started dropping in 1990

http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=KD0VRSNUS1&f=A

Oil usage for electicity peaked in 2001

http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=KD0VEUNUS1&f=A

I'm guessing "Useful Thermal Output" means steam. There are still centralized steam generation facilities.

http://en.wikipedia.org/wiki/Cogeneration

Randall Parker said at January 9, 2011 3:10 PM:

De Monge,

If the rise in oil production is inexorable then why did oil production decline in 2006 and 2007 as compared to 2005 in spite of higher oil prices?

Also, after oil has increased from $12 to $90 per barrel in the last dozen years why is world oil production for 2010 close to what it was in 2005?

What is going on is not Business As Usual.

Oh, and are we supposed to be consoled if oil production rises even though exports fall?

Randall Parker said at January 9, 2011 3:24 PM:

Bruce,

You aren't looking back far enough to see when oil usage for electric power generation peaked (and I suspect as well for home heating). See page 19 of this IEA pdf. That includes all the OECD. Due to US energy policy I believe the decline in the US was even sharper. Most likely the peak was in the early 1970s for the US as a result of prices and Congressional legislation to reduce utility usage of oil:

Finally, conservation legislation effectively barred utilities from wider use of natural gas and petroleum. The Energy Supply and Environmental Coordination Act of 1974 (ESECA, P.L. 93-319) allowed the Federal Government to prohibit electric utilities from burning natural gas or petroleum. The 1978 Powerplant and Industrial Fuel Use Act (FUA, P.L. 95-620) succeeded ESECA and extended Federal prohibition powers. The National Energy Conservation Policy Act of 1978 (NECPA, P.L. 95-619) required utilities to provide residential consumers free conservation services to encourage slower growth of electricity demand.

That document also gives us a clue for one of the categories of electric power generation from oil:

About one-half of 1991 nonutility capacity was located in the West South Central Census Division, particularly in Texas, and the Pacific Contiguous Census Division, particularly in California. Most nonutilities in Texas, which produced 49 billion kilowatthours of electricity in 1991, were engaged in chemical manufacturing, which provides many opportunities for generating electricity along with another form of energy (such as heat or steam). In California, which produced 53 billion kilowatthours in 1991, most nonutilities were engaged primarily in electricity generation.

So electric power is just an added output from petrochemical plant generation of excess heat. That source of electric power will track with the amount of petrochemical production.

Randall Parker said at January 9, 2011 3:36 PM:

Bruce,

If you go to that IEA pdf then on page 24 table you will see that in 1994 US electric power generation in 1994 was already 69% lower than the max. That's consistent with my understanding that Congressional legislation in the 1970s shifted US electric power demand heavily away from oil and toward coal and nuclear power.

qna said at January 9, 2011 3:36 PM:

It is all because of the gov want us to believe and to do what they want us to do.

th said at January 9, 2011 3:40 PM:

Randall, at this time, inflation adjusted oil is over $100 in dollar terms, last year was a picture perfect look at the price of oil in the US in terms of normal events as in there were no unusual incidents to sway the market either way.
The dollar index USDX started 2010 at 77 and rose to 90 and dropped to 79 by years end, oil started at $82 and ended at $90. Demand during the year rose by 2mmbbls/d, that should have spiked oil over the 100 dollar mark, as it stands now, oil is probably underpriced. And your reference to oil going from $12 to $90 contains lots of oil politics, in 1997 the saudis decided they'd had enough of venezuala under rodriquez cheating on its quotas, they dropped the price deliberately and got hugo chavez. Referencing $12 oil looks good for making points but the real world average at the time was around $22.

Randall Parker said at January 9, 2011 4:02 PM:

th, Inflation-adjusted oil is over $100? How can that be? What is your reference year? Some year in the future?

Are you adjusting the dollar price for a change in the dollar's value as compared to other currencies?

Okay, I concede that $12 is not the best reference point. But a $22 reference point is also far lower than oil is today. What is noteworthy is that oil has sustained a price well above $22 for several years with a brief period after the financial panic when it dropped as low as $37. Even $37 is not cheap.

The fact that oil can stay this high indicates that the market isn't going to boost supply much in response to high prices. That's unlike the oil market of the 1980s or 1990s.

Bruce said at January 9, 2011 4:40 PM:

Randall, people are switching from oil to alternatives for heating. Thats the way the market works when alternatives are cheaper.

Power plants can convert from oil to coal or NG. Homes can be heated with electricity or NG instead of oil furnaces.

The real problem in the USA is fanatical greenies preventing the building of new power plants, whether they are coal,NG or nuclear.

The UK is even worse off since they are building way more wind than they have backup power for. This winter, when Wind is capable of 10% of UK power needs, some days it ran at .2%. A few more years from now when no more coalr or NG plants are built and wind is a greater percentage of total generation, thousands will freeze to death. Maybe 10s of thousands.

Greg F said at January 9, 2011 5:24 PM:

Randall,

The electricity produced from oil is for the most part from the "residual fuel oil" part.

http://www.absoluteastronomy.com/topics/Fuel_oil

Residual fuel oil is less useful because it is so viscous that it has to be heated with a special heating system before use and it contains relatively high amounts of pollutants,particulary sulfur, which forms sulfur dioxide upon combustion. However, its undesirable properties make it very cheap. In fact, it is the cheapest liquid fuel available. Since it requires heating before use, residual fuel oil cannot be used in road vehicles,boats or small ships, as the heating equipment takes up valuable space and makes the vehicle heavier. Heating the oil is also a delicate procedure, which is inappropriate to do on small, fast moving vehicles. However, power plants and large ships are able to use residual fuel oil.
th said at January 9, 2011 5:29 PM:

Randall, its using post 1970 world average price of $35 from 1970 to 2009, in 1978 dollars. Using 1945 as the benchmark, it would be about $71. Prior to 1970, oil was around $3 or $4 for the duration skewing the results somewhat. $22 reflects going back to 1945, since 1970 world prices have averaged $35. Using $35 in 1978 dollars, inflation adjusted price is around $100. The oil companies have said or at least implied that cheap oil is gone, they slow exploration below $60 or $70 as the rig count collapsed in 2008, capex spending by major cos. is expected to rise bigtime for 2011, but I agree, any hope of returning to the sixties is like looking at a mayan calendar for guidance.

Randall Parker said at January 9, 2011 6:31 PM:

Bruce,

We do not lack for electric generation plant capacity. In fact, utilization factors are down. What we lack are enough technologies to switch more uses of oil to electric power.

There's considerable opposition to new coal electric power plants, for sure. But I see little opposition to natural gas electric plants. Also, the utilities have backed off their plans for new nukes due to the low whole price of electric power and the low cost of natural gas. The nuke cost estimates went up while natural gas prices went down.

Greg F,

Interesting about residual fuel oil. I'd be curious to know the long term trend in the ratio of gasoline or jet fuel to residual fuel oil. Is residual fuel oil becoming relatively less valuable due to more price sensitive users? Or is its use for shipping going up faster than its use for electric power generation is going down?

Randall Parker said at January 9, 2011 6:33 PM:

Greg F,

On further reflection: My guess is that residual fuel oil competes with natural gas for electric power generation and with lighter fuel oils for shipping. If it costs more than natural gas per million BTU then its price is being driven by shipping uses, not by electric power demand. I'm guessing it is driven by shipping.

Bruce said at January 9, 2011 8:14 PM:

The EPA will kill new NG plants ... and wind/solar projects that are so unreliable they need NG plants for backup power.

"A draft rule proposed by the Environmental Protection Agency late last year targeted emissions, such as carbon dioxide, that contribute to global warming. As currently written, the rule may delay the construction of natural gas-fired plants that are needed as a back-up to renewable energy sources.

As hopes for comprehensive climate-change legislation fade, the administration wants to regulate such emissions using the Clean Air Act, a move that puts at odds two complementary elements of Obama's energy policy: emissions reduction and renewable energy. Concerns in California, which is aiming to cut emissions by 30% from 1990 levels by 2020, may be a harbinger for a national problem.

Because renewable power is sometimes intermittent--the wind doesn't always blow and the sun doesn't always shine--new natural-gas facilities are vital to preserve the system's reliability.

The California Energy Commission warned the EPA late last year that unless the federal agency made major modifications to its proposed rule, the state's renewable energy projects could face massive delays."

http://www.fa-mag.com/green/news/5277-in-a-twist-epa-may-hinder-new-kinds-of-power.html

Randall: "We do not lack for electric generation plant capacity."

Not one coal powered plant was built in the USA in 2010. The EPA will kill the US economy by banning coal and NG plants.

Randall Parker said at January 9, 2011 9:39 PM:

Bruce,

I agree the need for fossil fuel back-u for wind is a big problem. Wind and solar need full fossil fuel plant back-up. Worst case is wind stops blowing over a large area for days. This is why I question the economics of wind. It can play some role. But there's a limit to how big wind's role can be.

th,

The key question in my mind: How fast will oil extraction costs go up? A larger fraction of oil production comes from deep water and heavier oils (e.g. Alberta oil tar sands). So will the marginal barrel of production cost go to $80 and $90 and $100 in short order?

Fat Man said at January 9, 2011 10:28 PM:

The EIA chart you copy above is very frustrating.

Electricity is not a final consumption use, it is an intermediate use. That competes with many other sources such as nat gas.

The Electricity business had an output in 2009 of about 4000 Billion KWh (see Table 8.2a of the AER). In SI terms that is (4e3*1e9*1e3*3.6e3*W*s) or 14.4 EJ. The chart uses Quads which are 1e15 BTUs. (a BTU =~1055J). The chart shows Electric Power at 38.3 quads (40.4 EJ), but that is the input not the output.

But, even that is not a pure figure. the chart shows Nuclear electric as 8.3 quads. But table 8.2a shows that sector as generating about 800 Billion KWh, which is 2.9 EJ not the 8.8 EJ that the chart implies.

Bruce said at January 9, 2011 11:38 PM:

Randall: "High oil prices are delaying the decline from global plateau."

I believe the opposite. From 1986 to 2003 oil prices were almost pre-1973 prices (adjusted for inflation). There wasn't a lot if incentive to spend huge amounts of money looking for oil in expensive places.

Since 2003 the climbing price of oil has made exploration a worthwhile risk. on top of that fracking (perfected for Shale NG) can now be used on Shale Oil. North Dakota is now producing 350,000 barrels per day of Shale Oil and will double that in the next 4-7 years.

"Global technically-recoverable oil shale reserves have recently been estimated at about 2.8-3.3 trillion barrels of shale oil, with the largest reserves in the United States, which is thought to have 1.5-2.6 trillion barrels"

anonyq said at January 10, 2011 10:34 AM:

Fat man: I believe that nuclear shows energy released by the nuclear reaction, not the final output of electricity


Randall: Residual fuel oil will be dropping in price in relation to oil because ships are legally required to use cleaner fuel and a barrel of heavier oil contains more residual fuel oil

Nick G said at January 10, 2011 1:59 PM:

Bruce,

the kind of oil being produced in N Dakota is conventional oil, produced with unconventional techniques - there is likely to be something in the range of about 4b barrels extractable, though more is certainly possible (the overall theoretical maximum is around 400B). The shale oil that is estimated at 3T barrels is very different - it's kerogen, which is much, much harder to extract.

Randall,

Bunker fuel (the heaviest form of fuel oil), like asphalt, can be converted to lighter & cleaner forms, though there is a cost to doing so. As overall oil prices rise, so does the price of fuel oil.

th said at January 10, 2011 4:27 PM:

Randall, "How fast will oil extraction costs go up?"
Not fast enough for obama. Skinny atlas has made no secret he's for $5 gasoline. While he's promoting deep offshore brazil, the $90 production oil, he's blocking everything else. The greenie goal is to raise the percentage of high priced oil into the mix as fast as possible, peak oil by decree. Admittedly, non-opec will have to go more unconventional as time goes by, which I guess is going to drive prices for the rest of our lives. Saudis with $1 production costs are going to enjoy this. BTW, put in your favorite oil price and time frame and see why $45 looks cheap.

http://www.westegg.com/inflation/

Bruce said at January 10, 2011 4:32 PM:

Randall, there could be 24 billion barrels of immediately recoverable oil in the two ND fields. And they are just the beginning of shale oil ... the "proof of concept".

http://www.willistonherald.com/articles/2011/01/08/news/doc4d28fd8b30693964393372.txt

ND will be the #2 oil state in a few years.

"For example, in North Dakota’s Bakken play, oil production has risen from zero to 250,000 B/d in a few short years. The Bakken can be viewed as a proof-of-concept oil play much as the Barnett was to natural gas. Horizontal drilling targeting oil is extremely profitable at current price levels and so will continue to climb through 2011. As such, oil production from nascent plays in both the US and Canada is rising quickly. This year’s North American oil production growth is going to confirm the reversal of a 35-year decline and maybe even shake a few peak oil theorists."

Read more: http://www.calgaryherald.com/business/What+Canadian+industry+should+watching+2011/4087665/story.html

Gas and to a lesser extent oil are being found in vast quantities in shale formations.

Did you know kerogen is directly burnable in power plants? But thats not relevant. Fracking will be creating regular oil from kerogen, probably in as quick a time frame as fracking has been used for gas and oil in ND.

Fat Man said at January 10, 2011 7:23 PM:

anonyq: I doubt that EIA measures the raw thermal output of electricity generating nuclear power units. I believe they are using a fudge factor to go from the electric out put back to thermal number. What their purpose in doing so, I do not not know.

Engineer-Poet said at January 11, 2011 1:40 AM:
oil is no longer an important fuel for electricity production.
In the USA.  In many island states and Saudi Arabia itself, oil generates a very large fraction of all electricity; KSA's oil exports are being curtailed because it's being used locally in lieu of declining natural gas supplies.
As the price of oil increases new sources will be developed.
That's what they said in 1973, 1979.... How's that working out?
Oil prices need only to maintain their current prices to make it economically viable to extract/process these sources.
But those same prices (a) force the US economy into recession and decrease demand, and (b) are already pushing wholesale substitution with non-petroleum energy (Smith Electric vehicles, Volt, Leaf, Ford C-MAX Energi... and this is just the beginning).

Nobody's going to put their money into CTL or an oil-shale processing system with a lifespan of 50 years when the prospective customer base can disappear in 10.  We'll see THAI and other things where the payoff is a few years, but not those.  Thank goodness!

Re petroleum consumption for electricity:  note that EIA figures include petcoke, and at least one US plant imports Venezuelan petcoke because it's cheaper than coal.  I suspect that petcoke is not included in figures for crude oil and refined products.

as far as the aviation component of transportation goes - there simply is no substitute for kerosene-like liquid motor fuels.
Actually, there is.  If the aircraft is big enough, uranium.  Seriously.

Nick G said at January 11, 2011 9:19 AM:

E-P,

I don't think KSA gas supplies are declining in an organic fashion. Rather, they've been suppressed, and made chronically scarce, by very low price caps intended to subsidize domestic industry.

I'm not sure US declines since 1973 are as reliable as an indicator as we might think. Oil prices were capped in the US until 1979, and they declined to a low level in only a few years later. It's true that rising rig counts didn't reverse the decline, but I'm not sure the domestic oil industry really had a sufficiently long period of high prices to prove the relationship between price and supply. For one thing, new tech takes a little while to arrive.

I agree about CTL, "oil-shale", and EVs.

What's the closest proof of concept that you've seen for nuclear aircraft?

Bruce,

The news from the Bakken/Niobara is certainly encouraging.

When you say "Fracking will be creating regular oil from kerogen", what are you referring to? I think you may still be mixing up conventional oil produced from shale formations with kerogen (aka "shale oil").

Bruce said at January 11, 2011 9:54 AM:

Nick G, in situ retorting is estimated to be economically viable at $30/barrel.

http://dailyreckoning.com/oil-shale-reserves/

http://ostseis.anl.gov/guide/oilshale/

The techniques for deep drilling (part of fracking) are making this all possible.

Nick G said at January 11, 2011 1:25 PM:

Bruce,

Thanks for the info.

I agree that there's some potential there, but if you read the discussions carefully, I think you'll find that it's very uncertain. Coal to Liquids will be developed long before "shale oil", and CTL will be slow and expensive.

The techniques for deep drilling (part of fracking) are making this all possible.

Have you seen any discussion/sources for this? I think if you look closely, you'll find that Bakken type oil (and the fracking techniques used) doesn't really relate to "shale oil".

Bradcock said at January 11, 2011 2:23 PM:

Folks who bet on wholesale US transfer to electric transportation fleets in the next few decades are more than a few cards short of a full deck. The infrastructure orients around liquid fuels, and, like, global economic downturns and the debt pox will prevent anybody but China from switching infrastructures. China is expanding its nuclear plants, coal plants, and anything that will produce electric power.

In the US, Obama's NRA is sitting on nuclear, the Interior Dept has effectively shut down offshore oil, the EPA is closing in on shale gas and oil sands imports. It's a bad time to be an energy user in the US, much less for trying to overhaul the entire transportation infrastructure.

Bruce said at January 11, 2011 2:34 PM:

Fracking is the key to Exxons technique.

"Exxon’s leading candidate technology to commerticalise oil shale is the Electrofrac process, which is designed to heat oil shale in-situ by conducting electricity through induced fractures in the shale that have been filled with conductive material to form a resistive heating element. Heat flows from the fracture into the oil shale formation, gradually converting the oil shale’s solid organic matter into mobile oil and gas, which can be produced by conventional methods."

http://www.thegwpf.org/energy-news/1642-here-comes-the-shale-oil-revolution.html

Thanks to Shale gas, fracking is now a very mature technology.

Bruce said at January 11, 2011 4:08 PM:

Light vehicle car sales in the US are around 11 million. With 10,000 Volts being sold in 2011, and maybe 200 or so Leafs, how long will it take to replace all 135 million currently registered cars with electric ... let alone the other 100 million trucks/SUVs?

EP?

Engineer-Poet said at January 11, 2011 7:34 PM:
What's the closest proof of concept that you've seen for nuclear aircraft?
There was a test of a nuclear-powered turbojet in the 50's, and the flight of a 1 MW test reactor aboard a B-36.  I've been looking into technical feasibility of nuclear airliners but have been unable to find accessible design rules for shielding; the reactor and heat exchangers don't appear to be a problem.
in situ retorting is estimated to be economically viable at $30/barrel.
Then why did Shell suspend its latest ISR program?  Crude never fell below $30/bbl, and it's 3x that now.

The Daily Reckoning claim is based on ONE quote in the article from the Rand corporation claiming "under $40/bbl" (the other link also references a Rand Corporation report, probably the same one).  That suggests that there's more at work than the report took into account, the same "receding horizons" problem which makes ethanol perpetually uncompetitive:  as the price of energy goes up, so does the price of producing the marginal resources (like oil shale).  Without a really cheap supply of electricity (like off-peak wind power from the Dakotas?), ISR may never be a player.

Folks who bet on wholesale US transfer to electric transportation fleets in the next few decades are more than a few cards short of a full deck.
First remove the beam from your own eye.  What's going to stop electrification?  The electric grid already has more than enough off-peak capacity to replace the end-use energy we get from liquid transportation fuels for ground vehicles; expanding this a bit during the next 20 years of maintenance can be done without breaking a sweat.
The infrastructure orients around liquid fuels
What do you mean, "the" infrastructure?  Infrastructure delivers natural gas to a very large fraction of all US homes and businesses, and an even bigger infrastructure delivers electricity to almost 100% of them.  If you think there's any supply-side obstacle to electrification, you're the one who's a few fries short of a Happy Meal.
With 10,000 Volts being sold in 2011, and maybe 200 or so Leafs, how long will it take to replace all 135 million currently registered cars with electric ... let alone the other 100 million trucks/SUVs?
Up to your old tactics again, Bruce?

Chevrolet is planning to build 60,000 Volts next year.  News I have on the Leaf is 25,000 in 2011, probably many more in 2012.  The Focus EV is coming in (but fewer than the Leaf) and the C-MAX Energi is coming too.  Also, Toyota is turning Prius into a brand with plug-in models already in testing, and the hybrid system used in the Fusion/MKZ is likely to have its upper speed limit increased and battery expanded to make it a PHEV.  This sort of thing is getting ready to spread across entire companies; soon, the models without any electric option will be the rarities.  Not long after that, the ICE-only versions may stop being offered.

It doesn't matter how long it takes to replace the fleet at historic rates.  Two factors are relevant:

  1. Even in normal times, a new vehicle is driven about half its lifetime mileage in its first 6 years.  Sales of EVs/PHEVs/EREVs will affect fuel consumption way out of proportion to their fraction of the fleet simply because they'll be new.
  2. High fuel prices will accelerate retirement of low-economy vehicles.  We saw this in the 70's (people couldn't give muscle cars away), and we'll see it again.

Nick G said at January 12, 2011 10:15 AM:

Bruce,

The article you found says: "Premature shale oil is still a dream, due to the cost to mine, retort kerogen-rich organic material, heat up, and extract this resource. Until oil prices are well above $100/bbl, the amount of energy, water and upfront capital investmetn will mean this reousrce is not commercially achieveable. Only in Estonia, where the Soviet Union central planning system funded the development, does premature oil shale add any material volume.

That said, there are those in the industry who dare to dream. After all, nobody expected the shale gas boom that has tripled estimates of US supplies in just the past few years. The majors, in particular, recognize that the industry is always innovating, and technology is constantly opening new doors."

So, again, there's some potential there, but it's very uncertain. Coal to Liquids will be developed long before "premature shale oil", and even CTL will be slow and expensive. I'm much more hopeful for "mature shale oil" and EV/EREV/PHEVs.

I would be curious for more info on the Shell Electrofrac process - it does seem to have been modified to take advantage of recent advances in fracking techniques. I'm also curious if Shell is doing anything currently with the Colorado Green River project, or if it's still on hold. Have you seen anything?

E-P,

I agree about EV utilization. Heck, the first users will be heavily weighted towards high-mileage drivers who will maximize the low operating cost advantage of EVs.

Have you happened to see any good cost data for ICE repair costs? Everyone knows that EVs will lower maintenance costs, but how much? I'd love to find something that breaks it out by year (over at least 10 years) and vehicle component/area.

Bruce said at January 12, 2011 5:05 PM:

EP: "Chevrolet is planning to build 60,000 Volts next year. News I have on the Leaf is 25,000 in 2011, probably many more in 2012."

Sure. You fantasize too much. 85,000 out of 11,000,000 means nothing ...

Nick: Shale Oil will come onto the market soon enough ... I mean it was only a few months ago that people on this site were mocking Shale Gas.

anonyq said at January 13, 2011 4:02 AM:

Bruce: It depends a little bit on the growth rate. If they keep the growth rate between 2009 (a few Tesla's) and 2011 than you would expect all cars to be electric in a few years

Engineer-Poet said at January 13, 2011 5:46 AM:

Ford expects its production to be 10-15% electrified by 2015.  Ecoboost will increase mileage up to 30% on top of electric savings.  Ford's sales in 2010 were 1.9 million, and trending upward; that means 200k to 300k electrified vehicles in 2015 from Ford alone.

JX Holdings is increasing its production of Li-ion battery material by 1600%.  They expect to have a market for it; you get three guesses what it will be, and the first two don't count.

Bruce said at January 13, 2011 2:13 PM:

EP: Ford also includes hybrids in that 10-15% plan. I would guess 90% or more of those will be hybrids of some kind. Which means no more than 20,000 all electric.

All electrics will have little effect on US oil consumption.

If the heavy trucks in the USA all were converted to LNG, that would save 1.6 million barrels per day in oil.

http://www.americanprogress.org/issues/2010/04/american_fuel.html

anonyq said at January 13, 2011 6:06 PM:

Bruce, 10% electrified by 2015 is a very serious push. That only makes sense if they think electric is mainstream in 2020

Engineer-Poet said at January 13, 2011 8:01 PM:

With Ford planning to produce somewhere between 10,000 and 25,000 Focus EVs in 2011 alone, claiming no more than 20k all-electric Fords in MY 2015 isn't serious.  By 2015 the Focus will be available in hybrid and PHEV as well as ICEV and EV, and the Fusion/MKS will be plug-in (not announced AFAIK but it's a no-brainer and Ford isn't missing those the way GM does).

The heavy-truck and rail sectors burn about 2.6 million bbl/day of fuel (that's the "distillate" column).  Most of that is diesel trucks.  Both are convertible, and co-fueling both could save up to 80% (that's 2.1 million bbl/day, not 1.6).  Electrifying rail and powering everything with stationary CCGTs would increase the efficiency as well as the pulling power while eliminating the petroleum consumption.

Bruce said at January 13, 2011 11:25 PM:

"The bad news however was that while Ford is still committed to bring the Focus Electric to market late in 2011, it will be on very thin volumes"

"When asked for comment on the volume for 2011, the Ford VP would only say, “some.”

Ep ... you are a joke. "Some" is not 10,000. 10. Maybe 20. Tops.

Bruce said at January 14, 2011 12:24 PM:

LNG locomotives were tested in the 1990s for 5 years of service.

They could carry an LNG tender behind them.

"Although locomotives have a young history with respect to natural gas use, ECI 's system is the first and only to operate successfully under the sustained rigors of commercial long haul locomotion. The Burlington Northern's successful demonstration of two ECI equipped dual fuel locomotives, 7890 and 7149, provided nearly five years of full time dual fuel service from 1991-1996. BNSF's corporate decision failed to renew the gas refuelling contract, which halted the use of gas on these locomotive thereafter. However, the locomotives continued to operate continuously in diesel-only mode with all the conversion equipment completely operational, until the locomotives' scheduled overhaul in late1998. Parts retained by ECI from the experimental locomotives show wear to be superior to that of standard diesel EMDs at the time of standard class overhaul. Apart from several minor component replacements made during the course of the demonstration, the ECI system remain intact and in excellent operating order. During the entire term, the locomotives proved very reliable, providing full power and returning shipments consistently and without incident."

http://www.energyconversions.com/tender.htm

Imagine even 1% of all the money squandered on wind/solar spent on LNG conversions for every diesel locomotive in the country.

Engineer-Poet said at January 15, 2011 7:05 AM:

Imagine electrifying the rail system and eliminating the 4.2 billion gallons/year of diesel it burns.  No emissions at the loco.  No engine noise.  Greater power, faster acceleration (increasing the capacity of the rail lines), regenerative braking.

It also eliminates the need for (and energy overhead of) LNG, and boosts the efficiency from ~50% in the low-speed diesel to 60+% in a CCGT.

Bruce said at January 15, 2011 10:40 AM:

Imagine not having to dig up million of pounds of copper. And not having to erect millions of pounds of steel to hold up those wires.

70,000 miles of tracks minimum.

Imagine burning clean LNG instead of coal.

Imagine only modifications to existing locomotives and adding an LNG tender.

It will be an order of magnitude cheaper.

Nick G said at January 15, 2011 3:52 PM:

E-P,

Are freight train diesels really 50% efficient? I thought only two story marine diesels got that high.

That table from the FHWA is interesting. That's less fuel for rail than I expected, and much more for water transportation. Water transportation can't just be inland waterways - surely that includes international shipping?

Bruce, E-P,

Have you seen good data for the cost of rail electrification? I would think only 10% of the track mileage would need caternaries: even a very small battery could carry a train through most of it's route, with electrification for 10 miles every 100 miles, say, with a small generator onboard as backup.

Almost all trains have electrical drive trains now anyway. LNG is just another way of generating electricity, and utility power will almost always be cheaper, even with LNG. Isn't the natural evolution a gradual growth in the use of utility power, and gradual growth in the size of onboard batteries, and a gradual reduction in the % of energy from the onboard generator?

Bruce said at January 15, 2011 4:58 PM:

I read that 35,000 miles is the minimum and 70,000 out of the 250,000 miles of track would be the goal.

In 2009 the UK planned a big electification push. (only 40% of lines are electric).

London to Swansea - 1 billion pounds and 8 years - less than 200 miles

Liverpool to Manchester - 100 million pounds and 4 years - less than 40 miles


2.5 to 5 million pounds per mile = 3.75 - 7.5 million US per mile

70,000 miles = 250 to 500 billion dollars.

100 years maybe?


Better to convert to LNG


Engineer-Poet said at January 16, 2011 8:14 AM:
Imagine not having to dig up million of pounds of copper. And not having to erect millions of pounds of steel to hold up those wires.
Imagine not having to build NG liquefaction plants which will be stranded assets in a decade or two at most.
Imagine burning clean LNG instead of coal.
Imagine 60% efficiency (CCGT) instead of ~40% efficiency, and seamless changeover to nuclear power without changing a thing.
Imagine only modifications to existing locomotives and adding an LNG tender.
Imagine being able to idle or sell the diesels instead of overhauling them and have a unit with greater power, higher reliability and zero emissions.  GE's electric locos being built in India are 12,000 HP units; the standard Evolution diesel has only 8,800 HP.
It will be an order of magnitude cheaper.
In Bruce's dreams.  In reality, electric moves more freight faster (better acceleration and braking which LNG can't provide) for less money and is as future-proof as it's possible to be.  If it's good enough for the Trans-Siberian RR, it's good enough for us.

Only about 36,000 miles of mainlines need to be electrified to get the bulk of the benefits.  Alan Drake quotes a figure of $40 billion to electrify 16,000 miles, or $2.5 million/mile ($90 billion for all 36,000 miles).  (Drake also quotes diesel thermal efficiency figures of 34-38%, which seems quite low to me; high-speed diesels currently exceed 40% IIRC.)  Eliminating 3.4 billion gallons of diesel at a future price of $3.00/gallon is a payback of $10.2 billion/year or about 11%/year.  Shifting half of OTR truck freight to electrified rail saves another ~1.3 million bbl/day or about 20 billion gallons/year.  At $3.00/gallon this is another $60 billion/year saved and pays for the entire effort in less than 2 years.

Bruce will keep yelling "LNG! LNG!" but he's just a shill for the fossil-fuel industry.  The electrified system will run fine on NG, but get at least 35% more miles burning it in CCGTs to make electricity instead of liquefying it to run converted diesels.  The electrified system will also run fine on hydropower (ideal for the PNW), wind (Dakotas to Texas) or nuclear (anywhere).  Bruce is exposed as a rent-seeker for the oil and gas industry; I would not be surprised to find he's being paid by XOM, and if he's working for them for free he's an even bigger fool than I thought possible.

Randall Parker said at January 16, 2011 10:47 AM:

Bruce,

Good to know that natural gas could substitute for diesel in locomotives. I wonder how big the gap has to be between natural gas and diesel in order for that substitution to make sense. What's the cost per conversion?

The problem with that form of substitution is that it makes sense due to the ratio of energy cost of diesel to natural gas. But as capital investment for substitution progresses the price ratio declines as demand for natural gas increases. So how much of oil to natural gas conversion can happen realistically? Some certainly.

Fortunately trains use only about a tenth the total that diesel trucks use. If memory serves trains are only using 220,000 barrels per day.

E-P,

If oil prices head in the general trajectory both of us expect then I expect HEV/PHEV/EV cars will be more than 15% of Ford's 2015 volume. I also expect Ford will sell a lot of Fiestas.

What I am wondering: will diesel cars make serious in-roads? My brother just bought a diesel Jetta and he called me up the other day to rave about the fuel efficiency. If memory serves you drive a diesel too, right?

Bruce said at January 16, 2011 11:30 AM:

URL for UK cost estimates: http://www.telegraph.co.uk/news/uknews/road-and-rail-transport/5892812/Gordon-Brown-unveils-1-billion-rail-electrification.html

EP: Alan Drakes most recent suggestion is 70,000 miles. Try and stay current.

"One of the quickest and most effective responses to the realities of a post-Peak Oil economy is to electrify and expand the main-line railroads (about 35,000 miles in as little as 6 years) and later the busy branch lines (another 35,000 miles)."

http://www.aspousa.org/index.php/2010/10/electrification-and-expansion-of-railroads-as-a-response-to-peak-oil-by-alan-s-drake/

His cost recommendations (not just electrification) add up to 600 billion. I suspect the UK estimates are more realistic.

"The following are reasonable cost estimates for what is being proposed, given the available information, in 2010 dollars.

•Electrify 36,000 miles of double track railroads - $100 billion or 0.55 AIG
•Double track 15,000 miles of single track, new rail over rail bridges, better signals, improved curves and grades - $75 to $150 billion, 0.4 to 0.8 AIGs
•Grade Separation (a cost that should be borne by highway budgets) could easily absorb $50 to $100 billion, 0.27 to 0.54 AIGs
•Semi-High Speed “3rd track” on existing ROW - 7,000 to 14,000 miles - $140 to $280 billion, 0.77 to 1.54 AIGs
•Strategic Railcar Reserve - perhaps a couple of billion dollars for mothballed used equipment. New equipment, when used is not available, should be an order of magnitude more expensive.
•Improved Intermodal Centers - a very rough estimate to supplant 85% of existing truck traffic would be $50 billion or so. Roughly a quarter of an AIG."

Randall: " So how much of oil to natural gas conversion can happen realistically?"

Well, they ran two locomotives in the 1990s on LNG for 5 years. LNG tenders would give trains the range to keep the number of LNG stations to a minimum. And the locomotives were converted back to diesel.

http://www.energyconversions.com/tender.htm

California did some studies showing LNG/CNG to be worthwhile for trucks in the ports if oil was over 22/33 per barrel.

Diesel is filthy (it is not an imaginary pollutant like CO2). Getting the truck fleet onto LNG/CNG would bring huge health benefits. Moving some of the truck traffic to LNG locomotives would save a lot of oil.

Randall Parker said at January 16, 2011 12:29 PM:

E-P,

I think it unlikely that Bruce is in the employ of interests trying to bid up the prices of fossil fuels. So calling him a shill seems unjustified.

Electrifying rail: What fraction of current diesel train consumption would be eliminated by electrifying 16,000 miles? My guess is only the railroads know. We are looking at a total 4.2 billion gallons per year or maybe $12 billion per year potential avoidable.

My take on the economics of rail electrification: The rails are operated by a small number of fairly well capitalized companies. Those companies have the competence to calculate at what price of oil (and copper and other materials, as well as electricity) it makes economic sense to electrify the rails. I am skeptical of other sources for those calculations.

If oil already costs enough to justify the electrification then the railroads are probably holding back out of uncertainty on whether oil will stay this expensive. You and I expect higher prices due to Peak Oil. I wonder what the rail execs think.

Bruce said at January 16, 2011 12:41 PM:

24,000 Class I locomotives.

http://www.bts.gov/publications/national_transportation_statistics/html/table_01_11.html

in 2008 this company claimed:

8 - 10 hours for a conversion to dual use.

770,000 in savings per year ... based on 60% LNG / 40% Diesel (I assume excluding the cost of a dedicated tender for long range)

You must burn 40% diesel in thse configurations because:

"Because of the very high ignition temperature of natural gas (approximately 1300 degrees Fahrenheit), sufficient heat is not generated during the diesel compression stroke to ignite 100% natural gas. As such, dedicated gas engines employ spark plugs and an ignition system to facilitate combustion of the air-natural gas mixture. In contrast, during bi-fuel operation, a reduced quantity of diesel fuel acts as the ignition source for the air-gas mixture; this process is often referred to as pilot ignition."

http://www.gfs-corp.net/industry-rail.php

http://www.gti-altronicinc.com/faqs.htm#gas

I think this would be way cheaper than electrifying the US railways.

Bruce said at January 16, 2011 12:49 PM:

EP: I think you are a shill for the coal industry.

Engineer-Poet said at January 16, 2011 2:02 PM:
EP: I think you are a shill for the coal industry.
I'm a shill for an as-yet nonexistent Gen IV nuclear industry.  I write about things like how the coal industry smothers its infant competition in the cradle.  Get it right.
Nick G said at January 16, 2011 2:48 PM:

Are NG ICE's are efficient as diesel?

What is the efficiency of converting NG to LNG and keeping it cold during it's lifecyle? perhaps 70%? If freight train size NG powered ICE's are 36%, then LNG ICE's would have 25.2% efficiency, or about 40% as good as CCGT. That efficiency penalty would certainly make the capital investment in electrification worthwhile.

On the other hand, the UK is going to import a lot of it's NG in the form of LNG, which could be shipped directly to rail systems rather than being burned in central plants. So, maybe LNG for transportation makes more sense in the UK than in the US.

Engineer-Poet said at January 17, 2011 5:11 AM:
What I am wondering: will diesel cars make serious in-roads?
I don't think so.  Gasoline direct injection (especially in turbocharged engines, like Ecoboost) gets close to diesel efficiency (and torque!).  The window for diesels in the USA has shut at least halfway, and my next car will probably not be a diesel (I'm watching Ford to see what the plug-in Fusion looks like).
EP: Alan Drakes most recent suggestion is 70,000 miles. Try and stay current.
I see he raised the cost of electrifying that 36k miles about 10%.  How does that invalidate the sub-2-year payback for the 36000 miles of mainline if it takes half of truck traffic off the road?

Answer:  it doesn't.  Try to keep your reasoning straight... oh, sorry, I forgot who I was talking to.

Well, they ran two locomotives in the 1990s on LNG for 5 years. LNG tenders would give trains the range to keep the number of LNG stations to a minimum. And the locomotives were converted back to diesel.
Isn't that interesting?

The main argument for LNG is that it's cheaper than diesel.  This is by no means a permanent situation.  Shale-gas companies are not making money, and all it will take is a solid link between fraccing and groundwater contamination to wipe out the cheap gas completely.  That would bring NG back towards energy-cost parity with oil, and the economic rationale for LNG disappears. 

The rails are operated by a small number of fairly well capitalized companies. Those companies have the competence to calculate at what price of oil (and copper and other materials, as well as electricity) it makes economic sense to electrify the rails.
They're also at the mercy of government, and government is driven by lobbyists.  The trucking companies have more lobbyists than they do.  I think Drake is correct that it would take a policy prescription from the top to offset things like predatory local governments ready to assess any new construction at a high value to grab more tax revenue.
You must burn 40% diesel in thse configurations because:
Co-fuelled diesels can use up to 80% methane.
Are NG ICE's are efficient as diesel?
That's a good question.  I'm very disappointed that the Cummins-Westport gas engine brochure conspicuously omits the usual BSFC curve.  I went to the Cummins site to look at diesel specs and couldn't find any BSFC curves there either.  They seem to have been purged from the product literature.

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