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Posts Tagged ‘sustainability’

0 Jul 9 2010 @ 10:52am by Matt Smith in Capital Markets, Crude Oil, Economy, Global Energy, Natural Gas

Burrito Bites

Anyone seen my keys? (...a waterpark, Chinese style...)

As we make a splash into the midst of summer, the temperatures have been rising, but not the price of natty, as hurricane fears abate for now. Crude, on the other hand, has been rejuvenated by a few scraps of info (IMF report and retail sales data, take a bow). Meanwhile, equities have also moved higher in this holiday-shortened week, and the euro has rallied once more. Enough of the small talk, let’s take some big bites:

–How many DOE (Dept. of Energy) workers does it take to change a lightbulb?

–Moving from coal to natural gas is the cheapest way to cut carbon emissions…but hang on, it would cost hundreds of billions to implement.

–Feed indian food to sheep to save the world.

The rise (and fade?) of gas Opec.

–Predicting the long-term trajectory of the Gulf oil spill by NOAA. 

–Truth and lies about the oil-skimming statistics for the Gulf spill.

–Cheaper flight tickets through standing-room only flights.

–Searching ‘double dip’ on Google goes crazy.

–The commodity bull corner…time to be bullish on coal?….and $100 oil: coming sooner than you think.

–Simple yet genius…a new economic index – The Coffee Indicator.

BP-themed board game foreshadows the Gulf spill by a few decades.

–Solar-powered plane flies through the night  (brave pilot) for 26 straight hours.

–Psychic octopus chooses the winner of The World Cup…

Energy efficiency to have twice the impact of renewables, nuclear and clean coal, combined – by 2020.

Never slaughter a chicken in front of a monkey.

The Burrito Deluxe Award of the week is split; it goes to retail sales data, which gives some hope of a continued economic recovery through consumer spending (in the face of weaker data everywhere else)…. and to Katie Schultz and ‘Singapore Dave’, for their energy limerick responses to Wednesday’s post. Katie, a giftcard is winging its way to you; ‘Singapore Dave’, if you find a burrito in Singapore, send me your bill.

The Burnt Burrito Award of the week goes to prompt natural gas prices. Not a lot has changed since last week; a hurricane threat to offshore production has come and gone, temperatures have been above the norm across much of the US (in NY, 11-year highs – el  scorcho!), yet a storage number erring to the bearish side, and prices have sold off with vehemence.

Have a terrific weekend! 

0 May 14 2010 @ 9:26am by Matt Smith in Capital Markets, Crude Oil, Economy, UK natural gas

Burrito bites

It seems to have been a week for testing boundaries in commodityland(tm). Natural gas has tried to break out to the upside of the range it’s been bouncing around in for the last six weeks or so, while crude has sliced through a vein of key support (= 200-day moving average), heralding potential further bloodletting in the near-term. No sooner has the dust settled on the Greek debacle then murmurs about problems in Portugal arise; this issue isn’t going to disappear quickly is it? The movement in crude is no doubt exacerbated by a stronger US dollar weaker euro and pound as they both get pounded. Equities started the week showing strength (amazing what a $1 trillion bailout does to brighten the mood), but are fading this move as realization dawns that bailouts facilitate liquidity, but do not fix the problem. All the while, the bond markets are rallying, indicating the choppiness in this current market storm (never forget: Equities and Bonds = Pinky and the Brain). Wow. That was all very serious wasn’t it? Let’s lighten the mood and learn some lessons as we head into the weekend, forks at the ready: 

No room at the Inn for Cushing crude supplies. 

–The world’s strangest vending machines

–A link to links of links on the latest about the Gulf of Mexico oil spill

–Think UK natural gas is wacky? Don’t fret, so does everybody else

–A closer look at the 1,000 point plunge on the Dow last week. 

The Evolution of privacy on Facebook.  

–Why the US could go the same way as Greece, and why it won’t

China’s coal bubble, and how it will deflate the US efforts for ‘clean coal’. 

Rock-paper-scissors-lizard-Spock

–I don’t buy into this, but hey – as summer nears, gasoline prices are set to go down

–If you missed it, here’s a link to a webinar Summit participated in this week on Carbon Management – a really, really good intro to the topic. 

–Re the picture top right – the art of manipulation.

–Concord, MA may be the first US town to ban bottled water.

Seen leaving Concord, MA.

The Burnt Burrito Award of the week goes to the Euro, as it plunges, and plunges. A rolling stone gathers no moss, but it appears a falling euro is gathering momentum. All a bit worrying for the global economy. 

The Burrito Deluxe Award of the week goes to gold, as it rallies to a record level as a hedge against, ooh,  pretty much everything it would seem.   

Burrito Quote of the week – ‘For every one of our failures, we had spreadsheets that looked awesome.’ — Intuit founder Scott Cook. (HT: MM). 

Have a splendid weekend!  

0 May 6 2010 @ 10:57am by Matt Smith in Crude Oil, Global Energy, Natural Gas, UK natural gas

10 simple points about energy markets

I am a huge proponent of keeping things simple (hence the use of cartoons, films, the Hoff, etc), so in these times when information whizzes past our eyes every minute of every hour of every day, I thought it useful to get back to basics and outline 10 simple points about energy markets which add some background to the news at the fore – it’s easy to forget ’em:

Opec was a different animal back in 1986....

 

1) So what exactly is the big deal about Opec again? It is this: in 2009, the twelve-country cartel produced 39% of world’s oil (42% in the prior year, before they curtailed production in 2009 to support prices). Their influence has grown in recent times, and is likely to continue, given lackluster production growth in OECD countries. Opec has come a long way; back in 1986, Opec only made up 22% of the world’s oil production. 

2) Is the US increasing or reducing greenhouse gas emissions? Data just released by the EIA show US carbon dioxide emissions fell by 7% in 2009. But was this due to lower economic growth? In a word, yep. The ‘exceptional’ drop was more to do with lower energy demand from lower output (aka ‘the great recession’), added to a cleaner mix of fuels in the economy, with a sprinkling of improving energy efficiency.   

3) Why does storage inspire such concern in the UK natural gas market? – simply because there is so little. Due to a maximum daily withdrawal rate (like at an ATM), there are 80-ish days of supply in storage. But if there were no technical constraints on withdrawals, there are only approximately 21 days of supply (or as little as 9 days at the height of demand). This compares to the US which has approximately 44 days (without constraint on withdrawals) – hence, there is a corresponding rise in blood pressure in the UK to a falling level of storage, especially at the start of the winter months. 

4) Just who is the largest exporter of oil to the US? This may come as a surprise, but it is Canada. The US imports more from our friends in the Great White North than from the entire Persian Gulf (= Saudi Arabia, UAE, Bahrain, Qatar, Kuwait and Oman). And also interestingly, Venezuela is ever-present in the top four eager exporters to the US, despite their rhetoric to the contrary

The shale revolution has left LNG rather deflated.

 

5) Shale, schmale. How much of US natural gas production comes from LNG?  In 2009 this level was approximately 1.6%. This is expected to grow this year, as more global production comes to market. Part of LNG‘s charm comes from the fact that it can be stored and transported at a size 600 times smaller than its gaseous form. 

6) Is coal still relevant in the US? In these greener-than-thou times that we live in, the fact that half the power generation in the US comes from coal is swept under the rug somewhat. And it doesn’t look like this percentage is going to radically change anytime soon, despite the possible implementation of a cap-and-trade-and-tax-and-shimmy scheme, or otherwise. Although technological advancement such as CCS (carbon capture and sequestration) may mitigate some of the emissions from coal, coal consumption in 2008 accounted for 37% of energy-related carbon emissions in the US.     

7) WTF is the SPR? (What Type of Facility is the Strategic Petroleum Reserve?) It is the emergency fuel store of oil for the US. There are four storage facilities, two in Louisiana, and two in Texas. Current capacity is 727 million barrels (over a trillion gallons). How full is the SPR? Pretty much to the brim

8) Is China really taking over the world through consuming more and more oil?  The answer is a resounding yes. In 1990, Chinese oil demand represented 3.4% of global demand. The estimate for 2010 is 10%. More importantly, since 2000, China alone has represented half of all growth in global oil demand. At the current rate, China will represent 20% of global oil demand by 2020, potentially a larger share than the US. 

9) Aw, c’mon then. How much of current US production comes from gas shale? While gas shale accounted for 2 Bcf/d five years ago (approximately 4% of total US production), this has now dramatically increased to approximately 8 Bcf/d due to seven key shale plays, including Barnett (5 Bcf/d), Fayetteville (1.3 Bcf/d) and Haynesville (1.1 Bcf/d).  This is approximately 14% of total US production; a rather significant amount.         

10) How much gasoline does the US consume in a year? The amount of gasoline consumed in the US annually would fill approximately 250,000 Olympic-size swimming pools.

1 Mar 5 2010 @ 10:50am by Matt Smith in Capital Markets, Crude Oil, Economy, Global Energy, Natural Gas, Random, UK natural gas

Burrito Bites

Welcome to Nonfarm Friday, my favorite day of the trading month, as it brings a more volatile reaction than eating mentos and drinking soda. Here’s a random list of events that have defined my deliberations on markets this week:

  1. There was a spanner in the works of the engine room of the global recovery, as Chinese Manufacturing took a nosedive (please feel free to complete the expletive “oh —-“).
  2. To temper this news a little, India came through with impressive manufacturing growth, and is expecting economic growth to ratchet up.  
  3. US natural gas has hit a three-month low as negative sentiment is encouraged by falling  weather-driven demand as we enter shoulder months.
  4. Greece had a bond auction and it wasn’t a catastrophe, mostly due to reassurances made the previous day about how they were to narrow their deficit gap(ing hole). Greece lives to fight another day, while tragic flaws remain.
  5. Crude broke back above $80, mostly due to currency fluctuations and risk appetite, and less to do with market-specific fundamentals (per the trend of recent times). The 4 mb build in weekly inventories was not bullish, but also not unusual.
  6. UK natural gas hit a new low for the year, with a similar story of funky fundamentals to US natty (=improving weather outlook, lower demand).
  7. US unemployment data came in better than expected (-38k jobs vs. -68k expected). The number was teed up to provoke a likely positive response…if  it had been poor, it would have been blamed on recent inclement weather, but as it was good it was viewed as robust. Hum dee dum.  

 

One good list deserves another, so let’s move straight on to the burrito bite buffet:

–Green tip of the week – save electricity on those middle of the night excursions by buying glow in the dark toilet paper.

–10 companies reinventing energy infrastructure.

–If anyone is able to chip in the additional $1,999,230, I’d love to combine our savings and  buy a Greek island. It’s for a good cause too.

Natural gas wins hands down in the fight against global warming.  

–This is random but fascinating – insuring Nicole Kidman. Also the first comment below the article about Jackie Chan is great.

–We hear about peak oil, but what about peak natural gas?.

–Prohibiting insider trading in commodities – The Eddie Murphy rule  (proceed to next bite if you have never seen the film Trading Places).

–A monster of an article, but fascinating – Michael Burry, the man who led the way in shorting subprime.

–Looking to own the latest in popular pets? – go get a goat.

The Burrito Deluxe Award of the week goes to equity markets. After a tentative start to the week, they are finishing with a flourish, having survived a torrential downpour of data in this first week of the month – avoiding potential pitfalls, potholes and puddles.

The Burnt Burrito Award of the week goes to stuttering Chinese data, from tumbling manufacturing numbers to stumbling forecasts of refinery slowdowns.

3 Feb 17 2010 @ 10:45am by Matt Smith in Biofuels, Global Energy, Technology

Topic #153 that I find fascinating but need to know more about: Algae

There is something about algae that I find absolutely fascinating. I don’t know if it’s because I find it so incredulous, but producing biofuel from squeezing seaweed really hard (presumably that’s how they do it) is mind-boggling to me. Hence its charm.   

algaeAlgae, or Oilgae as those in-the-know like to call it (ie – not me), is taking over the mantle as the potential savior of biofuels, as the energy world scrambles to find a way to meet the renewable fuels standard, a law requiring the US (stipulated by,erm, the US) to produce 36 billion gallons of biofuel by 2022. 

The US government, having passed the law five years ago, are obviously getting a little tetchy about achieving the goals they have outlined. The data aren’t fully in yet, but preliminary results indicate that the US has fallen short of their mandated level for 2009 of 11.1 billion gallons, and are keen to find a solution to such a behemoth of a problem. Hence, their interest in algae has been piqued, with $80 million in stimulus money recently paid out to research algae-based biofuels.

To add (bio)fuel to the fire, the cause is also not without the support of ‘big oil’. Exxon Mobil’s first ever venture into the green arena has been to team up with algae research company, Synthetic Genomics, in an initial $300 million joint venture. Admittedly, this is spare change (almost a gesture?) when compared to Exxon’s annual capital and exploration spend of approximately $30bln (= more than the US government’s renewable energy budget) . However, as an affirmation of algae’s potential, there doesn’t come any higher endorsement. 

...not to be confused with the DARPA Initiative...

...not to be confused with the DARPA Initiative...

Last April the Pentagon tasked DARPA, who helped to develop some of the most revolutionary technology used today (from the internet to a propane-powered GPS system), to develop algae as a biofuel on a large enough scale to supply the entire US military. All becomes clear when it’s realized the US military is the largest single consumer of energy in the world (60 – 75 million barrels of oil a year); oil dependence on the countries you could potentially be at conflict with is not ideal.
 
As for the recent ripples of excitement, these were caused by an article in the newspaper, The Guardian, last weekend. It claims that DARPA’s research shows they are already producing biofuel from algae ponds at a cost of $2/gallon, and are months away from developing the technology to produce biofuel for $1/gallon – similar to gasoline costs. And we are not talking niche quantities here; a 50 million barrel-per-year refining operation could be up to speed within the next two years. 

This revelation has taken the biofuel industry by surprise – even algae producers. This has also followed hot on the heels of a backlash against algae in a study released last month, which stated algae required much more water and energy to produce than originally projected. This claim was vehemently refuted by market players.

36 beeellion gallons

36 beellion gallons

So in a bizarre twist, in a world where technological advancement is making madcap biofuel visions a reality, algae looks well positioned to lead, or at least be a part in this effort. In similarly interesting news this week, British Airways announced they will be producing their own biofuel from London garbage. Who would have believed even five years ago that jet fuel would be being produced from seaweed and trash? Modern life is indeed rubbish.

As with its predecessors, algae has been placed on a pedestal, which is set to wobble and topple under the weight of its own expectations. Other fuels have received similar treatment – jatropha (=topic #137 I found fascinating but needed to know more about) and corn-based ethanol, to name but two. If only expectations could be tempered somewhat, algae could be perceived for what it is – another paving stone on the path to oil independence, but not the path itself.