I sat in on a meeting hosted by the International Energy Agency here in Paris to hear the great and the good discuss the energy transition. I don’t propose to summarize this right now, perhaps next month, along with the IEA’s informative analysis of Oil and gas in energy transitions. Lets just state what seems to be the consensus and say that the industry’s days are numbered, even if we don’t yet know what the number is.
Talking of energy in its broader sense I came across a graph that I found interesting. S&P Global Platts Analytics has just released its 2020 energy outlook. The press release includes a graph of energy prices. Not, as we are used to seeing, with oil in dollars per barrel and coal in dollars per tonne. This graph shows the cost of a unit of energy. During 2019, oil varied from $8 to $12 per MMBtu* with an average of around $10. Natural gas at the US Henry hub was a snip at around $2, although as natural gas gets shipped around the world it gets quite a bit more expensive, around $6 in Japan and the UK. Coal is cheap too, at a pretty constant $3.
Now I know that the world is turning away from fossil fuels. But note how expensive oil is compared to natural gas and coal. This has meant that producers of these cheaper fuels (US for natural gas, China and India for coal) have a huge incentive to use them. China is building new coal plants as is India. So is Japan. Even virtuous ‘green’ energiewende Germany is building a new coal fired generating station at Datteln.
Of course, the above prices are the price for raw heat. To compare these with renewables we have to look at the price of generated electricity. This is quite tricky depending on geographies, taxes and so on and is pretty comprehensively covered elsewhere, by the IEA for instance. But there is a paradox here. While the reports all have it that wind and solar are now ‘competitive’ with fossil fuels for the electricity generators, this is definitely not the case for the consumer. I can heat my home (and I am afraid I do) much more cheaply with fuel oil than electricity from the grid. OK I should have photovoltaics on the roof but these, although perhaps cheaper than grid electricity would I think have a job competing with the cheap, untaxed calories that my pink diesel provides.
Going back to oil, why is it so expensive? I guess it is demand and, in particular, demand for it as a mobile fuel for cars, boats and planes. With the exception of planes, oil is now at risk of being displaced by electricity from any of the above sources. My evidence for this comes from a fellow dog walker who works in the EU automobile sector which is currently undergoing convulsions as manufacturers are being forced by government to shift their production to e-vehicles. There is little evidence of this happening on the street. Except for the paradox that there are more and more gas guzzling SUV’s on Europe’s roads. This is conjectured to be due to manufacturers dumping their last models before the new regulations, creating a likely CO2 blip that will see us through the next few tens of ppm of CO2 and tenths of a degree of warming.
Walking through a Paris suburb recently I came across a heavy-duty drilling rig operating on a rather large pad filled with service company kit. It was a geothermal well (oil exploration has been banned in France). They must have been testing the produced water as there was quite a lot of hot vapor coming off the operation. Subsequent research determined that this was a breakthrough test of the deepest geothermal target in the Paris basin, the Triassic, with water produced at somewhere around 80°C. The idea being that the deeper you go, the hotter is the produced water. The hotter the water, the more energy. Pretty obvious really.
Even for the ‘obvious’, confirmation is always useful. I chatted with some heat pump specialists at GE Oil & Gas last year who were showing off some rather impressive industrial systems that manage to use the energy in hot flue gasses. The waste heat recovery systems like their heat hot! Several hundred degrees C at least otherwise, forget it!
So how is it that the folks who promote low temperature geothermal energy, including incidentally the IEA through its HeatPumps.org resource, can get energy from tiny temperature differences of a few tens of degrees? Long-time readers of Oil IT Journal will perhaps recall my earlier quixotic tilting at the windmills of the heat pump brigade, in 2008 and 2013. Since these early rants, I have given the heat pump fallacy some further thought, and I think I have got it nailed. The heat pumpers rely on a property of the reversible air conditioning unit (the essence of the heat pump) called the ‘coefficient of performance’, the COP. This is often quoted as a number around 3x or 4x and is presented as an energy multiplier. In other words, for 1 kilowatt of energy input you get 3 or 4 kw out, a fantastic deal! But if you look into how the COP is defined there is a small problem. Wikipedia and other sources give the COP as a ratio of temperatures as T(cool)/(T(cool)-T(hot)) for a cooling system. As the temperature difference tends to zero (i.e. when there is no heat flow available), the COP actually increases. This is often cited as a benefit of such systems which are ‘most efficient’ at vanishingly small temperature differences.
This apparent paradox is due to a misunderstanding or misrepresentation of what the COP Is measuring. As a ratio of temperatures, it is a measure of the gearing in the system. The COP is not a measure of energy (heat) at all**. The COP just tells you how cold your office will be for a given outside temperature. The energy used to do the cooling all comes from the mains electricity that is driving the pump. The shallow borehole, the serpentine under your lawn, the ‘air-geothermal’ fans or pipes going down into the ocean are simply fantastical artifices to fool the unwary.
* Million British thermal units.
** Confusing heat and temperature is quite commonplace as a recent letter to Physics Today explained.
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