From FuturePundit.com:

August 05, 2008

EEStor Claims Battery Energy Density Breakthrough

Venture capital start-up EEStor claims their battery outperforms lithium-based batteries.
EEStor claims that its system, called an electrical energy storage unit (EESU), will have more than three times the energy density of the top lithium-ion batteries today. The company also says that the solid-state device will be safer and longer lasting, and will have the ability to recharge in less than five minutes. Toronto-based ZENN Motor, an EEStor investor and customer, says that it’s developing an EESU-powered car …

The economy, the stock market, and our understanding of the future direction for energy and transportation may all be on the brink of major changes .  This letter will open a discussion of these ideas. 

A Very Tough Month

Before turning to the future, I must confess that the immediate past month was  most painful for the EIS portfolio.   Oil prices hit a violent downdraft in July, which especially impacted my “options on futures” strategy.  It declined in value by about 33%.  Since the purpose of these options is to provide portfolio …

The drum beat for substituting natural gas for petroleum to power cars and trucks has begun to get louder.  It’s been part of Boone Pickens’ plan, of course.  And now Jim Cramer has picked up the theme with support from Aubrey McClendon of Chesapeake (CHK). The concept is potentially practical since natural gas is currently much cheaper than oil on an equivalent power basis and since converting cars to NG is done in many parts of the world and is not terribly expensive.  Apparently conversions are popular in Australia …

The Chair of BP is quoted by Reuters (below) saying that the recent Russian tax reduction on oil companies will lead to production increases in “a year or two.”  Which often means three or four.  In my view the reality is that Russian production can increase if Mr. Putin wants it to do so.  The new tax reduction still leaves a very high tax rate in place.   It is not clear what Mr. Putin truly wishes, but it seems geologically possible that Russia can increase production if it so desires …

A report in The Economist analyzes the possibility that ultracapacitors are a game changer.   Remember:  “the prize” that everyone seeks is a technology that will allow electricity to power personal transportation economically.  In other words, can we build a PHEV or EV that can be more attractive to the consumer than a Smart car?   When that happens we will begin to transition away from petroleum and toward electricity, which is our inevitable ultimate destiny. The Economist analyzes whether ultracapacitors may be the key to that prize.  The article …

We can add Indonesia to the list of major oil fields in rapid decline.  The list is headed by Mexico’s giant Cantarell field and by the North Sea.  Apparently political mismanagement is a factor in Indonesia’s inability to attract foreign capital and expertise to try to find new reserves.
Indonesia warns oil output to finish in 10 years’ time
JAKARTA: Indonesia’s oil watchdog, BPMIGAS, warned on Friday that the country’s dwindling oil reserves could be exhausted in 10 years’ time if no new reserves are found.
Indonesia has struggled to develop its rich …

The following report from Asia Times Online points to another example of strategic trade by China.  “Looking to fill the vacuum created when the Russians returned home from the five former Soviet Central Asian republics of Kazakhstan, Kyrgyzstan, Uzbekistan, Tajikistan and Turkmenistan, and the roubles dried up, China is now making moves to become the new Central Asian superpower.”

China’s interest in these poor Muslim countries is primarily their fossil fuel resources.  Once again we see China wrapping up a supply of oil before it can hit the …

A well-respected Dutch consultancy supported by substantial corporate interests including Shell has issued a report that warns of severe oil price shocks starting in 2010.  As my readers know, I have been suggesting a similar time frame for severe oil shortages based on my reading of predictions for supply constraints by many analysts and by the Wikipedia Megaprojects works. I have not analyzed the report in depth but my reading of the summary found aspects that were confusing.    For example, the report blames Mexico and Russia …

I’m a rich environmentalist who thinks the green movement often goes too far.  So I’m happy to see that advocates for the poor are starting to put their oars in the water to limit the influence of the environmental lobby.  Clearly higher oil prices hurt the poor disproportionately.  Now the poor are fighting policies that may raise oil prices. Take ANWR as an example.  If there are any environmentalists who actually go to northern Alaska to enjoy the natural beauty, you can bet they are wealthy.  People living in the …

The report posted below from the Washington Post is focused on continuing high Chinese demand for big cars like Hummers despite fuel subsidy reductions.   It is worth remembering that developing countries are now experiencing the same reckless conspicuous consumption habits among their many newly wealthy citizens that the U.S. saw in the ’80’s and ’90’s.  SUV sales in China were up 43% in May, for example.  The piece also cites continuing subsidies for oil in other developing countries.  By Ariana Eunjung Cha Washington Post Foreign Service Monday, …

As I’ve noted before, the difference between China’s national policy on buying oil and that of the OECD in general and the U.S. in particular is striking.  The Chinese have been trying to wrap up as many direct bi-lateral purchase agreements as they can while the U.S. relies on the “free market.” The U.S. may become highly disadvantaged by being a passive observer as China takes oil off the market via long term bilateral deals.  China’s actions will result ultimately in less oil being available to the free market.  …

There are two oil myths currently making the rounds.  The public could become convinced that pursuing these myths is a solution to the energy crisis so the danger the myths represent is partially the environmental risk but more importantly the risk of our not pursuing a truly useful energy policy.   Both myths envision  the U.S. being delivered  from dependence on evil foreign oil sellers  by one of two Fairy Godmothers.  The two are:   1.  drilling for oil in the Outer Continental Shelf and the Alaskan National Wildlife Preserve …

I strongly recommend the following report from the 7/30/08 Financial Times in its entirety to serious oil supply students, but I will offer the following summarizing comment: According to the CEO of Schlumberger, a serious shortage of personnel trained to operate sophisticated oil drilling equipment, caused by two decades of low oil prices, will severely limit the ability of the industry to expand oil production.  It takes ten years to turn out a fully trained deep ocean drilling technician, apparently. A key element of the problem is that …

The Zenn and its related power source from EEStor could the The Next Big Thing.  Or not.  It’s speculative but well worth watching.  Does anyone have an opinion?  Here’s a report: ZENN making giant leaps with EEStor technology! By Auto123.com, Saturday, August 02, 2008 Topics: auto123.com, zenn, environment, news Everyone knows that energy storage is still the Achilles’ heel of all electric vehicles. In its ongoing efforts to become the world’s foremost …

Production in Nigeria declined slightly in ‘07 from ‘06 - about 110 kb/d, but it is off about 500 kb/d in ‘08 vs. ‘07.  Clearly the MEND and other criminal/protest forces are gaining the upper hand.

In a sense, Nigeria has really become the world’s “swing producer”.   The tightness of global oil supplies hinges as much on whether the Nigerian government can get control of its country as whether the Saudis increase their production or not.

Here is a recent report from Bloomberg

July 28, 2008, 9:33AM
Nigeria to ramp up oil exports by …

The number of reports of electricity shortages in China, India, and other developing economies recently, some of which I have posted, seem to be increasing.  Part of the problem in China may be due to environmental sensitivity surrounding the Olympics.  But it may also reflect a real shortage of coal globally and also the fact that electricity is becoming  uneconomical to produce given price controls on electricity combined with rising coal prices.   The last sentence of the report below from The Times  on an “electricity crisis …

Pipeline company Enbridge has announced significant progress toward linking Asian markets to Canadian oil sands producers.  A report from the Globe and Mail reproduced in part below states that financing for the pipeline is coming from both the oil producers and potential Asian buyers.  This is significant because market for Canadian oil sands producers have been limited to Canada or the U.S.  Some U.S. environmental lobbyists are pushing Congress to limit purchases of oil sands products by U.S. government entities which could  potentially reducing …

They all want to do It - the only question is when will they be able to make a profit at it?   Here is a recent report from Reuters: Chrysler aims to have electric cars in three to five years Mon Jul 14, 2008 9:27pm BST   By Poornima …

Could it be that the Japanese car companies have such complete control of the U.S. market that they are trying to keep the American producers alive because they can’t handle all the business they would get if GM/Ford/Chrysler go under?  And could it be that the Japanese think there is much more mileage left to go in the current hybrid technology that uses NiMH (nickel-metal-hydride) batteries before any transition to Lithium-ion happens? Those are two of many interesting views of reality contained in an essay by Jack Lifton that …

Phillips, the European electrical company, is betting large that the ultimate lighting product will be L.E.D.s, not C.F.L.s, a topic I have discussed before.  “Philips is betting the store on the L.E.D. bulbs, which it expects to represent 20 percent of its professional lighting revenue in two years.” But the cost problem has not yet been solved.  L.E.D.s are now mostly found in commercial and industrial operations where experts can judge the long-term ROI, not in residential sites.   Apparently Phillips thinks it can solve this problem within …

A report in the Globe and Mail recently described how one of the environmental “problems” often cited by critics of oil sands has become a useful export for Suncor (SU), one of the largest oil sands producers.  The byproduct is coke, which has been stacked  like new mountains for some eventual low-value use like landfill.   Now it is being exported to China for real money.  

Let’s hope the Chinese can figure out a way to burn it while controlling the carbon dioxide emissions.  (Fat chance, I suppose.)  Well, at least this …

John Mauldin, an economist and investment advisor who often offers both unusual and insightful views recently wrote that new applications for solar power plants are booming.  He said: “The July 21 Fortune has a great article on the rush to build solar power plants in the deserts of California, Arizona, and Nevada. Applications have been filed to build plants that would generate a theoretical 60 gigawatts of electricity. To put that into perspective, California only uses 33 gigawatts. And the biggest and richest firms are lining up to get land …

  China’s Power Crisis Deepens as Coal Supply Dwindles (Update1) By Wang Ying July 29 (Bloomberg) — China, the world’s second-biggest energy consumer, is facing a deepening summer power crisis that may persist into the winter months, the nation’s dominant electricity distributor said. State Grid Corp. of China, which more than 1 billion people rely on for power, said electricity shortages have worsened because of inadequate coal supplies. Forty-six percent of the power stations connected to the distributor’s grid have coal stockpiles below the “caution line,” or …

The EIS portfolio is now substantially out of the stock market and in cash. What sort of an energy investment strategy is cash?  It’s the strategy you might want to employ when you judge that   1. All stocks are likely to decline, taking energy stocks down with them, or   2. Oil and/or gas have become short term overpriced and are likely to correct , or   3. Energy stocks have run so far that they’ve become severely overpriced.  I’ve come to judge that  #1 above - the …

As reported in today’s New York Times Carlos Ghosn the CEO of Nissan and Renault stated that Nissan will produce an all electric car with a range of 100 miles (U.S.) or 50 miles (E.U.) for release in 2010 - 2012.   Ghosn believes the plug in electric hybrid is a mistake and that his all-electrics will be profitable, not a “loss-leader.” How can a mere consumer-observer like myself question the judgement of the reigning guru of the global auto industry?  Still…if I were on a lot and had a choice …

The International Energy Agency based in Paris is conducting a study of the conditions of the oil fields of the major oil producing nations - I believe the first of its kind by a respected national or international agency.   Among other things it will try to assess decline rates of existing fields and the projecte the adequacy of new supplies expected to come on the market. The study is expected to be released in November.   In the meantime the  well respected analyst leading the study, Fatih Birol, has released an …

People are mighty miffed at the price of gasoline and my favorite presidential candidate, Sen. Obama, does not seem to be offering much.  Yes, he talks about a grand “go to the moon” scheme of “alternative energy” development a la Kennedy and like Mitt Romney.  But he’s tied to orthodox Democratic objections to more drilling and to nuclear power, both of which people sense are needed.  More important, Obama has not brought his own more progressive thoughts into a clear focus that people can understand as meaningful.   It’s not just …

According to this report from Bloomberg,  a European consultancy says that OPEC’s recent forecast of 2008 non-OPEC oil production is well in excess of reality.  It recommends that OPEC raise production (as if) and lower the prices it is demanding  for its excess heavy sour crude so as to be appealing to the market.  The implication is that OPEC is trying to keep oil prices high.  You think?  We are starting to get low enough prices that we may find out, particularly if they fall another $10 …

A recent post published at Seeking Alpha provides interesting data and commentary - both from the author and readers - regarding the prospects for various nat. gas producers, particularly in regard to the Marcellus Shale play.  I’m not sure this is the day to be loading up on such stocks, but some day the sun will shine on them again.  

This story may not impact the price of oil in the near term but some day it may bite.  It’s a useful construct for understanding what is happening in the geo-politics of oil, which is vital since above-ground conditions increasingly determine how much oil reaches OECD markets. Here is the short version:    1. A great deal of future potential oil flows lie offshore Africa.    2. Shipments of oil from Nigeria are attracting pirates.  Bandits who are internal to Nigeria are also stealing much …

Pemex announced another substantial year over year drop in oil production from its huge Cantarell field in June.   June production was 1.017 mb/d, compared with 1.038 mb/d in May  and 1.074 mb/d in April, but it was 35% less than June, 2007.  This is reported to be the fastest decline rate in 12 years. Total Mexican oil production in June dropped 11.4%  from June, 2007 to 2.838 mb/d which compares favorably with May’s 2.79 mb/d.  The monthly increase is due to the fact that, “The company …