Re: AAE Good investment in oil crisis?
I am in the process of writing a rather large document (about 150 page, no pictures or charts, all text) explaining this to an ASX listed company. Details are confidential but I will say that at some point the company has been the subject of threads on ASF and is not itself an energy company.
Very heavily condensed, the energy picture looks something like this over the next half century.
My calculations, which include practically every significant oil producing country including OPEC members, suggests strong production growth in 2005 and 2006, moderate growth in 2007, minimal net change in 2008 and decline after that. Others have produced very similar results despite using widely varying methods.
If you take an optimistic view then technically production growth can be maintained with demand met until at least 2013. But it requires enormous co-operation and an incredible amount of (mainly American) capital invested particularly in Venezuela, Iraq, Kuwait, UAE, Saudi Arabia, Iran, Canada, Kazakhstan, Russia, Libya, Nigeria, Azerbaijan and other countries.
Judge for yourself but I think the chances of US co-operation and unrestricted access to ALL of those countries is so small as to be not worth considering. Take even one country out and production falls short.
Environmentally, hydro-electricity is a clear winner in terms of greenhouse followed by wind. With present technology solar (photovoltaic) systems are highly polluting due to the fossil fuels used in production.
If we are ever to move to a totally renewable energy system then hydro is critical for the energy storage it provides, flexibility of output (to balance all those fluctuating wind and solar sources) and the technical characteristics of large rotating machines as power generation sources (a totally wind system is incredibly unstable in operation, and of course doesn't work two thirds of the time when there is inadequate (or too much) wind. That's why you need other sources with hydro the most practical and clean at present.)
Politics is the big problem with energy. The Greens came into existance for the specific purpose of OPPOSING renewable energy. That may shock some, but it is completely true. Just check their history if you doubt me. Opposition to renewables and the infrastructure needed to support them is particularly strong in NZ (to the point where opponents appear to favour nuclear) and parts of South-East Australia at the moment.
Realistically, a mix of technologies are the way forward. Gas is in the same position as oil with a time delay. We need it for transport, industry, fertiliser manufacture (the food you eat is largely fertilised with natural gas-based nitrogen fertiliser). Therefore, and I say this in the strongest possible terms, it is an absolute priority for the world to move away from oil and gas as sources of electricity. Power generation is just such an inefficient use of diminishing resources. Economics will (and is starting to) force the shift if other considerations don't.
So what are we going to use? For electricity, which represents by far the largest fuel use, renewables will play an increasing role but expect very major confrontation with environmentalists. Yes the landscape will be filled with wind turbines and it is almost certain that at some point the construction of big hydro-electric dams will be back on the agenda due to the critical storage role played by hydro in a renewable power system (otherwise it's fossil fuels forever with wind as merely a supplement).
Unfortunately, it will be some decades before we see the end of conventional power generation. Due to the oil and gas problem, this does mean that coal and / or nuclear have a substantial ongoing role to play over the next 50 years. Hate it or love it, that is practical reality.
Mobile power sources are by far the biggest problem since oil and gas are running out. Ethanol from waste is a useful contributor which makes a positive energy gain, but there is no point growing cane just to produce ethanol. Gas is a short term option, but is running out (discovery peaked nearly 30 years ago worldwide).
Hydrogen is a viable alternative only in the context of having a plentiful supply of electricity with which to produce it. It is incredibly inefficient such that oil or gas-fired electricity combined with hydrogen vehicles would more than double the total quantity of fuel used compared to conventional vehicle fuels. That's why developing non-oil and gas electricity is a must if hydrogen is ever to play a significant role.
Initial hydrogen production would largely be from natural gas by means of chemical processing (that is, not using the gas to generate electricity but directly extracting hydrogen from the gas itself). Another good reason not to squander gas for electricity. The process is, however, an inefficient use of gas compared to directly using the gas to fuel vehicles.
Realistically, unconventional oil sources like shale and coal liquefaction are almost certain to play a role. Incredibly polluting perhaps, but likely. Not expanding electricity generation would greatly increase the need for such unconventional oil sources since the lack of electricity rules out hydrogen for vehicles.
That the deadline is perhaps 3 years away is the reason why a totally renewable solution is simply not an option. A combination of all options including wind, solar, geothermal, tidal, large scale hydro, biofuels (including ethanol), nuclear and coal-fired electricity and production of liquid fuels from coal and shale is likely to be used. And of course we still have the ramaining supplies of oil and gas, total production of which will decline relatively slowly with gas still growing over the next couple of decades in some countries (Australian production peak seems likely around 2025-2030 based on present discovery and production trends).
Environmentally, the good news is that there isn't enough oil and gas to cause all but the mildest greenhose scenarios. The bad news is this lack of oil and gas is likely to be the greatest problem of the 21st century.
This was very highly condensed as I said at the start. Invest your money as you see fit but I suggest that Uranium (due to the Kyoto Protocol), and oil stocks with good PROVEN reserves are the way to go. This doesn't take account of the ethical considerations. Gas depends on location - anywhere in North America and UK there is a massive market due to reserves running out an production falling. There are good opportunities in NZ for anyone who makes a large find (the country faces a gas crisis as existing fields run dry) but the small size of the market (around 40 PJ plus 80PJ each for power generation (which is shifting to coal and renewables due to lack of gas) and export methanol production (which has substantially ceased due to lack of gas).
As for renewables, ethanol would make money in an oil crisis despite questionable fundamentals. The solar tower (Enviromission) and hot dry rock technologies seem to have a strong future in a technical sense although they are sources of electricity not vehicle fuel.
The dominant renewable energy business in Australia is not listed - it is owned 100% by the Tasmanian Government. Generates 60% of Australia's renewable energy from operations in Tas and SA. Will supply peak power to Vic in about 12 months. Involved in hydrogen research both for vehicles and stationary energy - has operating prototype systems and a 100% wind/hydrogem system on a remote island is planned. Has 50% wind in the King Island grid with a grid-connected battery system. Extensively involved in provision of technical expertise for hydro and other renewable energy and water supply systems around the world. Also a world leader in proven technology which increases rainfall 10 - 20% over targeted areas.
The next biggest player is the Snowy Mountains scheme. Another one you can't invest in.
The remaining players are generally focused on one or two projects and have minimal (if any) present production. Good thing though is they are ASX listed.