Tag Archives: Peak Oil

Spoke to the Hawaii County Council’s Energy Committee

February 1, 2012 Richard Ha 1 Comment

Wally Ishibashi and I gave a briefing to the Hawai‘i County Council Energy Committee yesterday. We are co-chairs of the Geothermal Working Group, which submitted its final report in time for this legislative session. Wally briefed them on the Working Group report, and I briefed them on the four Peak Oil conferences that I have attended.

People testifying commented about public safety such as evacuation plans and gas emissions, as did council members. As co-chairs, Wally and I are strongly in favor of addressing safety issues. Nothing is more important. The Working Group suggested streamlining procedures, but never at the expense of public safety.

Although the working group was not required to abide by the sunshine law, Wally and I believe in transparency, so we operated in the spirit of that idea as we worked on the Geothermal Working Group report.

We’ve had about 25 meetings with the community and we strongly believe that we must continue to “talk story.” The discussion must start from the ground up, and we encouraged the council members to arrange opportunities for us to engage their constituents.

The council members expressed support for energy independence, and for geothermal in particular. They are very aware of the vulnerability we face because we are located in the middle of the Pacific, where we rely on fossil fuels to sustain most of our lifestyle. It is about safety: physical, economical and societal safety.

I shared my perspective after having attended four Peak Oil conferences. The most significant thing that has changed recently is that the price oil is now being driven by increasing demand, rather than abundant supplies. For the past 150 years, it has been driven by abundant supplies.

That’s why we now have oil that costs $100 per barrel, even in a recession. If world economic activity increases, the price will go even higher. The changes that will come from this will be profound, and the effects will have human consequences. The rubbah slippah folks understand this clearly.

I offered my opinion that we do not have the luxury of waiting 10 years. I think that we may be lucky to have five years to make meaningful change. It is clear that we are moving too slow in terms of safeguarding the well-being of our people.

Geothermal

What Should Oahu Do When Big Isle Electricity Rates Drop?

January 30, 2012 Richard Ha

As the Big Island deploys more geothermal, its electricity rates will come down relative to O‘ahu’s.

It won’t be too long before the Big Island’s electricity rates are lower than O‘ahu’s.

See HECO rates per island here.

Should O‘ahu try to levelize rates, in order to take advantage of some of this decrease in electricity cost? Or should it wait for a cable, which would lower electric costs more?

For various reasons, it is better to wait for a cable.

To be continued

Community, Geothermal, Peak Oil

Peak Oil: Preaching to the Laupahoehoe Choir

January 27, 2012 Richard Ha

Last night, I spoke at the Laupahoehoe Community Association meeting and shared the perspective I have gained from watching the world oil supply subject evolve over a short five years.

I related how I have attended four Peak Oil conferences, most recently as Hawai‘i County’s representative. The first thing I learned was that the world has been using twice as much oil as it has been finding for 20 to 30 years – a trend that continues.

Five years ago, oil prices were supply driven. When supply was restricted, oil prices rose, and when oil supply resumed, prices fell.

Last year, that correlation fundamentally changed. We now have a demand problem. And the demand is coming from the new economies: China, India and others.

That’s why, during this recession, we still have $100 per barrel oil. Unlike during the last 150 years, supply cannot seem to keep up with demand. If you are a subscriber to Nature magazine, or don’t mind becoming one, you can read a good article about that here.

Oil’s tipping point has passed

The economic pain of a flattening supply will trump the environment as a reason to curb the use of fossil fuels, say James Murray and David King.

…There is less fossil-fuel production available to us than many people believe. From 2005 onwards, conventional crude-oil production has not risen to match increasing demand. We argue that the oil market has tipped into a new state, similar to a phase transition in physics: production is now ‘inelastic’, unable to respond to rising demand, and this is leading to wild price swings…. Read the rest here

World oil supply is naturally declining at approximately five percent, meaning we need to find the equivalent of a Saudi Arabia every two to three years. Clearly we have not been doing that, nor is it likely we will do that.

To make matters worse, oil-exporting countries are forced to use more of the oil resource in their own countries or the people will revolt. Sooner or later, oil-exporting countries will keep all its oil for its own people. All the signs indicate that we have much less time than we think.

I told the folks that most of us, except the native Hawaiians, were immigrants. We all dream of a better future for our children and grandchildren, and rising oil prices are a threat to that dream.

We are very lucky, though, to have an indigenous alternative – Geothermal. Generating electricity from geothermal costs approximately 10 cents per kilowatt hour, while generating electricity from oil (at $100 per barrel) costs more than 20 cents per kilowatt hour. Geothermal-generated electricity prices will be stable for generations, while oil prices will keep on rising.

I was preaching to the choir. They wanted to know what could be done. I told them to contact their legislators and that I would make sure to keep in contact with their organization.

Geothermal, Peak Oil, Renewable Energy Sources

If We Spend All Our Money on Electricity…

January 9, 2012 Richard Ha 1 Comment

At a local level, the rising cost of electricity, whatever the cause, will result in severe economic pressures.

What’s important to realize is that 70 percent of our economy is based on consumer spending. “If people no more money, they no can spend.”

It all relates to costs.

See these Honolulu Star-Advertiser articles on the subject:

Geothermal power production could double

Hawaiian Electric Light Co. wants to tap more of the Earth’s power for electricity

By Alan Yonan Jr.

POSTED: 01:30 a.m. HST, Jan 07, 2012

Officials from Hawaiian Electric Light Co. said Friday they will soon seek regulatory approval to more than double the amount of geothermal power produced on Hawaii island in a move that could provide some relief for residential utility customers, who pay the highest electric rates in the state…. Read more

and

Keep close eye on geothermal funds

POSTED: 01:30 a.m. HST, Jan 07, 2012

Hawaii has been touted as an ideal laboratory for the development of renewable energy that’s bound up in its wind, seas and sunshine. It’s the southernmost island in the chain, however, that may be the most richly endowed overall, and the most promising resource of all is the one that’s buried far beneath the surface…. Read more

Having attended four Peak Oil conferences now, I have seen that Jeff Rubin is one of the credible commentators on the world oil situation. His comments are especially relevant to the discussion about rising oil prices in Hawai‘i today.

Audio of Jeff Rubin’s talk at the most recent ASPO conference.

From his blog:

…The real story behind triple digit oil prices is not the threat of supply shocks, but the sheer, unrelenting rise in world oil demand. Already closing in on 90 million barrels a day, the quick rebound in world oil consumption to new record highs demonstrates the global economy can’t grow without burning greater amounts of oil.

No matter how many rabbits the oil industry can pull out of its hat, be it tar sands from Alberta or shale oil from the Bakkens, supply just can’t seem to keep pace – at least not at the prices most consumers can afford to pay. That is the message that triple digit prices keeps telling us.

If the global economic expansion, troubled as it may be, continues, we will see even higher oil prices in 2012. But what does that say about the sustainability of growth?

And even if there is growth, what is the pace? Read the whole post here.

Jeff Rubin explains why he quit his job as Chief Economist at CIBC World Markets. In Hawai‘i, we call it kuleana.

After twenty years as Chief Economist for a North American investment bank, it was time for me to seek a larger audience for the story I needed to tell.

My predictions of steadily rising oil prices over the last decade, including my call for $100-per-barrel oil by 2007, had flown in the face of conventional wisdom.

Among other things, my track record on predicting rising oil prices demonstrated that the traditional laws of supply and demand were no longer working for one of the economy’s most basic and essential commodities. And when they stopped working, the consequences for the economy would be severe.

It wasn’t subprime mortgages but triple-digit oil prices that brought down the world economy.

And unless that economy started to wean itself off an ever-depleting supply of affordable oil, there would be other recessions to follow as economic recoveries would simply push oil prices right back into triple-digit range. But weaning our economy off oil meant, at the same time, making fundamental changes in the way we live.

This is not the kind of message investment banks want their chief economists delivering these days, to either governments or investors. But the urgency of this message grows with every passing day.

On March 31, 2009, I resigned my position as Chief Economist and Managing Director of CIBC World Markets to deliver this message in my book, Why Your World Is About To Get A Whole Lot Smaller: Oil and the End of Globalization.

Jeff Rubin was the Chief Economist at CIBC World Markets for 20 years. He was one of the first economists to accurately predict soaring oil prices back in 2000 and is now one of the world’s most sought-after energy experts. He lives in Toronto.

Peak Oil, Renewable Energy Sources

2011: The Year in Review

January 2, 2012 Richard Ha 1 Comment

What a year it’s been! Here are some 2011 highlights:

There was a lot of conversation, of course, about geothermal. The Geothermal Working Group Interim Report – which provided lawmakers with an evaluation of using the hot water reservoir in certain locations of Big Island to provide local and renewable energy for electricity and transportation – was distributed to state legislators. I also wrote about it being a matter of leadership, about mopping the deck of the Titanic, and about how the momentum toward geothermal has shifted. Also about a Democratic Party Resolution supporting geothermal for baseload electrical power.

I attended a geothermal energy forum in Pahoa, with Hawaiian leaders speaking and every seat taken. There were more Hawaiian perspectives in supporting geothermal, this time in Hilo. And about even more Big Island support for geothermal.

I posted a link to the cloudcam, a time-lapse video taken by the Canada France Hawaii telescope’s cloud cam at night, which I thought was really neat. It’s time-lapse photography where you can watch the stars migrate across the night sky.

June and I enjoyed meeting and talking with visionary Earl Bakken at his Kiloho Bay home, and learning about his manifesto.

We participated in Alan Wong’s Farmers Series dinner for a second time, and really enjoyed it.

People seemed to enjoy the conclusion of my Maku‘u Series. I got a lot of great feedback on it. It was fun remembering the old days and the old ways of my Kamahele ‘ohana in Maku‘u.

I wrote about biofuels, and the very real problems with them. Also on biofuels and feedstock. I wrote a post about the National Research Council calling biofuels costly and their impacts questionable.

I spoke to the Kamehameha Schools First Nation Fellows about food sustainability, showed them the farm and gave them some of the best advice I could think of.

Of course I mentioned a few times about how “If the farmers make money, farmers will farm.” That link is to one of those times.

In June, seven Polynesian-style voyaging waka (canoes), representing different Pacific Islands, arrived in Hilo Bay after a two-month voyage from Aotearoa (New Zealand).

Leslie Lang, my blog editor, went for a spin around the bay on one, and we wrote about how the ancient ways are again showing us the way.

“It’s all about taking the knowledge and wisdom of the past and using it in the present to make a stronger future. It’s exactly what the old Polynesians did when they sailed out into the Pacific to find new land.”

It’s a strong metaphor. I wrote my impressions of the vaka here.

More vaka posts: The Canoes are Coming: Te Mana o Te Moana, They’re Here! and What’s the Big Deal about Voyaging Canoes?

In July, CEO of Ku‘oko‘a Ro Marth and I went to Iceland, in order to see for ourselves how Iceland went from being a developing country in the 1970s to one of the most productive countries in the world today. (Here’s a hint: GEOTHERMAL.)

Read about our very interesting trip (I wore shorts) at Heading to Iceland, Heading to Iceland 2, Power Plant Earth and Iceland, In Conclusion.

The online news organization Civil Beat published my three-part series on energy and food security in September.

And I attended my fourth Peak Oil conference, this one in Washington, D.C. I wrote about it here: Part 1: As the ASPO Conference Gears Up, Part 2: Impressions from the Conference, Part 3: Energy Return on Energy Invested and Part 4: The Answer is Geothermal.

It has been a busy, productive and interesting year, and I look forward to having another of the same. My best wishes to everybody out there reading for a happy, healthy and successful 2012!

Peak Oil

Oahu’s Electricity Rates Surpass Other Islands

December 30, 2011 Richard Ha

It used to be that the avoided cost (the part of your electricity bill that is due to oil) was higher on the other islands than on O‘ahu. This Hawaiian Electric (HECO) chart shows the rate on different islands back to 2008.

This past October, though, the avoided cost on O‘ahu, Maui and Hawai‘i Island was roughly the same, at approximately 15 cents per kwhr.

Now, O‘ahu’s avoided cost has about doubled. It’s 29 cents per kwhr now, and actually higher than on the other islands.

This is more proof of what has been clear to me since 2007, when I attended my first Peak Oil conference – that oil prices were going to just keep rising.

Avoided costs for January 2012:

HECO (O‘ahu)

On Peak 29.167 cents per kwhr

Off Peak 19.060 cents per kwhr

HELCO (Big Island)

On Peak 21.656 cents per kwhr

Off Peak 17.656 cents per kwhr

MECO (Maui)

On Peak 20.240 cents per kwhr

Off Peak 19.194 cents per kwhr

MECO (Lana‘i)

On Peak 34.621 cents per kwhr

Off Peak 29.057 cents per kwhr

MECO (Moloka‘i)

On Peak 29.428 cents per kwhr

Off Peak 26.580 cents per kwhr

Geothermal, Peak Oil

Democratic Party Resolution Supports Geothermal for Baseload Electrical Power

December 28, 2011 Richard Ha 1 Comment

The following is a resolution that the Hawaii County Democratic Party adopted at its 2011 County Convention. It recognizes the value of geothermal as an indigenous resource, and it recognizes that low cost is a relevant and important aspect that benefits society.

It also notes that the EPA has directed the HECO companies to retrofit its oil-fired plants to comply with emission standards. But that will cause oil-fired plants to stay in operation longer than desirable, and will result in higher cost to ratepayers.

Note especially this:

“NOW THEREFORE BE IT RESOLVED THAT the Hawai‘i County Committee of the Democratic Party of Hawai‘i hereby formally requests the 2012 Hawai‘i State Legislature to direct the Public Utilities Commission to require HELCO to develop a timely plan to retire its fully depreciated fossil fuel power generation facilities and accept geothermally generated electrical power as the primary baseload source. HELCO should continue to include other alternative energy sources – such as wind, solar and hydro – in its mix of sources, but geothermally generated electricity must become the primary baseload source for Hawai‘i Island within the next five years; and

FURTHER BE IT RESOLVED THAT the PUC should continue to implement contractual procedures between HELCO and geothermal power producers that represent an equitable return on investment but, as important, reduce the kilowatt hour cost to consumers whenever possible.”

The Resolution:

Requesting the 2012 Legislature to Mandate PUC to Require HELCO to Develop A Timely Action Plan To Retire All Depreciated Oil-Fired Power Plants on Hawai’i Island And Transition to Geothermally Generated Electricity As the Island’s Primary Baseload Power Source

WHEREAS, the Hawai‘i County Democratic Party adopted a resolution at its 2011 County Convention supporting the use of indigenous, renewable geothermal energy to generate baseload electrical power to (1) reduce dependency of imported fossil fuels, (2) reduce our carbon footprint and other environmental risks, and (3) hold the line or reduce electrical energy costs to consumers; and

WHEREAS, Puna Geothermal Venture has proven the safety and reliability of geothermally generated electrical power for Hawai‘i Island consumers for about 18 years; and

WHEREAS, this geothermal power has also generated royalty payments to the State and County of Hawai‘i and the Office of Hawaiian Affairs running in the millions of dollars over the past 18 years; and

WHEREAS, the Public Utilities Commission has in the past year initiated new contractual procedures between HELCO and PGV which are successfully reducing the kilowatt hour cost of geothermally generated power to consumers; and

WHEREAS, all but one of HELCO’s existing fossil fuel-dependent power generation facilities on Hawai‘i Island are fully depreciated but continue to be operated, which has destructive environmental and economic consequences, including forcing Hawai‘i Island consumers to pay the highest kilowatt hour charge in the state – a cost that will continue to increase as the global peak oil situation further drives up the cost of fossil fuel;

WHEREAS, the federal Environmental Protection Agency has recently directed all HEI companies including HELCO to retrofit existing oil fired plants to comply with EPA emission standards. This expensive undertaking will force continued usage of these plants and perpetuate a level of emissions and kilowatt hour costs that exceed that of geothermal. Also, this investment – which will inevitably be borne by consumers – should, instead, be dedicated to the transition to environmentally and economically preferred geothermal power production and/or distribution;

NOW THEREFORE BE IT RESOLVED THAT the Hawai‘i County Committee of the Democratic Party of Hawai‘i hereby formally requests the 2012 Hawai‘i State Legislature to direct the Public Utilities Commission to require HELCO to develop a timely plan to retire its fully depreciated fossil fuel power generation facilities and accept geothermally generated electrical power as the primary baseload source. HELCO should continue to include other alternative energy sources – such as wind, solar and hydro – in its mix of sources, but geothermally generated electricity must become the primary baseload source for Hawai‘i Island within the next five years; and

# # # # #

Peak Oil, Renewable Energy Sources

HECO Starts TV Ads Explaining Increasing Electricity Rates

December 24, 2011 Richard Ha

In an article in yesterday’s Honolulu Star-Advertiser, Hawaiian Electric Company (HECO) Vice President Robbie Alms talks about how current increases in electricity rates are due to forces beyond our control, and says that customers should “brace for an extended period of high electricity prices.”

The article mentions that HECO is starting to run educational spots on TV to explain what is going on.

HECO sees electric prices staying high

The utility will begin airing TV ads tonight explaining reasons behind the rate hikes

By Alan Yonan Jr.

POSTED: 01:30 a.m. HST, Dec 23, 2011

Hawaiian Electric Co. is launching its first-ever public awareness campaign telling customers to brace for an extended period of high electricity prices.

Electric rates on Oahu have hit record levels in four out of the past five months largely due to an unprecedented hike in the cost of petroleum-based fuel, which the utility burns for more than 75 percent of its electricity production. Read the rest

I’ve been to four Peak Oil conferences now. During the first, in 2007, I learned that the world had been using twice as much oil as it had been finding for the past 20 years (and that trend continues). Ever since, I have been trying to educate folks so we can transition to more sustainable energy sources in an orderly manner.

At the time, one could not tell if the leveling off of oil production since 2005 was the beginning of a trend or not.

By 2009 though, at the time of the Peak Oil conference in Denver, we could see that the leveling off of oil production continued. At that time, I started paying attention to an idea that Professor Charles A.S. Hall called Energy Return on Energy Invested (EROI).

The idea: It is the net energy, resulting from the effort to get that energy, that is what society can use. The more difficult it is to get oil in its final usable form, the less net energy that’s available for society to use.

By 2010, Lloyds of London had issued a white paper alerting its business clients to be prepared for $200/barrel oil by 2013. By then, it was generally agreed that oil fields begin, peak and decline in a bell-shaped curve. And the decline rate of all the world’s oil fields could be estimated to within reasonable limits, say between 3 and 6 percent.

So the natural decline rate would be between 2.5 and 5 million barrels/day each year. Since Saudi Arabia produces 10 million barrels per day, we would need to find the equivalent of a Saudi Arabia every four years. Or, in the worse case scenario, every two years.

Renewables would have to fill that amount just for us to stay even.

Somewhere along the way, I picked up that our world economy is about manufacturing – building or making things – and that takes energy. But if the primary source of energy is not increasing, could it mean that the world economy cannot grow? It sounds plausible.

By this most recent Peak Oil conference, in October – and as recent events are starting to show – it looks like there is a fundamental change occurring in the oil market. Normally, one would expect to see the price of oil declining in a recession. But something different is happening: Oil costs close to $100 per barrel.

In China, the per capita usage of oil is around 2, while in the U.S. the per capita usage is around 26. At $100/barrel oil, China’s economy is still growing. The upside of this is that we have a cushion.

If oil supply is not able to keep up with demand, it seems reasonable that the price of oil will be rising. If this results in higher gas and electricity costs, it will put a drag on consumer spending, two-thirds of which affects economic growth.

The EPA is requiring upgrades to oil-fired plants, which will cost ratepayers even more.

It feels like we will be starting down the backside of the oil supply curve soon. And as it becomes more difficult to get oil, the net oil available to society will be less and less.

We in Hawai‘i are so lucky to have geothermal as an option for base power electricity, which is 80 percent of our electricity use. Geothermal is proven technology, environmentally benign and it’s affordable: Geothermal-generated electricity costs less than half that of oil at today’s price, and the cost will stay stable for 500,000 to a million years.

As the price of oil rises, and if we rely on affordable geothermal for a large portion of our electricity base power, our economy will become more competitive compared to the rest of the world, and our standard of living will rise. Our farmers and food manufacturers will become more competitive and Hawai‘i will become more food secure. Our young people will be able to find jobs at home.

I saw the first of the new HECO television spots a short time ago. Congratulations to HECO for starting them. There is a huge amount of catching up to do. It will be a challenge.

If we move urgently toward affordable energy, we will strengthen our Aloha way of life – where people aloha and take care of each other. Together we can make a better tomorrow for all.

Happy Holidays!

Peak Oil

It Fails The Common Sense Test

December 15, 2011 Richard Ha

But it sounds too good to be true!

Energy Expert Robert Rapier writes that:

On December 6th, the Institute for Energy Research released a groundbreaking report claiming that the amount of oil that is technically recoverable in the U.S. is more than 1.4 trillion barrels, with the largest deposits located offshore, in portions of Alaska, and in shale deposits throughout the country. The report estimates that when combined with resources from Canada and Mexico, total recoverable oil in North America exceeds nearly 1.7 trillion barrels.

To put this into perspective, the largest producer in the world, Saudi Arabia, has about 260 billion barrels of oil in proved reserves. It’s suggested that the technically recoverable oil in North America could fuel the U.S. with seven billion barrels per year for almost 250 years.

So, what does this mean for our energy future? For starters, it could mean the end of our reliance on imported oil from unfriendly nations.

I find these sorts of reports highly misleading, for the following reason. It is true that the U.S. has tremendous oil resources. But it is also true that most of those resources are not economically recoverable. An analogy I have used in the past is the amount of gold in the oceans. There are trillions of dollars of gold in the oceans that is technically recoverable. But that gold is not — and in my opinion will never be — economically recoverable. So it would be misleading for me to argue that we can have all the gold we want if we just get serious about it.

In fact, I tracked down the report referenced above from the Institute for Energy Research: North American Energy Inventory. Then I tracked one of the references they used to come up with their estimate of more than a trillion barrels of “technically recoverable” oil in the United States. The source is a U.S. Department of Energy report: “Undeveloped Domestic Oil Resources.” What that report says is quite different than the implications that are being drawn. The following chart tells the tale:

So of the 1.3 trillion barrels of oil from this DOE report, most is not technically recoverable, and the only category that is known to be presently economically recoverable is that tiny sliver of 22 billion barrels that says “Proved Reserves.” This accounts for less than 2% of the 1.1 trillion barrels categorized as “Undeveloped Oil In-Place.” Read the rest here.

The U.S. imports roughly 12 million barrels of oil per day. Prudhoe Bay, on Alaska’s north slope, produced, at its high point, two million barrels per day.

To be self-sufficient in oil, we would need to have six Prudhoe Bays sitting in North Dakota. This does not pass the “common sense” test.

Geothermal, Peak Oil, Renewable Energy Sources

Momentum Toward Geothermal Has Shifted

December 9, 2011 Richard Ha

It is clear that the momentum toward geothermal has shifted.

There have been numerous community meetings on the Big Island, where the overwhelming number of Hawaiians are in favor of geothermal if it is done in a pono way: It needs to be culturally sensitive and benefit the community, and before we implement geothermal, it must be shown that its use is environmentally benign.

People on the Big Island are very aware that geothermal electricity is much cheaper to produce than oil- or biofuel-generated electricity. They expect to see a difference on their electric bills.

This major change will be very challenging for the electric utility as it tries to translate geothermal production into lower electric bills. But they have the best people working for them; they are our friends and neighbors. Actually, they are us.

Not, no can. CAN!