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Mismatch with the Natural Gas Market

by Luis de Sousa Fri Feb 3rd, 2012 at 05:46:13 PM EST

So its cold. Very cold. The daily morning walk from home to office is becoming a considerable challenge, no matter the amount of clothing, there's always that bit of skin exposed to the glacial breeze. At sun rise the thermometer can be as low as -15║, with this temperature the light wind cuts like a knife. There's a good side to it though, the anti-cyclones the Arctic has been presented us with have cleared the skies. Fiat lux, after months of grey weather it is like a balsam for your soul, especially with all the snow and ice still covering the ground, the brightness immerses you.

And in what is now becoming an yearly routine the gas supplies from Russia got disrupted once more. This time there's no fundamental economic or political dispute, no bad tempered leaders or tough negotiations, it is simply too cold. Russian stakeholders had to choose between honouring their contracts or let their folk die of hypothermia. I guess it wasn't a hard choice.

Nevertheless, some stakeholders seem to be living in a parallel universe, where none of this is real.


This is a crosspost from AtTheEdgeOfTime.

As usual in these situations Italy is the first to suffer the consequences, being the last in the supply line. Late Tuesday the press reported a 10% pressure reduction in the tarns-alpinean pipelines feeding the country. Not an issue they say in Italy, there are reserves and the pipeline from Algeria can also help out. This morning we got the news the supply reductions are already affecting most of the other clients of Russian gas.

EUObserver
Deja vu as Russia gas cuts hit eight more EU countries
Brussels, 03-02-2012

Eight EU countries have joined Italy in noting a sharp drop in Russian gas supplies, in events recalling the massive 2009 crunch.

Gazprom deliveries to Austria and Slovakia reportedly fell by 30 percent on Thursday (2 February). Shipments to Poland fell 7 percent and Czech distributor RWE Transgaz said deliveries are "several" percent lower than normal.

The European Commission on Friday added that Bulgaria, Greece, Hungary and Romania have also been affected.

The cuts began in Italy on Tuesday. Earlier this week it reported a 10 percent drop, but the figure hit 20 percent on Thursday.>

This afternoon the Energy Commission diffused a note to the press that could only have been written in another planet, maybe Jupiter, where methane seems to abound in its huge atmosphere.
European Commission - Press release
EU gas market: Commission refers Ireland and the United Kingdom to Court to ensure European law is properly implemented
Brussels, 26 January 2012

The best way for ensuring security of supply and affordable energy prices is to have a competitive internal EU energy market. An efficient and properly functioning internal market in natural gas will give consumers the choice between different companies across national borders. EU legislation aims at facilitating cross-border gas trade and increasing the capacity on gas markets. The European Commission considers that Ireland and the United Kingdom are not fully in line with EU gas market rules and has decided today to refer these countries to the Court of Justice of the European Union.

According to EU gas rules, the maximum interconnection capacity between Member States and between different gas transmission systems must be offered to the market so that consumers can fully benefit from competition on the market. Only when interruptible reverse flow capacity and short-term services (short term contracts to book gas capacity) are offered, can pipelines be used to their maximum capacity. This means that more gas can be transported and new companies can enter the market. This will give consumers the possibility to choose between different companies and services.


This promotion of the internal market deregulation as a guarantee of supply has been continuously spawned by the Energy Commission in its documents for a good number of years. In spite of its many actions towards the materialization of the deregulated market, decoupling energy transportation from generation, privatizing this way and that, referring and fining any state not willing to follow along, the gas shortages keep on recurring. The Arctic is a stubborn character, no matter how deregulated is the European energy market it keeps sending us those anti-cyclones. And the Ukrainians, why do they insist on their demands for half priced gas? And the Russians, why do they want someone else to pay for the maintenance of the Ukrainian pipeline network? Don't they get that our market is now deregulated?

Sarcasm apart, this lack of vision and/or dogmatic approach to resource policy can only leads us to a serious crisis one day. Ahead of any internal market politics must be the guarantee that there are effectively things to trade. Europe must ensure proper mechanisms exist to maintain the gas grid in transit neighbours, like Ukraine, in a sustainable fashion, even if it means to start taking the bill. Europe must seriously commit itself to the modernization of the energy infrastructure in Russia, increasing efficiency in all stages of the energy process, from extraction to transport, to generation and final consumption. It wont be a free initiative, but like the parable tell, the ant had to work in advance during summer to be ready for winter; as for the cicada, that one probably spent its summer days dreaming of deregulation.

Have a nice weekend and stay cosy.

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A further idea is to stop using natural gas for heating, cooking and power generation. But deregulation of gas and power does the opposite.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Fri Feb 3rd, 2012 at 07:17:25 PM EST
heating is a much better use for gas than generating electricity. And cooking is the noblest of all uses. I expect that when gas has become rare and expensive, people will be prepared to pay a premium to cook with it, just as i will be happy to buy diesel for my camper van in 20 years, at whatever the price is.

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II
by eurogreen on Sun Feb 5th, 2012 at 12:10:05 PM EST
[ Parent ]
1 kWh of nat gas burned for heating equals 1 kWh of heat. The same amount of gas burnt in a combined cycle turbine gives you 0.4 kWh of power, which when feed into a heat pump gives you about 1.5 kWh of heat. Burning gas for heat is just such a waste of a noble commodity.

If I made the laws, gas wouldn't even be burnt for power, but would be used exclusively as a motor fuel and chemical feedstock.


Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Sun Feb 5th, 2012 at 01:18:04 PM EST
[ Parent ]
I've been looking through IEA numbers for electricity generation. It's always suprising to see how much natural gas, and petroleum, is used to make electricity in big oil exporters.

Oil-fired electricity seems to be an even greater waste than gas fired production.  At the very least in economic terms.  

It seems to me that a program to introduce windpower in bulk to these countries would free an enormous amount for oil for the world market. Venezuela has made moves towards this, but I'm not sure that there has been a lot of effort in other countries.

Venezuela burned through the equivalent of 26,000 barrels of oil equivalent a day to produce electricity in 2009. Think of it this way.  A single 3 MW wind turbine operating at 35% capacity saves the equivalent of over 5600 barrels a day if replacing oil-fired production. A 1GW wind farm would save the equivalent of 5,000 barrels a day. Driving out oil-fired production, on an annual basis, would require just over 1730 3 MW turbines. Coupled with hydro in the country, you could free a lot of oil for export.

And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg

by ManfromMiddletown (manfrommiddletown at lycos dot com) on Mon Feb 6th, 2012 at 10:04:54 AM EST
[ Parent ]
I imagine this only happens in places where there are massive government subsidies on oil as oil-fired power plants are extremely unprofitable in the baseload role.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Mon Feb 6th, 2012 at 11:07:51 AM EST
[ Parent ]
I can't say for certain, but my understanding is that oil is used for peaking while hydro and gas fills the baseload role in most of Latin America.

Hmm.   Maybe a diary with the figures would do some good. I've not been good about diarying lately. Preoccupied with writing for school and the job search.

BTW if anyone knows of a job search site for academic positions in Europe, I'd appreciate it.  

And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg

by ManfromMiddletown (manfrommiddletown at lycos dot com) on Mon Feb 6th, 2012 at 12:27:32 PM EST
[ Parent ]
For Germany, there's the Ausschreibungsdienst of the Hochschulverband, but I'm not sure if you can get the listings for free.
by gk (gk (gk quattro due due sette @gmail.com)) on Mon Feb 6th, 2012 at 12:34:32 PM EST
[ Parent ]
Or they could also try a Nuclear Energy programme. If NATO agrees, that is.

luis_de_sousa@mastodon.social
by Luis de Sousa (luis[dot]de[dot]sousa[at]protonmail[dot]ch) on Tue Feb 7th, 2012 at 04:29:59 PM EST
[ Parent ]
The best way for ensuring security of supply and affordable energy prices is to have a competitive internal EU energy market.

I suppose that this is dogma and all at the EU Energy Commission would laugh at any requests to provide evidence. Having basic services, upon whose proper functioning life itself depends, provided through an environment maximizing competition, seems obviously to lead to a chaotic system characterized by moving failures as firms loose their competitive edge and go bankrupt. But then I am not a trained economist.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Feb 3rd, 2012 at 08:12:28 PM EST
In my view, markets are the best way to allocate resources, but only markets where producers connect directly with consumers.

The presence of intermediaries in markets completely fucks them up, to use a technical term.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Sat Feb 4th, 2012 at 06:30:13 AM EST
[ Parent ]
ChrisCook:
The presence of intermediaries in markets completely fucks them up, to use a technical term.

yup, and then the kiss of death... when the bets start on events.

look at sports, how many thrown games!

there's your precious 'market forces' aka invisible hand, the collective power to distort reality by the pressure of waves of wild hunches and greed-crazed schemes.

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Sat Feb 4th, 2012 at 06:56:00 AM EST
[ Parent ]
Hang on, melo, there have been bets on events as long as there have been events.

And of course, events have from time to time been rigged as a result.

My point is in relation to the allocation of resources: nothing more, and nothing less.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Sat Feb 4th, 2012 at 07:18:44 AM EST
[ Parent ]
i wasn't intending to mean that was what you said, Chris.

your comment just triggered mine, s'all.

orthogonal... it's (rarely?) the creators/producers or the purchasers who game systems.

it starts with the intermediaries, which then become amenable to betting forces, which if they remained a commentary would be just dubious, but when they start to push events things are f'ed up bigtime. where would the the betters access the chain of events if not through the said intermediaries?

please tell me i'm full of it if that's the case. it just appears that way to me, ignorant wally that i am :)

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Sat Feb 4th, 2012 at 08:06:58 AM EST
[ Parent ]
And the oil and gas markets are a labyrinth of intermediaries.
by rifek on Tue Feb 14th, 2012 at 12:24:52 AM EST
[ Parent ]
Just for fun, I went and googled a temperature map for Russia today. The word that spring to mind is "Yikes". Continental climate and very northernly geography means that Russia gets very, very cold. Which in turn means that unless they get their heat from some other technology than gas, they are not going to sell a joule that is not strictly surplus. Because they would literally die.
Suddenly the various stabs the Soviet Union and Russia have made at nuclear district heating make a lot of sense - when the temperature hits -40, that probably seems like a lot better idea than it does to people in less.. Hostile. Climes.
by Thomas on Mon Feb 6th, 2012 at 04:07:18 AM EST
I have no idea how much effect these "stabs" have had, as I understand that in Moscow communal district heating is set at ~24 degrees C. Permanently.

Apparently, no one in a flat can change that temperature, every room is heated equally.

Is that surplus heating...? Or is it just a result of Russian splurging on gas?

by Nomad on Mon Feb 6th, 2012 at 04:51:48 PM EST
[ Parent ]
Maybe that's the area that relies on nuclear district heating.  1/5th of 1% of Russia's district heating apparently does come from nuclear.

And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg
by ManfromMiddletown (manfrommiddletown at lycos dot com) on Mon Feb 6th, 2012 at 05:18:20 PM EST
[ Parent ]
It was the same with the steam heating in my Upper West Side apartment. The way to change the temperature is to open the window.....
by gk (gk (gk quattro due due sette @gmail.com)) on Tue Feb 7th, 2012 at 01:30:49 AM EST
[ Parent ]
Hardset miniums on heating are not unusual in rental properties everywhere that needs heating, because turning the heat off entirely during a coldspell can cause very expensive damage to the property. Usually it is a bit more flexible and sane than just "Termostat, what termostat?" tough, but the broader point is that while adopting best-practice in insulation could probably cut Russias heating needs in half, half of "Oh, my fracking god" it is still going to be quite a high number.

Russia is quite heavily set on a nuclear path to decarbonization, and I dont really see that they have that much of a choice. - Russia has good hydro reserves, and quite substantial biomass waste from their forestry operations, but other renewable options do not really get along with russian weather. At all.
Not that carbon is why they are doing it - Russia is building reactors because burning gas that could be sold abroad is an affront to gasproms accountants, and the cold war left them with an enormous legacy of institutional expertise in all things related to fission.

by Thomas on Tue Feb 7th, 2012 at 06:10:38 AM EST
[ Parent ]
I can see your point about central heating using water, but I don't see what harm turning off steam would do. Maybe it's simply that there's no way of switching it off without switching it off to the apartments above you.
by gk (gk (gk quattro due due sette @gmail.com)) on Tue Feb 7th, 2012 at 06:51:06 AM EST
[ Parent ]
wind turbines have run in Arctic and Antarctic environments since the 80's, cheaper than nukes. they run in the Ukraine, they can run in Russia. and they're modular, can build a vast supply chain in a few years.

"Life shrinks or expands in proportion to one's courage." - Ana´s Nin
by Crazy Horse on Tue Feb 7th, 2012 at 08:36:45 AM EST
[ Parent ]
Russias cost of nuclear is not the same as the cost in the west. Very emphatically not. They have an ongoing build programme that clocks in at about 2.5 billion dollars per reactor, and without significant price overuns. (they do have regular delays due to not having enough capital) I am not sure how that works out per kwh as I have no clue what cost of capital Rosatom pays, but as they are planning to base reactors in the Kalingrad enclave on the baltic explicitly in order to export electricity to europe, their accountants presumably reckon that it is outright cheaper than european coal fired power.

Also, the planned Arkhangelesk, Voronezh, Saratov, Dimitrovgrad Chukoyka, Severodvinsk, Leningrad and Severs plants are to be either exclusively heating, or cogen plant which, no, windmills really not an option for that.

by Thomas on Tue Feb 7th, 2012 at 02:30:23 PM EST
[ Parent ]
Nomad:
Or is it just a result of Russian splurging on gas?

According to a friend who has worked with post-Soviet energy on a city level, the efficiency is horrible with lots of heat leaking out.

So I would say that it is probably a legacy of large-scale planning that did not really care about energy efficiency.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

by A swedish kind of death on Tue Feb 7th, 2012 at 03:39:05 PM EST
[ Parent ]


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