June 2009 Open Thread

No, Bif gets zulukilo. … NO dude, there was never any doubt. Did you see the monkeys on her?

Lydia Guevara and bandoliers of carrots

Lydia Guevara and bandoliers of carrots

Yes. I freely admit to adding this one. ~BB

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MetMich

Link to story

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“Monday, Monday… can’t trust that day.” I haven’t even checked to see if there are any grenades waiting in my mail box. Anyways… this is probably the best energy article you’re going to find today. Trust me. Granted, some of the stuff is “duh, no shit”, but it’s a clear-eyed overview and provides an interesting USGS update with regard to coal.

U.S. Foresees a Thinner Cushion of Coal

By REBECCA SMITH

Every year, federal employee George Warholic calculates America’s vast coal reserves the same way his predecessors have for decades: He looks up the prior year’s coal-reserve estimate, subtracts the year’s nationwide production and arrives at a new official tally.

Coal provides nearly one-quarter of the total energy consumed in the U.S., and by Mr. Warholic’s estimate, the country has enough in the ground to last about 240 years. A belief in this nearly boundless supply has led officials to dub the U.S. the “Saudi Arabia of Coal.”

But the estimate, recent findings show, may be wildly overconfident.

While there is almost certainly as much coal in the ground as Mr. Warholic’s Energy Information Administration believes, relatively little of it can be profitably extracted. Last year, the U.S. Geological Survey completed an extensive analysis of Wyoming’s Gillette coal field, the nation’s largest and most productive, and determined that less than 6% of the coal in its biggest beds could be mined profitably, even at prices higher than today’s.

“We really can’t say we’re the Saudi Arabia of coal anymore,” says Brenda Pierce, head of the USGS team that conducted the study.

No one says the U.S. is facing a coal shortage. But the emerging ranks of “peak coal” theorists argue that current production levels may be unsustainable and, if anything, create a false sense of security. David Rutledge, an electrical-engineering professor at the California Institute of Technology who has studied global coal production, figures the U.S. has about half as much recoverable reserves as the government says, which would work out to about 120 years’ worth.

The Energy Information Administration, part of the Department of Energy, says it is reassessing its coal tally in light of the new Geological Survey data. It intends to create a new coal baseline from which it will begin its annual subtraction “as soon as we can,” says William Watson, a member of the energy analysis team at EIA in Washington, D.C.

In the field, challenges are becoming more apparent. Mining companies report they have to dig deeper and move more earth to extract coal from aging mines, driving up costs. Utilities have grown skittish about whether suppliers can ship promised coal on time. American Electric Power Co., the nation’s biggest coal buyer, says it has stepped up its due diligence to make sure its suppliers can make deliveries after some firms missed shipments last fall. It even bought a mine to lock down supplies.

“We are very much concerned, and it’s getting worse,” said Tim Light, senior vice president for AEP.

Coal mines began appearing in America in the early 1740s in Virginia. A century later, as the nation’s railroads branched out, coal provided fuel for steamships on the Mississippi and blast furnaces that made steel. The U.S. came to rely on abundant coal to generate electricity, too. About half of the electric power in the U.S. still is produced by coal combustion, more than in most other industrialized nations.

The country’s coal supplies have been seen as a bulwark of energy security. In 1979, as the U.S. was reeling from an oil shock, President Jimmy Carter pushed for projects to create liquefied gas from America’s vast coal reserves. Today the U.S. produces 1.1 billion tons of coal annually, more than any nation but China.

Concerns about supplies are out of the spotlight now, masked by what could be a short-term lull in the appetite for coal.

Recession has reduced demand from the two biggest users of coal, electricity producers and steelmakers. A proposed law capping greenhouse-gas emissions could make coal-generated electricity — currently one of the cheapest power sources — significantly more expensive. At the same time, the country has found itself awash in cleaner-burning natural gas after recent big discoveries, prompting some power companies to pull the plug on proposed coal plants and shift toward gas-fueled power generation.

Experts expect coal production to drop this year by 5% to 10%, or as much as 100 million tons. Prices for coal from Wyoming’s Powder River Basin are down nearly 30% from a year ago, to about $8.50 a ton. (Prices of Eastern coal, which burns hotter and typically doesn’t have to be transported as far to customers, have also fallen.)

Coal is down but hardly out. It remains the electric-power industry’s dominant fuel. Emerging “clean coal” technology could help improve coal’s environmental profile. And coal remains an energy ace in the hole, available to substitute for other fuels if shipments are disrupted.

Some in the coal industry believe concerns about future supplies are overblown. Coal advocates argue that improved technology could increase the amount of coal that can be extracted profitably. Coal “is certain to remain an enormously competitive energy resource by virtually any conceivable measure,” says Kim Link, spokeswoman for Arch Coal Inc., which produced about 12% of the nation’s coal last year.

The U.S. isn’t the only nation employing improved drilling data and computer modeling to reassess its supplies. Germany cut its proven hard-coal reserve estimates by more than 99% in 2004 as it explored reducing mining subsidies, which would make coal more expensive to extract. Overall, assessments of total world reserves dropped by half from 1980 to 2005, according to a study by Energy Watch Group, an independent group based in Germany.

The U.S. Geological Survey, the Department of the Interior’s science agency, attempted to get a clearer picture of the nation’s coal supplies beginning in 2004. Its full study of the Powder River Basin in Wyoming and Montana will be completed next year.

The agency began with the Powder River’s rich Gillette coal field, an 80-mile-long strip in northeastern Wyoming that contains the nation’s 10 top-producing mines. About one-third of all coal in the country is produced there. Some 1.2 million short tons leave the field daily, a river of coal filling more than 75 trains of 125 to 150 cars each.

For the Gillette study, USGS engineers, geologists and economists spent three years analyzing data from 10,200 drill holes, the most comprehensive study ever attempted of the region. The team concluded there are 201 billion short tons of coal in the Gillette field. Environmental rules and physical challenges put much of that out of reach, leaving what they figured were 77 billion short tons of recoverable coal.

Little is presently worth mining. Analyzing coal beds that contained 82% of the Gillette deposits, the team determined that with coal selling for $10.50 a ton, the prevailing price two years ago, less than 6% of the coal could be extracted profitably enough to leave mining companies an 8% rate of return.

If Powder River prices were to hit $60 a ton in current dollars, as much as 47% could be extracted. But at that price, coal would have a tough time competing with other fuels and technologies.

By adding an economic component, the study broke ground. Jim Luppens, an industry veteran who is now chief of the coal-assessment project for USGS, says policy makers often confuse the total coal resource — which he describes as the “blood, guts and feathers” number — with coal reserves, which he likens to the edible meat. “They mix up the R-words,” he says.

The findings are percolating through the coal and power industries. “USGS made a leap forward with this study,” says Vic Svec, spokesman for Peabody Energy Resources, the U.S.’s biggest coal company. He adds that when his company plugs in prices as the USGS study did, it reaches similar conclusions.

Modern estimates of the U.S. coal resource began in 1907, with field geologists reporting on outcroppings — places where coal stuck out of the ground — and mines. Based on consumption at the time, the USGS concluded there were three trillion tons of coal, enough to last 5,000 years. By the 1950s, armed with more mining data, the USGS and the now-defunct U.S. Bureau of Mines reduced their estimate of the total resource to 500 billion tons.

The federal method for calculating U.S. coal reserves has changed little in 35 years. In 1974, the Bureau of Mines established a baseline reserve level, considered good for its era. Each year since, the government — currently, the DOE’s Energy Information Administration — has subtracted each coal region’s production and mine waste to get a new estimate of what’s left in the ground.

In 2007, the EIA said the U.S. had a “demonstrated reserve base” of nearly 500 billion tons of coal. It regarded 267 million tons of that as “economically recoverable,” enough for 240 years.

Even Mr. Warholic, the EIA analyst, says he’s skeptical about the results. “It’s kind of crazy” to postulate how long U.S. reserves will last, he says. “It could be 110 years or 225 years or something completely different. It all depends on your assumptions.”

After many decades of mining, some of the country’s coal fields are showing their age. “What’s left to mine is not as easy as what we mined even 10 or 20 years ago,” says Janine Orf, spokeswoman for Patriot Coal Corp. in St. Louis. “The seams are getting thinner and there are more limestone intrusions.”

Even at the Gillette field, where surface mining started around 1924 and production still is buoyant, obstacles are emerging.

Coal at its Gillette’s eastern edge lies mostly close to the surface but the seams generally slope downward in a westerly direction, forcing miners to dig progressively deeper to extract it. At Arch Coal’s Black Thunder mine, five pits are moving westward and will intersect the main Burlington Northern-Santa Fe railroad line at some point. Arch then will have to move heavy equipment to the other side of the tracks and dig a new pit down several hundred feet, which it says could cost $100 million or more.

Coal’s big buyer, the power industry, has grown increasingly nervous about securing reliable suppliers for power plants that often have a useful life of 50 or 60 years. Plants fine-tune their equipment to burn the coal they expect to receive and to remove its particular pollutants from the waste stream. That makes it problematic to switch suppliers.

Last fall, production problems caused some coal producers in the East to struggle to fulfill contracts. Utility executives say the delays were a wake-up call.

American Electric Power has 9,100 railroad cars and 2,480 river barges dedicated to keeping its power plants furnished with coal. In May, AEP, together with a partner, Cleco Corp., bought a coal mine in Louisiana after a coal source faltered that had been furnishing fuel to a power plant they own together.

Buying the mine outright, says AEP’s Mr. Light, was the best way to understand — and control — how much coal the power company could expect to receive. “We don’t know what the future holds,” he said.

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With having unintentionally yet firmly established that no one gives a hoot about David Carradine, now let’s move on to a contrast in views with regard to Obama’s speech in Cairo.

A person named Moubayed (from Asia Times) published a piece today, seemingly from a Syrian perspective. He wrote:

“Certainly more people were listening to Obama in Syria and the Arab world than those who paid any attention to Bin Laden. Most Arabs reasoned that from where things stood under Bush, the only way to go in Arab-US relations was up. Things could never have gotten worse for the Middle East, and in testimony to that, the Arabs wanted someone who could inspire them to hope for a better future. Obama did just that with his Cairo speech.”

Whenever someone of questionable credibility uses the word “certainly”, immediately change all instances of the offending word to “hopefully” and then reread the recalibrated text. “Things could never have gotten worse for the Middle East…” Now that is just plain dumb.

Hanson’s piece for National Review raises concerns about Obama’s message. (You’d never suspect that Moubayed and Hanson live on the same planet.) Hanson writes:

“In short, few Arab leaders wish to give a “speech to the West.” They would have to take responsibility, directly or indirectly, for either fostering or appeasing radical Islam, while denying their culpability for its decades of mass murdering. They would also have to lament the global economic havoc caused in part by oil cartels and energy price-fixing.

President Obama’s intent is noble, but therapeutic efforts to disguise the truth never really work. We will see how the short-term good created by his therapeutic speechmaking compares to the long-term harm caused by telling the Muslim world, once again, that its problems were largely created by us — and, therefore, that we are largely responsible for providing the remedies.”

Yes, of course! As others have suggested, the remedy is to dissuade you from interfering with our oil which — through an act of geologic malfeasance — somehow crept within the boundaries of your sovereign state. Please be patient. In these circumstances of persistent American military superiority, a comprehensive Rope-a-dope strategy will take approximately 20-30 years to unfold.

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NBA Finals: Game 1 rout

“Bryant, playing like a man possessed, scored 40 points and the Los Angeles Lakers, who have waited nearly one year for a chance to erase bitter memories of a Boston beatdown and a championship they felt belonged to them, pounded the Orlando Magic 100-75 in Game 1 on Thursday night.

This year, nothing short of a 15th title will do for the Lakers.”

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Turkish Grand Prix — tune in Sunday morning!

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Celebrity leader prototype in action

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David Carradine found dead in Bangkok.

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Somehow, I missed this from the other day. Geithner in China

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I’m scratching my head wondering why a former VP is spending so much time advancing his version of history (certainly against advice of counsel) and offering opinions on relatively unimportant issues such as same sex marriage. Is he about to die and this is some sort of attempt to square himself morally with family members? To the extent that it’s even relevant, he’s had one foot in the grave and the other on a banana peel for a lot of years now already. What gives?

Cheney supports same-sex marriage ‘on a state-by-state basis’

“Cheney has long departed from conservative orthodoxy on the issue. He said during the 2000 presidential campaign that same-sex marriage should be left to the states, and he caused a small uproar during the 2004 race by appearing to distance himself from a proposed constitutional amendment to ban same-sex marriage, strongly supported by President George W. Bush.

Cheney’s position appears to put him to the left of the current president on the issue. President Obama has said he supports civil unions, rather than marriage, for gay and lesbian couples.”

(more news to be added as I get to it)

Editor’s Note: This isn’t what I normally do around here, but I’ll open thread “pinch hit” until JR or Bif or dave or Nudge or someone else wakes up.

This entry was posted by Bunn Bunn.
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