2014 January 24

The Master Resource Report 2014-01-24

Prices of diesel & natural gas compete for attention but propane takes the prize.

Declining natural gas in storage is pushing the price towards $5 per million Btu this week. That is a long way from shale gas hype days in the spring of 2012 when many were predicting prices around $5 would not be seen again for decades if ever. Remember the hype about an unlimited 200 year supply.

Diesel prices also jumped on news that distillate supplies in the Central Atlantic area fell by 1.6 million barrels reaching the lowest level of this time of year since 1990 according to Bloomberg. As supplies fall prices rise putting pressure on consumers.

However natural gas and diesel are in the slow lane when compared to propane. Prices have more than doubled in a week at a central trading hub in Kansas. Terminals are rationing supplies and governors from Missouri to New Jersey have invoked emergency powers to speed distribution.

This week’s report covers the propane issue. But it really comes down to cold weather, wet corn and booming exports of propane.

When looking at the propane pipeline map in this week’s report pay attention to the Cochin Pipeline which has historically flowed south from Canada with propane and ethane. In 2014 it will become another export route for US propane as it switches to a north bound flow to supply propane and condensate for tar sands production in Alberta, Canada.

Yes, there is a lesson here for those concerned about LNG and oil exports.

One critical link is storage

Billionaire Bill Gates participated in a recent funding of Aquion Energy, a startup making low-cost sodium-ion batteries intended for use with renewable power generation. The batteries use inexpensive sodium ions instead of lithium ions to store the energy allowing the use of much cheaper electrolytes as well.

MIT Technology Review: Jay Whitacre, the Carnegie Mellon professor of materials science and engineering who invented the new battery, says it will cost about as much as a lead-acid battery—one of the cheapest types of battery available—but will last more than twice as long. And while lead is toxic and the sulfuric-acid electrolyte in lead-acid batteries is potentially dangerous, the new battery is made of materials so safe you can eat them (although Whitacre says they taste terrible). Nontoxic materials are also a good fit for remote areas, where maintenance is difficult.

As novel new battery technologies come to market the real test will come with scale and cost. But as the cost of both solar power and wind continue to fall the gap between renewables and fossil fuels for power generation will continue to narrow with the support of cheaper storage.

When thinking about battery storage don’t get trapped into thinking only about the very high demands required for use in electric vehicles where energy densities matter the most. When the battery doesn’t need to be hauled around in a vehicle many of the constraint like weight drop away and alternatives choices open up.

Video on oil supplies

This video is from three years ago. It has some very valuable remarks by Salad Al-Husseini who is an industry insider with a unique view of the petroleum world. Jeremy Leggett, author of “The Energy of Nations” is also interviewed along with other industry veterans.

This week’s report links to a new interview of Salad Al-Husseini by Steve Andrews. Has the story changed? Does he tell a different story today than in 2011?