Energy Sources and The Economy

Forums

The biggest worry I have in the long run about the Irish economy is where can we get out cheapest source of energy.When the recession is but a distant memory the price of oil will rise sharply as the oil reserves begin to dry out and the price of refining will also rise. We will be at the mercy of the volatile situtation in the middle east and Russia will use all the tricks in the book to make us(Europe) pay through the nose for oil and gas.
Should we as a nation and is (Goverment very lax about this) have a proper debate on future energy sources. Wind energy is talked about and also Nuclear. My question is would a comprehensive plan to develope cheap energy on this little island add stimulas to the economy and that our non dependence on oil and the cheap energy bring confidence in the Irish economy.The stock markets is looking for certainty and to have control over our energy sources bring certainty
I know its an aspirational argument but we are an open economy and we need something to insulate us against future
(mods move to some other toxic forum if not relevant:))

SkepticOne

One issue that needs to be looked into with regard to the market here is the fact that the ESB as well as being in the generating business is also involved in distribution (along with Eirgrid). ESB are responsible for the local distribution system as well as hooking up power generators to the grid. Consequently there's no incentive for them to provide low barriers to entry to the market.

Forums

yes thats true. I would have no agenda against the ESB but my fear is like everything nowdays that everything will turn out to be a house of cards and that the ESB will be found wanting when it comes to longterm planning.
inexpensive energy(compared to oil) will be one of the fundamentals of a well run economy also not to be held hostage by oil/gas producers. We are a small country 4/5 million people, we should be able to lay out a logical plan. No agendas be it green/nuclear/wave no vested interest just the good of the country . Also openess of debate.

cavedave

There is a good podcast here about the practicalities of life in a low carbon economy.

The world currently runs on about 16 terawatts (trillion watts) of energy, most of it burning fossil fuels. To level off at 450 ppm of carbon dioxide, we will have to reduce the fossil fuel burning to 3 terawatts and produce all the rest with renewable energy, and we have to do it in 25 years or it’s too late. Currently about half a terrawatt comes from clean hydropower and one terrawatt from clean nuclear. That leaves 11.5 terawatts to generate from new clean sources.

That would mean the following. (Here I’m drawing on notes and extrapolations I’ve written up previously from discussion with Griffith):

“Two terawatts of photovoltaic would require installing 100 square meters of 15-percent-efficient solar cells every second, second after second, for the next 25 years. (That’s about 1,200 square miles of solar cells a year, times 25 equals 30,000 square miles of photovoltaic cells.) Two terawatts of solar thermal? If it’s 30 percent efficient all told, we’ll need 50 square meters of highly reflective mirrors every second. (Some 600 square miles a year, times 25.) Half a terawatt of biofuels? Something like one Olympic swimming pools of genetically engineered algae, installed every second. (About 15,250 square miles a year, times 25.) Two terawatts of wind? That’s a 300-foot-diameter wind turbine every 5 minutes. (Install 105,000 turbines a year in good wind locations, times 25.) Two terawatts of geothermal? Build 3 100-megawatt steam turbines every day-1,095 a year, times 25. Three terawatts of new nuclear? That’s a 3-reactor, 3-gigawatt plant every week-52 a year, times 25.”

Not only do you need a lot of wind turbines but (roughly)
1. You will travel an awful lot less
2. You will be 7/8 veggie
3. You either shower or have a beer of an evening.

its not a manhattan project (fusion, superconductors etc require that) but more of a world war 2 sized engineering project.

silverharp

According to Wikipedia, Uranium can be taken from sea water at a cost of $260kg

A 1000mw reactor needs 200t per year

Which gives us costs of $52m per year, or $1.65 a second, to generate 1000mw. "Too cheap to meter" suddenly makes a lot of sense.

Forums

http://www.irishtimes.com/newspaper/ireland/2009/0227/1224241893177.html
well its something now a debate on Nuclear. The Italians are building four. Our dependence on oil will the economy on shaky ground as producers will have more leverage as the oil start drying up.

nesf

There's a good overview in Scientific American this month. The full article isn't available to non-subscribers unfortunately though: http://www.sciam.com/article.cfm?id=how-renewable-energy-and-storage

It includes a discussion on present storage technologies and brief overviews of the main type of renewables and their cost per kW.

solas

I don't know how relevant it is but I was going to start a thread to ask about our energy supplies too, Does anyone remember this

Sunday May 20 2007
THE property boom might be over, but Ireland could be on the verge of an oil and gas boom to rival the concrete economy of the last tenyears.

According to the Petroleum Affairs Division of the Department of Communications, Marine and Natural Resources, there is at least 10 billion barrels of oil lying off the west coast Ireland - which has a current value of €450bn (€50 a barrel).

Added to gas supplies, energy exports have the potential to transform Ireland into a new Middle East.

have these plans been thrown out the window because it would be conveniently enough to cover the national debt a few time over too.

solas

solas wrote: »

I don't know how relevant it is but I was going to start a thread to ask about our energy supplies too, Does anyone remember this



have these plans been thrown out the window because it would be conveniently enough to cover the national debt a few time over too.

It comes down to a 'magic number', the price that oil would have to be make a profit on the construction of the wells and the infrastructure.

If you are producing in an 'established' oil area, then the marginal cost of adding a new well is pretty low as you are just plugging in to an existing area. Thus, as long as the oil price is above $20, then you are making money.

However, if the area has no existing wells, then the cost of establishing the well and the infrastructure is higher, along with the risk as the reports by your engineers and prospectors (I don't know the correct word) are normally unreliable.

'Crude' by Shah is a good book which goes through the economics of the oil industry for a non specialist.

T Corolla

I think we our place in Europe i.e exposed to the Alantic Ocean and have a coastline drom Kerry to Donegal we should be able to harness a substancial volume of electricity to should reduce our dependance of oil/gas significantly. I do'nt think we will ever be rid of oil but we can help it by harnessing the power that is avaiable.

solas

Deleted User wrote: »

It comes down to a 'magic number', the price that oil would have to be make a profit on the construction of the wells and the infrastructure.

If you are producing in an 'established' oil area, then the marginal cost of adding a new well is pretty low as you are just plugging in to an existing area. Thus, as long as the oil price is above $20, then you are making money.

However, if the area has no existing wells, then the cost of establishing the well and the infrastructure is higher, along with the risk as the reports by your engineers and prospectors (I don't know the correct word) are normally unreliable.

'Crude' by Shah is a good book which goes through the economics of the oil industry for a non specialist.

Like you say, I'm not a specialist but it was something that I was discussing with someone earlier and if I recall right he said that we already sold one of our oil/gas fields (or the rights to it) to whichever companies doing the exploration (or exploitation however you like to look at it) for 1billion a few years back. A paltry sum when all is taken into consideration but then there are other factors to be taken into account like oil refinement production facilities and taxes which would all account as income. Now if there are four or five more fields like this and the same competitors biting the cash for the exploration and ownership rights then Ireland is hardly in a position to not invest in it.
Either way, it looks like good collateral that can be put to use for Ireland's future.

I would really recommend the Shah book, it goes through all of the 'oil economics'

solas

I'll have a look out for it, just it would be nice to have an easy answer from an ecnomists ppoint of view.

nesf

solas wrote: »

I'll have a look out for it, just it would be nice to have an easy answer from an ecnomists ppoint of view.

The short answer is that there is quite a lot of oil left but a lot of it isn't economical to extract because of where it is or how it's deposited. An example would be the "tar sands" in Canada. You can get oil out of them but it's very expensive versus an oil well in the Middle East. If oil prices are below a certain level it's just not practical to extract it.

It's similar with gas, for instance there are large gas deposits in very deep water off Brazil. Brazil wants to extract it but it's going to be very expensive and the equipment to do it (from the best of my knowledge) does not exist yet and is only in development.


Essentially, just because there's oil or gas somewhere doesn't mean it's actually usable or worth getting up out of the ground at today's prices. In 20-30 years as more and more of the easy deposits are gone and we move onto having to use these more expensive deposits the price of oil will have to rise to compensate, which could make oil uneconomical for private transport at the present scale of use and so on. You also have to add uncertainty to the equation, until a well is proven and you've paid for all the gear to go in and spent years developing the site you don't actually know how much the oil/gas you're getting up is going to cost and what market price you'll need to make a profit.

And all of the above is ignoring any environmental externalities that might come from oil extraction which the State or the people will have to pick up the tab for essentially.

solas

I just flicked through the book and I understand what you mean by usable oil but I havent seen it suggested that the reserves along the atlantic ridge are unusable. Gas and oil supplies are already evident and in production there and the it appears to be the oil companies who are investing in R&D. I know it's a long shot and I'd be the first to recommend using alternative sources of energy but in our current climate I can't help thinking wouldn't it be good for our economy? I guess its just the lure oil has over people.

nesf

solas wrote: »

I just flicked through the book and I understand what you mean by usable oil but I havent seen it suggested that the reserves along the atlantic ridge are unusable. Gas and oil supplies are already evident and in production there and the it appears to be the oil companies who are investing in R&D. I know it's a long shot and I'd be the first to recommend using alternative sources of energy but in our current climate I can't help thinking wouldn't it be good for our economy? I guess its just the lure oil has over people.

Good for our economy in the short run? No. Good in the medium to long run? Maybe but it would require substantial capital investment that makes it not exactly on the cards right now. We need to deal with our present fiscal situation before we can look into Government sponsored exploration unfortunately.