Exxon buys green power.

(edited)

6 hours ago, Rasmus Jorgensen said:

https://renews.biz/50270/danes-deliver-texas-green-deal-to-exxonmobil/

Exxon signs PPA for green power. Does anybody know if this is politically motivated or if green energy is the most competetive for those locations? 

Its more competitve than using diesel gen sets to deliver the power.

I recall reading somewhere that shale oil / gas operators ideally hook up their drill rigs to mains power as its cheaper than using diesel. What with all that day time wind and solar in Texas they may get good deals for daytime use only.  

Edited by NickW
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26 minutes ago, NickW said:

Its more competitve than using diesel gen sets to deliver the power.

I recall reading somewhere that shale oil / gas operators ideally hook up their drill rigs to mains power as its cheaper than using diesel. What with all that day time wind and solar in Texas they may get good deals for daytime use only.  

Industries will start using electricity in a smarter way when prices are down (when the wind blows hard and the sun shines) and even store behind the meter. This is part of the reason why renewables will work.

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It would be really interesting if anybody knows anything in-depth about this. I am acutally surprised if it is to support fracking production. I would have thought it would be more economical to use gas otherwise being flared?  

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Both? No harm in cleaning up its image a bit.

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2 hours ago, Marina Schwarz said:

Both? No harm in cleaning up its image a bit.

All true. 

I just thought it interesting Exxon being a pure-play IOC (maybe the only one?) and a lot of gas being flared in the Permian (currently a waste product). It would speak volumes of the economics. And in truth it might actually mean that the technological tipping point is closer than I thought. For clarity - technological tipping point doesn't mean that oil is being displaced any time soon. It takes a long time to build up infrastructure.... 

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On 11/28/2018 at 8:36 PM, Rasmus Jorgensen said:

It would be really interesting if anybody knows anything in-depth about this. I am acutally surprised if it is to support fracking production. I would have thought it would be more economical to use gas otherwise being flared?  

Do they flare much gas?  I thought one of the big drivers int he industry was to try and eliminate gas flaring. 

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50 minutes ago, NickW said:

Do they flare much gas?  I thought one of the big drivers int he industry was to try and eliminate gas flaring. 

It is still more cost-effective to flare than capture (figures, anyone?). Gas flaring is alive and well in Texas. There simply aren't enough pipelines to bring it anywhere. 

they can try to eliminate gas flaring all they want, but this is an absolute no-go without the infrastructure to move it once it's captured. 

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10 minutes ago, Rodent said:

It is still more cost-effective to flare than capture (figures, anyone?). Gas flaring is alive and well in Texas. There simply aren't enough pipelines to bring it anywhere. 

they can try to eliminate gas flaring all they want, but this is an absolute no-go without the infrastructure to move it once it's captured. 

Spot on.

Natural Gas Prices Fall Below Zero In Texas

Surging U.S. oil production in the Permian basin has helped crash oil prices. But the Permian is also home to skyrocketing natural gas production, and output is growing so fast that drillers are trying to give it away for free. When they can’t, they just burn it off into the atmosphere.

Unlike in the Marcellus shale, where natural gas is the main target, drilling in the Permian is focused entirely on crude oil. Natural gas is a nice bonus that comes along with the oil. But the drilling frenzy in West Texas and New Mexico has resulted in a glut of this associated natural gas. There is a pipeline bottleneck for crude oil, but there is also a shortage of pipeline space for natural gas.

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On behalf of my buddy, Tom Kirkman, allow me to introduce you to Sky Truth. Sky Truth will rock your boat regarding the waste of associated gas from shale oil wells being produced in two of America's major shale oil basins, the Bakken and the Permian. Most of the Eagle Ford can still get it's gas to market simply based on proximity to the Texas Gulf Coast.

The waste of  associated gas from shale oil wells has now reached epic proportions. This waste makes shale well economic calculations based on BOE worthless. If gas is not being flared, and is going down a pipeline at a negative number, as Tom points out, the effective BOE calculation is not 6:1, it is zero. Zilch. Nada. That makes shale oil well economics worse, if that is possible. Be weary of the US shale oil industry always needing to put lipstick on its pigs.

More importantly, it is waste. It is a waste of America's hydrocarbons. It is being wasted so that the Permian, primarily, can get its oil exported to foreign countries, with steep discounts to WTI prices, so that interest can be paid on massive amounts of long term debt. That's a double whammy to America and a whammy that every American should be livid about. In Texas, as a proud Texan for over 67 years, and an oil producer for over 50 years, I am furious at the Texas Railroad Commission for allowing this waste.

We're going to wish we had this gas back someday.

Here is Sky Truth. Focus on middle America, particularly West Texas and North Dakota and watch what happens to associated gas flaring over time, particularly beginning mid 2017. Remember, we live in America, not Siberia: https://viirs.skytruth.org/apps/heatmap/flaringmap.html#lat=29.43243&lon=15.26825&zoom=3&offset=15

 

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14 minutes ago, Mike Shellman said:

Here is Sky Truth. Focus on middle America, particularly West Texas and North Dakota and watch what happens to associated gas flaring over time, particularly beginning mid 2017. Remember, we live in America, not Siberia: https://viirs.skytruth.org/apps/heatmap/flaringmap.html#lat=29.43243&lon=15.26825&zoom=3&offset=15

Whoa, that Sky Truth graphic app is seriously cool.  Thanks Mike.

 

And yes, dead on accurate in your assessment:

More importantly, it is waste. It is a waste of America's hydrocarbons. It is being wasted so that the Permian, primarily, can get its oil exported to foreign countries, with steep discounts to WTI prices, so that interest can be paid on massive amounts of long term debt. That's a double whammy to America and a whammy that every American should be livid about.

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7 hours ago, Rodent said:

It is still more cost-effective to flare than capture (figures, anyone?). Gas flaring is alive and well in Texas. There simply aren't enough pipelines to bring it anywhere. 

they can try to eliminate gas flaring all they want, but this is an absolute no-go without the infrastructure to move it once it's captured. 

Rodent,

If I understand you correctly then implication is that it is cheaper to build wind / solar installations than it is to build the infrastructure to process, transport and turn gas into electricity. I know that there surely are other factors at play such as improving image, daytime utilization, leadtime on pipeline / gas-powerplant etc. But still... 

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8 hours ago, Rasmus Jorgensen said:

Rodent,

If I understand you correctly then implication is that it is cheaper to build wind / solar installations than it is to build the infrastructure to process, transport and turn gas into electricity. I know that there surely are other factors at play such as improving image, daytime utilization, leadtime on pipeline / gas-powerplant etc. But still... 

and regulatory approvals. No one is excited to be building pipelines right now. Wind farms, on the other hand, sure thing. Lots of support there. 

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(edited)

20 hours ago, Rodent said:

and regulatory approvals. No one is excited to be building pipelines right now. Wind farms, on the other hand, sure thing. Lots of support there. 

I don't really think that pipeline construction is an issue in the permian. There are several pipelines being built there (I think even one with Exxon equity in). This has even been reported here on oilprice.com. 

This seems to be about basic economics - in this particular instance renewables is the cheapest way to generate power. That is why I am so interested in whether anybody has any background on this? Is it really economics or is there a hidden politcal agenda? The reason for my interest is simply that I personally have always believed this technological tipping point to be further out in the future. But, if we are already here then I think I need to look at my investment portfolio. 

Edited by Rasmus Jorgensen

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2 hours ago, Rasmus Jorgensen said:

This seems to be about basic economics - in this particular instance renewables is the cheapest way to generate power. That is why I am so interested in whether anybody has any background on this? Is it really economics or is there a hidden politcal agenda? The reason for my interest is simply that I personally have always believed this technological tipping point to be further out in the future. But, if we are already here then I think I need to look at my investment portfolio.

Lazard's levelized cost of energy 2018, wind- $30-60 range, gas combined cycle - $42-78. Using an on site gas generator although the gas will essentially be free, buying and operating the generator will be costly. Depending on the market the tipping point has been reached and is rapidly pushing in to more markets. Subsidies are normally still required to break into a market but once establish they go head to head and win.

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I wonder if engineers are working on systems to capture the methane and use it on-site?

Go innovative engineers!

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I wonder if engineers are working on systems to capture the methane and use it on-site?

Go innovative engineers!

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Most of the Natural Gas in the Permian is 'associated gas' and is "sour" hence, not usable without processing. Exxon's reasoning, for bringing 500 Megawatts of Renewable energy online is partially political, but it also leaves them with more oil and gas to sell and expands a new Renewable Energy business segment. This is something Total, Royal Dutch Shell and BP have already been doing on a global basis.

 

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On 11/28/2018 at 12:36 PM, Rasmus Jorgensen said:

It would be really interesting if anybody knows anything in-depth about this. I am acutally surprised if it is to support fracking production. I would have thought it would be more economical to use gas otherwise being flared?  

I think they are just too mentally lazy to be bothered with it. All the technology and equipment is available. They could be processing the natural gas and using it in natural gas fueled trucks, pumps, etc. and/or shipping it by truck as CNG or LNG to buyers. I would like to see far stricter rules on flaring, that would wake them up and preserve our natural resource. 

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