FUTURE ENERGY GENERATION – Why are our major oil & gas companies, apparently under threat by the environmental lobby, not diversifying into energy generation as part of their future strategy?

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FUTURE ENERGY GENERATION – Why are our major oil & gas companies, apparently under threat by the environmental lobby, not diversifying into energy generation as part of their future strategy?

Having watched with interest over the past weeks discussions relating to the strategic development of future energy generation I noted one discussion that questioned if the major oil & gas companies today would be the energy companies of tomorrow. This question did not arouse much discussion, but then I thought that if we beg the question of why these companies have not already diversified into the energy generators of today we might have a more interesting debate. After all they have both the Balance Sheets and the income generation to engage in energy generation, and they have the environmental lobby trying to drive them out of the business of fossil fuel production. So why have they not, at least, diversified their activities, but continue to pursue ever more costly development of fossil fuel production?

Looking at the business model of the major oil & gas companies such as BP, Exxon, Shell, etc. they all engage in exploration, development, production, refining, wholesale and retail distribution of fossil-based products. Thus their business model fully accommodates the substitution of power generation (even nuclear as a means to offset the fossil fuel debate) for refining which then provides for both wholesale and retail distribution of electricity. The companies have both the Balance Sheets and income profile (cash flow) to support the development of new primary generation capacity using the new generation of nuclear reactors, namely thorium reactors, as a logical diversification away from fossil fuels.

Before anyone raises the fact that these companies, in various degrees, have invested into renewable energy projects I would suggest that an intelligent review of their capital commitment to such projects is less than their annual promotional costs, and would further suggest that these projects are undertaken as part of their promotional costs, taking full advantage of all available government grants and subsidies, in order to create the illusion that they care about the impacts they may, or may not, be contributing to climate change. Of course we must remember that such impacts are not as yet reasonably proven, and are essentially propaganda by bodies fronted by the UN IPCC committee.

So why do these companies not take the environmental lobby seriously? Why do they continue with the ever increasing cost of developing ever more expensive fossil fuel recovery, yet do not spread their risk into other sources of energy?

Could it be that the latest IPCC climate change report provides a significant clue as to why these companies do not see the need to contemplate energy generation as part of their business strategy. Indeed could the advent of successful fracking for both oil and gas provide an even stronger foundation to the forward strategies of these companies in that the net production costs of recovering fossil fuels is getting cheaper? And the quantum of fossil fuel recoverable reserves has never been in doubt other than by the doomsayer environmentalist activists.

Why do these major oil & gas companies not see the need to diversify into energy generation even though such activity fits within their existing business model? I would suggest that they understand the business of energy, and their fundamental involvement in secure supply of fuel for the foreseeable future – much to the chagrin of the environmental lobby. These companies know that they will maintain their position as the primary source of fuels for generations to come, regardless. They are the only consistent source of fuels for primary energy generation, especially now that the nuclear program has been stalled by the unrealistic (but understandable) reaction to events such as the Fukushima incident. They are likely to have to find ways of reducing the hostile emissions of fossil fuels but, as with the creation of solutions such as the syntroleum process to remove the sulphur content from natural gas thus providing clean feedstock diesel fuel, they will find cost-effective solutions to other emission issues.

I share their confidence – that is until either/or thorium reactors and fusion reactors provide a significant commercial alternative. Other initiatives such as hydrogen fuel cells are unlikely to be cost effective enough to replace internal combustion engines. Indeed there are cheaper and much cleaner fuel alternatives that can be used in the existing internal combustion engine – if the powerful oil & gas interests will let such fuel alternatives see the light of day, even though they are the logical producer and distributor of these alternate fuels.

The major oil & gas companies are formidable political lobbyists. They will ensure that the revelations of uncertainty in the latest IPCC climate change report will set back the climate change/fossil fuel debate by decades, and I expect to see political support of the environmental lobby begin to cool. Indeed politicians in need of votes are likely to slowly but surely defuse the debate by asserting the current lack of reasonable evidence. Germany has irrationally indicated its lack of support for nuclear, not by reference to renewable alternatives, but to a return to coal of which they have significant reserves. Thus I propose that fossil fuels are the preferred reliable source of primary energy generation for the foreseeable future, and as such the major oil & gas majors are in no hurry to diversify.

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NUCLEAR REACTORS – Are the new generation worthy of our trust?

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NUCLEAR REACTORS – Are the new generation worthy of our trust?

Why should people put their trust in nuclear energy production in light of recent accidents and the problems of dangerous, long half-life hazardous radio-isotopes that have to be stored in underground bunkers for many years? Having referred to ‘new generation reactors’ in my blog ‘ENERGY – What does the future hold?’ I have been challenged to explain my view that nuclear is the cleanest safe form of base load energy generation.

Firstly there are two basic forms of nuclear reactor – ‘fission’ and ‘fusion’.

Nuclear fission, generally known as a chain reaction, is a process in which neutrons released in fission from an unstable heavy isotope such as uranium causes additional fissions in at least one further nucleus. This nucleus in turn produces neutrons which then go on to cause further fissions. This process can be controlled (nuclear power) by absorbing some of the neutrons thus preventing them causing further fission, or uncontrolled (nuclear weapons). The nuclear chain reaction releases several million times more energy per reaction than any known chemical reaction. This is the process used in current nuclear reactors.

Nuclear fusion is a nuclear reaction in which two or more atomic nuclei are rammed together at a very high speed to form a new atomic nucleus. During this process, matter is not preserved because some of the mass of the fusing nuclei is converted to photons (enormous amounts of energy at incredibly high temperatures). The energy that the sun emits into space is produced by nuclear fusion reactions that happen in its core due to the collision of hydrogen nuclei forming helium nuclei. The problem to be overcome by the Ifer project is the containment of this vast energy to allow it to be harvested. I cannot comment further on this subject other that suggest a look at the Ted lecture by Taylor Wilson (link at end of blog).

The current types of nuclear fission reactors use specific fissile isotopes to make energy. The 3 most practical ones are:

  • Uranium-235, purified from mined uranium. Most nuclear power to date has been generated this way.
  • Plutonium-239, transmutated from Uranium-238, refined from mined uranium. Plutonium is also used for nuclear weapons.
  • Uranium-233, transmutated from Thorium-232, refined from mined thorium.

The new generation reactors are the generation III uranium-235 and plutonium-239 fuelled reactors which incorporate evolutionary improvements in design developed during the lifetime of the generation II reactor designs. These include improved fuel technology, superior thermal efficiency, longer life (60+ years), passive safety systems (they close down themselves, if necessary), and standardized design for reduced maintenance and capital costs. The first Generation III reactor built was at Kashiwazaki in 1996.

By way of example the contrast between the 1188 MWe Westinghouse reactor at Sizewell B in the UK (generation II) and the generation III AP1000 of similar-power illustrates the evolution from 1970-80 types. First, the AP1000 footprint is very much smaller – about one quarter the size, secondly the concrete and steel requirements are less by a factor of five, and thirdly it has modular construction. These modules comprise one third of all construction and can be built off site in parallel with the on-site construction.

However these reactors still produce long lasting, albeit less, hazardous radioactive waste.

The International Atomic Energy Agency claims that the world currently has 442 nuclear reactors. They generate 372 gigawatts of power, providing 14pc of global electricity. They say that nuclear output must double over the next twenty years just to keep pace with the rise of the China and India. If a string of countries cancel or cut back future reactors, let alone follow Germany’s Angela Merkel in shutting some down, they will most certainly shift the strain onto gas, oil, and coal. Since the West is also cutting solar and wind subsidies, we can hardly expect these industries to plug the gap – even in the unlikely event that they could.

What is more, nuclear power generation is under intense scrutiny due to the recent Japanese disaster (see my thoughts on this in my ‘ENERGY – What does the future hold?’ blog). Nuclear programs across the world are re-evaluating regarding their future power source with politicians hiding behind citing safety concerns. Solving the real and perceived dangers of nuclear power is critical to future investment. However perspective would argue that, setting aside what may emerge from the Fukushima disaster, (as yet none of some 15,000 deaths are linked to nuclear failure) there has never been a verified death from nuclear power in the West in half a century.

The exciting new development, however, is the Liquid Fluoride Thorium Reactors (LFTRs) – albeit work started in the 1960’s – 1970’s primary at the Oak Ridge National Lab’s (ORNL) in the USA, but abandoned because it does not produce weapons-grade plutonium. LFTRs have distinct safety, environmental, and economic advantages over uranium-based and solid-fuel nuclear power. It has a higher neutron yield than uranium, a better fission rating, longer fuel cycles, far safer, substantially lower construction costs, and does not require the extra cost of isotope separation. As a happy bonus, it can burn up plutonium and toxic waste from old reactors, reducing radio-toxicity, and acting as an eco-cleaner.

Over the past decade Oak Ridge National Lab’s (ORNL) LFTR research from the 1960s–1970s has been revived in various global programs. A private Japanese company is seeking funding for a LFTR called FUJI. Canada is researching a fast-breeder LFTR design in their current CANDU research. Thermal LFTRs are part of the generation IV reactor research in France. China announced a LFTR development program in February 2011. At the U.S. federal level, Senators Harry Reid and Orrin Hatch support providing $250 million in federal research funds to revive the ORNL research and draft specific resolutions. This has all passed unnoticed – except by a small of band of thorium enthusiasts – but it may mark the passage of strategic leadership in energy policy from a potentially inert and status-quo West to a rising technological power (China) willing to break the mould.

The greatest advantage of LFTRs is that there is very low chance of a catastrophic, explosive meltdown like Chernobyl, or a partial meltdown like Japan’s Fukushima-Daiichi or Three-mile Island in Pennsylvania. In the event of an earthquake or other disruptive event, a simple freeze drain plug would melt, allowing the fissile material to flow into a containment chamber where the system could be air-cooled. Electricity and active controls are not required for this process. LFTRs operate near atmospheric pressure with little possibility of a containment breech or explosion. By using air cooling, instead of pressurized water, hydrogen gas, which caused the explosions at the Fukushima-Daiichi site, cannot be produced. The liquid fuel allows for online removal of gaseous fission products, such as Xenon, for processing, thereby these decay products would not be spread in a disaster. Furthermore, fissile products are chemically bonded to the fluoride-salt, including iodine, caesium, and strontium, capturing the radiation and preventing the spread of radioactive material to the environment. Former NASA scientist and thorium expert Kirk Sorensen (see link to his Ted lecture below) notes that because LFTRs operate at atmospheric pressure, hydrogen explosions as happened in Fukushima, Japan in 2011, are not possible. “One of these reactors would have come through the tsunami just fine. There would have been no radiation release.”  Meltdown is impossible, since nuclear chain reactions cannot be sustained, and fission stops by default in case of accident.

Just as an illustration that there is no perfect safety the Didcot Power Station (coal fired) was being built whilst I was at AERE, Harwell. The ground upon which the 500MW turbines were being installed was not the firmest. Thus we computed the likely impact should one end of the turbine casing drop 2cm causing the turbine to leave its mounts whilst at full load. We computed that it would cut a channel all the way to Cornwall (around 100 miles or 160km) before coming to rest.

Professor Robert Cywinksi from Huddersfield University said thorium must be bombarded with neutrons to drive the fission process. “There is no chain reaction. Fission dies the moment you switch off the photon beam. There are not enough neutrons for it continue of its own accord,” he said. Professor Cywinski, who anchors a UK-wide thorium team, said the residual heat left behind in a crisis would be “orders of magnitude less” than in a uranium reactor.

The earth’s crust is estimated to hold some 80 years of uranium at expected usage rates. But thorium is as common as lead. America has buried tons as a by-product of rare earth metals mining. Norway has so much that Oslo is planning a post-oil era where thorium might drive the country’s next great phase of wealth. Even Britain has seams in Wales and in the granite cliffs of Cornwall. Almost all the mineral is usable as fuel, compared to 0.7% of uranium. There is enough to power civilization for thousands of years.

It is nearly impossible to make a practical nuclear bomb from a thorium reactor’s by-products and thus of no interest to rogue Governments or terrorists. According to Alvin Radkowsky, designer of the world’s first full-scale atomic electric power plant, “a thorium reactor’s plutonium production rate would be less than 2% of that of a standard reactor, and the plutonium’s isotopic content would make it unsuitable for a nuclear detonation.

The quantity of construction materials is reduced because large cooling towers and containment structures that handle high pressures are not needed. LFTRs operate at high temperatures allowing use of higher-efficiency Brayton nitrogen generators rather than steam generators, raising thermal efficiency from 35% to ~50%.

At the end-of-use phase, significantly fewer radioactive materials remain. LFTRs produce one ton of spent radioactive fuel per GW year. The volume of waste products from a LFTR is approximately 300 times less than that of a uranium reactor. The fissile waste is 83% spent within 10 years and below background levels in approximately 300 years. Conventional nuclear reactors take thousands of years to decay. LFTRs therefore eliminate the need for a multibillion dollar containment facility.

China’s Academy of Sciences said it had chosen to develop a thorium-based molten salt reactor system not least because the system is inherently less prone to disaster, and the hazardous waste will be a thousand times less than with uranium. So the Chinese will soon lead on thorium technology, as well as molten-salts. They are doing mankind a favour.

It has come as a surprise to most to learn that such an alternative has been available to us since World War II, but not pursued because it lacked weapons applications. Others, including Kirk Sorensen, agree that “thorium was the alternative path that was not taken”. According to Sorensen, during a documentary interview, he states that if the U.S. had not discontinued its research in 1974 it could have “probably achieved energy independence by around 2000”.

Summarizing, thorium can provide a clean and effectively limitless source of power whilst allaying all public concern—weapons proliferation, radioactive pollution, toxic waste, and fuel (uranium and plutonium) that is both costly and complicated to process. Nobel laureate Carlo Rubbia of CERN, (European Organization for Nuclear Research), estimates that one ton of thorium can produce as much energy as 200 tons of uranium, or 3,500,000 tons of coal. Coal, as the world’s largest source of carbon dioxide emissions, makes up 42% of U.S. electrical power generation and 65% in China.

From an economics viewpoint, U.K. business editor Ambrose Evans-Pritchard writes that “Obama could kill fossil fuels overnight with a nuclear dash for thorium,” suggesting a “new Manhattan Project“, and adding, “If it works, Manhattan II could restore American optimism and strategic leadership at a stroke”.

So where should our trust lie, in technology that can answer most of the problems, or politicians who have ignored this technology firstly because it could not produce weapons-grade plutonium, and then to win favour (votes) with the environmental lobby. I am reminded of the ending dialogue in the film ‘Three Days of the Condor’; a film about securing energy resources for the USA, and starring Robert Redford. The essence of the conversation is what would happen if the lights went out and the fuel pumps ran dry. The CIA chief stated, quite correctly in my opinion, that the people would look to the government to restore power and fill the gas stations quickly, and they would not care how it was done. I asked an ecology activist what she would expect to happen if we did not have enough reliable base load capacity. Her reply was that people would have to learn to use less energy. I think the CIA chief was much closer to reality, and thus we must trust the technology – it is probably safer than self-serving politicians.

Links:

Taylor Wilson: Yup, I built a nuclear fusion reactor

http://www.ted.com/talks/taylor_wilson_yup_i_built_a_nuclear_fusion_reactor.html

Kirk Sorensen: Thorium, an alternative nuclear fuel

http://www.ted.com/talks/kirk_sorensen_thorium_an_alternative_nuclear_fuel.html