16 thoughts on “Gas-fired recovery

  1. For once, it might be worth looking at stock market valuations. I don’t follow this at all closely, but I get the impression that oil and gas companies have been marked down a lot in the past year or so, and it’s for both fuels. This doesn’t look cyclical, more a recognition of reality.

    Minor niggle: has there really been a lot of *technical* progress in hydrogen recently? The last big thing in electrolysis was the proton-exchange membrane, invented by GE in the 1960s. It hasn’t entirely replaced the previous technique of alkaline water electrolysis, so it wasn’t a revolution. Hydrogen DRI for steelmaking has been making good progress, and there is a nifty new cloudy-sky Australian scheme to replace Haber-Bosch with plasma reactors for oxidising nitrogen, but against that hydrogen fuel cells for cars have stalled.

    FWIW, I suggest the massive upsurge in hydrogen investment is mainly down to three things: the arrival of unlimited 2c/kwh LCOE wind and solar electricity in a lot of good regions; routine economies of scale in the manufacture of electrolysers (basically simple devices, first demonstrated in 1800); and the realisation by cash-rich oil and gas companies that hydrogen offers a plausible if risky path to refloating their future stranded gas assets.

  2. Extracting hydrogen from the methane component of natural gas leaves CO2 or CO, neither being desirable.

    At present most if not all hydrogen is produced from processing fossil fuels – it is a major source of global CO2.

  3. From a practical point of view, there have been pretty big reductions in cost of fuel cells with even the limited deployment in vehicles seen to date (e.g. the reduction of platinum use in the Toyota Mirai).

    Hydrogen looks like a loser for light vehicles, but cheap fuel cells could be pretty useful (of course, expensive ones have been around for almost a century).

  4. Batteries
    .”Once the cost of carbon dioxide emissions is taken into account, batteries provide a more cost-effective way of firming electricity supply..” Lazards suggest that you don’t need a carbon price now, and batteries are already competitive with new gas peaker plants in parts of the USA – with internationally low gas prices and their trademark unrealistically high cost of capital. It’s quite certain that battery prices will keep falling; gas has a production cost floor..

    The gas guys have a fair point when they say that batteries are only good for 12 hours or so, while a gas peaker can run as long as there is pressure in the pipeline. But that doesn’t help them much. Most peaks are short, so the battery owners, with very low marginal costs, will cream off most of the nice high peak wholesale revenue. The gas owners are left with the long-tail Dunkelfflauten, which don’t in aggregate produce enough revenue for the investment to be worth it. And as John implies, the amount of gas you need to burn to cover Dunkelfflauten is not great.

    Texas has just confirmed how bad lightly regulated markets are at handling such long-tail energy risks. There is no alternative to heavy-handed technocratic government regulation to secure a reliable supply, whether through nominally private generators and grids as in the USA outside Texas, or a publicly-owned grid and reserve utility.

  5. JQ: useful article on electrolysis. But what’s this? “Australia, with its abundant sun and wind, has the potential to become a renewable energy superpower…” This horrible meme should be reviled. One of the great side-benefits of the renewable energy revolution is that almost all countries have abundant renewable resources, so no more thuggish oil superpowers bullying the have-nots, thank God. Comparative advantage will leave some energy trade, but it won’t be coerced. Even Monaco could build a floating wind farm in its territorial waters if it chose – and as it happens, oceanography is their one area of real scientific expertise.

  6. I think a decent fraction of the peaking gas capacity will stay online, but only operate 5% of the time or so, and increasingly on electrofuels and hydrogen (and hopefully only a tiny amount of biofuel). Nothing beats chemical storage for that last few percent of electrical generation.

    Fuel cells might eventually be good in that role too.

  7. akarog; The pace of the switch to hydrogen DRI in steelmaking is illustrated by ThyssenKrupp’s announcement that it’s joining the party. Its first green hydrogen production site, due to open in 2025 near an existing steelworks, will have a capacity of 500 MW. Steel companies are typically big like their plants, and managers don’t go into shock at figures in billions. In fact penny packets are useless. ThyssenKrupp must be certain this will work: the questions are how much and who pays. https://www.pv-magazine.com/2021/02/26/german-steel-giant-wants-to-set-up-500-mw-green-hydrogen-plant/

  8. Eat your fill of ExxonMobilschadenfreudestrudel mit Sahne in this long piece at deSmog. It’s more than writedowns in the tens of billions, a shrinking stock price, cash flow problems, and a gas-based business strategy that even the born-again IEA has finally disowned. Fraud charges are a real possibility. https://www.desmogblog.com/2021/02/26/exxon-reality-bad-fossil-fuel-investment-tar-sands-fracking
    PS from me: that’s before investigators really start digging into Tillerson’s Russia deal.

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