Export Land Model in Action

[Twilight]

Over a week ago I mentioned this, but the thread sank.

Now I have time to elaborate. Here is what I was referring to.

Under the first of the new contracts announced today, GE will supply 20 Frame 9E gas turbines to Kharafi National of Kuwait for the Sabiya Power Station, which will add more than 2.5 gigawatts of power capacity for the State of Kuwait. The new power plant will be owned and operated by Kuwait’s Ministry of Electricity & Water.

This will be an emergency power, fast-track project with an aggressive delivery schedule. The gas turbines will be manufactured at GE’s facilities in Belfort, France, with shipments to the project site planned for October 2007 through June 2008. The commissioning phase for the new units is expected to begin in May 2008 and be completed in September 2008.

The Sabiya plant will operate in simple-cycle base load mode, initially using liquid fuel with plans to switch to natural gas when it becomes available in approximately three years.

I trust you understand the implications.

Subtract 70 kb/d from exports? I'm taking a wild guess (my rule of thumb for large diesel generators is the best I can do), but can anyone put a sane number to this from personal experience? One which is softer and gentler than -3% in Q4 2008 production extended into 2011 at the earliest?

That's a 25% capacity expansion in just one year, from just one supplier of several selling into the market right now (you can probably up that with another 5-10%). And that's reflected in the setup - jet engines fed from the refineries, blasting hot air into the desert with a thermal efficiency of 35%.

Why the panic?

Let's see what Reuters have been saying.

KUWAIT, July 10 (Reuters) - Kuwait on Tuesday stepped up a campaign of text messages to its inhabitants to conserve electricity, warning power generation was nearly at breakpoint.

"Only 4 percent electricity remains!!," Kuwait's Ministry of Water and Electricity told inhabitants in text messages in English and Arabic, advising people not to use some electrical appliances before evening.

Call centres have been calling offices and apartments in the past two weeks and urging them to turn down air conditioners.

"Do you know that you should switch off your A/C in unused rooms. Please do it," a woman told the Reuters office.

Now imagine ConEd or PG&E making the same demands. I'm talking mass texting an order with exclamation marks. Hmm? Not likely, is it?

By the way, in that same release above, seems Qatar wants an aluminium smelter, although it's going for the full NG-fired CCGT setup. In practicality, that's an improvement on Dubai's ambitions, but that's still gas not arriving at a port near you.

Isn't it strange how the markets can celebrate energy technology exports and double-digit growth in the sector, yet in another breath make demands for oil output increases? A double-edged sword not being priced in?

This sort of thing replicated across the ME Gulf is going to wipe out any increase OPEC could credibly pull off.

EDIT: Again, I would like to know, can someone make an educated estimate for the rate at which this specific OCGT gear is going to burn liquids, and maybe a boe/d or something so we have an idea of how this compares to crude volumes? I know the refinery balance in the ME Gulf produces kerosene / jet fuel for export, so I am assuming that gigawatts'-worth of guaranteed new demand showing up in 13 months is not going to be negligible.

[aflatoxin]

The Frame 9 machines are the big ones....Usually about 200-225 Mw each in simple cycle mode. The 2.5 GW total number seem way low, but based on 125 MW each.....

A conservative guestimate of fuel consumption would be something like 8500 btu/bhp-hr, so these ~167,000 horsepower engines will use somewhere in the neighborhood of 1.42 e+9 btu/hour. This translates to approx 10,000 gallons per hour per unit. times 20. So, running all 20 units balls out is going to use something like 200k gallons per hour, or a little less than 5k barrels an hour.

I've seen a lot of Frame 7 turbines(125-150 MW), and they burn, from memory, about 25 pounds of either NG or fuel oil a second. Given that these units are different, but the fuel usage is about the same per MW of output, I think the 5k per hour for the frame 9 units running at 125 MW is pretty close. If I was at work, I could look up the real values, I will if there is real interest. We have done a lot of performance tuning on GE turbines over the years, and I have access to a lot of information on them.

Just think, they can burn 120,000 barrels a day at this place. Wow.

When they go to NG, this place will burn something like 25 million CF a day per unit, or 500 Million CF a day total. Might actually be a lot more, though.

Simple cycle gas turbines are fuel pigs, usually ~30% efficient. Must really need the juice. Iraq maybe.

[Ayame]

You are right to be worried over this. The Export Land model is very troubling. I nearly dropped my lunch when I read a recent article about how if as many cars are sold in 2008 as this year in Venezuela that it will have no surplus fuel production for export and may even have to import. Not looking good.

[Twilight]

I think the 5k per hour for the frame 9 units running at 125 MW is pretty close. If I was at work, I could look up the real values, I will if there is real interest.

Just think, they can burn 120,000 barrels a day at this place. Wow.

Thanks, that's exactly the sort of information I was looking for. All the little snippets I have found online about the 9E point to it being a 125 MW unit (project examples vary 110-130 MW). Confirmation of power output and fuel consumption would be very useful.

Based on the above, my 70 kb/d was an underestimate and we could be talking 115 kb/d. I am very interested in knowing for sure.

Surreal.

[MD]

In the simplest terms, the "export land model" means that the rest of the world will no longer allow the United States to consume more that its share of energy inputs. This pressure will continue to build.

The other point this thread demonstrates so well is the need to watch capital flows. Watch the money and you'll see where we are headed.

I've made these points a few times over the years and the threads typically sink. It's nice to see activity in that direction. Thanks Twilight.

[Twilight]

I looked up the 9E gas turbine: page and brochure.

It is a 126.1 MW unit, so 2.5 GW from 20 units is correct.

Heat rate is given as 10100 Btu/kWh (10653 kJ/kWh). That is indeed 10,000 gallons per hour - aflatoxin was spot on. That is nearly 4,800 barrels/hour for all 20 units, which is 115 kb/d.

Kuwait's 2006 oil production rate was 2,535 kb/d according to US EIA IPM Table 4.2, but Table 1.2 shows a steady decline through the year, with the 2007 average 2,428 kb/d so far. An all liquids table shows 2006 production of 2,674 kb/d, demand of 524 kb/d and net exports of 2,150 kb/d. I will take that data as reliable, though it is only a snapshot and the ratio will not stay that way for long.

Note also that half of Kuwait's (significant) refinery output is kerosene and distillates. It is not going to import the fuel, it already produces it for export.

What this shows is that the Sabiya Power Station project, indeed an emergency addition of baseload (simple cycle no less!), will from Q4 2008 remove over 5% of Kuwait's exports in a step change, until 2011 at the earliest. Thereafter it may switch over to natural gas as planned, or the "temporary" compromise may become permanent, with an addition of steam turbines closing the cycle.

Given this earlier revelation, I believe this is a big deal. Not only because the duration of Kuwait's production plateau has already been greatly shortened (that's the bigger picture, if you will), but because it confirms that significant capacity additions to compensate for internal demand growth are out of the question.

I agree with MD, news of energy-intensive capital investment is coming in regularly from all over the world, and every project makes a contribution to local energy and other commodity demand growth. For example, a new plastics plant in Qatar or KSA removes the opportunity to supply a new plastics plant in the US or France, however lucrative the one-off sale of equipment. However, it is not every day that you get an example with an effect so easy to estimate and so quick and easy to verify.

This particular news snippet was not supposed to happen, internal demand growth projections would not have included it, and it dropped in everyone's lap a week and a half ago out of the blue. This project is in addition to existing demand growth in transport and manufacturing.

Therefore I would like to bring this to people's attention as an Export Land Effect case study validating the Export Land Model, and also as an interesting unexpected event which I believe will be felt. We at PeakOil.com may in fact be the first to put a number to it, and it will be worth revisiting this in 18 months to check whether it shows up in EIA data. I will be surprised if it does not.

[Zardoz]

Therefore I would like to bring this to people's attention as an Export Land Effect case study validating the Export Land Model, and also as an interesting unexpected event which I believe will be felt.

I second the motion. Great work, Twilight. This is a big deal, indeed, and is yet another piece of data indicating that we are in for some unpleasant surprises in the very near future.

[DantesPeak]

Thanks Twilight for the the summary.

Based on reports from the oil tracking service, Oil Movements, which is no Chicken Little as far as expecting OPEC production to fall, OPEC shipments over the last few months have fallen faster than production (see Oil Movements - OPEC Shipments Falling ).

In June, this was partially explained by the impact of Typhoon Gonu. However as we go from July to August, we hear some suspicious sounding second hand reports that OPEC is accumulating inventories instead of exporting. This doesn't sound correct to me for two reasons - 1. Prices are at all time highs, so why hold back now? 2. The Saudis are selling oil to the US at a $1 discount to Europe and at an even larger discount to Far East countries, but US imports are starting to fall.

I also posted in the Saudi production thread that new production and refinery capacity of 400,000 bpd coming on line about 2010/2011 will be used entirely for internal purposes.

These are troubling signs that we should soon stop paying less attention to OPEC production reports and pay more attention to actual OPEC exports.

[Starvid]

What is so very hot with the Export Land model anyway? I never understood that.

Okay, we all know that in the next couple of years supply of liquid fuels will either stay flat or increase or decrease a little. Right. We also know that, barring a global recession, demand will keep growing, especially in the developing world, which includes many oil exporting countries who are getting rich not only by the current great globalisation-fanned global growth, but are also supercharged by the high price of oil and who might also be subsidising domestic oil consumption. Hence the famous "alligator jaws" graph.

The result is as ever higher oil prices on the world market.
Did I miss anything?

Ps. Edited a little.

[Twilight]

...Hence the famous "alligator jaws" graph.

To summarise what follows, it is important because it gives us a context in which to discuss actual examples, an economic context which does not scare off most potential readers.

Yes, it is simple and elegant; oil exports will be crushed between a static production ceiling and rising domestic demand, so oil importing nations' imports will decline faster than the overall world oil production decline rate. That the only escape on offer is a global recession which destroys demand in exporting countries only underlines the severity of the implications. Also, a severe recession in exporting countries is not in the interests of international stability.

Yes, that is the basic idea.

Its importance is that it is one of those ideas which need to be understood before the observer understands peak oil, or maybe has a fair chance of learning about it initially.

At present, the treatment of peak oil in the media is unsatisfactory - that it is a "theory" (in the incorrect derogatory sense - they should consult a dictionary, any dictionary before they type it), and that this theory says that we will "run out of oil" or "production will fall" at some date and at some rate the theory's advocates can't even agree on, hence a range (2005-2040 where quoted, percentage decline rates never quoted) so wide it can be disregarded as akin to throwing darts at a chart. Whenever OPEC reserves are mentioned, the before/after numbers and dates of revision are never listed, certainly never tabulated. The heavy clustering of projected peak dates around the end of this decade is never shown. This is one reason why Kuwait's reserve restatement is a slow-burning local political story which did not lead to any follow-up questions about the rest of OPEC.

When the media finally does start to give statistics alongside mentions of peak oil, it will have a very hard time convincing anyone that a rate like 2% is important. And that will be the rate pushed by the industry, not the 5% that is actually more likely. Maybe that is where we will be next decade, pursuing a public education effort in compound interest.

The Export Land Model's strength is that it pushes the discussion into the economic realm. It is hard to get a business news reader excited about rock permeability, that will never grace the pages of the financial press, let alone the general press. But the consequences of certain capital expenditure on commodities markets? Now that is a different story. This particular one has a press release, a ticker, a country and a traded commodity. It has a life outside the peak oil debate. The same questions may well be asked about where new polymer plants are being built and what that's going to do with shipments, and so on.

This is why the Export Land Model is important, it is more than just a projection or a dry academic debate, it has the potential to furnish the peak oil debate with actual examples of wider interest. If the world does not accept peak oil, eventually it will still start to make the connection between what is being built out there, and what is arriving. As DantesPeak wrote above, for these and other reasons, what is actually being shipped will increasingly be given greater attention.

[aflatoxin]

Twilight:

Thanks for the spec sheet. I'm used to seeing 60 Hz units, which run at 3600 RPM instead of the 50 Hz models at 3000 rpm. These are also E turbines, most of the ones I've seen are FA's, which I think have a much higher pressure ratio, and higher horsepower.

At any rate, the brag about the DryLowNOx system, which reduces nasty NOx emissions to the atmosphere, should be clarified. The DLE system only works on NG. If the Kuwati's are concerned about air pollution, and elect to burn kero/diesel in their fancy new power station, the only way to reduce NOx emissions is with either steam or water injection. GE usually goes with water. These beauties will use about 40 pounds (8 gallons, ~30l) a second of very pure deionized water a second in order to achieve 42 ppm, about triple of what NG does. Without the water, 100-150 ppm is possible/likely.

Lets play fun with math:

120,000 barrels of kerosene a day, at 68.2% Carbon content, and a SG 0f .78 comes to 19.5 tons of kero a day, or ~48 tons of CO2 a day per unit, or 978 tons of CO2 a day for the 20 units.

(They might not be burning higrade kero in these, Maybe #6 or bunker fuel. Makes the CO2 and SO2 a lot higher. Anyways, back to class.....)

If they have the water to spare, a mere 400,000 gallons per unit a day, or 8 million gallons a day for the whole plant, then the NOx emissions might be 42 ppm.

Given that, NOx emissions from one of these gems will be about 160 pounds/hour, if the environmentally-minded Kuwati's wish to part with the drink. Friends, that translates to 696 tons of NOx a year per unit, or almost 14,000 tons a year for the plant. This makes a tasty 37,000 tons of concentrated nitric acid for the environment to enjoy.

If, however they choose to be stingy with the water, this goes up a bit. At 100 ppm of NOx.....

NOx emissions would be about 378 pounds/hour per unit, 1658 tons a year per unit, or about 33,000 tons a year total of NOx (90,000 tons of Nitric acid)

I can't guess about sulfur, depends on the fuel. They would most certainly never burn nasty, high sulfur fuel in these. If they chose to however, it would put the NOx emissions to shame. 100k tons a year of SO2 would not be hard to picture.

wheeze.

[Starvid]

Still, the Export Land Model, after wrangling about things like imports and exports, only tells us that oil will be more expensive on the world market, something we already knew.

I don't see the use of breaking out individual countries exports from total exports, or indeed from the total supply.

The way I see it, it's just not relevant to say "Kuwait will increase its domestic demand, hence exports will fall, pushing prices higher". It's true, sure, but it all becomes clearer and easier to understand if you just say "Kuwait will increase its demand, hence total global demand, and hence prices will rise".

Talking about imports and exports instead of global supply and demand just clouds the issue, in my opinion.

Or have I missed something profound? Please help me understand this.

[azreal60]

I guess starvid the important point your missing is the rate of price rise will hugely increase because of the exporting nations no longer exporting. As their demand increases, most of these nations will Stop exporting. Not just increase the price, but Stop. So it will basically accelerate the rate of price increase and eventual lack of product availability.

Remember, the orginal peak oil projections called for 2 percent decline rate world wide. The reason why this is that much more worrysome is because this increases the decline rate, makes it that much more choppy, and is on top of the already increased decline rate from advanced tech being used and causing fields to go down faster.

It's like going down a 8 percent slope and suddenly it increases to 10 to 16.

[Starvid]

I guess starvid the important point your missing is the rate of price rise will hugely increase because of the exporting nations no longer exporting. As their demand increases, most of these nations will Stop exporting. Not just increase the price, but Stop. So it will basically accelerate the rate of price increase and eventual lack of product availability.

But this is nothing new. We already know that demand will grow strongly, and it doesn't mean anything if this growth happens in an oil exporting country which then effectively stops exporting, or if the same growth happens in an already importing country. As oil is a fungible product, the effect will be exactly the same.

Remember, the orginal peak oil projections called for 2 percent decline rate world wide. The reason why this is that much more worrysome is because this increases the decline rate, makes it that much more choppy, and is on top of the already increased decline rate from advanced tech being used and causing fields to go down faster.

Well, the decline rate is unaffected. What happens is that the gap between supply and demand grows not only because of flat/falling supply, but also because of growing demand, inlcuding in oil exporting countries.

But we already knew that.

[pstarr]

Twilight, thank you for the beautiful explanation. When you said:

But the consequences of certain capital expenditure on commodities markets? Now that is a different story. This particular one has a press release, a ticker, a country and a traded commodity. It has a life outside the peak oil debate. The same questions may well be asked about where new polymer plants are being built and what that's going to do with shipments, and so on.

I take it you to mean that some capital expenditure (on the polymer plant?) should tell us that some amount of petroleum will heretofore be diverted as a particular industrial feedstock (polymer) rather than remain an internationally traded commodity. Consequence is it is essentially lost to the markets? Is that the connection?

Or have I missed something profound? Please help me understand this.

Yes I believe you have. For me, the value of the Export Land model is similar to Net Energy the quantification of eroei analysis. It informs us quantities of petroleum are accounted for and not available to the general market. Both are useful predictors of net production shortages where in the former (Net Energy) how much of the liquid disappears into the production system itself, and in the latter (Export Land) how much does not get out of the country (because of homeland consumption subsidies, wealth creation, etc. ) into the commodities market. It tells us what petroleum essentially disappears. from the system and is not measured by ship-counters and market weenies

[MD]

Over a week ago I mentioned this, but the thread sank.

Now I have time to elaborate. Here is what I was referring to.

...

By the way, in that same release above, seems Qatar wants an aluminium smelter, although it's going for the full NG-fired CCGT setup. In practicality, that's an improvement on Dubai's ambitions, but that's still gas not arriving at a port near you.

...

This sort of thing replicated across the ME Gulf is going to wipe out any increase OPEC could credibly pull off.

EDIT: Again, I would like to know, can someone make an educated estimate for the rate at which this specific OCGT gear is going to burn liquids, and maybe a boe/d or something so we have an idea of how this compares to crude volumes? I know the refinery balance in the ME Gulf produces kerosene / jet fuel for export, so I am assuming that gigawatts'-worth of guaranteed new demand showing up in 13 months is not going to be negligible.

I'd just like to see booked and pending orders from all the major powerplant builders world-wide.

Going back ten years and forward as far as they know.

what a tale that would tell, I'm sure.

[Twilight]

We already know that demand will grow strongly, and it doesn't mean anything if this growth happens in an oil exporting country which then effectively stops exporting, or if the same growth happens in an already importing country. As oil is a fungible product, the effect will be exactly the same.

But what effect will be exactly the same? World or country?

World oil production, yes, it will be declining at some rate. World oil supply/demand shortfall consequently will be increasing at some rate. That high level of detail is of limited practical use however, beyond saying that the world on aggregate has a problem.

Regional trade, no.

The problem is, averaged world statistics while interesting from an academic point of view, are not going to be what gets people excited. When a nation is demonstrably losing out at a multiple of the world average, that is what will make headlines - not the world picture, not for many years yet. Export Land tells you what shortage of foreign exchange or imported resources a specific country may suffer, and that gets political fast. It is detail that the general peak oil theory by itself does not provide. Peak oil is directly relevant of course, but because of its accumulated baggage and dry science, it will probably be a background reference once resource nationalism kicks off in earnest.

I think around 2010, the first Export Land effects from Mexico and Russia will be on the front page of the Guardian, and the global picture will still be absent except as a footnote or Comment. As with the global warming debate, people take an interest in their country's share first, the world picture second. That may be a sad comment on humanity and a poor survival strategy, but politics being what they are, I can say with confidence that is what we will see. This is why Export Land is important - it is the framework for those first self-interested discussions. In the news stakes, Mexico or Venezuela ending exports to the US, or Russia reducing exports to the EU, will beat a 3% world decline that year.

I don't see the use of breaking out individual countries exports from total exports, or indeed from the total supply.

Talking about imports and exports instead of global supply and demand just clouds the issue, in my opinion.

And so where geopolitical self-interest enters the picture, this in fact becomes the key question. Production, consumption and shortage can be summed, but their distribution will be politically and economically important.

I take it you to mean that some capital expenditure (on the polymer plant?) should tell us that some amount of petroleum will heretofore be diverted as a particular industrial feedstock (polymer) rather than remain an internationally traded commodity. Consequence is it is essentially lost to the markets? Is that the connection?

Yes, you could put it that way. Once a raw material exporter decides to go into a value-added product business domestically, it means someone else's value-added product business is deprived of the formerly exported raw material, and that other party no longer benefits from said addition of value. If on top of that the product is consumed domestically as well, it is lost to former consumers who no longer enjoy access, and it doesn't figure on shipping manifests any more. By way of example, this sheds light on one reason why there is no point building new refinery capacity in the US. Oil exporters would be doing themselves a favour, maximising revenue and creating high-value jobs, by refining at source and shipping the product.

It tells us what petroleum essentially disappears. from the system and is not measured by ship-counters and market weenies

Yes, it becomes oil the importers never see, and frankly the effect would play out even if world oil production did not immediately decline.

I'd just like to see booked and pending orders from all the major powerplant builders world-wide.

what a tale that would tell, I'm sure.

I agree, and that kind of data will have been assembled somewhere. No doubt those with a professional interest in the shaping of the future already study it.

[Twilight]

I should have dug deeper. There was more. An additional 800 MW of gas turbines at Az Zour, I would guess with similar fuel consumption figures, so another 37 kb/d, running full blast through Q3 and at some level beyond. Different site, part of the same emergency initiative, announced at the same time.

The release does not actually specify liquid fuel, but given Kuwait's impressive backlog of gas-fired plants deliberately held up to make way for this, and its feature on dieselprogress.com (Google cache only), I have a hunch it will be using oil-derived fuel.

For comparison, the EIA's Kuwait page says only 100 kb/d is currently used for power generation, natural gas import projects are still at the planning stage, but domestic gas infrastructure is being expanded. Reading around the internet, it does seem that Kuwait favours gas-fired CCGTs. However, the government underestimated demand growth. Moving too slowly and displaying reluctance to curb its citizens' extravagant power consumption, it ran into a wall and needed an emergency bridge for other energy infrastructure to catch up. Hence these projects.

We can conclude that until some time in 2010, up to 152 kb/d of Kuwait's 2,150 kb/d (2006) exports (7%) will be withdrawn from market. That word "baseload" suggests much of this will not be seasonal. It will be interesting to see what EIA IPM statistics will show.

[cube]

Under the first of the new contracts announced today, GE will supply 20 Frame 9E gas turbines to Kharafi National of Kuwait for the Sabiya Power Station, which will add more than 2.5 gigawatts of power capacity for the State of Kuwait. The new power plant will be owned and operated by Kuwait’s Ministry of Electricity & Water.

That's a 25% capacity expansion in just one year, ....

What do these people do with all that energy....turn up the air conditioning? To put this in perspective if the French were to "hypothetically" consume electricity at that rate they'd need to literally double the number of nuclear reactors. --> build an extra 59 reactors.

Kuwait
3.1 M people
9.4 + 2.5 gigawatts

France
64 M people
112.2 gigawatts

[Twilight]

Similar trend in Saudi Arabia.

In the first agreement, GE Energy has received a contract to supply gas turbine-generators for the 960-megawatt expansion of the Rabigh Power Plant in Rabigh City, on the west coast of Saudi Arabia. The project is part of SEC’s initiative to provide additional power to support the region’s economic and population growth.

Also...

• Frame 7EA gas turbines to the Al-Toukhi Company for Industry and Trading of Riyadh, the EPC contractor, for a 260-megawatt power plant in Jizan City, southern Saudi Arabia.

• 7EA gas turbines, also to Al-Toukhi, for a 120-megawatt power plant in Qunfutha City, western Saudi Arabia.

• 7EA gas turbines to the National Contracting Company Limited of Al-Khobar, Saudi Arabia, for a 111-megawatt facility in Aljouf City, northern Saudi Arabia.

• 7EA units, also to National Contracting, for a 183-megawatt power project in Tabouk City, northwestern Saudi Arabia.

This batch is only half the size of Kuwait's order and has a much slower schedule; it looks like planned work rather than a last-minute panic. Fuel will be mostly heavy fuel oil (Rabigh and Jizan at least, if my searches threw up correct information), though with these units the mix can be adjusted.

Here are SEC's expectations of the future - see page 4.

Somewhere in my reading I saw that half of Saudi power generating capacity is liquid fuelled. Whether or not natural gas becomes the more popular choice, it is clear that in coming years more of Saudi oil production will be refined and consumed internally, even if it is the kind of gunk that nobody wants at present, as seems to be the case here.

This is their right of course, and it is difficult to express reproach without hypocrisy. What would be more helpful would be some kind of sign that these trends are being recognised and included in our own energy policy planning. This is something that requires timely adaptation on our part.