Peak Oil: Net Exports Aren’t Everything Forbes Compared to the end of cheap oil, “peak oil,” or the moment when worldwide production hits its peak, is irrelevant, at least from an economic standpoint. What we really care about is how much we’re paying for the oil that keeps our economy running. See all stories on this topic »
Drilling fluid linked to a CSG project has leaked into a Queensland river that is part of the Murray-Darling Basin.
The leak occurred when contractors for coal seam gas company QGC were drilling to run a pipeline underneath the Condamine River in Queensland’s southwest.
Environment Minister Andrew Powell released a statement on Saturday saying his department was investigating the spill but he did not say when the incident occurred or how much fluid polluted the river.
He said a limited amount of fluid seeped from the drill hole but had since been contained within a wall of sandbags and pumped out.
Drilling has stopped at the site while an investigation is underway.
Mr Powell said his department wants to address the risk of further potential impacts.
‘Work will not resume until the department has reviewed the assessment and decided whether the operation can be undertaken without further impact,’ Mr Powell’s written statement said.
‘The operations of coal seam gas companies and their contractors are being closely monitored and where necessary, changes will be made to operational practices to ensure environmental safety is maintained.’
Markets have soured and the investment boom may be over for now, writes Paddy Manning.
A run of bad news, culminating this week in the failure of a planned $313 million share placement by Cockatoo Coal to its South Korean shareholder SK Networks, has given analysts plenty to think about.
Prices for most grades of metallurgical or coking coal (used for steelmaking) and thermal coal (used for power generation) have been falling for more than a year, since the early 2011 spike driven by Queensland’s floods, Japan’s earthquake and the Fukushima nuclear disaster.
Rising supplies, as Australia’s mines swung back into operation and countries such as Indonesia, Mozambique, Mongolia and China ramped up production, and the glut of US shale gas have pushed prices steadily lower.
Advertisement: Story continues below
Unexpectedly bad figures for trade in February, released this month, showed falling coal export volumes and prices, sparking a round of commentary that Australia’s terms of trade had peaked and investors would soon begin to mothball mining projects.
At a corporate level, signs of weakness came last month, when coalminer New Hope – controlled by Robert Millner – announced the termination of a sale process triggered by unsolicited approaches last year. Millner said talks never got to price.
Since then, BHP Billiton has announced the closure of its Norwich Park coal mine in Queensland and there are rumours it is looking to close the nearby Gregory Crinum mine.
Rio Tinto has pulled out of a $9 billion development of six new coal terminals at the port of Abbot Point, near Bowen.
Only days earlier, Rio’s coal boss in Australia, Bill Champion, struck an urgent tone in a Brisbane speech, warning the Queensland government could lose billions of dollars of mining royalties if coal projects were not approved quickly.
Citing a margin squeeze in thermal coal, with prices expected to fall by 25 per cent on average to 2020, Mr Champion said Queensland had ”no time to lose” if it wanted to open up the Galilee and Surat Basins.
”In these two areas alone, there are announced plans to go from virtually zero output today to over 300 million tonnes by 2020, with the vast majority of this output being thermal coal,” he said.
”We estimate that a delay of two years for a generic thermal coal project would cut around 70 per cent from its value to the company investing in it.
”There is a real risk of projects missing the current ‘price wedge’ that makes investment possible.”
A UBS commodities analyst, Tom Price, has been bearish on coal for almost 18 months and says the soft outlook means developments far from rail and port infrastructure, in the west of Queensland and NSW such the Galilee, Surat and Gunnedah basins, will be re-evaluated.
Most significant for thermal coal exporters, in his view, is that Asia will begin to develop its own, cheaper unconventional gas resources as fracking and horizontal drilling technologies mature.
”That’s where the thermal coal is going to come under pressure, in the medium-to-longer term,” he says. After adjusting for inflation, UBS expects thermal prices will fall as low as $US85 a tonne by 2015.
Trade in thermal and metallurgical coals is linked, Price says, with some miners able to switch between the two, so a thermal coal producer suffering soft prices will switch part of its output to the higher-value met-coal market.
Price says the met-coal prices are getting some support from the strikes at the BHP-Mitsubishi Alliance mines in the Bowen Basin, where BHP recently declared force majeure. Additionally, as coking coal prices fall below $US210 a tonne, marginal suppliers such as the US begin to cut production, slowing the price decline.
But in the longer term, hard coking coal prices will fall as low as $US150 a tonne, UBS predicts, as lower-cost suppliers in Mozambique, Mongolia and China increase production.
Bruce Jacques, an analyst with IHS McCloskey, says coal miners will be taking ”a more clinical” approach to new developments.
”There’s a huge amount of projects on the drawing boards. It always looked pretty ambitious.”
While he predicts demand for the best hard coking coals will hold up, and he is wary of long-term forecasts, Jacques says ”it’s hard to see a narrative as to why thermal coal should turn around and stop falling. It’s an unrelenting oversupply story for the foreseeable future.”
At thermal coal prices under $US100 a tonne, Jacques says the Galilee Basin projects ”might look a bit dubious”. With a high dollar and the best targets already picked over, Jacques says investors are falling out of love with Australian coal: ”Everybody’s getting the feeling there’s better places to look.”
So is Australia’s coal boom over? ”In investment terms, probably yes,” Jacques says … at least for now.
Benefit From the Latest Energy Trends and Investment Opportunitiesbefore the mainstream media and investing public are aware they even exist. The Free Oilprice.com Energy Intelligence Report gives you this and much more. Click here to find out more.
A design firm from New York, Atelier DNA, has developed a concept that uses cattail like stalks instead of traditional turbine blades for harnessing the power of wind. Planned for the city of Masdar, being built just outside of Abu Dhabi, the “Windstalk” project came in second in the Land Art Generator competition, generating renewable energy in an artistic way from a plethora of international submissions.
Traditional wind turbines’ biggest downfalls include noise pollution, inadvertent bird death trapping and general difficulties in installing such large structures. Atelier’s new stalk design generates electricity when the wind sets them waving—minus the dreadful noise or danger posed to birds. Another advantage will be the density at which the stalks will be able to be built whereas turbines need to be spaced about three times the rotor’s diameter from each other.
The pilot project calls for 1,203 stalks at 180 feet high each, anchored by concrete bases that are between 33 and 66 feet wide. With each stalk containing alternating layers of electrodes and ceramic discs that generate a current under pressure, the discs compress as they sway, creating a charge.
“The idea came from trying to find kinetic models in nature that could be tapped to produce energy,” explained Atelier DNA, founding partner Darío Núñez-Ameni, to Discovery. “Our system is very efficient in that there is no friction loss associated with more mechanical systems such as conventional wind turbines.”
Each base contains a torque generator to convert kinetic energy into energy using shock absorber cylinders. An LED lamp glows at the top of each stalk when the wind is blowing.
“Windstalk is completely silent, and the image associated with them is something we’re already used to seeing in a field of wheat or reeds in a marsh. Our hope is that people living close to them will like to walk through the field — especially at night — under their own, private sky of swarming stars,” Núñez-Ameni told Discovery.
The wind farm is expected to have a comparable output to that of a conventional wind farm covering the same area of land.
