There were two pieces of news on the wire today about energy projects whose combined value exceeded $80 billion, two of the largest such projects in history.
And of no surprise to anyone halfway savvy, neither of them had anything to do with “green” or renewable energy.
Developments such as these are part of the reason that electricity demand in the UAE is growing so rapidly.
These two stories came hard on the heels of the G20 ministers promising that they’ll do something great for the environment only if everyone else does the same. At point was Japan’s PM-elect, Yukio Hatoyama, vowing to cut GHGs 25% if China and India would do the same, knowing full well that will never happen.
There was a report this morning that the United Arab Emirates was ready to award a $40 billion nuclear power contract to two consortia of French firms, the largest energy development project ever in the Middle East.
The UAE later in the day denied that the contract award was imminent.
A story that developed this afternoon out of Melbourne said that dozens of companies from around the world were lining up for $42 billion worth of work on the Gorgon liquefied natural gas project, Australia’s largest resource development.
Some $82 billion worth of conventional energy work after a week of articles about the failure of solar, wind and biofuel projects.
It’s almost as if the adults are doing what adults are supposed to do — finding ways to keep everyone they’re responsible for warm, fed and housed — while the kids are in the back yard playing with imaginary friends.
Nuclear in the Mideast?
The first story is a bit of a shocker, till you think it through. Why would the UAE be investing in nuclear power?
Reuters quoted a source in France as saying the UAE originally wanted two reactors, but that grew to four and then, perhaps, six.
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UAE consists of seven emirates, including the burgeoning financial powerhouses of Abu Dhabi and Dubai.
This growth has strained the power grid, and Abu Dhabi wants to use nuclear power to replace oil and gas — which it hopes to sell overseas to keep the revenues flowing.
UAE expects its electricity requires to rise from 15.5 gigawatts in 2008 to 40 GW in 2020 and it wants nuclear power to grow to supply 15% of that need by 2025.
It’s likely that UAE can get reactors, perhaps ones supplied by the French firm Areva, on line quite a bit faster than a utility in the United States and at a considerably lower cost, leading to lower electric costs.
Now nuclear power is GHG friendly, of course, but it’s not “renewable,” and it’s hated by most environmental activists. Spending some time with a recent Areva presentation, however, points out that current resources of uranium are 200 times as great as 2008 demand for the element.
It also points out something the kids playing in the back yard don’t seem to get — worldwide demand for electricity is expected to double by 2030.
Just to keep GHGs at the current level, that means the equivalent of every single existing power plant would have to be replicated as wind, solar, geothermal — or nuclear — over the next two decades.
Right now, only 16% is nuclear and 19% is hydro, with the rest producing GHGs.
In dollars and cents, Areva says, capex in the power sector is expected to reach $13.8 trillion by 2030. A couple of million for a solar demonstration project here and a wind turbine there isn’t going to make much different in the real world.
Even if you change the “m” to a “b,” you’re still talking about chicken feed.
What’s it mean for uranium?
Because leaders in the west have been unable to decide whether they want to romance nuclear power or the Chicken Little crowd, there has been total political uncertainty driving the market.
The price of uranium has been bouncing up and down, from mid-$50s last December down to $40 in March, back to the $50s in July and now on a downward trend to the mid-$40s.
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However, major uranium producers are gearing up for greater demand. Areva, for example, is looking at doubling its production, from about 6,300 tonnes in 2008 to about 12,000 tonnes in 2012.
In a report titled “The Changing Geopolitics of the Nuclear Energy Market – China,” The Ux Consulting Co. said that “no country in the world comes close to matching China’s plans for nuclear power expansion. 
“China’s latest official target of reaching 5% of total electricity from nuclear plants by 2020 means that around 78 gigawatts-electric (GWe) of new nuclear capacity should be built over the coming decade.
“In fact, given current trends, China is on track to potentially becoming the world’s largest user of nuclear power by the year 2030.”
China now has 11 reactors in operation,but another 16 are under construction and a further 250+ are planned.
Big Aussie gas complex
The Gorgon liquefied natural gas project, Australia’s largest resource development, is operated by Chevron Corp. (50%) with partners Royal Dutch Shell (25%) and ExxonMobil (25%.)
A final investment decision is expected by Sept. 15.
The $3 billion LNG plant alone will take 250,000 tonnes of steel, with most of that work going to Korean and Japanese companies, though some has been reserved for Australian firms.
It also will require 230,000 cubic meters of cement over three years.
In recent weeks, Chevron has been getting needed environmental permits from national and state agencies after six years of preparation of an environmental assessment.
The Greater Gorgon gas fields are between 130 and 200 kilometers off the north-west coast of Western Australia.
The fields contain resources of about 40 trillion cubic feet of gas, constituting Australia’s largest-known gas resource.
The subsea gas-gathering system would be located on the sea floor at the gas fields west of Barrow Island in 200-1300 meters water depth.
The key components of the subsea gathering system include development wells, subsea trees, cluster manifolds, pipeline termination structures, flowlines and control systems.
Extensive use will be made of corrosion-resistant alloys and chemical corrosion management techniques to counteract the corrosive nature of the produced fluids.
Normal operation of the wells and subsea facilities would be remotely controlled from the gas-processing facility on Barrow Island.
Requirements for offshore support, such as the provision of construction materials and maintenance, would be provided from a mainland support facility.
This would ensure that offshore construction and maintenance does not impact on Barrow Island, Chevron said.
Remotely operated vehicles, offshore work vessels and semi-submersible drilling rigs would be used for inspection and maintenance of the subsea system.
30-year life
It is anticipated that between 20 and 30 wells would be drilled in the Gorgon area gas fields over a 30-year period. The number of development wells and timing of construction will depend on future gas demand.
Wells would be drilled in campaigns to optimize the efficiency of rig operations and minimize mobilization/de-mobilization costs. Offshore support during the drilling campaign would be from an onshore support base located on the mainland.
Subsea trees (providing containment to and control of production wells) would be connected to cluster manifolds via well jumpers, all located on the ocean floor.
Subsea trees are installed by the drilling rig during well completion operations.
Fluids from up to eight wells would flow to each cluster manifold located nearby on the ocean floor.
These cluster manifolds gather fluids from the wells into a single flow path for connection via jumpers to the pipeline termination structures.
Pipeline termination structures provide a connection hub to the flowlines via flowline expansion spools and enable tie-in of future equipment. The structures also provide access points for flowline pigging.
Flowlines of various sizes would connect the pipeline termination structures together and ultimately form the conduit for produced fluids to the LNG plant on Barrow Island.
Some of the flowlines will be made of corrosion-resistant alloys, depending on their function.
Gas processing facility
At Barrow Island, proposed gas processing facilities include an LNG plant, condensate handling facilities, carbon dioxide injection facilities and associated utilities.
The LNG plant will comprise three trains capable of producing a total of 15 million tonnes per annum. About three shipments a week are expected to leave a dedicated LNG loading jetty.
The facility would separate gas and condensate (light oil) received from the Gorgon gas fields.
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After separation from the gas, the condensate will be stabilized prior to shipping to market.
The gas component of the stream will then be treated to remove carbon dioxide, hydrogen sulfide, trace amounts of mercury and water vapor. At this point the gas can be liquefied for export as LNG.
The environment
Chevron says the Gorgon project has the potential to be the first project in Australia to significantly reduce greenhouse gas emissions by the injection of carbon dioxide underground. The opportunity to reduce greenhouse emissions in this way is relatively new.
The preferred location for CO2 injection is on the central eastern coast of Barrow Island in the general location of the proposed gas processing plant.
This site was selected to maximize the migration distance from major geological faults and to limit disturbance to areas around the proposed gas processing plant.
Demand growing rapidly
With energy demand expected to continue it growth, much of that is expected close to Australia.
Current demand for LNG in the Asia-Pacific region is about 80 million tonnes per year, Chevron says, and is forecast to more than double by 2015.
The established LNG markets of Japan, South Korea and Taiwan are expected to continue to comprise the bulk of this demand.
However, emerging markets in North America, China and other Asian countries will also add significant opportunities, the company added.
Chevron is anticipating that natural gas will be the fastest-growing energy source in the 21st century because of its technical, economic and environmental advantages.
Talk to Areva and you might get an argument that such is the role of nuclear power.
And this doesn’t even bring coal into the mix, already the major source of electricity in the United States and a big and growing component of utility feed in both India and China, the most populous and fastest-growing economies.
So where does that leave the “green, renewable” resources?
Certainly not playing any major role in the world’s energy picture for the next couple of decades.
And where does that leave all the promises that G20 nations are making to each other?
Oh, well, the world is used to politicians making grand gestures. But few in any nation are willing to pay the price for these dreams, nor are most nations capable of doing so.
Thus we can expect to continue to read about major energy projects, using the traditional, reliable fuel sources, expanding to meet the needs of the real world.
