• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Home
  • About
  • Podcast
  • Archives

Atomic Insights

Atomic energy technology, politics, and perceptions from a nuclear energy insider who served as a US nuclear submarine engineer officer

Peak Oil

Atomic Energy Wells

January 12, 2023 By Rod Adams 15 Comments

Petroleum – a term includes oil, gas and derivatives – wells have been going dry for more than 150 years. Until the late 2000s, the solution to that problem of resource depletion has been to find a new place to drill. We now have the alternative of drilling deeper and using hydraulic fracturing techniques to reach previously known but inaccessible formations.

Though there is still a lot of oil left inside the Earth, it is getting more difficult to reach. Even the booming fields made available by horizontal drilling and hydraulic fracturing are beginning to degrade; people in the field are reporting that many of the best locations have already been exploited.

Even if there was an unlimited and magically refilling source of petroleum, it is becoming increasingly clear that the waste products from petroleum combustion, including CO2, are causing major damage to Earth’s livability. We need clean power sources with greater longevity.

Russia’s invasion of Ukraine reminded all of us of the importance of a broad base of fuel suppliers that can overcome politically driven changes in global production and distribution. Low cost producers will always find a way to market their product unless there is a coordinated effort to prevent their output from being sold.

Few people would dispute the fact that the oil and gas that has been discovered and extracted so far is the most accessible portion of the available resource. It was relatively easy to find and it was located close enough to human populations or transportation routes that it was reasonably easy to deliver to the ultimate customers. The petroleum that is still left underground or underwater is the harder portion. It is more challenging to find, it is deeper underground, it is in tighter formations, it is lower quality, or it is located in areas that make it difficult to move to markets.

Petroleum alternatives – coal, wind, solar, biomass – have been available for hundreds to thousands of years. New technologies have evolved to make them more affordable and competitive, but those technologies have only partially overcome inherent disadvantages in many applications. Petroleum is still the world’s dominant energy source because it is readily transported, it’s more energy dense than non-nuclear competitors, it burns more cleanly and thoroughly than coal, its output can be controlled, and it has an enormous base of equipment designed to operate with refined hydrocarbons derived from oil.

The realization that the easy oil is gone has led to volatile energy prices that have tended to ratchet up for the past two decades.

Downloaded from https://www.eia.gov/outlooks/steo/realprices/

Increased prices have put hundreds of billions of dollars into the hands of petroleum producers, but they have not led to a large increase in production. An increasing portion of the slowly increasing petroleum supply is in the form of natural gas liquids (NGLs) and not conventional crude oil.

IEA, World oil supply and demand, 1971-2020, IEA, Paris https://www.iea.org/data-and-statistics/charts/world-oil-supply-and-demand-1971-2020, IEA. Licence: CC BY 4.0

Petroleum producers know that there are not many opportunities to make major new discoveries so they are focused on maintaining their current production levels. In many cases, there is a growing supply of unused capital waiting for an appropriate place to invest.

Oil executives would be wise to consider investing their human and financial resources in nuclear reactors, which can be considered to be modern, near zero emission energy wells. When nuclear reactors are used as advanced heat sources to produce synthetic fuels and hydrocarbons, a substantial portion of the capital infrastructure and core competencies are directly transferrable from the conventional petroleum industry.

Short historical digression

When nuclear power first entered the energy market during the mid 1950s, several oil companies invested heavily into the uranium and fuels processing portion of the business. This was the portion of the new energy system that seemed to fit with their core competencies of finding and producing the raw materials needed to produce useful energy. For the most part, these investments were not successful.

Part of the problem is that the cost structure for nuclear power is different from the one historically associated with producing electricity with fossil fuel power stations. With nuclear, a most of the cost and risk is incurred at the beginning of the project. Once the plant is fully operational, the recurring fuel cost is minimal. With fossil fuel power plants, capital and operating costs are often minimal compared to the ongoing expense of purchasing new fuel. In some natural gas plants, fully 90% of the electricity production cost is purchasing delivered natural gas.

Building nuclear plants is analogous to drilling oil wells

The path that fossil fuel producers take between finding a promising new field and selling finished product from that field into the market is a tortuous one full of regulatory hurdles, government agreements, massive capital investments, and significant risk. That path description should sound familiar to nuclear professionals.

Once the challenging process has been successfully negotiated, the producer and his investors can look forward to an uncertain number of years worth of selling the product at an uncertain price that depends on a number of external factors. The incentive for making those up front investments and taking the risk is that sometimes those factors lead to market price increases. For an already producing asset, there is little risk that the actual cost of operating that asset will change very much, so price increases due to market conditions fall directly to the bottom line.

Fossil fuel companies have the necessary assets to make successful investments in nuclear energy wells. They can raise capital from investors that are comfortable with risk, work their way through the regulatory wickets, buy the steel and concrete, develop the necessary agreements with local governments and ensure that their suppliers meet exacting specifications. They live and breathe safety based on long experience with massive quantities of volatile materials. After their new energy wells begin operation, they can look forward to many decades worth of reliable production and sales – energy is not a fad and people will always find new ways to use whatever quantity is available.

Sea-going or floating nuclear plants are especially well-matched to the current infrastructure and skill set of fossil fuel companies. They will be produced in the same shipyards that currently produce off-shore platforms, tankers, support vessels, and barges. In some cases, the production platforms will closely resemble floating petroleum or natural gas processing plants.

There are increasing pressures on fossil fuel companies to slow or stop their contributions to greenhouse gas emissions. Fossil fuel companies can legitimately meet their fiduciary responsibility to maximize their investor returns by directing their capital budgets to a new generation of energy production and distribution capability.

That new energy production capacity should include:

  • Systems using heavy metal fission to directly supply heat and power
  • Installations that use fission to produce heat and power for synthetic fuel production that combines hydrogen from water and carbon that is captured from the atmosphere.

At Nucleation Capital, we are focused on investing in advanced nuclear energy, synthetic fuels and macro energy integration systems that can all help decarbonize our energy and power sources. The transition from hydrocarbons to clean energy will be challenging, but nuclear energy investments will enable its success with lower costs than attempting to complete the transition without nuclear energy.

If you are and accredited investor who is interested in opportunities in private companies in our target sectors, please make contact. We’re happy to help.

Filed Under: Atomic history, Clean Energy, Fossil fuel cooperation, Peak Oil, Process heat

Big bets in energy technology from “Beyond Petroleum”

October 28, 2013 By Rod Adams

As an energy industry observer with a long memory, I was somewhat bemused by a recent interview aired on Platts Energy Week. Bill Loveless sat down with David Eyton, BP’s head of technology, to talk about the exciting new technologies that his company is developing.

The company is making substantial investments; in June 2013, BP reported that its capital expenditures for the first half of 2013 were $23.5 billion dollars.

My bemusement comes from the fact that BP spent tens of millions of dollars between 2000-2010 on an initially effective advertising and rebranding campaign to convince us all that its initials, originally meaning British Petroleum, now stood for Beyond Petroleum. The green and yellow sun-shaped logo seemed reassuring to many. Then a series of deadly mistakes culminated in BP’s Macondo (aka Deepwater Horizon) disaster in the Gulf of Mexico that killed 11 people and spewed more than 4 million barrels (168 million gallons) of crude oil over a period of 84 days.

BP’s marketing and development strategy has moved past “Beyond Petroleum”; any company whose technology chief gushes about extracting more oil using 20,000 psi drilling rigs at depths in excess of 30,000 feet below the earth’s surface is not moving beyond petroleum any time soon. Eyton clearly summarized his company’s long term product strategy when he made the following statement:

(Starting at 7:59 in Part 1) David Eyton: There’s no doubt whatsoever that, at the end of the day, people are concerned about the consumption of hydrocarbons and that is the vast majority of what we do at BP. We produce and we convert hydrocarbons, so we’re bound to be concerned about it.

We’re very much engaged in the debate with people about how to use these precious resources as efficiently as we can. And we also engage in the debate about a slow transition to a more sustainable energy system. But the world’s energy systems don’t change that fast. When we build assets they can last as long as 100 years in the case of one of our refineries. So we’re talking about a long term change and yes, we are very actively involved in that debate, engaged in that debate and learning what to do about it.

(Emphasis is detectable in the original audio.)

BP – Big Bets in Energy Technology Part 2

Here are a couple of key quotes from part 2 of the interview:

(Starting at 1:16) Bill Loveless: And by the way, we’re just reinforcing, you do not subscribe to the Peak Oil theory?

David Eyton: I do not. I think the world may stop using oil at some time in the future, but it’s not going to be because we run out.

Aside: That statement is quite reminiscent of one attributed to Sheik Zaki Yamani, the Saudi Arabia’s oil minister during the 1970s, a time of great disruption in the world petroleum markets.

“The Stone Age did not end for lack of stone, and the Oil Age will end long before the world runs out of oil.”

End Aside.

I tend to agree with Eyton and Yamani. The Oil Age will end when we begin taking more advantage of actinide energy density to develop power systems that are economically superior to oil and gas in head to head competition. In my opinion, we have the technical solutions.

It is worth making some comparisons between technology development in oil and gas and technology development in nuclear energy. As David Eyton and many other energy pundits have pointed out, shale oil and gas development in the United States started taking off in 2005.

What many observers fail to mention, however, is that geologists have known about the vast quantities of energy stored in shale rock for many decades. Here is a quote from Timothy Mitchell’s Carbon Democracy: Political Power In the Age of Oil:

On 10 April 1973, a week before Nixon’s energy message to Congress, James Akins had delivered a presentation in Denver, Colorado, before a meeting of the American Petroleum Institute, the collective organization of the oil industry. He repeated his argument about the inevitability of high prices, but warned that ‘there is one spectre which will always lurk in every producer’s mind: the development of new sources of energy which will make oil irrelevant. As improbable as this is in the short run, it is always possible that some dramatic, sudden technological development could render oil superfluous.’ He proposed that

hydrocarbon prices should continue to rise until they reach the cost of producing alternative energy — that is from coal, shale, tar sands or even garbage conversion. The price of energy from hydrocarbons would then roughly parallel the cost of alternative energy sources until, toward the end of the century, alternative sources would supply the growth in demand. At that time hydrocarbons could be expected to be devoted to higher uses: plastics, building materials, medicines, and even food.

(Emphasis added.)

The key developments that made extracting hydrocarbons from shale possible were technological, economic, and political. George Mitchell figured out how to combine horizontal drilling and hydraulic fracturing; oil and gas prices rose sharply enough in the period from 1999-2005 to enable developers to make a convincing case to financial backers that it was time to put those technologies to use. The Energy Policy Act of 2005 also contained several provisions that empowered often cash-strapped states to approve drilling plans without federal environmental reviews.

Here is a quote from the Platts interview with Eyton that should help critical thinkers understand the importance of the combination of these developments in creating the shale storm that has so captured the attention of energy industry observers.

(Starting at 0:49) David Eyton: For many years, decades now, people have been saying we are going to run out. Well, the fact is that we keep on finding more. And that’s down to two things, it’s down to the price — and that’s been going up a bit in terms of oil — and it’s down to technology. Technology keeps on improving our ability to find, and develop, and convert, and make products out of the oil resources that we find in the world.
…
(Starting at 3:36) David Eyton: Just to point out one point, these are not new technologies, fracking and horizontal drilling. In fact, Amoco, one of the predecessors to BP invented fracking in 1947, so this has been around for a long time. And hundreds of thousands if not millions of wells have been hydraulically fractured since then, so it is not a new technology. It’s just come into the spotlight, recently, I would say.

I find it fascinating how oil and gas guys gush about the way that recently developed technology has provided us access to almost immeasurable new resources of oil and gas in one breath, and then tell us that those technologies are not new or untested; they have used them for many decades.

We have a similar situation in nuclear energy. We have developed and tested such amazing technologies as the Integral Fast Reactor and the Molten Salt Reactor, each of which offers a path towards virtually unlimited quantities of emission free energy. We have also been operating reliable small reactors that can be built in factories since the very beginning of the Atomic Age. However, critics often dismiss those technologies as unproven or speculative.

Maybe all we really need is the equivalent of what the Energy Policy Act of 2005 did for natural gas drilling to unleash the world-changing potential of new nuclear energy developments. It would only take a modest set of rule changes and a reemphasis to the leaders of the NRC that their mission is to regulate “the Nation’s civilian use of radioactive materials to protect public health and safety, promote the common defense and security, and protect the environment.”

If read carefully, with a comprehensive understanding of our energy needs, it is hard to avoid the strong sense that the NRC is supposed to perform its regulatory assignment in a way that enables the use of radioactive materials so those energy dense isotopes can contribute as much as possible to providing a better life for us all.

It would also help speed nuclear energy development if companies like BP would invest a portion of their massive capital budget into an aggressive effort to develop new nuclear energy systems. It certainly would not hurt the nuclear industry if multinational petroleum companies effectively contributed their considerable large project development skills.

Of course, I am not holding my breath waiting for established petroleum companies to take a page from Apple and invest to control the disruptive technology that threatens their current comfortable business model. I expect that the investments are more likely to come from well capitalized energy consuming companies that are not so happy about the way that oil prices have increased by a factor of ten in the past 15 years.

Filed Under: Advanced Atomic Technologies, Fossil fuel competition, Peak Oil

Conspiracy theory or just recognizing a normal business practice?

February 25, 2012 By Rod Adams 12 Comments

As a lazy man who likes to repurpose his work whenever possible, I want to share a note that I just sent to some of my nuclear friends who question my analysis about the actions of fossil fuel interests to restrain the growth of nuclear energy. Rod, I have never been a big fan of […]

Filed Under: Fossil fuel competition, Peak Oil

Fission can help avoid a post hydrocarbon economic collapse

September 17, 2011 By Rod Adams

Another Environmentalist for Nuclear Energy

In my engagement with the Sierra Club group on LinkedIn (note – the group is not sponsored or affiliated with the actual Sierra Club) I ran across a commenter who would probably find some kindred souls among the Peak Oil pessimists and the skeptical survivalists. Here is what he told me after I had described […]

Filed Under: Peak Oil, Unreliables Tagged With: Energy abundance

Does the end of cheap, easy oil really mean the end of cheap, reliable energy?

September 15, 2011 By Rod Adams

A Crude Awakening: The Oil Crash (2/2) (PL) by DobrySamarytanin Part 2 of A Crude Awakening: The Oil Crash adds more stark images and historical footage that shows the importance of energy in the form of readily accessible oil, but it also illustrates some of the toxic hazards and armed conflicts that we have accepted […]

Filed Under: Fossil fuel competition, New Nuclear, Peak Oil

End of era of cheap combustion energy; beginning of era of cheap fission energy

September 14, 2011 By Rod Adams

During the next few days or weeks, I am going to try to develop an energy story that I hope will inspire action, not depression. I may not succeed. The first installment is the first half of a 90 minute documentary video titled A Crude Awakening: The Oil Crash a 2007 documentary film that includes […]

Filed Under: Fossil fuel competition, Peak Oil

I do not hate oil companies; I hate their business model and the way they dismiss nuclear energy

February 13, 2011 By Rod Adams

I do not hate oil companies, I hate their business model. I hate the fact that they are capturing a vast portion of the world’s wealth and power by extracting an ever higher price for essentially the same product that they have been selling for 100 years with few technical improvements that make it more […]

Filed Under: Fossil fuel competition, Peak Oil

Admiral Rickover’s Final Testimony to Congress

November 10, 2010 By Rod Adams

Twice during the past week, I have run into antinuclear rants that point to Admiral Rickover’s final testimony to Congress in January 1982 as evidence to support an assertion that nuclear energy should be avoided. Admiral Rickover was one of the pioneers in the field of capturing nuclear fission energy for beneficial use; he is […]

Filed Under: Peak Oil, Technical History Stories

Primary Sidebar

Categories

Join Rod’s pronuclear network

Join Rod's pronuclear network by completing this form. Let us know what your specific interests are.

Recent Comments

  • Eino on Oil and gas opposition to consolidate interim spent fuel (CISF) storage facilities in Permian Basin
  • Rod Adams on Can prototype nuclear reactors be licensed in the US under current rules?
  • Rob Brixey on Can prototype nuclear reactors be licensed in the US under current rules?
  • Jon Grams on Oil and gas opposition to consolidate interim spent fuel (CISF) storage facilities in Permian Basin
  • Rod Adams on Oil and gas opposition to consolidate interim spent fuel (CISF) storage facilities in Permian Basin

Follow Atomic Insights

The Atomic Show

Atomic Insights

Recent Posts

Oil and gas opposition to consolidate interim spent fuel (CISF) storage facilities in Permian Basin

Atomic Energy Wells

Enough with “renewables!”

Can prototype nuclear reactors be licensed in the US under current rules?

Atomic Show #303 – Bret Kugelmass, CEO Last Energy

  • Home
  • About Atomic Insights
  • Atomic Show
  • Contact
  • Links

Search Atomic Insights

Archives

Copyright © 2023 · Atomic Insights

Terms and Conditions - Privacy Policy