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Transporting energy is a growing challenge

January 5, 2011

By Drs. Robert & Sonia Vogl
President and Vice President
Illinois Renewable Energy Association

As demand for energy increases, so does the transportation network needed to deliver it to major sources of consumption.

China is facing the problem of internal coal and oil supplies being far away from the areas of increased demand. With China’s rapid economic development and increasing demand for energy, prices will rise, as will the global levels of carbon emissions. According to the International Energy Agency, China’s energy demand doubled over the last decade and is expected to soar 75 percent by 2035. With diminished national supplies, they are seeking energy sources around the world, increasing the need for new energy transportation networks.

Sometimes existing networks are disrupted. The United Kingdom recently warned that nearly 2 million homes, schools and hospitals still heated with oil may face fuel rationing as ice- and snow-covered rural roads impede oil deliveries while consumption levels have spiked in the presence of a cold wave.

The rich oil and gas reserves of the Caspian Basin were exclusively controlled by the Soviet Union with pipelines moving the energy north and west toward Russia. During some recent winters, Russian gas supplies to western Europe running through the Ukraine were reduced to force Ukrainians to pay a higher price.

Western energy interests are developing alternative transportation networks to Turkey, the rest of Europe and the rapidly growing energy markets of China and India. Since oil and gas wells, pipelines and refineries are expensive long-term investments, financial interests seek supportive governments and long-term contracts to protect their investments. Since pipelines are attractive sites for theft or sabotage, investors also seek military protection.

The development of energy distribution networks changes the landscapes through which they pass, and in the case of oil and gas pipelines, imposes additional environmental risks from inevitable breaks in the pipelines. In some cases, such as in Colorado, the development of the Rocky Mountain Express pipeline reduced the presence of excess gas in the state and shipped it to the East Coast to overcome natural gas shortages there. The pipelines are costly, so removal of surplus gas in Colorado raises energy costs there while increasing supplies in the east.

As more oil is sold to China and India and overall supplies dwindle, Paul Sankey of Deutsche Bank believes the United States is likely to dramatically decrease its consumption of oil. Americans will be forced to implement energy efficiency measures including the use of hybrid and electric cars. For that to happen, battery costs will have to drop from $650 per kilowatt hour to $250 per kilowatt hour by 2020. Countries will compete to secure a share of the advanced battery and electric car markets.

Rising oil scarcity and prices will stimulate the conversion of natural gas into fuels such as the firm Sasol intends to do by securing an interest in a shale gas field in Canada to convert gas into diesel fuel. The high price of oil and the low price of shale gas makes it financially feasible. If it is successful, additional pipeline capacity is likely to be needed.

As energy transportation networks become longer and more complex, more individuals and communities become increasingly vulnerable to supply disruptions over which they have little control. Considering this situation, pursuing energy efficiency and sustainable energy strategies should be a high priority.

Drs. Robert and Sonia Vogl are founders and officers of the Illinois Renewable Energy Association (IREA) and coordinate the annual Renewable Energy and Sustainable Lifestyle Fair. E-mail sonia@essex1.com.

From the Jan. 5-11, 2011 issue

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