Tuesday, January 7, 2020

GWPF Newsletter: U.S. Shale Revolution And The Middle East Crisis

How The US Shale Revolution Changed The Face Of Geopolitics

In this newsletter:

1) Gaurav Sharma: Middle East Tension Will Bring More Oil Market Speculators And Yet More Barrels
Forbes, 6 January 2020
2) Dan Eberhart: Global Oil Supply Glut Gives Trump Room To Maneuver On Iran
Forbes, 3 January 2020

3) Noah Rothman: The Fracking Decade
Commentary Magazine, January 2020
4) Walter Russell Mead: How American Fracking Changes the World
The Wall Street Journal, 26 November 2018
5) John Hulsman: How The US Shale Revolution Changed The Face Of Geopolitics
 City A.M. 8 July 2019

6) John Constable: The Role of Distributed Generation in the UK Blackout of 9 August 2019
GWPF Energy, 4 January 2020
7) Ignore Climate Hysteria: India’s Wheat Production To Touch All-Time High
Economic Times of India, 31 December 2019
8) And Finally: Russia Announces Plan To Adapt To And ‘Use The Advantages’ Of Climate Change
Agence France Presse, 5 January 2020

Full details:

1) Middle East Tension Will Bring More Oil Market Speculators And Yet More Barrels
Gaurav Sharma, Forbes, 6 January 2020

In the small hours of Friday (January 2) morning, the global oil market got its first geopolitical jolt of 2020 after a U.S. airstrike in Iraq took out Qasem Soleimani, an Iranian General of the country's Islamic Revolutionary Guard Corps, and commander of its Quds Force, a division primarily responsible for extraterritorial military and clandestine operations.

Soleimani's killing marked the most high profile political assassination in the region since that of another Iranian protégé - Lebanese Islamic Jihad Organization's founder and then Hezbollah's second-in-command Imad Mughniyeh in 2008; a man widely thought to have masterminded U.S. embassy bombing in Beirut, Lebanon in 1983, and described by none other than Soleimani as "the legend of our time."

However, there were two stark differences between both killings. First off, unlike Mughniyeh, Soleimani was an Iranian national and senior serving military official, and de facto architect-in-chief of proxy operations in Lebanon, Syria, Iraq and Yemen.

Secondly, Mughniyeh's killing despite being blamed on the Central Intelligence Agency and Mossad, was never claimed by either, whereas that of Soleimani was announced by U.S. President Donald Trump on Twitter. It came barely days after Iran's Supreme Leader Ali Khamenei had taunted Washington that it could do nothing to his country in the region, following a spate of pro-Iran militia attacks on U.S. facilities and the American embassy in Baghdad in December.

Add it all up, and it has given oil market speculators, ever keen on geopolitical risk premiums, a very unique set of circumstances to take a punt on. Unlike other high profile take-downs of recent years, including that of Al-Qaeda leader Osama Bin Laden (2011) and ISIS leader Abu Bakar Al-Baghdadi (2019), the geopolitical ramifications for the market are visible and direct. Both were wanted terrorists but Solemani was an Iranian state actor.

Iran and the U.S. have renewed hostilities since Trump withdrew Washington from the 2015 Iranian nuclear settlement brokered by European governments and the Obama administration in 2018. Since then, the President's sanctions have squeezed Iran's oil exports from an average of ~3.2 million barrels per day (bpd) in the wake of the settlement down to 2.15 million bpd, going by S&P Global Platt's OPEC survey for November 2019.

In the intervening period, oil tankers in the Persian Gulf have been attacked and Saudi Aramco's Abqaiq processing facility hit by drone and missile strikes. Blame of these has been apportioned on Iran, something it denies. Iran's forces in the Gulf have also detained (and released) oil tankers.

Before the latest escalation, long bets on Brent and West Texas Intermediate front-month futures contracts, i.e. calls on prices going up, were already on the up following OPEC's decision to deepen its crude production cuts by 500,000 bpd to 1.7 million bpd at its December meeting.

Taking out the actions of more pragmatic physical traders, pre-Christmas commitment of traders' data from both U.S. CFTC and ICE pointed to non-commercial traders expanding their collective net-long positions in oil futures to a 12 to 15-month high during the week ended Christmas Eve.

Soleimani's assassination has added the metaphorical fuel to the fire in the eyes of some. In European trading on Monday (January 6), Brent futures briefly hit $70.74 per barrel, before falling back to $69.56, up $0.96 or 1.40% intraday at 11:49 GMT, despite there being no actual oil supply disruption as yet. Tired old theories of the Iranians shutting down the Strait of Hormuz or all out war are doing the rounds once again.

Both are as unlikely in the wake of the latest flare-up, just as they were following attacks on Abqaiq in September for precisely the same reason – a need for their own self-preservation by Iranian hardliners.

A direct strike on U.S. assets would leave the country's own coastline and all its ports vulnerable to a vastly superior American arsenal. And closing the Strait of Hormuz would be self-defeating to begin with, and won't last both politically, as China which takes over 40% of its crude imports via the maritime artery won't stand for it, and militarily, as the U.S. would respond.

Instead, Iran would respond via its preferred modus operandi – proxy wars the likes of Soleimani facilitated, and the likes of Mughniyeh benefited from. Such disruptive tactics equated to a near $10 per barrel premium in the eyes of many paper traders prior to the U.S. shale revolution, and before Obama and European leaders initially brought Iran back to the negotiating table.

Anyone who thinks a return to those days is imminent short of an unlikely all out Gulf War III is kidding themselves, especially given that the U.S., one of the world's leading crude consumers, is itself on the verge of becoming a net energy exporter and on track to pump in excess of 13 million bpd in 2020.

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2) Global Oil Supply Glut Gives Trump Room To Maneuver On Iran
Dan Eberhaft, Forbes, 3 January 2020 

Stop me if you’ve heard this one before. Tensions in the Middle East escalate to a fever pitch, one side strikes a stunning blow in the never-ending “shadow war” against American hegemony in the oil-rich region, and crude prices spike on fears of an oil shortage. 

But then tensions calm, the oil keeps flowing and prices come back to earth.

As the unprecedented attacks on key Saudi Arabia oil facilities showed last September, it’s not easy in this era of abundance to establish a geopolitical risk premium in global oil markets or sustain a price rally.

That’s why those traders betting on higher oil prices after Friday’s killing of Gen. Qassem Soleimani, Iran’s most senior military commander, in a U.S. drone attack in Iraq should err on the side of caution.

Iran has pledged to retaliate, and it showed last year that it can significantly disrupt Middle East oil markets in several ways, including pestering tankers in the Strait of Hormuz, hitting critical pipelines and ports, and, most spectacularly, attacking Saudi oil fields and facilities, an event that temporarily halved Saudi oil production.

But perhaps the most telling story of oil markets in 2019 was how quickly oil prices retreated to pre-attack levels in the days following that September 14 attack. 

A well-supplied oil market, both in terms of spare production capacity and inventories, rendered the attacks a virtual non-event. That’s incredible given that the loss of production from OPEC-leader Saudi Arabia – known as the world’s “central banker” for oil – was, in the past, considered a doomsday scenario by veteran oil analysts.

Sure enough, the price of oil on the international benchmark Brent hub pushed higher on Friday, at one point peaking at $69.50 – its highest level since the Saudi oil facilities were attacked. But gains were quickly pared as the session wore on, with the price closing up around $2 at over $68 a barrel.

There are some reasons to believe that “this time will be different” and that a real risk premium of perhaps $3 to $5 a barrel could now be built into oil prices.

Unlike in September, oil prices at the end of the year were on a roll before the January 3 killing of Soleimani, boosted by OPEC’s latest supply cut deal and an improved global demand outlook as a result of the phase one trade deal between the U.S. and China.

Another factor favoring higher prices is the slowing of U.S. shale oil production growth. That would be sufficient in a normal market to prompt a rally in oil prices if retaliations escalate between Tehran and Washington. The reality, though, is that it may take a full-blown war in the region to make oil prices move substantially higher – such is the extent of the oversupply of oil in the market at the moment.

Even with the combined effect of slower non-OPEC production growth and deeper OPEC cuts, the International Energy Agency recently stated there could still be a surplus of 700,000 barrels a day in the global oil market in the first quarter. Other analysts see the surplus in the first half at 1 million barrels a day or higher. 

It’s important to remember that Saudi-led OPEC and its allies are deliberately holding back roughly 2 million barrels a day of production to make room for still growing non-OPEC supplies, to keep oil markets balanced and support oil prices.

That is 2 million barrels a day that could be brought on virtually overnight if necessary.

The IEA assesses global spare capacity at roughly 3.1 million barrels a day, of which some 2.1 million barrels a day is in Saudi Arabia. Another source of supply resilience is due to come online later this year when the Wafra and Khafji fields in the Saudi Arabia-Kuwait “neutral zone” return, adding roughly 500,000 barrels a day.

Of course, that’s contingent on oil capacity in Saudi Arabia, the UAE, and Kuwait – all U.S. allies – remaining unaffected. That remains an unknown as Iran looks for targets to retaliate against without directly attacking U.S. forces.

Tehran may well believe it has to respond to the U.S. drone attacks to save face with hardliners within its government –Soleimani was immensely popular. But Iran is typically strategic in its attacks on the West, depending on proxies in Lebanon, Iraq and Yemen to give it deniability. 

But there are also roughly 3 million barrels a day being held back by U.S. sanctions and civil strife. Sanctions on Iran and Venezuela won’t ease anytime soon, but the output from conflict-stricken nations like Libya, Nigeria, South Sudan, Yemen and Syria could increase if political and security conditions in those states improve.

That is a massive amount of spare capacity – even if some of it can’t be tapped immediately, it has a significant effect on oil-market psychology.

Full post

3) Noah Rothman: The Fracking Decade
Commentary Magazine, January 2020

The most disorienting seismic shifts attributable to the fracking revolution have been felt in the Middle East, where oil served as the lifeblood of rogue regimes for almost a century.

The malady afflicting the country was unmistakable, according to George W. Bush. “America is addicted to oil,” the president observed in his 2006 State of the Union address. This wasn’t just an observation. It was a call to arms. If the U.S. failed to wean itself off foreign oil, the consequences for the domestic economy and U.S. foreign policy would be grave. Doing so would require substantial investments in America’s ethanol industry as well as the development of oil deposits in pristine natural parks and off the nation’s shores.

In 2008, the U.S. produced an average of just 5 million barrels of oil per day—the nadir of domestic energy production since the exploitation of fossil fuels began in the late 19th century. By 2009, the price of West Texas Intermediate crude was approaching $150 per barrel. The U.S., therefore, was obliged to spend over $1 billion per day on oil imports from foreign countries, few of which could be considered models of good governance. America’s thirst for oil propped up abusive governments in places such as the Democratic Republic of Congo, Venezuela, Pakistan, Saudi Arabia, Algeria, Mauritania, and Syria.

But even as Bush addressed the nation in 2006, a remarkable new technology was quietly coming of age. It would have a profound impact on the American economy and geopolitics in the decade that followed. That technology—hydraulic fracturing, or “fracking”—yielded an energy boom and scrambled assumptions about how the world would organize itself in the 2010s and beyond.

In 1998, a petroleum engineer named Nick Steinsberger pumped a slurry of sand, water, and chemicals under high pressure into a shale formation beneath a rural town just north of Fort Worth, Texas. It shattered the rock and released the natural gas trapped inside. A decade later, the petroleum industry discovered how to apply Steinsberger’s approach with directional drilling to free not just natural gas but the hydrocarbons that make up crude oil from subterranean rock formations.

At the beginning of the 2010s, the soaring price of oil and the low interest rates that followed the collapse of the mortgage market made the enormous costs associated with the development of techniques like fracking seem reasonable. Investment dollars poured into the firms that were pioneering unconventional drilling methods, and those firms began to apply those techniques to previously unexplored shale formations across the country.

By 2012, the U.S. was producing more domestic energy than it had since 1998, when Steinsberger fracked his first well. The following year, domestic American oil production exceeded imports for the first time since 1991. In June 2014, the price of crude oil peaked at $108 per barrel. On December 18, 2015, President Barack Obama signed a law repealing the 1975 ban on the export of domestically produced petroleum products. In January 2016, the global price of crude oil plunged to just under $30 per barrel.

In November 2014, the Saudis rejected calls from poorer OPEC member states to cut production rates in the effort to prop up sliding crude prices. That slide became a collapse, sending benchmark Brent Crude prices below $72 per barrel. Indeed, led by Saudi Arabia and Iraq, OPEC’s response to the challenge posed by American wells wasn’t to cut production but increase it. “It should be in the interest of OPEC to live with lower prices for a little while in order to slow down development projects in the United States,” one petrochemical consultant told Reuters.

The U.S. did not slow down.

At the end of 2018, the U.S. produced nearly 18 million barrels of petroleum products (crude oil, natural gas, and refinery products) per day. For the first time in 40 years, the U.S. had outpaced Saudi Arabia’s output, and estimates showed that it also surpassed Russian oil production. By 2022, the United States is forecast to become a net energy exporter for the first time in nearly 70 years.

The commercial effects of reduced energy prices were unmistakable, but the impact of the fracking revolution on geopolitics was less immediately apparent. It would not be long, though, before that would become clear, too. According to the recent congressional testimony of former National Security Council official Fiona Hill, Russian President Vladimir Putin recognized the threat to his country’s position posed by American fracking technology as early as 2011. He was soon feeling the pain. In November 2013, the U.S.-based multinational Chevron signed a deal with Ukraine and its Russia-friendly president to develop the country’s domestic shale-gas deposits—wresting control of the country’s energy sector from Moscow, which wields its oil and gas exports like a weapon. By late 2014, Russia was forced to contemplate a net 10 percent reduction in domestic spending to compensate for the revenue lost amid falling oil prices.

Venezuela sits atop the world’s largest crude-oil deposit, but its corrupt and socialist government needed oil to trade at around $100 per barrel to cover its own costs. By the time Obama halted Venezuelan oil imports in 2015—itself an action facilitated by America’s renewed production capacity—crude was trading at around $50 per barrel.

Obama only reluctantly set sanctions against the Venezuelan regime in response to its violent repression of popular anti-government protests, and those sanctions were tailored to avoid targeting the already struggling Venezuelan oil sector. Those limited sanctions had little effect on the regime’s behavior. The Trump administration has since blacklisted the Venezuelan oil tankers trading with Communist Cuba, prohibited American businesses from engaging in transactions with the Venezuelan national oil industry, and halted U.S. exports of light crude to Venezuela, where it was blended, refined, and exported.

The most disorienting seismic shifts attributable to the fracking revolution have been felt in the Middle East, where oil served as the lifeblood of rogue regimes for almost a century.

Full post

4) Walter Russell Mead: How American Fracking Changes the World
The Wall Street Journal, 26 November 2018

The most important news in world politics this month isn’t about diplomacy. Bigger than Brexit, more consequential than presidential tweetstorms, the American shale revolution is rapidly reshaping the global balance of power as energy prices plummet.

Until recently, observers expected American energy production to reach a plateau. A lack of pipeline capacity was expected to constrain output in the Permian Basin through 2020. Instead, shippers found ways to use existing pipelines more efficiently, and new pipelines were constructed faster than expected. U.S. crude-oil production is expected to average 12.1 million barrels a day in 2019, 28% higher than in 2017. Surging production has roiled world energy markets.

The biggest loser is Iran. Shale has been pummeling Tehran for some time. The economic benefits Iran hoped to gain from President Obama’s nuclear deal were largely offset by the sharp 2016 fall in the price of oil. Now the pesky Permian is blighting Iranian hopes again. Rising American output made it easier for the U.S. to slap tough sanctions on Iran without risking a sharp rise in world energy prices. Low prices also reduce Iran’s income from the oil it still manages to sell.

The next biggest loser is Russia. Oil is a key revenue source for the Kremlin. But the shale boom doesn’t only pick Vladimir Putin’s pocket; it also attacks his foreign-policy strategy.

Russia wants to control the world oil price and use that power to boost its diplomatic weight. Mr. Putin has two ways to influence the price of oil. The first is to increase geopolitical tensions. If threatening Ukraine or bombing Syria spooks traders and jacks up energy prices, Russia has a better hand in negotiations with Europe and the U.S.

Mr. Putin’s second option is to cooperate with the Organization of the Petroleum Exporting Countries on price fixing. Building a closer relationship with Saudi Arabia over their common interest in inflated oil prices might loosen the kingdom’s U.S. ties and generate lucrative commercial and arms deals for the Kremlin.

Shale disrupts both approaches. With supplies relatively abundant, energy markets can shrug off geopolitical shocks. The surge of American oil and gas also reduces the benefits of OPEC-Russia cooperation for both sides. Russia and OPEC can raise prices by reducing output, but that makes new drilling projects more profitable for American frackers. Cutting prices to starve the competition also doesn’t work. Thanks to past pressure from OPEC and the innovation it forced on the industry, many wells in West Texas now break even at an oil price of $30 a barrel. That’s not a price Russia can accept.

America’s latest shale success is also bad news for the Gulf sheikhdoms. As their incomes fall, their control over the world’s oil price diminishes, as does their ability to fund global Islamic movements. Meanwhile, their importance to the U.S. gradually declines while their military dependence on the U.S. and even Israel grows.

Closer to home, falling energy prices from the shale surge also strengthen America’s hand. The pressure on Venezuela, a major oil producer, increases. The troubled Central American countries sending migrants to the U.S., energy consumers all, get an economic reprieve. Mexico may be pressured to pursue more business-friendly economic policies. More than a sixth of the Mexican government’s revenue comes from energy; falling prices will force the incoming government to find ways to attract more foreign capital.

Europe, too, benefits from low energy prices. They are a relief in particular to French President Emmanuel Macron, whose government faced violent protests over the weekend over fuel taxes. Falling prices also offer relief to Italy. They might help Rome and Brussels reach a fiscal compromise.

Shale power is not, however, an unalloyed good for the U.S. China’s energy-intensive manufacturing economy benefits substantially when energy prices fall. In a world with low prices, Beijing is in a better position to ride out a trade war. Recep Tayyip Erdogan’s Turkey also benefits both from low prices and the weakness of its Middle Eastern neighbors.

Ever since the shale boom began, diplomats and politicians have underestimated its importance. The U.S. has regained the position it lost in 1973 as the world’s largest oil producer, which it will likely hold through at least the 2040s. The consequences for energy markets and world politics will be far-reaching. Roughnecks in the American Southwest are doing more than most foreign ministries to change the world.

But the shale revolution isn’t only an energy revolution; it’s a technology revolution, enabled by advanced methods for oil prospecting and extraction. From the transistor to satellites, to the personal computer to the internet and now shale, it is America’s innovation—as much as its hard power and diplomacy—that shapes world politics.

5) John Hulsman: How The US Shale Revolution Changed The Face Of Geopolitics
City A.M. 8 July 2019

In theory, we all know that major technical revolutions change and fundamentally disrupt the face of the world we live in.

In practice, analysts of all stripes are too often glacially slow to realise this process when it is at work, let alone what it means.

These events (such as the advent of the mass-produced automobile and the personal computer) transcend their technical importance, having profound social, economic and even geopolitical ramifications – consequences that are far too often seen decades after they have actually come to pass.

The shale revolution is the latest case in point.

One of my proudest analytical moments came during my glorious first stint with City A.M., when we, from very early on, not only saw that the shale revolution was real, but that it was bound to overturn both the global energy market, and, equally importantly, the world of geopolitics.

There is nothing that has come to pass in the years since this claim was boldly stated in this newspaper that leads me to change our initial (then unheard-of) assessment.

Hydraulic fracturing, commonly called “fracking” – the process of injecting liquids at high pressure into subterranean rocks, widening existing fissures, and far more plentifully extracting oil and natural gas – has been such a technical game-changer.

It has transformed the US, by far its leading exponent, from a long-term energy mendicant into the largest producer of oil in the world, in the blink of an historical eye.

By contrast, hapless Europe has been loath to follow the American example, as environmental fears have overcome its desperate need for new energy sources. It remains the energy beggar that the US was just years ago.

US energy production has increased an eye-opening 140 per cent since the shale revolution took flight in 2008. In 2018, US crude oil production rose by a stratospheric 30 per cent, with natural gas production also up fully 12 per cent. American oil production reached an all-time high of 10.9m barrels per day last year.

These startling numbers simply don’t lie; the shale revolution is alive and well and here to stay.

Saudi Arabia, alarmed by the ramifications of the shale revolution, has tried to contain America’s disruptive presence on the global energy market scene.

First, the Saudis attempted a variation on what I call the “Rockefeller strategy”, following in the footsteps of America’s nineteenth-century energy titan in driving prices down by over-producing (at a loss) to try to force new competitors into bankruptcy and out of the market.

But the Saudi gambit backfired spectacularly, amounting to a serious self-inflicted wound in a country that needs oil prices to be around $80 a barrel to balance its bloated budget.

Shale production has proved to be far more price sensitive than old, fixed-rig dominated Saudi and Russian energy production. It can be turned on and off at a fraction of the fixed-rig price like a water faucet, depending on the global energy price. Fracking rigs shut down when the Saudis over-produced, only to restart as the price inevitably edged upwards.

Going in the opposite direction has not worked very well, either. Present Opec and Russian production cuts, while leading to a global energy price increase, have bequeathed to the Americans greater market share.

In ramping up production, the US has kept a ceiling on global oil prices. It is not too much to say that the shale revolution has left the US, and not Opec or Russia, with the potential to become the global energy swing producer – a change of gargantuan proportions.
The geopolitical ramifications of the shale revolution are as profound as they are ignored. Shale means that the US must focus far more of its attention on its own backyard. For if Mexico, Canada, and the US work in unison (as the new USMCA trade pact makes possible), the dream of North American energy independence is possible.

Gone should be the days of over-worrying about the Middle East (except as an offshore balancer), a major strategic windfall for an America determined to turn its attention to Asia, where much of the political risk and reward will be in the new era.

There, great power rival China finds itself far more dependent on energy production outside its borders, a very real handicap in the emerging superpower competition with the US.

The shale revolution is a major reason for America’s basic strategic realignment away from the Middle East and towards Eurasia in our new multipolar era. Its importance simply cannot be overstated, and demands understanding.

6) John Constable: The Role of Distributed Generation in the UK Blackout of 9 August 2019
GWPF Energy, 4 January 2020

Dr John Constable, GWPF Energy Editor

It has been widely claimed that Distributed (or embedded) Generation, such as solar and wind connected to the low voltage distribution network, reinforces electricity system stability.

The final reports into the widespread blackout of the 9th of August last year by the UK electricity regulator, Ofgem, and the British government’s Energy Emergency Executive Committee, E3C show that this is not the case. Distributed Generation is now under the spotlight as a leading cause of the severity of the 9 August blackout, and as a hazard increasing future risks to security of supply.

Both the UK electricity market regulator, Ofgem, and the Energy Emergencies Executive Committee (E3C) of the Department for Business, Energy and Industrial Strategy (BEIS) have now (3 January) released their final reports into the blackout on the 9th of August 2019, a blackout that disconnected over 1 million consumers for nearly an hour with knock-on impacts that persisted for days in many cases and in case, an oil refinery, for several weeks:

Ofgem, Investigation into 9 August 2019 power outage

E3C,  Great Britain power system disruption review

The two studies have different roles. Ofgem’s work, which is now almost complete (there is just one more as yet unpublished technical paper, see p. 10) concentrates on regulatory compliance, that is to say on whether the relevant parties, National Grid, the Distribution Network Operators, and the generators, breached the terms and conditions of their various licenses. In essence it is a retrospective, forensic and essentially historical study.

The E3C work is more forward looking and aims to examine measures that should or are being taken to a) reduce the likelihood of a recurrence of a similar blackout, and b)  improve the way in such a blackout is handled in the event that it cannot be prevented.

The two studies are as far as I can tell entirely consistent, but they are complementary; and they need to be studied together.

Those who have been following the blackout story from the outset, as well as more casual readers of press stories on the blackout, some of which I have discussed in a previous post (“Telling the Story of a Blackout”), will want to know what new facts and analytic interpretation of the blackout emerge from these two studies.

The answer is that there is a good deal here, but it is not initially obvious, and at first glance such readers may be disappointed. While there are some new or at least newish facts these are mainly confined to details, and often about the consequences of the blackout rather than its causes. For example we learn that some four hospitals, not just the much-reported case of Ipswich Hospital, were disconnected during the blackout (see Ofgem, p. 20; E3C p. 19), and that National Grid perhaps over-zealously reconnected the Hornsea 1 before it was confident that the wind farm’s “technical issues”, which had without doubt contributed to the blackout, had been fully understood. We also learn that 371 rail services were cancelled, and 220 part cancelled, with three Transport for London tube stations, and eight rural signalling stations all disconnected, though without significant effect on services (Ofgem, p. 20).

Many of these details are certainly important in themselves, and Ofgem even singles out for particular criticism National Grid’s hasty reconnection of Hornsea (Ofgem, p. 28), but the principal novelty and value of these two documents is not in such material minutiae pure and simple, but rather in the general and cumulatively damning description of weaknesses in the UK electricity system that emerges from this material when it is put into the context of the event overall. It is proverbial that electricity systems shift from stability to chaos in fractions of a second, while the causes of a blackout take weeks and months to understand, but the mists are beginning to clear and we are beginning to get to grips with what happened on the 9th of August.

However, with regard to the story of the blackout, the main narrative has not changed much since last year; a lightning strike trigged the disconnection of, firstly, 150 MW of Distributed Generation, closely followed by the almost instantaneous loss of 737 MW of the Hornsea 1 offshore wind farm. Shortly after that the steam unit at Little Barford Combined Cycle Gas Turbine tripped off. All of this occurred within 1 second of the lightning strike. The consequent drop in frequency triggered further disconnections of Distributed Generators. Additionally, the first of the two gas turbines at Little Barford also now had to disconnect, closely followed by the second of the two gas turbines, and yet more Distributed Generation. (See Ofgem pp. 16–19).

Even in this sketch of the summary it will be obvious to those familiar with earlier accounts that while the main facts remain, the light cast on them has changed significantly, and this results in a somewhat different picture. Attention has switched from the two main Transmission System connected generators, Hornsea 1 and the Little Barford, which have both been fined £4.5 million each for failing to ride through the fault, and is now focussed on Distributed Generation, that is to say on generators connected to, and sometimes said to be “embedded within”, the Distribution Network. These generators are usually invisible to the system operator and can range from very small domestic systems, right up to what are by any standard large onshore wind and solar installations.

The role of Distributed Generation in the blackout was, of course, known from quite early on in the post-event analysis, but the scale is only now becoming fully apparent, though even at this late stage it remains and will remain uncertain. The E3C report goes so far as to remark that “There is a significant possibility that the total volume of loss of embedded generation on 9 August is in excess of the transmission connected generation lost during the event.” Since the transmission-connected generation lost comprises Hornsea and Little Barford, and this totals 1,384 MW, we can infer that somewhere in the region of 1.5 GW of Distributed Generation disconnected in several closely proximate phases over the entire event. That is itself a significant quantity, and suggests that, as the E3C remarks (p. 9), the total generation loss during the blackout was a monumental 3 GW. 

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7) Ignore Climate Hysteria: India’s Wheat Production To Touch All-Time High
Economic Times of India, 31 December 2019

New Delhi: India will see record wheat output this year on higher acreage and conducive weather, the chief of a top government research institute said.

Production of the grain in the current crop year 2019-20 that runs from July to June will touch an all-time high of 105 million tonnes, said Gyanendra Pratap Singh of the Directorate of Wheat Research at Karnal, Haryana. Bumper production in the rabi season should ease pressure on household budgets and boost consumer spending. 

“The cold wave conditions along with winter rains is very beneficial for the wheat crop. It will help in increasing tillering (an increase in the number of flower bearing branches), which will lead to higher yield,” said Singh. Wheat acreage has increased 26.27 per cent to 29.7 million hectare this year, and that will lead to record output, Singh said. “It will be the fourth consecutive year of record production, and will be about 3 per cent increase in production over the previous year,” he said.

Full story

8) And Finally: Russia Announces Plan To Adapt To And ‘Use The Advantages’ Of Climate Change
Agence France Presse, 5 January 2020

The Russian government has published a plan to adapt the economy and population to climate change, aiming to mitigate damage but also “use the advantages” of warmer temperatures.

The document, published on the government website on Saturday, outlines a plan of action and admits that changes in the climate have had a “prominent and increasing effect” on socioeconomic development, people’s lives, health and industry.

Russia is warming 2.5 times quicker than the planet, on average, and the two-year “first stage” plan is an indication that the government officially recognises this as a problem, even though Vladimir Putin denies that human activity is the cause.

It lists preventive measures such as dam building or switching to more drought-resistant crops, as well as crisis preparations including emergency vaccinations or evacuations in case of a disaster.

It says climate change poses risks to public health, endangers permafrost, increases the likelihood of infections and natural disasters. It also can lead to different species being pushed out of their usual habitats.

Possible “positive” effects are decreased energy use in cold regions, expanding agricultural areas and navigational opportunities in the Arctic Ocean.

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