Extracts from Nandini Chemical Journal, Aug 2008
Thorium based fuel|Uranium extraction|Yellow phosphorous|Oil in arctic
TALK OF THE MONTH
GEOLOGISTS FIND HUGE OIL RESERVE IN ARCTIC
WAR OF WORDS BETWEEN BIOFUEL PRODUCERS
THORIUM BASED FUEL
FEARS ABOUT TURKEY'S NUCLEAR PLANS
URANIUM EXTRACTION PROJECT OF DEPARTMENT OF ATOMIC ENERGY
YELLOW PHOSPHOROUS SCENARIO
WHY IS OIL PRICE RISING?
Contributed by V.Swaminathan,Singapore
V.Swaminathan is graduate in Chemical Engineering and MBA from Indian Institute of Management, Ahmedabad. He is presently working in senior position in an international consultancy organization at Singapore office.
Has oil price finally topped out .. will it rise further .. will we enter the 200 dollar per barrel territory .. what will happen to the price of petrol and its impact to our economy ?
These are questions on the mind of most people who are directly bearing the brunt of these all time high oil prices these days. While it requires great sagacity to predict with any degree of accuracy where the price is headed, it is equally interesting to analyze how we got here in the first place.
The common theory including that of our Finance Minister is that the high prices are being driven by speculation and it’s a bubble.
While there is some semblance of truth with huge bets being placed on the future direction of price of oil, if the oil market is in a bubble, at least it is a bubble mitigated by three very important circumstances:
1) oil is perhaps the world’s most useful commodity,
2) more and more people across the world want the stuff,
3) it is priced mostly in dollars whose value, in terms of everything else, has been going down.
Let us examine each of the above factor in greater detail.
The consumption pattern of oil underlines its usefulness in the industrial development of most developed countries. Post World War II, Western Europe and Japan recovered on an ocean of cheap oil($1/bbl). Oil demand in Europe grew from 2 mbd in the early 1950’s to 17 mbd in the early 1970’s. Japan oil use grew from 0.2 mbd in the early 1950’s to 5.5 mbd in the early 1970’s. The Asian “Tiger” economies and Thailand also witnessed an explosion in oil consumption from the mid1980’s until the turn of the century corresponding with rapid penetration of cars in their economies. Oil consumption rose from 1.7 mbd in 1985 to 5.2 mbd in 2000. The more advanced economies of Asia, i.e.Japan, S.Korea, Taiwan, Malaysia, Thailand. Hong Kong and Singapore consume some 10.5 mbd or about 13 bbls/person/year.
To achieve explosive economic growth with current available technologies, it is inevitable that oil consumption has to fuel it.
China and India are now among a group of developing countries undergoing sustained high economic growth with corresponding high growth in oil consumption. Since the 2.3 billion people in China and India are consuming about as much oil as the 300 million people in Japan, Thailand and the Tiger economies together, the scope for rapid demand escalation exists from India and China in the next 15 years.
About three quarters of future oil demand growth is projected to come from the developing countries and perhaps as much as two thirds of that from developing Asian countries like China and India, while significant global oil discoveries have peaked several decades ago.
On the supply front, there has been no new significant new oil field discovered in recent years that could change the demand supply equilibrium in a significant way. In addition in recent times, supplies from non-OPEC countries have been erratic due to weather disruptions, strikes and technical reasons as the chart below shows.
Several recent studies show non OPEC oil production peaking by the middle of the next decade.
There are rising doubts about extent of OPEC’s ability to meet global incremental demand after non OPEC peaks. Several researchers have concluded that even OPEC will struggle to fill the differential between non-OPEC supply and global demand beyond 2015 - 2020. Some OPEC producers are expected to peak in 5 to 10 years.
Finally, let us analyse the issue of US dollar. The following chart is borrowed from an investment newsletter which shows the annual money supply and credit growth across the world of a number of currencies.
Most countries have been printing money annually in double digit rates and many over 20%. This upsurge in paper financial assets across the world is driving an unprecedented demand to convert part of monetary assets into physical tangible assets like land, metals, oil, gold, gas and other commodities that have a better chance of holding their value against any potential collapse in currencies than the paper assets.
For the last 100 years, the oil price has tracked more or less the changes in money supply growth. As money supply has increased, so did the price of oil. Oil is going up – on a 10-year moving average basis – about 23% per year.
Looked at another way, from 1974 to the present, the price of oil has gone up a bit more than 14 times. Money supply meanwhile, has gone up a bit more than 11 times demonstrating a strong correlation between growth in money supply and growth in oil price.
In summary, demand for oil is being driven by newly industrializing economies like India, China, Brazil with vast population to support, while supply has only been increasing at a modest pace thus reducing the ability of markets to buffer effectively any surge in demand.
In addition, the fast depreciating value of US Dollar and surging liquidity worldwide, puts additional monetary pressure on oil price and thus has led to a sharp surge in oil prices worldwide.
The Arctic may contain as much as a fifth of the world’s yet to be discovered oil and natural gas reserves, the United States Geological Survey said as it unveiled the largest ever survey of petroleum resources north of the Arctic circle.
Oil companies have long suspected that the Arctic contained substantial energy resources and have been spending billions recently to get their hands on tracts for exploration. As melting ice caps have opened up prospects that were once considered too harsh to explore, a race has begun among Arctic nations, including the US, Russia and Canada for control of these resources.
The geological agency’s survey largely vindicates the rising interest. It suggests that most of the yet to be found resources are not under the North Pole but much closer to shore, in regions that are not subject to territorial dispute.
The assessment, which took four years, found that the Arctic may hold as much as 90 billion barrels of undiscovered oil reserves and 1670 trillion cubic feet of natural gas. This would amount to 13% of the world’s total undiscovered oil and about 30% of the undiscovered natural gas.
At today’s consumption rate of 86 million barrels a day, the potential oil in the Arctic could meet global demand for almost three years. The Arctic’s potential natural gas resources are three times bigger. That equals Russia’s proven gas reserves, which is the world’s largest.
The agency called the Arctic region the largest unexplored prospective area for petroleum remaining on earth.
The world currently holds 1.24 trillion barrels of proven oil reserves and 6263 trillion cubic feet of proven natural gas reserves.
The survey looked at undiscovered technically recoverable resources, defined as resources that can be produced using current technology.
While the findings contain some uncertainty, they confirm a widely held industry belief that the Arctic may be the next frontier for global oil exploration.
Last month, OPEC warned western countries that their efforts to develop biofuels to combat climate change risked driving the price of oil through the roof.
The global biofuels sector has criticized the Organization of the Petroleum Exporting Countries (OPEC) oil cartel by accusing it of deliberately “misleading” the public about who is responsible for soaring fuel prices.
An open letter to President of OPEC from the main biofuel organizations in Europe, North America and Brazil accuse him of providing self serving explanations by claiming that 40 per cent of the $140- a-barrel crude price results from the entry of bioethanol into the market.
“Since you, as head of OPEC, provide no explanation for what in our view constitutes a selfserving and misleading statement that goes counter to any independent analysis of the fuels market today, one can only conclude that OPEC views competition with bio-fuels as a direct threat,” says the letter signed by the European Bio-ethanol Fuel Association, the Renewable Fuels Association in the U.S., the Canadian Renewable Fuels Association and the Brazilian sugarcane producers of Unica.
The organizations point instead to a recent piece of research from the investment bank Merrill Lynch suggesting that bio-fuels push crude prices 15 per cent lower than they otherwise would be. They note that petrol prices in Brazil have not risen in two years because of competition from sugar cane-derived ethanol.
Last month, OPEC warned western countries that their efforts to develop bio-fuels as an alternative energy source to combat climate change risked driving the price of oil “through the roof.”
Secretary general of OPEC said the cartel was considering cutting its investment in new oil production in response to moves by the developed world to use more bio-fuels.
The bio-fuels industry says that OPEC members are heading for revenues of $1.2tn this year as a result of the “exorbitant” price of oil.
“We realize that bio-fuels may be reducing your windfall profits,” said the letter, which was published as a whole-page advert in the Financial Times. “But, perhaps, the time for OPEC to face some competition has finally arrived.”
Thorium is considered the world’s leading proliferation-resistant nuclear fuel. India has more than 25 per cent of the world‘s thorium resources.Using thorium-based nuclear fuels has many important societal advantages, such as safety, and environmental and non-proliferation benefits.
Thorium is more abundant, efficient and safer to use as a reactor fuel than uranium. Further, thorium reactors leave behind very little plutonium, meaning less material available for making nuclear weapons.Thorium is thus considered the key to long-term sustainability of nuclear energy.
The IAEA submitted a report on thorium utilization in May 2005. The IAEA recommended that companies augment the exploration and mining of thorium to ensure the availability of sufficient supplies of reactor-grade thorium. The report cites the following advantages of thorium fuels over conventional uranium fuel:
Thorium is easily exploitable and is 3 to 4 times more abundant than uranium in nature. The thorium fuel cycle is an attractive way to produce long-term nuclear energy with low radio-toxicity waste. Transition to thorium could be done through the incineration of weapons-grade plutonium (WPu) or civilian plutonium.
The high degree of chemical stability and the low solubility of thorium make irradiated thorium-based fuels attractive as waste forms for direct geological disposal.
Thorium reserves are widely present in India, according to the India in large quantities. The total estimated reserves of monazite in India are about 8 million tonnes (containing about 0.63million tonnes of thorium metal) occurring in beach and river sands, in association with other heavy minerals.
Of the nearly 100 deposits of the heavy minerals, at present, only 17 deposits containing about 4 million tonnes of monazite have been identified as exploitable. Therefore, about 2,25,000 tonnes of thorium metal is available for the nuclear power programme.
India has to immediately start the development of its own fuel for the nuclear programme.
Turkey plans to build three nuclear power plants in the next five years at a cost of at least $8 billion to meet demand for electricity that is rising faster
The nuclear power station near Sinop, a fishing town in one of Turkey’s poorest provinces, is part of the state’s effort to cut reliance on fuel imports.
Opponents say the plants will exacerbate what they believe to be a cancer epidemic caused by the meltdown at Chernobyl, the world’s worst nuclear accident. They also cite risks from earthquakes — most of Turkey straddles geological fault lines — and terrorism in a nation that has been targeted by Islamist and Kurdish militants.
Atomic power remains a small part of Turkey’s overall energy blueprint. The reactors would generate a combined 5,000 megawatts of power or about 5 percent of the country’s needs. Turkey also plans hydropower stations with a total capacity of 16,500 megawatts in the next five years.
Bids for the first reactor, on the Mediterranean coast, are due Sept. 24, and the government plans to seek offers for the Sinop plant by the end of the year.
Eight days after the April 1986 meltdown at Chernobyl in Ukraine, a cloud of radiation particles moved over Sinop about 600 miles away, images from the Lawrence Livermore National Laboratory in California showed.
Though no studies have been done on the effects on Sinop itself, the Turkish Chamber of Physicians did research in 2006 on the town of Hopa, about 350 miles east along the Black Sea coast. It showed that half of all deaths there were caused by cancer and blamed the fallout from Chernobyl. That’s more than twice the national rate, according to Health Ministry data.
There is a general feeling that Sinop has a higher cancer rate because of Chernobyl, The Government of Turkey has disputed such findings, blaming the cancers on causes such as smoking and X-rays. Two years ago, a ministry study on the Black Sea region as a whole found no significant increase in cancer because of the disaster. Turkey’s cancer death rate of 22 percent exceeds the global average of 13 percent, World Health Organization data show.
Department of Atomic Energy (DAE) has plans to diversify and augment the uranium sourcing base.
These include attempts to squeeze out nuclear grade uranium from secondary sources such as phosphoric acid, metallurgical process residues and even sea water.
The Bhabha Atomic Research Centre (BARC) has reported “significant progress” in its attempts to biorecover uranium from sea water and dilute nuclear waste using natural and genetically engineered microbes.
The Heavy Water Board, a state-owned utility under the DAE, is setting up an industrial scale technology demonstration plant for the recovery of uranium from phosphoric acid, manufactured using rock phosphate at Rashtriya Chemicals and Fertiliser’s Trombay facility.
Since the Heavy Water Board has taken on the challenge of producing uranium from phosphoric acid, atomic stations in the country could hope to get uranium from the Board in the foreseeable future. Once this happens, India could hope to generate electricity from Pressurised Heavy Water Reactors beyond the current limit of 10,000 MW, using indigenous resources The Board’s Technology Demonstration Plant (TDP) at Trombay aims to squeeze traces of uranium from phosphoric acid, basically taking advantage of the fact that rock phosphate contains 60 to 150 parts for every million parts of uranium.
The plant would be located adjacent to Rashtriya Chemicals and Fertiliser’s wet phosphoric acid plant in Trombay and would produce uranium in the form of ammonium di-uranate. This material would be processed further by DAE’s nuclear fuel complex at Hyderabad to prepare enriched uranium that can, subsequently, be used by nuclear power stations.
BARC’s attempts to viably extricate uranium from sea water have also begun yielding positive results.
Sea water is known to contain uranium but the low concentration of the nuclear fuel and high cost of its extraction has traditionally inhibited the option of commercial sourcing of uranium from the seas. The BARC method involves passing sea water through a specially made polymer that will absorb uranium selectively.
According to estimates, nearly 4.6 billion tonnes of uranium are estimated to be present in sea water, with Japanese scientists in the 1980s having demonstrated that extraction of uranium from sea water using ionexchangers was feasible Indian Rare Earths Ltd, another public service utility under DAE, is also setting up demonstration plants to recover uranium from phosphoric acid, in addition to recovering uranium from various secondary sources such as thorium hydroxide concentrate and other metallurgical process residues.
This article further discusses the following details :
- Global uranium supply scenario
- Undiscovered resources
- Long lead time
- Indian scenario
Prices of phosphorus-based products such as safety matches, insecticides, pharmaceuticals, agrochemicals, lubricant additives, and water treatment compounds have gone up in India, with China imposing an export duty of 120% on yellow phosphorus.
The revision of duty structure is significant for India, as it imports about 20,000 to 25,000 tonne of phosphorus annually from China.
China imposed export duty on yellow phosphorus to 10%, which was increased to 20% in June 2005 and now it is 120%. In the last four-five years, the price of Yellow Phosphorous has gone up ten times from $900 per tonne to current levels at $8,500 to $9,000. In addition to export duty, China has simultaneously increased the minimum price on which export duty is leviable from $4,000 per tonne to $8,000.
United Phosphorus which also imports phosphorus, is the only manufacturer of phosphorus India and also supplies key phosphorus-based products. It has already increased the price of most products between 30% and 70%.
China emerged as a major player in phosphorus and its intermediates due to large reserve of rock phosphate, used in making phosphorus. China’s low price of exports led to closure of manufacturing units in India and other countries.
Yellow phosphorus is used to produce thermal process phosphoric acid. Phosphoric acid is used as raw material for sodium tripolyphosphate production. Some of the phosphoric acid is processed into industrial grade, food grade, medical grade and reagent grade varieties.
Yellow phosphorus is used to produce phosphides and pesticides. It is also is used to produce red phosphorus.
This article further discusses the following details :
- Scenario in China
- Global trends
- Global demand
- Export tariff on yellow phosphorus in China
- Production cost
- Output / export of yellow phosphorus in China from 2000 to H1 2007
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