Tuesday, February 13, 2024

Abandoned Coal Mines Are Being Repurposed Into Renewable Energy Hubs

  • Governments globally are investing in assessing the potential of old coal mines for renewable energy, including geothermal operations and solar farms.

  • Successful projects like the Gateshead mine in the UK and solar operations in Virginia, USA, demonstrate the feasibility and benefits of repurposing former coal sites for clean energy.

  • Repurposing coal sites not only supports the transition to green energy but also creates jobs, revitalizes communities, and reduces CO2 emissions.

In the U.K., the government is investing in the assessment of the potential for old coal mine sites to be converted into renewable energy hubs. As many governments around the globe aim to phase out the use of coal, researchers are exploring the potential for old mining sites. Rather than be left abandoned, ex-coal production sites could be used for a multitude of purposes, from solar energy to geothermal operations, supporting a green transition and reinvigorating the economies of previous energy hubs. 

In the U.K., the metro mayor for the west of England, Dan Norris, is investing £1.5 million in the exploration of over 100 coal mines in Somerset and South Gloucestershire to explore the potential for supplying renewable heat sources in the region. The mines in this region were emptied of coal and then closed and flooded, as the pumps were turned off. The water in the mines is heated by geothermal energy, with heat coming from the Earth’s core, allowing it to reach temperatures of around 20oC. The idea is that the water is extracted, and the heat is separated from the water to be used in heat pumps in homes and businesses across the country. New geothermal operations in existing coal mines could provide vast amounts of low-carbon heat. In addition, the water is pumped back into the mines to be recycled, making it a highly efficient process. 

There has been an increasing focus on the potential use of heat pumps in the U.K., as well as other countries around the world. Heat pumps can replace furnace and air conditioning equipment, providing low-carbon heating. Several cities worldwide have already introduced bans on furnaces in new buildings, starting later in the decade, thereby increasing the demand for greener alternatives such as heat pumps. The U.S. and France are both now developing their heat pump manufacturing industries to respond to this demand. 

Dan Mallin Martin, a hydrogeologist with the Coal Authority, the public body responsible for managing the effects of past coal mining, explained, “The transition to heat pumps as an energy source is very important and that’s one of our options for decarbonising our heating requirements across the U.K..” He added, “With heat pumps, ground source options and mine water, we can feed into that decarbonisation, especially if we couple it with green electricity like solar panels and wind.” 

There have already been successful geothermal projects on old coal sites in the U.K., including the Gateshead mine in the north of England. In March 2023, the Gateshead Energy Company launched geothermal operations at the site, making it the largest mine water heat network in Great Britain and one of the largest in Europe. The project, funded by the Heat Network Investment Project (HNIP) and the Gateshead Council, took three years to develop.  Now, heat can be extracted from 150 metres underground to provide hot water to hundreds of homes and businesses across the region. The company hopes to grow the network for use in a new conference centre, a hotel development, and an additional 270 privately owned homes. This could help reduce CO2 use by around 1,800 tonnes a year. 

And it’s not just the geothermal energy potential that researchers are exploring when it comes to repurposing old coal sites. With many coal operations covering vast amounts of land, they are ideal for conversion into solar farms. Installing solar energy infrastructure on degraded lands like mining sites and landfills is a low-cost way of transforming the sites into clean energy hubs. Using ex-mining sites can help save time and costs associated with project development, as many sites already have vital infrastructure, such as transmission lines and roads. It can also revitalise the economy of former energy hubs, creating jobs and providing clean energy for communities. 

In Virginia, USA, the Nature Conservancy – an NGO, has converted several abandoned coal mines into solar energy operations, big enough to provide renewable energy to the grid. It was one of the first examples of transforming coal sites into solar farms and the organisation hopes it will encourage the rollout of similar projects countrywide. The Nature Conservancy partnered with solar developers, such as Dominion Energy and Sun Tribe to develop the projects. The mine sites are well-suited to the transformation as they are situated on vast flat areas exposed to sunlight. 

Daniel Kestner from the Virginia Department of Energy explained, “In the coalfield region, there are about 100,000 acres that’s been impacted from mining… better to build on a lot of these mine sites than some prime farmland or some areas that maybe don’t want solar in their community.” 

As governments look to increase their renewable energy capacity and reinvigorate former energy hubs, the repurposing of coal sites could provide the perfect opportunity for transformation. There is huge potential for the development of both geothermal and solar energy operations, which could help bring jobs and revenue back to long-neglected mining communities, as well as support a green transition.  

By Felicity Bradstock for Oilprice.com

 

Diamondback Energy’s $26 Billion Endeavor Acquisition Shakes Up Permian Basin

  • Diamondback Energy agrees to purchase Endeavor Energy for $26 billion in cash and stock, becoming the third-largest oil producer in the Permian Basin.

  • The deal reflects a trend of consolidation in the US energy sector, following recent megadeals involving Exxon, Chevron, and other major players.

  • The acquisition is expected to enhance efficiency and productivity in crude oil production, positioning the combined company as an attractive investment opportunity in the market.

Last year, when the full extent of the unprecedented consolidation wave in the shale sector gradually became apparent, we speculated that when it's all said and done, US energy companies would have more production discipline than the OPEC+ cartel, and sure enough, today we got the latest confirmation when Diamondback Energy agreed to buy fellow Texas oil-and-gas producer, the closely privately-held Endeavor Energy, in a $26 billion cash-and-stock deal that will create the third-largest oil producer in the Permian, behind only Exxon and Chevron. It would also be the largest oil producer operating exclusively in the Permian.

Diamondback will fund the deal with 117.3 million shares and $8 billion in cash, the two Midland, Texas-based companies said in a statement Monday. Diamondback shareholders will own 60.5% of the company after the deal closes. Shareholders of Endeavor, which isn’t publicly traded, will own the rest. The WSJ was the first to leak the deal over the weekend.

The agreement is the latest in a string of massive deals transforming the US energy landscape as companies push to line up future drilling sites and cut costs. Over the past four months, Exxon struck a deal to buy another shale giant, Pioneer Resources, for about $60 billion, Chevron Corp. agreed to buy Hess Corp. for about $53 billion and Occidental Petroleum Corp. agreed to buy CrownRock LP for about $10.8 billion.

The Financial Times noted that the deal would be a win for Diamondback over Conoco, which has also been a candidate for Endeavor, which the news outlet described as one of the most sought-after shale oil independents.

Acquiring Endeavor is a resounding coup for Diamondback after its failed attempt to acquire CrownRock last year. Instead, the independent was acquired by Occidental. Endeavor, which was founded by shale pioneer Autry Stephens, is one of the last remaining closely held producers in the Permian. It has attracted the interest of Exxon, Chevron and ConocoPhillips.

Stephens, who grew up on a watermelon-and-peanut farm and had to shut down almost all his rigs during the 2008 financial crisis, had a net worth of $14.8 billion before the sale to Diamondback was announced, according to the Bloomberg Billionaires Index.

Diamondback and Endeavor’s assets compliment each other very well, paving the way for the combined company to produce crude more efficiently, said Dan Pickering, who is founder and chief investment officer of Pickering Energy Partners and helped finance the shale revolution.

"Their (drilling) inventory is extremely high quality that will make the combined companies a very attractive investment on Wall Street. I imagine it will be well received by the market on Monday," Andrew Dittmar, senior vice president at Enverus, told Reuters.

The two companies, headquartered across the street from one another in Midland, the heart of the Permian, will have a combined 838,000 net acres and have net production of 816,000 barrels of oil equivalent, according to the statement.
The move also appears to be somewhat defensive for Diamondback, putting the company in better position to survive the ongoing merger wave as an independent operator, according to Bloomberg Intelligence.

The deal, which includes Endeavor’s net debt, has been approved by Diamondback’s board. The company will fund the cash portion of it through a combination of cash on hand, its credit facility, term loans and bonds. Diamondback expects the deal to close in the fourth quarter.

As expected, Wall Street was quite excited about the transaction:

KeyBanc Capital Markets analyst Tim Rezvan

  • A possible Diamondback-Endeavor merger has “industrial logic and the reporting is credible”
  • “A reasonably priced acquisition could support current FANG valuations and merit another upward re-rate”

ROTH MKM analyst Leo Mariani

  • Endeavor’s $25 billion valuation is lower than earlier reports for a “highly sought after set of assets”
  • “Endeavor is one of the most highly sought after deals remaining in the Permian Basin, so this is a bit of a coup for FANG”

Stifel analyst Derrick Whitfield

  • The deal would be fairly valued, given “the modest productivity uplift demonstrated by Endeavor’s wells”
  • Bottom line is that “we’re positively inclined on the rumored transaction”

RBC Capital Markets analyst Scott Hanold

  • “If this transaction occurs, we expect FANG to rationalize some of its less core focus assets, such as the Delaware Basin”

The Diamondback-Endeavor merger extends a series of megadeals that began with Exxon’s acquisition of Pioneer Natural Resources last year, followed by Chevron’s purchase of Hess Corp., and several smaller-scale but still nine-figure deals.

According to oil analysts, the shopping spree in the Permian play will continue as drillers rush to secure future production by expanding their acreage inorganically through acquisitions.

The Permian Basin, straddling West Texas and New Mexico, is the cornerstone of oil-production growth in the US. The nation’s output surged to a record high last year — besting Saudi Arabia by about 45% — thanks largely to wells in the Permian that can be drilled and fracked cheaper and faster than those in many other regions.  Oil remains in high demand globally despite efforts to transition away from it, with consumption expected to rise through 2030 — and perhaps beyond.

By Zerohedge.com 

How Fracking Helped the U.S. Become the World’s Top Oil Producer

  • Over the last decade, the US has become the top producer of crude oil globally, thanks in part to hydraulic fracturing in shale formations.

  • The US overtook Saudi Arabia and Russia in oil production in 2018, accounting for 14.7% of global crude oil production in 2022.

  • Despite leading in production, the US still trails in remaining proven reserves underground, ranking seventh globally behind countries like Venezuela and Saudi Arabia.

Over the last decade, the United States has established itself as the world’s top producer of crude oil, surpassing Saudi Arabia and Russia.

This infographic, via Visual Capitalist's Omri Wallach, illustrates the rise of the U.S. as the biggest oil producer, based on data from the U.S. Energy Information Administration (EIA).

U.S. Takes Lead in 2018

Over the last three decades, the United States, Saudi Arabia, and Russia have alternated as the top crude producers, but always by small margins.

During the 1990s, Saudi Arabia dominated crude production, taking advantage of its extensive oil reserves. The petroleum sector accounts for roughly 42% of the country’s GDP, 87% of its budget revenues, and 90% of export earnings.

However, during the 2000s, Russia surpassed Saudi Arabia in production during some years, following strategic investments in expanding its oil infrastructure. The majority of Russia’s oil goes to OECD Europe (60%), with around 20% going to China.

Crude Oil Production

United States

Saudi Arabia

Russia

1992

11.93%

13.97%

12.74%

1993

11.50%

13.68%

11.35%

1994

10.96%

13.32%

10.50%

1995

10.60%

13.17%

9.96%

1996

10.21%

12.87%

9.49%

1997

9.84%

12.73%

9.29%

1998

9.39%

12.58%

9.05%

1999

9.06%

11.99%

9.33%

2000

8.67%

12.33%

9.64%

2001

8.65%

11.89%

10.45%

2002

8.63%

11.49%

11.53%

2003

8.05%

12.92%

12.10%

2004

7.46%

12.74%

12.67%

2005

7.00%

13.21%

12.82%

2006

6.85%

13.00%

12.90%

2007

6.84%

12.38%

13.29%

2008

6.71%

12.44%

12.56%

2009

7.32%

11.28%

12.98%

2010

7.37%

11.31%

13.03%

2011

7.55%

12.81%

13.02%

2012

8.50%

13.04%

12.94%

2013

9.76%

12.86%

13.10%

2014

11.18%

12.60%

12.86%

2015

11.67%

12.77%

12.66%

2016

10.92%

13.12%

13.02%

2017

11.53%

12.68%

13.05%

2018

13.21%

12.77%

12.96%

2019

14.90%

12.15%

13.20%

2020

14.87%

12.37%

12.97%

2021

14.59%

12.06%

13.10%

2022

14.73%

13.17%

12.76%


 

 

 


 

 

 


 

 

 

Over the 2010s, the U.S. witnessed an increase in domestic production, much of it attributable to hydraulic fracturing, or “fracking,” in the shale formations ranging from Texas to North Dakota. It became the world’s largest oil producer in 2018, outproducing Russia and Saudi Arabia.

The U.S. accounted for 14.7% of crude oil production worldwide in 2022, compared to 13.1% for Saudi Arabia and 12.7% for Russia.

Despite leading petroleum production, the U.S. still trails seven countries in remaining proven reserves underground, with 55,251 million barrels.

Venezuela has the biggest reserves with 303,221 million barrels. Saudi Arabia, with 267,192 million barrels, occupies the second spot, while Russia is seventh with 80,000 million barrels.

By Zerohedge.com