Shorting Oil, Hedging Tesla

[TheTalkingMule]

My BS meter jumps to life when I see Bill Gross, famous investor names and buzzwords like AI in the same article....

This article says CSP receiver temps can reach 3000C, but no receiver can handle those temps so 1000C is a practical limit. How does using AI to aim mirrors fix that?

I seem to recall a few CSP systems screwing up and aiming too much flux in too small an area, leading to molten fun. I've also read of research into working fluids that can handle the higher temps heliostats can easily generate, as that could improve thermal efficiency. It seems high temps are easy to achieve, but devilishly hard to manage.

Desert CSP is terrific in theory, plus the systems look cool. Synchronized dancing mirrors! Glowing receivers! Cheap molten salt storage for 24x7 dispatchable power! But the systems never deliver on their promises. Thousands of moving parts and long pipes full of 500-1000C oil drive costs up and create myriad failure modes.

Not take this even further OT, but.....

I've always wondered why no one's taken the Nucor steel model to the desert and relied exclusively on concentrated direct heating. Problem solved!

 

[canoemore]

My BS meter jumps to life when I see Bill Gross, famous investor names and buzzwords like AI in the same article....

This article says CSP receiver temps can reach 3000C, but no receiver can handle those temps so 1000C is a practical limit. How does using AI to aim mirrors fix that?

I seem to recall a few CSP systems screwing up and aiming too much flux in too small an area, leading to molten fun. I've also read of research into working fluids that can handle the higher temps heliostats can easily generate, as that could improve thermal efficiency. It seems high temps are easy to achieve, but devilishly hard to manage.

Desert CSP is terrific in theory, plus the systems look cool. Synchronized dancing mirrors! Glowing receivers! Cheap molten salt storage for 24x7 dispatchable power! But the systems never deliver on their promises. Thousands of moving parts and long pipes full of 500-1000C oil drive costs up and create myriad failure modes.

Ah. Thanks for the reality check there.

 

[Doggydogworld]

Edit:
Now, scale by a few million roofs to get rid of most T&D costs, aggregate for FCAS, etc

You don't get rid of T&D costs because you still need the same grid for night, cloudy days, etc. In fact, if you foolishly try to scale rooftop you must upgrade the grid to handle backfeed.

Even with $80k of panels and Powerwalls these guys in CO still had to go back on-grid after a week when a bad storm hit. $80k!!! It doesn't matter if you use the grid every hour or once a week or month - you still need the same grid. There are no T&D savings.

Utility-scale PV at 1/3rd the cost is not just cheaper, it's better. You get more kWhs per installed kW thanks to better siting, tilt, no shading and tracking. Furthermore, utility-scale kWhs are worth more because tracking produces higher output during the morning and early evening demand peaks. Rooftop output is concentrated closer to noon, when there's already a surplus.

 

[ajdelange]

This article says CSP receiver temps can reach 3000C, but no receiver can handle those temps so 1000C is a practical limit.

Actually 1000 °C is the lower boundary defining the beginning of the domain of "high temperature materials" and the practical upper limit for steels. But materials that function at higher temperatures are very important in energy production as efficiency depends on the difference in temperature of the two reservoirs. Note that I have no knowledge of what these materials might be in a CSP system nor indeed much about CSP systems at all. The comment is based purely on the Second Law.

How does using AI to aim mirrors fix that?

"AI" is a term that broadly describes computer programs that in some way are supposed to mimic some aspect of how humans think. New technologies tend to go through a cycles starting with obscurity (just discovered), moving to enthusiasm (if the technology has any worth), increasing enthusiasm, hype, and super hype followed by a plunge back into obscurity as industry realizes the tech is not PFM as promised. If the tech really has potential cooler minds will begin to apply it and its "popularity" will again ascend. This seems to be the case with AI. It is just now pretty hot largely, IMO, because of the EV industry and auto driving push. Around the turn of the century "fuzzy logic" which is definitely AI based began to be widely adopted as a replacement for the PID algorithms used in temperature controllers. As clearly a CSP is going to require sophisticated temperature control I would think that fuzzy, and hence AI based, controllers, would be used. Fuzzy control definitely has some advantages over PI one of them being that temperature overshoot is better controlled. That, again not based on detailed knowledge of CSP systems, is how AI, in particular fuzzy logic, could improve a CSP system.

I seem to recall a few CSP systems screwing up and aiming too much flux in too small an area, leading to molten fun.

It's not alone a question of how many photons are dumped into a given volume but also a question of how fast the coolant extracts the heat.

It seems high temps are easy to achieve, but devilishly hard to manage.

There is less room for error, clearly, where energy densities are very high. Hence the need for better controls.

Desert CSP is terrific in theory, plus the systems look cool. Synchronized dancing mirrors! Glowing receivers! Cheap molten salt storage for 24x7 dispatchable power! But the systems never deliver on their promises. Thousands of moving parts and long pipes full of 500-1000C oil drive costs up and create myriad failure modes.

It's like any other system. Time (technology advancement) and the market will decide whether it is viable or not.

 

[ajdelange]

You don't get rid of T&D costs because you still need the same grid for night, cloudy days, etc. In fact, if you foolishly try to scale rooftop you must upgrade the grid to handle backfeed.

This is true only if you use the utility as the "battery" and today we do as we don't have any alternative. When this does happen then there is a potential to shed T&D. This is currently a hot topic. Microgrids are receiving a lot of attention.

If one upgrades his rooftop solar, as I will be doing this spring (and yes, it's probably foolish) and if everyone in the neighborhood did the same, there would be no requirement for upgrading the grid. The larger solar capacity will come closer to the peak load the houses can impose but the amount of power back fed is limited by the inverter system.

Even with $80k of panels and Powerwalls these guys in CO still had to go back on-grid after a week when a bad storm hit. $80k!!! It doesn't matter if you use the grid every hour or once a week or month - you still need the same grid.

Not if you have other means of backup.

Utility-scale PV at 1/3rd the cost is not just cheaper, it's better.

Depends on how you define "better".

 

[TheTalkingMule]

Realizing I'm as guilty as the next half of OT posting today.....

What does any of this have to do with oil? Can we get back on topic?

Edit:. And post this *sugar* in the Energy thread where the discussion is lacking!

 

[Oil4AsphaultOnly]

Respect is not obtained by request or demand. It is earned. Let's see how many of you disagree with that.

Indeed it is. And jhm has earned it over the countless posts in this thread. While you have dropped in and expected to be served. Did you have anything constructive to contribute or are you all snark?

 

[ajdelange]

I expect to be served? What does that mean/ How would this thread serve me? It has been amusing as all get out, I'll say that. But I didn't ask to be amused. It just worked out that way. What services are offered? What services have I requested?

And I don't particularly care whether anyone here respects me or not. The kind of people I hope to be respected by always eventually do.

Did I have anything constructive to contribute? We'll, you'd have to be the judge of that. In Nos. 5820 and 5825 I offered a perspective on the similarities of the physics of batteries and combustion. That should be of interest to the readers of this thread but perhaps it is technically too sophisticated as in No. 5852 I had to correct one of the self appointed experts who doesn't even understand the difference between cracking and polymerization. Is that constructive? Yes, I rather think so. In other posts I pointed out some other technical errors and added some perspectives on solar. That may be off topic but as energy is broadly the focus here it should be of interest to some.

Now my "fun" posts were really put out to "calibrate" the thread and I've got enough data at this point that I won't have to be doing any more of those. Interesting that only one guy was smart enough to figure this out.

This thread represents what we used to call in my industry a mutual, er, gratification society i.e. a group of people posting reams of stuff agreeing with each other. One does do such groups a service by letting the p out of them (as the Aussies would say) from time to time if it results in them stepping back a bit and looking in the mirror. So in reality that can be constructive too.

As clearly I have nothing to offer you and as I have it calibrated well enough to have determined it has nothing to offer me I am putting it on "unwatch" so you won't be troubled by me in the future.

 

[Oil4AsphaultOnly]

I expect to be served? What does that mean/ How would this thread serve me? It has been amusing as all get out, I'll say that. But I didn't ask to be amused. It just worked out that way. What services are offered? What services have I requested?

And I don't particularly care whether anyone here respects me or not. The kind of people I hope to be respected by always eventually do.

Did I have anything constructive to contribute? We'll, you'd have to be the judge of that. In Nos. 5820 and 5825 I offered a perspective on the similarities of the physics of batteries and combustion. That should be of interest to the readers of this thread but perhaps it is technically too sophisticated as in No. 5852 I had to correct one of the self appointed experts who doesn't even understand the difference between cracking and polymerization. Is that constructive? Yes, I rather think so. In other posts I pointed out some other technical errors and added some perspectives on solar. That may be off topic but as energy is broadly the focus here it should be of interest to some.

Now my "fun" posts were really put out to "calibrate" the thread and I've got enough data at this point that I won't have to be doing any more of those. Interesting that only one guy was smart enough to figure this out.

This thread represents what we used to call in my industry a mutual, er, gratification society i.e. a group of people posting reams of stuff agreeing with each other. One does do such groups a service by letting the p out of them (as the Aussies would say) from time to time if it results in them stepping back a bit and looking in the mirror. So in reality that can be constructive too.

As clearly I have nothing to offer you and as I have it calibrated well enough to have determined it has nothing to offer me I am putting it on "unwatch" so you won't be troubled by me in the future.

Not sure how you got here, but this thread is about shorting oil as a hedge trade against TSLA, and the justifications of it. Making all of your posts a fairly long way away from Kansas, Toto.

But I'm glad to hear that you'll be leaving this circle-jerk. You seem to think we're all too feeble-minded for your grandstanding. Toodles!

 

[TheTalkingMule]

Continued though slight build in US commercial crude stockpiles last week. Surprised 450M barrels in glut and the overall macros isn't pushing oil down today.

Perhaps the move is wait for a three day 6% bump in futures once a China deal is announced, then short.

 

[renim]

Continued though slight build in US commercial crude stockpiles last week. Surprised 450M barrels in glut and the overall macros isn't pushing oil down today.

Perhaps the move is wait for a three day 6% bump in futures once a China deal is announced, then short.

perhaps the state of USA American oil is becoming irrelevant to global pricing, once a country internal supply matches their internal demand, they vastly lose relevance to global pricing, similar to how american iron ore is competitive enough to supply America, but not competitive enough to ship across the oceans.

so the question now becomes one of China and OPEC/Iran etc, subterfuge is the norm, and American market openness is irrelevant.

 

[adiggs]

Just saw this from RenewEconomy - a chart of hurdle rates for different kinds of energy projects to get investors / funding:
The chart that shows why the market for new coal generators is dead | RenewEconomy

Solar is down around 10% - coal up around 40%. Hence the title of the article - why there aren't new coal electricity generation plants being built (or at least, slowing down the rate of new builds).

 

[TheTalkingMule]

perhaps the state of USA American oil is becoming irrelevant to global pricing, once a country internal supply matches their internal demand, they vastly lose relevance to global pricing, similar to how american iron ore is competitive enough to supply America, but not competitive enough to ship across the oceans.

so the question now becomes one of China and OPEC/Iran etc, subterfuge is the norm, and American market openness is irrelevant.

The general consensus of this thread is that our market being the only large transparent one in the world means the rest of the world is generally even more oversupplied than us.

Generally these weekly reports move the global market a bit. It's just surprising considering were elevated and kind of overdue for a dip. Perhaps there was a disruption I missed.

 

[renim]

how to reduce the cost of oil

https://5b.com.au/wp-content/uploads/2019/07/WhatsApp-Image-2019-05-17-at-3.19.15-PM-1.jpeg

 

[jhm]

Just saw this from RenewEconomy - a chart of hurdle rates for different kinds of energy projects to get investors / funding:
The chart that shows why the market for new coal generators is dead | RenewEconomy

Solar is down around 10% - coal up around 40%. Hence the title of the article - why there aren't new coal electricity generation plants being built (or at least, slowing down the rate of new builds).

This is important. I'm posting the chart because it will help us appreciate how the cost of capital varies across energy investments.

Hurdle rate is the internal rate of return on project that investor expect to justify the risks of the projects. So a high 40% hurdle rate is nigh impossible for new coal projects to hit. So this shuts down new coal.

Now let's consider that wind and solar are on the low end of the panel. Oil and LNG are becoming high. Obviously investors are not done throwing cashing into oil and gas projects. Low prices for LNG, oil and gas has done little to dial back the flow of capital. But utilimately the way carbon stays in the ground is that investors stop the flow of capital.

Hurdle rates reflect perceived risk. We need investors to more fully appreciate just how much risk there is in oil and gas. This is why peak oil demand matters so much. Investors still internalize the view that consumers are irrepressively thirsty and breathless for oil and gas. But peak demand will be a profound correction of this. The hurdle rate for coal is largely informed by a keen appreciation that coal demand is going into irreversible systemic decline. Hurdle rates for oil and LNG will climb as demand peak approach sooner than expected.

 

[jhm]

Bloomberg - Are you a robot?

“ExxonMobil’s negative outlook reflects the company’s substantial negative free cash flow and expected reliance on debt to fund its large growth capital spending program,” Peter Speer, a senior vice president at Moody’s, said in the statement. Debt will likely rise despite asset sales, he said.

Over the past 10 quarters, Exxon has frequently spent more cash on its operations and dividends than it generated as it ramps up mega projects from Guyana to Mozambique. Chief Executive Officer Darren Woods says now is a good time to be investing while rivals are retreating. But investors are wary, with the stock underperforming rivals over the past five years.

“The company’s high level of growth capital investments cannot be funded with operating cash flow and asset sales at projected levels given ExxonMobil’s substantial dividend payout,” Moody’s said.

How do you think the rating agencies will treat this sort of negative free cash flow when the IEA scenarios come to recognize imminent structural demand decline for oil. Right now the rating agencies probably believe the current forecast of demand growth out past 2030. So Exxon gets dinged for being a little more aggressive than peers. But when those growth expectation flatline, the rating agencies will need to be much more aggressive in downrating Exxon credit.

Perhaps Exxon shareholders should be a little more concerned that their dividends are not sustainable. I suspect that discounting cash flow yields a much lower valuation than discounting dividends. Down rating credit can expose the cracks in valuations.

 

[mspohr]

Bloomberg - Are you a robot?



How do you think the rating agencies will treat this sort of negative free cash flow when the IEA scenarios come to recognize imminent structural demand decline for oil. Right now the rating agencies probably believe the current forecast of demand growth out past 2030. So Exxon gets dinged for being a little more aggressive than peers. But when those growth expectation flatline, the rating agencies will need to be much more aggressive in downrating Exxon credit.

Perhaps Exxon shareholders should be a little more concerned that their dividends are not sustainable. I suspect that discounting cash flow yields a much lower valuation than discounting dividends. Down rating credit can expose the cracks in valuations.

Reminds me of the situation with Tesla where people are raising doubts about "demand" and "negative cash flow". Difference is that Tesla is a growing company and Exxon is in a dying industry.

 

[TheTalkingMule]

Ratings agencies will recognize structural oil demand decline precisely when they discovered issues with subprime mortgage backed securities.....when it's far too late.

It's not in their interest to halt this merry-go-round.

 

[jhm]

Has U.S. Shale Seen Its Profits Peak? | OilPrice.com

Wait. US Shale had profits?

 

[STARR X]

Has U.S. Shale Seen Its Profits Peak? | OilPrice.com

Wait. US Shale had profits?

Your comment is funny but the article is quite scary for frackers in the next several years with the amount of money they have coming due.