US shale gas: the economics?

This data-file breaks down the economics of US shale gas, in order to calculate the NPVs, IRRs and gas price breakevens of future drilling in major US shale basins (predominantly the Marcellus).

Underlying the analysis is a granular model of capex costs, broken down across 18 components. Our base case conclusion is that a $2/mcf hub pricing is required for a 10% IRR on a $7.2M shale gas well with 1.8kboed IP30 production.

Economics are sensitive. There is a perception the US has an infinite supply of gas at $2/mcf, but rising hurdle rates and regulatory risk may require higher prices.

The Top Public Companies for an Energy Transition

This data-file compiles all of our insights into publicly listed companies and their edge in the energy transition: commercialising economic technologies that advance the world towards ‘net zero’ CO2 by 2050.

Each insight is a differentiated conclusion, derived from a specific piece of research, data-analysis or modelling on the TSE web portal; summarized alongside links to our work. Next, the data-file ranks each insight according to its economic implications, technical readiness, its ability to accelerate the energy transition and the edge it confers on the company in question.

Each company can then be assessed by adding up the number of differentiated insights that feature in our work, and the average ‘score’ of each insight. The file is intended as a summary of our differentiated views on each company.

The screen is updated monthly. At the latest update, in February-2021, it contains 200 differentiated views on 100 public companies.

The Top 40 Private Companies for an Energy Transition

This data-file presents the ‘top 40’ private companies out of several hundred that have crossed our screens since the inception of Thunder Said Energy, looking back across all of our research.

For each company, we have used apples-to-apples criteria to score  economics, technical readiness, technical edge, decarbonization credentials and our own depth of analysis.

The data-file also contains a short, two-line description follows for each company, plus links to our wider research, which will outline each opportunity in detail.

Methanol production: the economics?

This model captures the economics and CO2 intensity of methanol production in different chemical pathways.

Different tabs of the model cover grey methanol production from gas reforming, blue methanol from blue hydrogen and industrially captured CO2, green methanol from green hydrogen and direct air capture CO2, and finally bio-methanol.

Inputs are taken from a wide survey of technical papers, cost breakdowns and energy intensity data. These are also broken down in the data-file.

Based on the analysis, we see interesting potential for bio-methanol and blue methanol as liquid fuels with lower carbon intensity than conventional oil products. You can stress-test input assumptions in the underlying model tabs.

Combustion fuels: energy economics and carbon content?

The purpose of this data-file is to disaggregate the energy economics of combusting different fuels, including natural gas, different oil products, NGLs, coal, hydrogen, methanol, ammonia et al.

In each case, we derive the enthalpies of combustion, the contributing share of carbon and hydrogen oxidation, and thus the CO2 emissions per unit of energy. We also derive the fuels’ energy density, expressed in kWh/kg, kWh/mcf and kWh/gallon.

There is recent enthusiasm to lower combustion emissions by blending hydrogen into gas grids. But materially greater decarbonization occurs by replacing coal/biomass with gas, or even replacing oil products with NGLs.

Hydrogen blending: costs and complexities?

This data-file estimate the costs of blending hydrogen into pre-existing natural gas pipeline networks. Costs are relatively low per mcf of gas, but very high per ton of CO2 abated. Costs also rise exponentially, as more hydrogen is blended into the mix.

Our estimates are based upon technical papers and TSE’s economic models, and they cover capacity degradation, maintenance costs and upgrading boilers, appliances and turbines.

Solid oxide fuel cells: what challenges?

This data-file reviews fifty patents into solid oxide fuel cells, filed by leading companies in the space in 2020, in order to understand the key challenges the industry is striving to overcome.

The key focus areas are improving the longevity and efficiency of SOFCs. But unfortunately, we find many of the proposed solutions are likely to increase end costs.

Economics of SOFCs could eventually become very exciting for low-carbon heat and power (model here). But our conclusion from the latest patents is that the technology is not yet on the path to deflate and achieve cost competitiveness in the near-term.

UK grid volatility as renewable gain share?

This data-file contains the output from some enormous data-pulls, evaluating UK grid power generation by source, its volatility, and the relationship to hourly traded power prices. We conclude the grid is growing more expensive and volatile, particularly for ‘downside volatility’.

Different tabs in the data-file cover the total monthly demand of the UK power grid since 2016, broken down by generation source, month-by-month and smoothed over trailing twelve-month timeframes; statistical analysis of hourly power prices, by day and by quarter; and an hourly cross-correlation of wind generation with power prices (chart below).

The data-file is also regularly updated and we are happy to run bespoke analysis on the underlying data-sets for TSE clients.

Turbo-charge gas turbines: the economics?

This data-file models the economics of turbo-charging gas turbines, which increases the mass flow of combustion air, in order to improve their power ratings c10-20%. This is especially important to counteract warm temperatures, which notoriously degrades power output (below, right).

Our model is derived from technical disclosures from PowerPhase, a leading private company that is commercializing the TurboPhase technology. We estimate base case IRRs of c13% in Europe and c20% in the US. Sensitivities can be flexed in Cells H7:17 of the model (below, left).

Turbo-charged gas turbines could be among the non-obvious technologies to gain greater share as grids become more saturated with renewables, in addition to CHPs, PCMs and fuel cells, per our prior research. All of these are much more economical than grid-scale batteries.

Decarbonization in Europe: but is there enough gas?

A lack of gas is likely to slow down Europe’s energy transition in the 2020s. This is the conclusion in our new 12-page note, which captures basic policy objectives, such as phasing out 50% of Europe’s coal, electrifying 20% of its vehicles, cleaning up 25% of its shipping and shifting 3% of its energy into low carbon hydrogen. To achieve this, an incremental 85MTpa of LNG must be sourced by 2030, absorbing one third of new global LNG supplies, and stoking mid-2020s LNG shortages.