Below the fold is a TOD:Campfire post on Passive Solar, from longtime TOD reader Will Stewart. Will is a Systems Engineer in the Energy industry - he will have a follow up post in the near future. For submissions to this series, please email campfire@theoildrum.com or todcampfire@gmail.com.

With news breaking that Russia has just suspended all exports of gas to and through Ukraine, what will the impact be on Europe and why has Russia chosen once again to take such drastic action?

Exports of gas from Russia fell 6% between 2006 and 2007 according to the BP statistical review of world energy. Production fell from 612.1 to 607.4 billion cubic meters (bcm) per annum and domestic consumption rose from 432.1 to 438.8 bcm per annum leading to a fall in exported gas.

Is Russia withholding gas supplies leading to higher prices and manipulation of its market position? Or is the Russian gas supply system unable to meet demand?

The following guest post was written by Tom Standing, a member of ASPO-USA and a "semi-retired, part-time civil engineer for the City of San Francisco." Here Tom takes on the calculations for a 280 MW solar thermal plant in Arizona that I looked at back in February. My conclusion from that essay was that the electrical capacity of the U.S. could in theory be met on 10,000 square miles of land (with the normal caveats about storage, costs, etc.) Tom peels the onion a few more layers and puts the energy production into perspective.

Shell seeks Colo. water for oil shale production

Shell Oil has filed for the first major water right on the Yampa River in northwest Colorado for its oil shale development plans.

Shell applied Dec. 30 in state Water Court to use about 8 percent of the Yampa's peak spring flow.

Shell spokesman Tracy Boyd says the water would be shipped to a reservoir for later use in oil shale production.

Critics say extracting oil from shale will use too much of the West's scarce water. Some estimates say it could take up to three barrels of water to produce a single barrel of oil.

Nate's interview on the Reality Report from December 29 is now available from Global Public Media. I think it is very good. According to the write-up:

In this edition of The Reality Report host Jason Bradford interviews Nate Hagens. In a show broadcast over a year ago Nate described the financial deleveraging process and how this could lead to commodity deflation, including "$50 oil."

Topics in this program highlight how the current financial melt down and impact the timing and severity of peak oil and natural gas--including the dreaded "natural gas cliff" as rigs go idle due to low prices. We discuss whether this means economic growth now over, and if so, how should societies adjust?

This is a link to the site where you can download or stream the talk. It is about 50 minutes long. (Per Jason: If you could ask TOD readers for help with GPM transcription services that would be handy. If interested/able they can contact laurel@postcarbon.org)

In this post, I consider some major issues contributing to our current financial problems, before making a financial forecast for 2009. These are

1. Why so many asset classes are so highly correlated in times of distress. This chart gives my interpretation of part of the problem.

Figure 1
2. Why growth is essential for keeping the current debt-based financial system operating.

3. Where we are now, and the role reduced resources (including peak oil) are likely to play as we go forward.

4. My forecast for 2009.

The Costly Compromises of Oil From Sand

OTTAWA — A major source of oil for the United States must now confront another problem: its carbon footprint.

Canada, in large part because of the production capacity of its oil sands, is now the largest oil supplier to the United States. But environmental groups in both countries are pushing for a slowdown or even a halt to further oil sands development, which is concentrated in northern Alberta.

Not all oil is alike when it comes to environmental impact, and many environmentalists single out production from the oil sands as the epitome of “dirty oil.” In a recent study, the RAND Corporation estimated that oil from the oil sands generates about 10 to 30 percent more greenhouse gases than conventional crude.

That may place oil sands exports in a precarious position when Barack Obama becomes president this month and moves forward with a climate change program.

I was asked to give a presentation to a group called Leadership Mendocino. Every year about 30 people in our County, usually from a mix of businesses, government agencies, and non-profits, meet monthly for a full day and intensively study a particular topic. Nov. 14th 2008 was their Ag day, and my presentation followed the Ag Commissioner’s, who reviewed the County’s history and present. I didn’t want to talk about the future as if I knew what was going to happen, but I did want to highlight the vulnerabilities and tensions I saw building and suggest some alternatives to our predicament. Hence I created a storyline in which I was now the County Historian in 2020 giving a talk to the group about the past decade of change.

While the details are specific to where I live, the general lessons apply to the whole world.

A video version of my presentation (which adds more details to the discussion presented here) is available here.

Click on any image to see a higher resolution version.

For Mendocino County the key date was December 12, 2009. The trucks didn’t show up that day.

US drilling outlays soar to $226.4 billion in 2007

-- US oil and gas drilling expenditures soared to a record $226.4 billion in 2007, more than doubling the previous record of $109.8 billion a year earlier, the American Petroleum Institute said on Jan. 5.

API said the Joint Association Survey of Drilling Costs for 2007, the latest year for which figures are available, showed that records also were set in average costs per well and per foot.

Average costs per US oil well grew 82% to $4 million in 2007 from $2.2 million, while per foot costs climbed 78% year-to-year to an average of $717 from $412, according to API. It said that average costs per domestic natural gas well rose 105% to $3.9 million in 2007 from $1.9 million in 2006 as average costs per foot grew 74% year-to-year to $604 from $348.

Total oil well expenditures jumped 94% to $72.3 billion in 2007 from $37.3 billion in 2006, while gas well expenditures grew by nearly 101% to $119.1 billion from $59.3 billion, API said.

Recently, Rune Likvern wrote a post talking about the possibility of a natural gas shortage in the United Kingdom, possibly as soon as February or March 2009. Rune isn't the only one worried about the supply of gas in Europe and the UK. A little over a year ago, Euan Mearns wrote two posts about the European natural gas supply, the first called European Natural Gas and a follow-up addendum called Daddy, will the lights be on at Christmas? In this post, we combine the two posts and re-run them. Besides being relevant to the gas shortage issue, the posts also provide some additional background related to current Russian/Ukrainian dispute.

OECD European gas production looks set to peak in 2008. After that, falling production combined with rising demand will see OECD European gas imports wanting to rise from current 197 BCM per annum to 442 BCM per annum by 2020. Where will this gas come from and how will rising European imports affect N America and the rest of the world?

Figure 1 OECD Europe gas production and conceptual forecast. Click all charts to enlarge