Reason #2,134 Why I Love To Blog -- Brazil Should Be Energy Independent? -- December 9, 2014

Just when I think I have one little piece of the energy picture figured out, someone throws me a curve ball.

I've been blogging on the Bakken since 2007, though the current blog only goes back to 2009. Of all the countries in the world, the one country -- okay, one of several counties -- that I thought had its energy future solved, particularly with its off-shore oil and ethanol was Brazil.

When I read articles in the mainstream media -- e.g., in The New York Times, The Los Angles Times -- I get the feeling that a lot of folks think that the energy picture is fairly static. Some countries use more energy than they produce; other countries produce more energy than they need, and export it; and the exporters and importers have pretty much remained the same since the 1950's. Sort of like ketchup: someone grows the tomatoes, and someone turns the tomatoes into ketchup, and someone distributes the ketchup all over the world (except France and Germany, where they eat French fries with mayonnaise). And the countries that grew tomatoes in the 1950s are the same ones today, and same with the makers of ketchup. Likewise, the Mideast produces oil, the West buys oil, and it's all the same.

But reading about energy day in and day out, from a layperson's perspective, one really gets the feeling that the least "static" thing in the world is energy. Day in and day out, producers are trying to find more energy, from every source, while consumers' appetite continues to grow and grow. It seems, that unlike ketchup, providing enough energy for any given country is a struggle, day in, day out. And we haven't even mentioned geo-politics.

Everyone knows China and India will struggle to meet its energy needs, and until recently the same for the US -- everyone thought the US would be at the mercy of OPEC, Russia, Mexico, Canada for its oil. And now the slump in oil prices. Peak oil? What peak oil?

But completely off my radar scope was Brazil. With it's off-shore oil, I thought Brazil was sitting in the cat bird's seat with regard to energy. So this Rigzone story caught me completely off-guard.

The article begins:

In a given year, Brazil imports nearly $70 billion in goods and services from the United States, according to figures from the Office of the U.S. Trade Representative.

Some of the top U.S. products that make their way to Latin America's largest economy include refined petroleum, electrical machinery, aircraft and organic chemicals.

In Walter Fróes' opinion, Brazil needs another import from its northern trading partner: the expertise necessary to economically produce hydrocarbons from its virtually untapped shale formations. 

What? I thought Brazil was going to be a net exporter and energy independent with all its oil and ethanol and hydroelectricity. Apparently things are not as good as cracked up to be in Rio city.

Some data points from the article:

Brazil obtains more than three-quarters of its electricity from hydropower, and lingering drought conditions in the country have exposed the shortcomings of this heavy reliance on hydro.

"Because of environmental problems, we don't build hydro power plants with reservoirs in Brazil anymore," explained Fróes. "As a result of that, the hydro generation has become similar to wind generation, which means that when the rains are good, electricity production is good. When the wind is good, generation is good. "

The price in Brazil has even approached $300 per megawatt-hour (MWh), or 30 cents per kilowatt-hour (kWh).

By comparison, the average retail price of electricity for residential, commercial and industrial customers in the United States – which boasts a more diverse array of fuels for power generation – was slightly less than 11 cents per kWh in September 2014. 

I'll stop here, but there is much more at the link:

To be sure, Brazil is adding new gas-fired power plants. Although the country produces natural gas, much of it associated gas from offshore oil production, it does not currently produce enough gas to satisfy all of its growing domestic demand. 

But who would have thought? Brazil? When you go through the article, one gets the feeling Brazil is not a lot unlike Mexico and Venezuela on how they manage their natural resources. Or their government.

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By the way, did you see this at the very beginning of the story: "...Some of the top U.S. products that make their way to Latin America's largest economy include refined petroleum...." Don sent me a link to an article the other day I have not had a chance to post yet. This is a good opportunity.