Ukraine’s New Energy Options

By Wolodymyr (Walter) Derzko

The energy debate is back in the news in Ukraine. Today, I thought I’d devote this column to address some of the myths and misinformation that is being propagated by Russia to protect its energy interests and the status quo.

Myth: Russia holds the geopolitical power card over Europe.

Wrong. Power is shifting from the producer to the consumer. The EU is no longer tethered exclusively to Russian gas pipelines.  European consumers will have more energy options in the near future.

One option is to create fuel from scratch, by first breaking up water and then recombining the resulting hydrogen with carbon monoxide to form hydrocarbon fuels. Since 2008, a European energy consortium has been operating a 100-kilowatt pilot plant that generates hydrogen from a combination of sunlight power and steam. It’s situated at the concentrating solar power tower – the Plataforma Solar de Almería, in Almería, Spain – which houses a series of mirrors to concentrate the sun’s rays onto solar panels beneath. The same technology can also be used to split up carbon dioxide - the resulting carbon monoxide can be combined with hydrogen to form fuel. Two reactors running simultaneously could generate hydrogen and carbon monoxide, which could then be combined into synthetic fuel by using one of two established chemical processes - either the Sabatier process to produce methane, or the Fischer-Tropsch process to generate liquid hydrocarbon fuels. This was used during World War Two by the Germans to make fuel.

So, over time, Europe could become energy independent from Russia. Similarly, Ukraine has the right sunny climate in Crimea to generate synthetic fuels too, if it wants to.

Sending gas to Europe now also involves new risks for Russia.

1) In Europe, more and more gas is being traded on the spot market, at prices considerably lower than those of Gazprom’s long-term contracts. If Gazprom tries to insist on long-term, high priced contracts, it risks losing considerable European market share.

2) Cheap shale gas produced in the USA, has driven the price of gas down sharply. Large deposits of shale gas in Poland mean that gas prices will inevitably drop in Europe too.

3) Gas consumption is being brought down in Europe by new energy-saving technologies and the current lingering recession.

Myth: Ukraine is totally dependent on Russia for energy.

Again wrong! The gas industry during the early days of the Soviet Union actually started in Western Ukraine near Dashava and not in Russia. For a time, Ukraine was energy self-sufficient, but the powers that be in Moscow decided to cancel all further infrastructure investments to develop new gas fields in Ukraine, and shifted all of Ukraine’s engineers to Siberia to build up capacity for the creation of Gazprom. Most people do not know that Siberian energy fields were opened up largely thanks to Ukrainian engineering know-how

Current estimates by numerous energy experts place Ukrainian gas reserves at over 45 trillion cubic metres - and that’s just from on-shore sources. Based on low end estimates, this gives Ukraine about 340 years of gas for all its internal needs.

Coal Gasification Option

Another option is coal gasification technology. There are around 70 operational coal-gasification plants in the world, including 30 in China and three in the US, but none in Russia or Ukraine, which combined have 21% of the world’s coal reserves. Most of the coal in Ukraine is low grade-brown coal and lignite, not worth mining. Ukrainian coal is high in sulphur and ash, and the only way to profit from it is to gasify it.  Ukraine would benefit from the technology’s widespread use both politically as well as commercially, given its high degree of dependence on Russia for natural gas supplies. Large-scale coal gasification, although expensive with high up-front capital costs, would give Ukraine energy independence and security, and cut its gas costs by 50% benefiting industry competitiveness and the home consumer.

Shale Gas Option

To its credit, the Ukrainian government is starting to explore its vast shale gas options. “Development of shale gas in Ukraine holds great promise,” First Deputy Prime Minister Andriy Kliuyev told journalists recently. “We are starting to work on coal-bed methane, which is a separate program. Now, new technology has appeared to extract not only coal-bed methane but shale gas,” Kliuyev said. “We have begun to study America’s experience with shale gas, which has in just three years seen production rise from practically nothing to 40 billion cubic metres a year. According to Kliuyev, the government hopes to increase natural gas extraction in existing fields by 1.5-2 times, to 30-32 billion cubic metres a year.

Other energy advances are on the horizon. Using carbon nanotubes, chemical engineers at MIT have found a way to concentrate solar energy 100 times more than a regular photovoltaic cell.