Group items tagged

Enter Rostam Ghasemi. While that might not be breaking news to some, the appointment of Ghasemi (who was also Iran’s Revolutionary Guard’s chief) as OPEC’s new president is sure to rock the boat

It’s not beyond the realms of possibility that Ghasemi might spill the beans as to what Saudi Arabia’s actual crude oil reserves are, hence sending the energy-hungry West into damage-control.

Ghasemi is currently subject to US, EU and Australian sanctions and his assets have been blacklisted by US Treasury and western powers. After all, this man belongs to the wing of the Iranian military which threatened to close the Strait of Hormuz if Iran is threatened by a foreign power (ie. Israel or the United States). It’s worthwhile to note that 40% of the world’s oil is shipped through that strait. Heres the kicker. Most of that oil comes from Saudi Arabia. War or no war, it seems that supplies are going to dry up regardless due to increased domestic consumption levels. Just last year alone, the Saudi’s consumed more than 2.4 million barrels of oil a day. That’s a 50% increase just within the last seven years. Yep, it’s going fast.

Oil companies will still be able to apply for leases in the eastern Gulf of Mexico and in two unexplored areas off the northern coast of Alaska.But the government has placed the Atlantic and Pacific coasts off-limits."It will have an emphasis in the Gulf of Mexico," the interior secretary, Ken Salazar, told a meeting. "We see robust oil and gas development in the Gulf of Mexico."A number of commentators described the plan as an attempt to please two implacable enemies: the oil industry and the environmental movement.But the proposals drew heavy criticism from both sides. Oil companies said the plan did not go far enough while environmental groups were angry that Obama was opening up pristine Arctic waters to drilling.

28,079 Abandoned Wells in Gulf of Mexico In an explosive report at Sky Truth, John Amos reveals from government data that “there are currently 24,486 known permanently abandoned wells in the Gulf of Mexico, and 3,593 ‘temporarily’ abandoned wells, as of October 2011.” [6] TA wells are those temporarily sealed so that future drilling can be re-started. Both TA wells and “permanently abandoned” (PA) wells endure no inspections.

Not only cement, but seals, valves and gaskets can deteriorate over time. A 2000 report by C-FER Technologies to the Dept. of Interior identified several  different points where well leaks can occur, as this image (p. 26) reveals.  To date, no regulations prescribe a maximum time wells may remain inactive before being permanently abandoned. [13] “The most common failure mechanisms (corrosion, deterioration, and malfunction) cause mainly small leaks [up to 49 barrels, or 2,058 gallons]. Corrosion is historically known to cause 85% to 90% of small leaks.” Depending on various factors, C-FER concludes that “Shut-In” wells reach an environmental risk threshhold in six months, TA wells in about 10-12 years, and PA wells in 25 years.  Some of these abandoned wells are 63 years old.

Leaking abandoned wells pose a significant environmental and economic threat. A three-month EcoHearth investigation revealed that a minimum of 2.5 million abandoned wells in the US and 20-30 million worldwide receive no follow up inspections to ensure they are not leaking. Worse: “There is no known technology for securely sealing these tens of millions of abandoned wells. Many—likely hundreds of thousands—are already hemorrhaging oil, brine and greenhouse gases into the environment. Habitats are being fundamentally altered. Aquifers are being destroyed. Some of these abandoned wells are explosive, capable of building-leveling, toxin-spreading detonations. And thanks to primitive capping technologies, virtually all are leaking now—or will be.” [11] Sealed with cement, adds EcoHearth, “Each abandoned well is an environmental disaster waiting to happen. The triggers include accidents, earthquakes, natural erosion, re-pressurization (either spontaneous or precipitated by fracking) and, simply, time.”

Over a year ago, the Dept. of Interior promised to plug the “temporarily abandoned” (TA) wells, and dismantle another 650 production platforms no longer in use. [7] At an estimated decommissioning cost of $1-3 billion [8], none of this work has been started, though Feds have approved 912 permanent abandonment plans and 214 temporary abandonment plans submitted since its September 2010 rule. [9] Over 600 of those abandoned wells belong to BP, reported the Associated Press last year, adding that some of the permanently abandoned wells date back to the 1940s [10].  Amos advises that some of the “temporarily abandoned” wells date back to the 1950s. “Experts say abandoned wells can repressurize, much like a dormant volcano can awaken. And years of exposure to sea water and underground pressure can cause cementing and piping to corrode and weaken,” reports AP.

As far back as 1994, the Government Accountability Office warned that there was no effective strategy in place to inspect abandoned wells, nor were bonds sufficient to cover the cost of abandonment. Lease abandonment costs estimated at “$4.4 billion in current dollars … were covered by only $68 million in bonds.” [12] The GAO concluded that “leaks can occur… causing serious damage to the environment and marine life,” adding that “MMS has not encouraged the development of nonexplosive structure removal technologies that would eliminate or minimize environmental damage.”

The AP noted that none of the 1994 GAO recommendations have been implemented. Abandoned wells remain uninspected and pose a threat which the government continues to ignore. Agency Reorganization The Minerals Management Service (MMS) was renamed the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) last May after MMS drew heavy fire for malfeasance, including allowing exemptions to safety rules it granted to BP. An Office of Inspector General investigation revealed that MMS employees accepted gifts from the oil and gas industry, including sex, drugs and trips, and falsified inspection reports. [14] Not only was nothing was done with the 1994 GAO recommendations to protect the environment from abandoned wells, its 2003 reorganization recommendations [15] were likewise ignored.  In a June 2011 report on agency reorganization in the aftermath of the Gulf oil spill, the GAO reports that “as of December 2010,” the DOI “had not implemented many recommendations we made to address numerous weaknesses and challenges.” [16] Reorganization proceeded.  Effective October 1, 2011, the Dept. of the Interior split BOEMRE into three new federal agencies: the Office of Natural Resources Revenue to collect mineral leasing fees, the Bureau of Safety and Environmental Enforcement (BSEE) and the Bureau of Ocean Energy Management (BOEM) “to carry out the offshore energy management and safety and environmental oversight missions.” The DOI admits:

“The Deepwater Horizon blowout and resulting oil spill shed light on weaknesses in the federal offshore energy regulatory system, including the overly broad mandate and inherently conflicted missions of MMS which was charged with resource management, safety and environmental protection, and revenue collection.” [17] BOEM essentially manages the development of offshore drilling, while BSEE oversees environmental protection, with some eco-protection overlap between the two agencies. [18] Early this month, BSEE Director Michael R. Bromwich spoke at the Global Offshore Safety Summit Conference in Stavanger, Norway, sponsored by the International Regulators Forum. He announced a new position, Chief Environmental Officer of the BOEM:

This person will be empowered, at the national level, to make decisions and final recommendations when leasing and environmental program heads cannot reach agreement. This individual will also be a major participant in setting the scientific agenda for the United States’ oceans.” [19] Bromwich failed to mention anything about the abandoned wells under his purview. Out of sight, out of mind. Cost of the Macondo Blowout

On Monday, the GAO published its final report of a three-part series on the Gulf oil disaster. [20]  Focused on federal financial exposure to oil spill claims, the accountants nevertheless point out that, as of May 2011, BP paid $700 million toward those spill claims out of its $20 billion Trust established to cover that deadly accident. BP and Oxford Economics estimate the total cost for eco-cleanup and compensatory economic damages will run to the “tens of billions of dollars.” [21] On the taxpayer side, the GAO estimates the federal government’s costs will exceed the billion dollar incident cap set by the Oil Pollution Act of 1990 (as amended). As of May 2011, agency costs reached past $626 million. The Oil Spill Liability Trust Fund’s income is generated from an oil barrel tax that is set to expire in 2017, notes GAO.

With Monday’s District Court decision in Louisiana, BP also faces punitive damages on “thousands of thousands of thousands of claims.” U.S. District Judge Carl Barbier denied BP’s appeal that might have killed several hundred thousand claims, among them that clean up workers have still not been fully paid by BP. [22] Meanwhile, destroying the planet for profit continues unabated. It’s time to Occupy the Gulf of Mexico: No more oil drilling in our food source.

Philip Verleger, an economist who specializes in oil markets, says even if environmentalists convince Obama to block the Keystone XL pipeline, it won't stop the growth of production in the Canadian oil sands. "With prices around a hundred dollars a barrel globally, that oil is going to make it to the market somehow," Verleger says. "The development may be slowed for a year or two. But one can move the oil west on the existing Kinder Morgan pipeline. They could expand pipelines east. Those pipelines already exist, and they can be expanded."

Leo Drollas, director and chief economist at the London-based Center for Global Energy Studies, believes closing the strait could affect about 16 percent of global crude oil shipments. "The fallout would obviously hit the prices straight away in the future markets," Drollas stated. "Oil prices would rocket because of the fears of what might happen."

But Drollas believes the spike would be temporary as the countries adjust and the West taps into its reserves.

For his part, Stevens of Chatham House doubts Iran will go through with its threat to close the Strait of Hormuz - in part because it relies on the waterway for its own oil exports

"Whether Keystone XL is built or not, the oil will find a way to market," added Alex Pourbaix, a president at TransCanada.

"The climate piece more than anything will be a focus,"

U.S. refineries already have invested in upgrades for heavy oil, which could favor supply from countries like Venezuela without Canada in the equation, said Michael Levi, a senior fellow at the Council on Foreign Relations. The International Energy Agency predicts that unconventional oil will meet a growing part of global demand, jumping from 3 percent in 2009 to 10 percent in 2035.

Then there are plans to extend or build pipelines carrying oil sands crude to Canada's West Coast, where oil could be shipped to thirsty Chinese markets.

Construction of Keystone XL only will play into more demand for oil, rather than spurring investment in cleaner power. The vehicles burning oil from Keystone XL could produce the same amount of C02 as all the trucks and cars in Canada, according to Leach's analysis.

According to the WSJ, the Saudi government said the former ambassador does not speak for it in an official capacity. Al-Faisal, however, is widely believed to be on a short list to be the next foreign minister of KSA. How credible his claim is about the potential for a regional arms race remains to be seen. Swapping nukes for oil drums

The main driver for KSA’s plans to build reactors is that at the rate that it is burning its own oil, it may have substantially less to export in just a decade or so. At a minimum, it may lose the excess capacity the rest of the world relies on when there are disruptions in supplies from other countries. One scenario suggested by energy analysts that follow oil markets is that within two decades most of the KSA output would be used for domestic consumption. Total Saudi reserves are estimated at 267 billion barrels. Debates rage in the news media over so-called peak oil, but energy experts discount them as speculative at best, and fantastic or worse on the downside.

Current production estimates put total KSA production capacity at 12.5 million barrels a day with a maximum output of 15 million barrels a day. The Wall Street Journal reported in April 2011 that production was running at 8 million-9 million barrels a day compared to 11 million barrels a day in 2010 reported by the Energy Information Administration. The difference is the global economic downturn has reduced demand. What’s got the attention of energy planners is that domestic use in KSA could grow from 3.4 million barrels of oil a day in 2009 to 8.3 million barrels a day by 2028.

The official Saudi press agency said in April 2010 that it was “alarmed” by increasing oil and gas consumption for domestic use and the resulting impact on export revenues. Reduction of consumption, which pushes up use of fossil fuel to produce electricity, is not an option for both economic and political reasons. In 2011, the Saudi government has increased its subsidies of energy supplies by $100 million for domestic use, in part to dampen any possibilities of social unrest like that which toppled regimes in Tunisia and Egypt.

Like other Arab countries, KSA has a large population of unemployed young people who have better than average educations.  This is a volatile mix and the arch conservatives that run KSA have defused it with lavish subsidies.

Electricity demand is predicted to increase from 75 GWe by 2018 to more than 120 Gwe by 2030. This growth can’t be sustained by fossil fuel alone and also maintain the income stream the nation depends on from oil exports. Nuclear reactors are an obvious choice to intervene in an unsustainable growth scenario.

This outlook is sending the Saudi government down a path to develop nuclear energy. In April, it announced that it was setting up the King Abdullah City for Atomic and Renewable Energy (KA-CARE) to pursue this objective. Saudi Arabia is building up its transmission and distribution grids to interconnect with the UAE on the east and Oman to the south.  It is developing its so-called empty quarter which Middle East experts point out isn’t as empty as it sounds.

The new city’s charter states that nuclear and renewable energies, especially solar, would be developed to ensure continued supplies of drinking water and electricity to its growing population and save hydrocarbon resources such as petroleum and gas for use by future generations. The objective is to make them a source of income for a much longer period.

Before entering into the non-profit world, he entered into the family business of oil industry analysis and claims to have achieved a fair amount of financial success. As Lundberg tells the tale, he stopped “punching the corporate time clock” in 1988 to found Fossil Fuels Policy Action.I had just learned about peak oil. Upon my press conference announcing the formation of Fossil Fuels Policy Action, USA Today’s headline was “Lundberg Lines up with Nature.” My picture with the story looked like I was a corporate fascist, not an acid-tripping hippie. The USA Today story led to an invitation to review Beyond Oil: The Threat to Food and Fuel in the Coming Decades, for the quarterly Population and Environment journal. In learning for the first time about peak oil (although I had questioned long-term growth in petroleum supplies), I was awakened to the bigger picture as never before. Natural gas was no answer. And I already knew that the supply crisis to come — I had helped predict the 1970s oil shocks — was to be a liquid fuels crisis.

Lundberg tells an interesting story about his initial fundraising activities for his new non-profit group.Setting out to become a clearinghouse for energy data and policy, we had a tendency to go along with the buzzword “natural gas as a bridge fuel” — especially when my previous clients serving the petroleum industry until 1988 included natural gas utilities. They were and are represented by the American Gas Association, where I knew a few friendly executives. Upon starting a nonprofit group for the environment with an energy focus, I met with the AGA right away. I was anticipating one of their generous grants they were giving large environmental groups who were trumpeting the “natural gas is a bridge fuel” mantra.

I slept on it and decided that I would not participate in this corrupt conspiracy. Instead, I had fun writing one of Fossil Fuels Policy Action’s first newsletters about this “bridge” argument and the background story that the gas industry was really competing with fuel oil for heating. I brought up the AGA’s funding for enviros and said I was rejecting it. I was crazy, I admit, for I was starting a new career with almost no savings and no guarantees. So I was not surprised when my main contact at AGA called me up and snarled, “Jan, are you on acid?!

Here is a quote from his July 10, 2011 post titled Nuclear Roulette: new book puts a nail in coffin of nukesCulture Change went beyond studying the problem soon after its founding in 1988: action and advocacy must get to the root of the crises to assure a livable future. Also, information overload and a diet of bad news kills much activism. So it’s hard to find reading material to strongly recommend. But the new book Nuclear Roulette: The Case Against the “Nuclear Renaissance” is must-have if one is fighting nukes today.

He goes to say the following:The uneconomic nature of nuclear power, and the lack of energy gain compared to cheap oil, are two huge reasons for society to quit flirting with more nuclear power, never mind the catastrophic record and certainty of more to come. Somehow the evidence and true track record of dozens of accidents and perhaps 300,000 to nearly 1,000,000 deaths from just Chernobyl, are brushed aside by corporate media and most governments. So, imaginative means of helping to end nuclear proliferation are crucial, the most careful and reasonable-sounding ones being included in summary form in Nuclear Roulette.

In the WEO’s central New Policies Scenario, which assumes that recent government commitments are implemented in a cautious manner, primary energy demand increases by one-third between 2010 and 2035, with 90% of the growth in non-OECD economies. China consolidates its position as the world’s largest energy consumer: it consumes nearly 70% more energy than the United States by 2035, even though, by then, per capita demand in China is still less than half the level in the United States. The share of fossil fuels in global primary energy consumption falls from around 81% today to 75% in 2035. Renewables increase from 13% of the mix today to 18% in 2035; the growth in renewables is underpinned by subsidies that rise from $64 billion in 2010 to $250 billion in 2035, support that in some cases cannot be taken for granted in this age of fiscal austerity. By contrast, subsidies for fossil fuels amounted to $409 billion in 2010.

Here’s the summary of the main points, released today by the agency: “Growth, prosperity and rising population will inevitably push up energy needs over the coming decades. But we cannot continue to rely on insecure and environmentally unsustainable uses of energy,” said IEA Executive Director Maria van der Hoeven. “Governments need to introduce stronger measures to drive investment in efficient and low-carbon technologies. The Fukushima nuclear accident, the turmoil in parts of the Middle East and North Africa and a sharp rebound in energy demand in 2010 which pushed CO2 emissions to a record high, highlight the urgency and the scale of the challenge.”

The use of coal – which met almost half of the increase in global energy demand over the last decade – rises 65% by 2035. Prospects for coal are especially sensitive to energy policies – notably in China, which today accounts for almost half of global demand. More efficient power plants and carbon capture and storage (CCS) technology could boost prospects for coal, but the latter still faces significant regulatory, policy and technical barriers that make its deployment uncertain.Fukushima Daiichi has raised questions about the future role of nuclear power. In the New Policies Scenario, nuclear output rises by over 70% by 2035, only slightly less than projected last year, as most countries with nuclear programmes have reaffirmed their commitment to them. But given the increased uncertainty, that could change. A special Low Nuclear Case examines what would happen if the anticipated contribution of nuclear to future energy supply were to be halved. While providing a boost to renewables, such a slowdown would increase import bills, heighten energy security concerns and make it harder and more expensive to combat climate change.

The future for natural gas is more certain: its share in the energy mix rises and gas use almost catches up with coal consumption, underscoring key findings from a recent WEO Special Report which examined whether the world is entering a “Golden Age of Gas”. One country set to benefit from increased demand for gas is Russia, which is the subject of a special in-depth study in WEO-2011. Key challenges for Russia are to finance a new generation of higher-cost oil and gas fields and to improve its energy efficiency. While Russia remains an important supplier to its traditional markets in Europe, a shift in its fossil fuel exports towards China and the Asia-Pacific gathers momentum. If Russia improved its energy efficiency to the levels of comparable OECD countries, it could reduce its primary energy use by almost one-third, an amount similar to the consumption of the United Kingdom. Potential savings of natural gas alone, at 180 bcm, are close to Russia’s net exports in 2010.

In the New Policies Scenario, cumulative CO2 emissions over the next 25 years amount to three-quarters of the total from the past 110 years, leading to a long-term average temperature rise of 3.5°C. China’s per-capita emissions match the OECD average in 2035. Were the new policies not implemented, we are on an even more dangerous track, to an increase of 6°C.“As each year passes without clear signals to drive investment in clean energy, the “lock-in” of high-carbon infrastructure is making it harder and more expensive to meet our energy security and climate goals,” said Fatih Birol, IEA Chief Economist. The WEO presents a 450 Scenario, which traces an energy path consistent with meeting the globally agreed goal of limiting the temperature rise to 2°C. Four-fifths of the total energy-related CO2 emissions permitted to 2035 in the 450 Scenario are already locked-in by existing capital stock, including power stations, buildings and factories. Without further action by 2017, the energy-related infrastructure then in place would generate all the CO2 emissions allowed in the 450 Scenario up to 2035. Delaying action is a false economy: for every $1 of investment in cleaner technology that is avoided in the power sector before 2020, an additional $4.30 would need to be spent after 2020 to compensate for the increased emissions.

ince June 2010, we have illustrated many physics of impossibilities concocted by BP. Two years later, it seems the world has not awaken from its ignorantly blissful slumber. This disaster is more than just a disastrous mega oil spill. If the world's foremost scientists and investigators cannot figure out the many fundamental flaws in the simple “3 leaks-3 wells” fairy tale, how can there be any hope of ever solving problems beyond kindergarten level? Forget the carbon tax, the ban on hazardous gas emission and just about any anti-pollution measures designed to improve the global environment. All these schemes have sinister undertones with profiting on mass miseries of others.

In the Gulf disaster, you have the biggest environmental polluter in human history. The punishment for a crime of mass destruction that could have been averted, was just a slap on the wrist? If this is not the clearest proof of corruption at the highest level and biggest HSE (health, safety & environment) farce, then what is?

It was not the failure of safety regulations but the enforcement of regulations. The government admitted this much by sacking MMS's director and changing it to BOEMRE. It was not the failure of technology but the devious use of technology to cloak unfair business practices or safety farce at the very least. But would shrewd corporate criminals risk billions of investment dollars just to skimp on some daily operation expenses and safety devices? Just like the fairy tale of the 3 leaks, this was just the red herring. The oil industry will start on its decline just as the coal industry did, after its replacement by alternative cheaper and cleaner energy sources (The Future of Free Energy).

Giant global oil corporations may not have the next 10 years to recover their mega billion dollar investments. With the writings on the wall and their failures to control (prevent) the advent of free energy, the oil oligarchs had to devise emergency exit schemes before oil independence becomes public knowledge. High crude oil prices cannot be manipulated too high or long enough to recoup their billions of investment dollars globally. They risk becoming economic dinosaurs.

She added that an admiral with NIC suggested she claim the estimate was between 12,000-25,000 barrels per day, noting the apparent disconnect between what the USGS actually found and what they were being advised to say. "Bottom line: if you are at a university, do convince some of your best and brightest to go into science communication," McNutt wrote. "Please."

According to the USGS website, under the undated heading, “Can we cause earthquakes? Is there any way to prevent earthquakes?” the agency notes, “Earthquakes induced by human activity have been documented in a few locations in the United States, Japan, and Canada. The cause was injection of fluids into deep wells for waste disposal and secondary recovery of oil, and the use of reservoirs for water supplies. Most of these earthquakes were minor. The largest and most widely known resulted from fluid injection at the Rocky Mountain Arsenal near Denver, Colorado. In 1967, an earthquake of magnitude 5.5 followed a series of smaller earthquakes. Injection had been discontinued at the site in the previous year once the link between the fluid injection and the earlier series of earthquakes was established.” Note the phrase, “Once the link between the fluid injection and the earlier series of earthquakes was established.” So both the U.S Army and the U.S. Geological Survey over fifty years of research confirm on a federal level that that “fluid injection” introduces subterranean instability and is a contributory factor in inducing increased seismic activity.” How about “causing significant seismic events?”

Fast forward to the present. Overseas, last month Britain’s Cuadrilla Resources announced that it has discovered huge underground deposits of natural gas in Lancashire, up to 200 trillion cubic feet of gas in all. On 2 November a report commissioned by Cuadrilla Resources acknowledged that hydraulic fracturing was responsible for two tremors which hit Lancashire and possibly as many as fifty separate earth tremors overall. The British Geological Survey also linked smaller quakes in the Blackpool area to fracking. BGS Dr. Brian Baptie said, “It seems quite likely that they are related,” noting, “We had a couple of instruments close to the site and they show that both events occurred near the site and at a shallow depth.” But, back to Oklahoma. Austin Holland’s August 2011 report, “Examination of Possibly Induced Seismicity from Hydraulic Fracturing in the Eola Field, Garvin County, Oklahoma” Oklahoma Geological Survey OF1-2011, studied 43 earthquakes that occurred on 18 January, ranging in intensity from 1.0 to 2.8 Md (milliDarcies.) While the report’s conclusions are understandably cautious, it does state, “Our analysis showed that shortly after hydraulic fracturing began small earthquakes started occurring, and more than 50 were identified, of which 43 were large enough to be located.”

Sensitized to the issue, the oil and natural gas industry has been quick to dismiss the charges and deluge the public with a plethora of televisions advertisements about how natural gas from shale deposits is not only America’s future, but provides jobs and energy companies are responsible custodians of the environment. It seems likely that Washington will eventually be forced to address the issue, as the U.S. Army and the USGS have noted a causal link between the forced injection of liquids underground and increased seismic activity. While the Oklahoma quake caused a deal of property damage, had lives been lost, the policy would most certainly have come under increased scrutiny from the legal community. While polluting a local community’s water supply is a local tragedy barely heard inside the Beltway, an earthquake ranging from Oklahoma to Illinois, Kansas, Arkansas, Tennessee and Texas is an issue that might yet shake voters out of their torpor, and national elections are slightly less than a year away.

The German government's decision to close all of its existing nuclear reactors by 2022 shows that this shift in sentiment is gaining traction. And it increases the likelihood that the nuclear-powerplant building boom that had seemed at hand will be set back. Without a doubt, this new reality will lead to global energy shortages and much-higher energy costs.But for us as investors, the real issue is this: Which sectors will step up to alleviate the shortfall resulting from the inevitable disappearance of nuclear power?

As the recent development in Germany so clearly illustrates, one key difficulty about major energy decisions is that far too many are political in nature.

Too often, rational scientific analysis and cost-benefit analyses are ignored as hard-line environmentalists push their own agendas. Many of the environmentalists' objections are valid - at least as far as they go. But more and more, those objections seem to include every source of energy that actually works.

Windmills are objectionable because they look ugly and kill birds. Geothermal energy is objectionable because it causes earthquakes. Even solar energy is objectionable because of the vast acreages of land required to house the solar panels

Replacing Nuclear Power Figuring out which energy sources will offset the decline in nuclear power output requires three calculations:

First, a calculation of the cost of an energy source - as it now exists - in its economically most practicable uses. However, much as we may like solar power, we are not about to get solar-powered automobiles; likewise, oil-fueled power stations are inefficient on many grounds.

Second, a calculation that demonstrates whether the cost of that energy source is likely to increase or decline. With oil and hydro-electric power, for instance, the cost is likely to increase: The richest oil wells have been tapped and the best rivers have been dammed. With solar, on the other hand, the cost could decline, given how quickly the technology is advancing.

And third, an estimate that includes our best guess as to whether hard-line environmentalists will win or lose in their attempt to prevent its use.

On nuclear energy, the environmentalists appear to have won - at least for the time being. Their victory probably extends to fusion power, if that ever becomes economical. Conversely, their battles against wind and solar power are futile, as there are no scary disaster scenarios involved.

I regard the German decision to abandon nuclear power as foolish, and it should make us very cautious when investing in large-scale German manufacturers, which may be made uncompetitive by excessive power costs. But as an investor, I think it opens up a number of profit opportunities.

Actions To Take: Environmental concerns have chased investment away from nuclear energy - at least for the time being. For that reason the nuclear build-out that was just starting to gain momentum now is likely to stumble. As investors, we must look for energy sources that will most likely replace lost nuclear power output. They include:

Shale Gas: Potential damage to the environment caused by "fracking," which is the process by which shale gas is extracted, has not impeded this industry's growth. Natural gas has grown increasingly popular, as it is relatively cheap and clean, and readily abundant in the United States. A recent study by the Massachusetts Institute of Technology (MIT) suggests that natural gas will provide 40% of U.S. energy needs in the future, up from 20% today. You might look at Chesapeake Energy Corp. (NYSE:CHK), the largest leaseholder in Pennsylvania's Marcellus Shale, which is trading at a reasonable 9.5 times projected 2012 earnings.

Shale gas. Tar sands. And solar energy. Let's look at each of the three - and identify the best ways to play them

Tar Sands: The Athabasca tar sands in Canada contain more oil than the Middle East. And at an oil price of $100 per barrel, it is highly profitable to extract. Of course, extraction makes a huge mess of the local environment, but environmentalists seem to have lost that battle - reasonably enough, in view of the "energy security" implications of dependence on the Middle East. A play I like here is Cenovus Energy Inc. (NYSE: CVE). It's a purer Athabasca play than Suncor Energy Inc. (NYSE: SU), but it's currently pricey at 16.5 times projected 2012 earnings. Suncor's cheaper at only 11 times projected 2012 earnings - so take your pick

Solar Energy: Of the many new energy sources that have received so much taxpayer money in the last five years, solar is the one with real potential. Unlike with wind farms, where there is almost no opportunity for massive technological improvement or cost reduction, there is great potential upside with solar power: The technology and economics of solar panels and their manufacture is improving steadily. Indeed, solar power seems likely to be competitive as a source of electricity without subsidy sometime around 2016-2020, if energy prices stay high.

There are a number of ways to play this. You can select a solar-panel manufacturer like the Chinese JA Solar Holdings Co. Ltd. (Nasdaq ADR: JASO), or a rectifier producer like Power-One Inc. (Nasdaq: PWER). JA Solar is trading at a startling forward Price/Earnings (P/E) ratio of less than 5.0, mostly likely because of the Chinese accounting scandals, whereas Power-One is also cheap at less than seven times forward earnings and is U.S.-domiciled. Again, take your pick, depending on which risks you are comfortable with.