Lou Grinzo (from the WSJ):

If you have an oil field the size of the moon but you can only produce a couple of million barrels per day from it (for whatever combination of geological, political, or other reasons you care to make up), then that doesn’t change the basic notion of peak oil,” he writes.

This of course applies to bitumen deposits--large reserves, slow production rate.

I've got my own little West Central Texas example. Normally our reservoirs have light, sweet oil, but we just tested 22 degree gravity free oil from a shallow oil reservoir. I don't know what the recovery factor will be, but if it had been light, sweet, we probably would have been looking at 400,000 BO per 40 acre unit, at a depth of 2,000'. In any case, we are planning on very slow production rates, probably in the 10 to 20 bpd range (versus 50 bpd plus normally).

The problem is that the we have heavy viscous oil in a high quality reservoir which is much more permeable to water than to oil, and producing at high rates is an invitation for early water breakthroughs.

BTW, with the WSJ reference, IMO you picked a very good time to raise the level of the discourse. I've always viewed the "recent unpleasantness" as a property right's issue. The editors are free to make the rules. No one has to stay.

I got this article in my email today, and since the the clamour from so-called experts that $30 oil is coming soon to a theatre near you, I thought I would post it, even if it causes some medium term apoplexy. $30 oil just doesn't seem reasonable, since it would cause the eventual cessation of development of tarsands, heavy oil and ultra deep water. The writer says he has done research for several months, but it looks like his research base was CERA.

Goodbye, Hubbert Peak Oil: The cyclical downturn of oil prices
Those predicting $30/barrel oil (and cheaper!) now find themselves in good company

by Andrew Mickey, BreakAway Investor

The first time I uttered “$30 oil,” all I heard was a few snickering comments and references to the Hubbert Peak Oil Theory. But after five months of research, phone calls and impatiently waiting in airports, I’m done. Everything I’ve come across over that time points to oil prices heading downward over the long term. Rest assured, by 2009, oil will be back to $30.

But all of a sudden, I find myself in good company. Steve Forbes, Cambridge Energy Research, Citigroup, and a bunch of top economists are starting to get on board with me. In fact, Kenneth S. Rogoff, a professor of economics at Harvard University, tries to do me one better: “I predict that we will see at least one period of $20 oil at some point over the next ten years.”

But he’s just one of the many converts. I’ll get to that in a second. First, I have to address Hubbert’s Peak Oil Theory, which Dr. Mark Hubbert created in 1954. Recently, Cambridge Energy Research Associates (CERA), the top oil-industry consultancy group, categorically disproved the myth of peak oil and Dr. Hubbert’s theory.

In a report titled “Why the Peak Oil Theory Falls Down,” CERA successfully dispelled any remaining evidence that the world has crested peak oil. CERA states the remaining oil-resource base is about 3.74 trillion barrels, including estimates of oil yet to be discovered. As a result, peak oil is 20 years off.

To put 3.74 trillion barrels of oil in perspective, consider that the world has consumed a mere 1.08 trillion barrels of oil to date in the past 100 years. At current global consumption rates of about 30 billion barrels per year and a very generous assumption of 5% annual growth in oil consumption, that leaves us with 97-year supply of oil, according to CERA.

So who’s right? CERA is the absolute authority on oil. The consultant is the leading advisor to international energy companies, governments, financial institutions and technology providers.

In the energy industry, when you have a question about oil, you turn to CERA. We’ve got two options: You can listen to a guy that developed a theory more than 50 years ago or to the top energy consultant in the world. It’s your choice.

Another reason oil prices are headed for a fall is due to the financial institutions that are responsible for a large part of the rise and the volatility over the past six months in oil prices.

Today, there are more than 500 energy funds that are buying up oil on the open market. They have no use for it other than that they hope it goes up and down, and their traders are positioned properly to trade the swings in price. A hedge fund manager can’t take delivery of 100,000 barrels of oil in his Stamford, Connecticut high-rise; he’s just in it to trade.

Oil prices have very little to do with supply and demand. After all, have you not been able to get heating oil for your house this year or visited a gas station that was out of gas?

Twenty years ago, oil producers sold their oil and petroleum-based fuels directly to customers like airlines, trucking companies and manufacturers, and the few hedge funds and smaller trading departments at the banks left the oil market alone.

And there’s nothing wrong with that, but their activity is just adding an additional layer of demand to oil prices. As of right now, there’s an additional $70 billion to $150 billion of speculative capital chasing oil prices up and down.

As long as oil prices move somewhere, they’ll be making money. That’s why, when OPEC announces a production cut, oil prices fall and, when oil inventories decline, oil prices rise. It all depends on where the money is flowing.

And now, those hedge funds and trading departments control oil prices. And just like the dot-coms, gold, silver and dozens of other trading vehicles of the speculative community, when they move out, they move out fast. And it’s the individual investors that are left holding the bag.

They’ve already started to see the end coming. Andrew Safran, head of Citigroup’s energy, power and chemicals business, says, “Prices will trade in the $40 to $60 range in the coming years.”

Philip Verleger, an oil economist who’s gained a reputation for early warnings on oil-price swings, says, “If pension funds decide they don’t want to take the risk anymore and bail out, we could see prices go a hell of a lot lower; I think prices could dip below $30. It really depends on what these pension funds do.”

With as much as $150 billion in speculative capital pushing around oil prices, once the rest of the financial community turns bearish on oil the resulting oil bust will be hard and swift.

I just heard this between articles on Democracy Now

The Price Of Oil

Voices on the radio
tell us that we’re going to war
those brave men and women in uniform
they want to know what they’re fighting for.

The generals want to hear the end game
the allies won’t approve the plan
but the oil men in the white house
they just don’t give a damn.

It’s all about the price of oil
it’s all about the price of oil
don’t give me no shit
about blood, sweat, tears and toil
it’s all about the price of oil

Now I ain’t no fan of Saddam Hussein
oh, please don’t get me wrong
if it’s freeing the Iraqi people you’re after
then why have we waited so long.

Why didn’t we sort this out last time
was he less evil than he is now
the stock market holds the answer
to why him, why here, why now.

Saddam killed his own people
just like general Pinochet
and once upon a time both these evil men
were supported by the U.S.A.

And whisper it, even Bin Laden
once drank from America’s cup
just like that election down in Florida
this shit doesn’t all add up.

It’s all about the price of oil
‘cause it’s all about the price of oil
don’t give me no shit
about blood, sweat, tears and toil
it’s all about the price of oil.

Music and lyrics by Billy Bragg, 2002.
Produced by Billy Bragg and Simon Edwards

http://www.thestar.com/Business/article/183769

Imperial Oil Ltd. (TSX: IMO) has called on the Ontario public not to engage in panic buying after a recent blaze at one of its refineries resulted in temporary gas shortages at 75 of the company’s 400 gas stations on Tuesday.

The province of Ontario has changed the rules governing urban and regional planning. Christopher Hume, writing in the Toronto Star, says it's about time:

A space to grow without sprawl

... So, for example, by 2015, a minimum of 40 per cent of new housing must be constructed within the existing urban footprint. In most jurisdictions in Ontario, the current rate is 15 per cent. In Vancouver, it's 70 per cent. The difference is what we call sprawl.

... In other words, now we are at the point where we will see just how committed Torontonians and Ontarians are to sustainability. We're still not paying the full cost of the services we consume, but the days of $2 a litre gas, and road tolls and the like, aren't far away.

Resistance will be stiff but ultimately futile. Indeed, when future historians look back at the last half of the 20th century, when vehicular addiction spiralled out of control, they will shake their heads and wonder: What were they thinking?

Indeed, what are we thinking?

Regardless, the days of reckoning are finally upon us. Think of it as the calm before the storm. By the time the clouds have cleared, we might just have our house in order. Canada, or at least our part of it, might no longer be a dinosaur.

Hopefully last on thread and to Alan at the Big Easy

My conclusion to PO is that we must eventually go electric. I know you have as well.

My thoughts ran to electric solar on roofs sent via the grid. I was reciently given a prospectus for "Gridpoint", which sells grid-tie equipment for solar/alt energy to be integrated to the grid.

http://www.gridpoint.com/

I couldn't find a price sheet on the "connect series"(grid-tie). Looks like 1st class equipment.

Hello TODers,

http://news.yahoo.com/s/nm/20070220/wl_nm/korea_suicide_dc
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South Korea seeks to curb rising suicide rate

In 2004, 24.2 South Korean per 100,000 citizens killed themselves, making suicide the fourth leading cause of death in the country, ahead of traffic accidents. There were 12,047 deaths by suicide in 2005.

One reason behind the increase in suicides may be a widening gap between the haves and the have-nots in South Korea, with poorer citizens more likely to kill themselves than the affluent, according to government data.
-----------------------------------------------------
Bob Shaw in Phx,Az Are Humans Smarter than YEast?

Hello TODers,

IF Mexico builds corn ethanol plants nationwide--is that a net long-term positive or negative for the country?

http://www.elpasotimes.com/business/ci_5262743
------------------------------------------------
Mexican entrepreneurs now hope to transform the corn industry. While the biggest growers can sell directly to multinational firms, Salazar said his association is using the boon to find ways to guarantee local markets for medium and small size farms as well.

Private investors are pushing for ethanol plants to be built nationwide -- new plants already are planned for at least three Mexican states, Salazar said -- and leftist lawmakers want to require the state-owned oil monopoly Petroleos Mexicanos, or Pemex, to oxygenate its gasoline with biofuels including corn, which could guarantee a local market for growers.
------------------------------------------------
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?

If we're coming up on PO, the folks in Dubai certainly don't seem to be aware of it.

http://www.skidxb.com/English/facts_eng.htm?mid=1&sid=2

A brief excerpt:
- 3,000m² Snow Park with a snow cavern
- Temperature maintained at a comfortable -1º to -2º (C)

The amount of energy that must required for this staggers the mind...

I have been researching the rising price of corn in Canada and comparing it the Hubberts peak oil theory - For more insight into this and other amazing Canadian ethanol production facts check out my blog at http://roberrific.typepad.com/drunkenmoose
and read about the Canadian industry leader, GreenField Ethanol.