DrumBeat: August 18, 2008
Posted by Leanan on August 18, 2008 - 10:25am
Schools scramble as tougher times hit
WASHINGTON (AP) -- Harder times and higher fuel prices are following kids back to school this fall.Children will walk farther to the bus stop, pay more for lunch, study from old textbooks, even wear last year's clothes. Field trips? Forget about it.
This year, it could cost nearly twice as much to fuel the yellow buses that rumble to school each morning. If you think it's expensive to fill up a sport utility vehicle, try topping off a tank that is two or even three times as big.
At the same time, bills are mounting for air conditioning and heating, for cafeteria food and for classroom supplies, all because of the shaky economy. And parents have their own tanks to fill.
This Is a Correction, Not the End of the Commodity Bull Market Part I
Every single day, the world's population uses more oil than the planet can possibly produce. This means the peak oil theory is still alive and well.
Whenever economies sour, politicians blame speculators. But on occasion, they are right to do so. Speculators did wreak havoc in 1630s Holland, 1720s France, and in the American stock market in 1929. That crash led to the Great Depression and 60 years of tight controls on speculation. Now, thanks to our 30-year infatuation with free markets, the controls are off, and the mad gamblers are at it again.
Should I buy heating oil in August?
Though pump prices have eased off a bit, energy prices are still a major budget buster for many households. In cold weather states, this is shaping up to be an expensive winter. But no one knows for sure just where heating bills will end up. So is it a good idea to sign up for one of those pre-paid heating plans? Or hope that oil prices will keep falling?
In 1992 a relatively little-known, Texas-based oil services firm called Halliburton was awarded a $3.9 million Pentagon contract. Its task was to write a classified report on how private companies, like itself, could support the logistics of U.S. military deployments into countries with poor infrastructure. Conspiracy theories aside, it is hard to imagine that either the company or the client realized that 15 years later this contract (now called the Logistics Civilian Augmentation Program or LOGCAP) would be worth as much as $150 billion.
World's farmers turn to raw sewage for irrigation
The future may not smell too rosy – it may lie in sewage. As cities and industries suck up ever more of the world’s scarce water resources, agriculture is destined to rely increasingly on recycling the contents of urban sewers, according to a new international study of “wastewater agriculture”.The good news – for farmers at least – is that the irrigation water from sewers comes with free fertiliser in the form of the nitrates and phosphates bound up in human faeces. The bad news is that this coprological cornucopia is filling vegetables sold in city markets with heavy metals, pathogenic bacteria and worms.
Saudi Arabia: Northern fuel shortages widen
AR’AR – A fuel crisis is the last crisis most would not expect in the world’s largest oil exporting country. The northwestern city of Ar’ar already facing a diesel shortage for the last month is now faced with a shortage of fuel....Thani Al-Anezi, chairman of the Northern Frontier Region Chamber of Commerce and Industry, said the complaint has been referred to the concerned authorities and will be followed up because the impact falls on citizens, travelers and owners of fuel stations. He called on Saudi Aramco to conduct a field survey and supply fuel as it is required to fuel stations and factories through its own fuel tanker trucks or contracted ones.
Al-Anezi said the shortage was due to a new electronic quota system adopted by Saudi Aramco.
“The electronic system distributes a certain quantity of fuel to each fuel station, but the quantity distributed is not precise and does not meet the market demand,” he said. “The system does not take into consideration that many fuel stations do not own their own fuel tanker trucks, so several fuel stations may help each other.” “Some factories purchase large quantities of fuel reducing the quota for fuel station owners,” he added.
Saudi Writer Urges OPEC to Prepare for Oil Market Surprises, Falling Prices
While some lean towards saying that the recent big drop in oil prices was a corrective response or the international oil market's reaction after prices saw a steep rise, the explanation that is closer to acceptance is the drop in the demand for oil from the countries consuming it, foremost of them the United States where the demand for oil dropped by a large percentage to around half a million barrel a day and also in the Organization for Economic Cooperation and Development countries.This important factor in the fast drop in oil prices is boosted by OPEC's hasty response to the consumer countries' (false) shouts about shortages in oil supplies and the daily demand to the organization to increase its production. The latest of these appeals, and it will not be the last, was the IAEA director's demand last week to OPEC to increase its production when he said: "Only the OPEC countries are capable of increasing the production capacity effectively." Out of good intentions, OPEC responded to the appeals, though it opposed them sometimes. But the final result was swamping the market with oil and some of the organization's members started to search for buyers but did not find any.
Price of oil independence: Eternal conservation
If oil prices continue to drop, they will also take some pressure off the Federal Reserve to raise interest rates in order to contain inflation. This would be just what the doctor ordered, in view of the precarious state of the economy in general and the housing sector in particular.Indeed, lower oil prices could ward off a recession, or, if we are already in one, get us out of it sooner rather than later.
Before we get carried away with all this good news, however, it might be worthwhile for us to examine the other side of this coin: It's called conservation.
Energy policy: Law of the land
In the earliest days of the global oil industry, big international oil companies such as ExxonMobil and Chevron were often granted generous access to develop a country’s oil resources. Since then oil-producing countries have come to realize the value in their resources, and there has been a resulting shift in control of oil reserves from the old oil giants to governments and national oil companies such as China’s CNOOC, Petroleos Mexicanos (Pemex) and Brazil’s Petrobras.Today, an estimated 77% of total global oil and natural gas reserves are state-owned, and that percentage should only get higher in the future. That trend is also changing the way large independent oil companies — and the oil service companies who work for the majors — do business since they now have to deal more often with state-owned firms rather than the traditional international oil companies. “These are unusual and frustrating times for the majors,” according to a recent article in the Journal of World Energy Law & Business. “The [state-owned firms] have a competitive advantage, because many governments prefer anything other than a western major these days.”
The sacrifice-free election strategy
Neither candidate speaks with much candor about solving the energy crisis. But the GOP will use U.S. oil drilling as a weapon against Obama.
Obama Meets Pickens, Seeks to Unify on Energy Policy
(Bloomberg) -- Democrat Barack Obama met with billionaire oilman T. Boone Pickens today and said the two will address how the country can look past political differences to unify around a comprehensive energy policy.
Why's oil so pricey? It's Big Oil's secret
A trader at Goldman Sachs boasted several months ago that "we move the price of oil when we want to move the price of oil." Mike Greenberg, a former big shot with the Commodity Futures Trading Commission, recently remarked that large banks and hedge funds control 80 percent of oil contract trading and are responsible for a 35 percent increase in the price of crude. Greenberg said, "These speculators sell oil contracts back-and-forth to each other simply to inflate the price and reap windfalls."I doubt there's a shortage of oil. I don't see lines of cars at the pumps, heating oil and diesel fuel seem plentiful, some United Arab Emirates countries are increasing production, Iraq's huge spigot is open again, Brazil announced a monumental discovery and world demand appears to be declining. So why did the price of oil double in the last 12 months then zoom $16 in less than 24 hours?
India: Govt explores ways to beat diesel crunch
The demand for diesel has risen nearly 25 per cent in recent times as it is increasingly being used in power generation instead of fuel oil and naphtha that are costlier.“The demand-supply gap seems to have widened because of this,” Deora said.
Kyrgyz PM Wants to Reduce Electricity Exports to Kazakhstan, Uzbekistan
Kyrgyz Prime Minister Igor Chudinov has said that his country should cut down the export of electricity to Kazakhstan and Kyrgyzstan this year due to a shortage of water in the country's major Toktogul reservoir.
Malaysia: Commuters pin hopes on Budget 2009
PUBLIC transportation seems to be the best option to help consumers mitigate the effects of the recent sharp fuel price hike that have burnt large holes in their pockets.
Oman plans to build coal-fired power plants to beat a shortage of gas to fuel future projects for economic diversification, an Oil and Gas Ministry official said on Monday.The Gulf is the world's biggest oil exporting region, but has been slow to develop massive gas reserves. Rapid economic growth has absorbed fuel supplies and left all the countries in the region except Qatar short of gas.
Zambia Copper Mines' Fuel Supply Steady - Indus Official
Zambia's copper mines are continuing to receive a steady fuel supply despite the shortage in the country due to increased demand and inadequate supplies from the country's sole refinery, a senior industry official told Dow Jones Newswires Monday.
Failure to advance more rapidly with reform runs the risk of turning Mexico’s dependence on oil and emigration into a chronic addiction.
Chavez Promises Paraguay All the Oil It Needs
Venezuelan President Hugo Chavez promised Saturday to supply Paraguay with all the oil it needs to meet its repeated problems of crude shortages.
Kenya: Fuel Crisis Bites As Companies Seek Black Gold
Even with reports that Kenya could have struck oil in Lodwar, the fuel situation in the country has been declared a crisis at the highest levels of Government. And the situation doesn't look promising.Industry experts now say that there is little the country can do besides planning for the future.
Kenya imports crude oil for national consumption. But it imports just enough to last a month.
Wind power is costly, ineffective source of electricity
Building and installing these turbines requires 5 to 10 times more steel and concrete than is needed to build nuclear plants to generate the same electricity more reliably, says Berkeley engineer Per Peterson. Add in steel and cement needed to build transmission lines from distant wind farms to urban consumers, and the costs multiply.Wind thus means more quarries, mines, cement plants and steel mills to supply those materials. But greens oppose such facilities. So the Pickens proposal could mean letting existing power plants rust, and importing steel and cement, instead of oil.
Wind turbines across Oregon stir up health scare: Study suggests living close to an energy farm can cause a variety of physical ailments
BOARDMAN, ORE. — Sherry Eaton pulled into the driveway of her rural, high-desert home to see one of several giant wind turbines being assembled a half-mile away."I started to cry," Eaton, 57, recalled of her first sight of the Willow Creek Wind Project in late July. "They're going to be hanging over the back of our house, and now there's the medical thing."
"The medical thing" is new research suggesting that living close to wind turbines, as Eaton and her 60-year-old husband, Mike, soon will be doing, can cause sleep disorders, difficulty with equilibrium, headaches, childhood "night terrors" and other health problems.
Recipes for new fuels reviving Maine's mills: Vast forests again pose rich resource
CORINTH, Maine - Over a lifetime working in the forest products industry, Randy Irish watched mills fail and friends lose jobs. It finally happened to him, after 32 years, when Georgia Pacific shut its paper mill near this northern Maine town.But two years later, Irish has a new future at a new mill. The product this time: energy.
Sri Lanka expert says solar energy too costly without subsidy
(LBO) - Solar energy is still too expensive to be used widely without government subsidies, a Sri Lankan expert has told the island's energy-intensive industries which are grappling with the highest electricity costs in Asia.Tilak Siyambalapitiya, managing director, Resource Management Associate, said solar energy cost 60 rupees per kilowatt hour whereas now industrialists are not paying over 13 rupees per kilowatt hour for power from the state utility.
The Strange History of Birth Control: Review of Fatal Misconception: The Struggle to Control World Population by Matthew Connelly
Recently, a number of family planning advocates have resumed warning us about the dangers of overpopulation. Wars in the Middle East and Africa, food shortages throughout the developing world, and even global climate change have all recently been attributed to "population pressure." Some of these groups use language that is worryingly similar to that of the "population bomb" alarmists of the 1950s and 1960s.In fact, population growth alone probably isn't the political or economic threat that so many people feared. In the 1950s, demographers produced studies showing a modest correlation between economic growth and reduced fertility, but these were largely refuted in the 1980s. In any case, it is debatable whether Congo and Kenya would be more stable and prosperous if there were half as many Congolese and Kenyans. The 1994 Rwanda genocide has sometimes been attributed partly to overpopulation, but the brutal eviction of the Tutsis from many of their farms -- which was later seen as a major cause of the genocide -- occurred in 1959, when there were only one third as many Rwandans. Likewise, attributing crises in the Middle East to population growth, as The Economist recently did, overlooks underlying issues of politics and justice.
A Multi-Prong Approach to Carbon Neutrality
Several charges have recently been leveled at the biofuels industry. Misinformed critics have cited indirect land use issues, the food-versus-fuel debate, and the destruction of the Amazon rainforest as reasons to halt or eliminate the production of fuel ethanol. It’s become clear the issues aren’t going away anytime soon.However, the industry can head in a direction that would leave the accusations baseless. This article depicts an avenue of growth that greatly increases industry profit while eliminating negative connotations permanently.
Using Land to Grow Biofuels a Net Loss for Environment
The production and use of biofuels such as ethanol would contribute to global warming more than simply using gasoline, according to two studies published in the journal Science.
With the regional and global spike in food prices it is naturally imperative that East Timor corner crucial sources of food, joining a queue of food deficit countries from the Philippines to Singapore. But how and why has East Timor – a land of subsistence agriculturalists and one of the world’s poorest nations- been turned into a net food importer?
As prices go up, so does potential: But today, ‘agriculture not a viable industry in Hawaii’
KAHULUI - There is enough fertile land in Hawaii to feed the state's entire population, but it will take even greater plummeting economics to force Hawaii residents, farmers, businesses and the government to make seismic shifts in their approaches to food and fuel, a Pacific islands expert said Saturday."I don't know how you would induce it," said Michael Hammett during his keynote address for the first Maui Island Sustainable Living Expo. "The problem is that the farmers and landowners would have to want to do it, and the people would have to want to pay higher prices."
Be prepared to pay extra for local produce, or watch it disappear
VANCOUVER ISLAND -- Fresh, locally grown vegetables and berries are two of the great things about summer, and August is the time when produce stands spring up on country roads across Canada.But if you look beyond the bucolic fields, there are two troubling issues threatening many of our produce growers: suburban development and a severe shortage of farm workers.
Meals on Wheels feels gas-price pinch
The people who make sure the frail, homebound elderly get a meal every day are feeling the pinch in their pockets and their pantries from skyrocketing gasoline prices.The cost of gas has driven up food prices and may be keeping some people from volunteering to deliver meals to the nearly 600 elderly people who get their meals each day from two Meals on Wheels programs in Broome County.
Waking up to the threat of 'peak oil'
The recent dip in the world oil market has given consumers relief from surging pump prices, and has investors and commentators waxing with hope that the dip will become a trend.But don't bet on it, says energy expert Matthew Simmons. Along with the likes of oilman T. Boone Pickens whose celebrated national campaign calls for a radical shift away from oil dependence, Simmons says that all fundamentals remain in place for energy prices to resume their skyward climb to levels quite beyond records of a month ago.
Everything is not peachy (Homer-Dixon)
Self-sufficiency isn't a sexy idea. At best, people who say they're interested in being self-sufficient are stereotyped as dour, old-fashioned rural types. At worst, they're seen as fanatical survivalists planning for an apocalypse. Economists also tell us that self-sufficiency is an anachronism. Instead, it is specialization that produces wealth, and economies - including the world economy - produce the most wealth when everyone, including countries, specializes in what they do best and then trades their products for the other things they need. The more specialization, the more connectivity among specialists, and the more trade along those connections, the better.But there are problems with this model. As we specialize, we become more dependent on other people, industries and regions in the global economy. That may be fine for non-essential goods such as children's toys and kitchen appliances, but should we depend on others for life's essentials such as food? Also, specialization at the global level tends to reduce the diversity of producers and products - a small number of large, highly efficient producers often comes to dominate the market for specific goods. In complex systems from economies to ecologies, however, lower diversity usually means lower ability to adapt to rapidly changing circumstances. And, finally, all that connectivity among specialized producers around the world makes everyone more vulnerable to cascading system failures: a shock or failure in one part of the global system can propagate through the rest of the system in the blink of an eye, like a row of falling dominoes.
How investors inflate commodities' bubble
Commodities - the stuff that feeds us, runs our cars, heats our homes and provides the basic materials of everyday life - recently enjoyed one of the great bull runs of modern investment history, nearly doubling in price in the space of a year.In the past month, though, prices of a wide range of commodities, from oil to corn to copper, have come back down with a vengeance as the global economy cools. We now know that the commodities boom was another bubble, not that much different from technology stocks in the 1990s and real estate earlier in this decade, market pros say.
Texas getting a floating oil port
As politicians continue to debate how to reduce U.S. dependency on foreign oil, a Houston partnership is spending $2 billion to prepare for an energy future that inevitably will include oil imports.The team will announce today that it plans to build and operate an oil terminal 36 miles off the coast of Freeport.
Ethiopia's new famine: 'A ticking time bomb' - Crop failure, global inflation and armed conflict creating crisis
Unlike 1985, when images of a famine that killed 1 million Ethiopians shocked the West — "We are the world!" pop stars sang at the globally televised Live Aid concert that raised more than $250 million — this year aid workers say there probably will be no mass starvation. An expensive, elaborate social welfare apparatus, erected largely by the world's rich nations to avert another 1985, will not permit it.Those good intentions, however, have helped produce another problem: A nation that has long seen itself as the most independent in Africa faces an ever-growing dependence on food aid from countries who now must deal with increasing food problems of their own.
Filling backpack a burden for more families
More than 2,000 children came to the Brevard Zoo in Melbourne, Fla., this month for free supplies. Hundreds more visited the Brevard Schools Foundation to pick up leftover items. "Families are barely making it. They can't even afford the basics for their kids," says foundation director Lynn Clifton.
Dear 44: Science vs. technology
In 1988, NASA scientist James Hansen testified before Congress that “global warming has reached a level such that we can ascribe with a high degree of confidence a cause-and-effect relationship between the greenhouse effect and observed warming.” The science behind that statement is today irrefutable. So, too, is the fundamental environmental and economic logic behind measures to combat climate change.This summer’s extreme weather events and record energy prices warn us that we must quickly switch from high-carbon, high-priced fossil fuels to low-carbon, low-cost renewable energy. This year’s record oil, gasoline, coal and natural gas prices are draining the wallets of middle and low-income Americans. And at the macroeconomic level, the effects of global warming will exact a huge economic cost — an estimated 5 percent to 20 percent of annual global gross domestic product.
Inventors are sure cars can fly
LOS ANGELES — The auto industry has seen its share of technological leaps, whether it was the advent of electric starters, automatic transmissions or hybrid gas-electric powertrains. And don't forget hideaway headlights.One leap that engineers and tinkerers have never quite made, however, but refuse to let die: the flying car.
Drive 55 campaign gaining speed
LOS ANGELES — Though it lasted longer than disco and leisure suits, the national 55-miles-per-hour speed limit was another remnant of the 1970s that did not endure.Yet with high fuel costs reviving memories of the energy crisis of that decade, proposals to bring back the "double nickel" or something like it are emerging, with backers saying federal speed limits could save fuel, money and perhaps lives.
Peak Oil Now? If so, Oil Prices Not Likely to Decline--Ever
There has been a lot of talk in recent years about "peak oil" - defined as the point where the maximum amount of oil that can be recovered is being pumped. After that, oil becomes increasingly scarce and expensive.If sticker shock at the gas pumps hasn't convinced you, talk to Dr. Darrel Schmitz, head of the Department of Geosciences, Mississippi State University.
"World oil reserves have probably peaked yesterday, today or tomorrow - literally right about now," Schmitz said. "Production worldwide will start declining relatively soon. We are right at that point."
Did you hear that Alaska has more oil than the Middle East?
Busting the myths about cheap and unlimited oil being broadcast by Rush Limbaugh, Jerome Corsi and other ignoramuses.
A NB Power meter reader leaving a truck running while reading meters inspired a citizen to write a letter to the editor. The complaint about the choice of vehicle and the apparent lack of concern for the extra cost of fuel drew mixed responses from readers. Of course, running a business is complicated but energy should not be ignored especially when we are nearly at peak oil.
Venezuela sends Colombia fuel to slow smuggling
CARACAS, Venezuela - Venezuela's government said Sunday that it will ship gasoline to neighboring Colombia in an attempt to slow cross-border smuggling of cheap Venezuelan fuel.Venezuela's Oil Ministry plans to send Colombia's Norte de Santander state at least 50,000 barrels (8 million liters) of oil a month starting Thursday and could double that supply, the state-run Bolivarian News Agency reported Sunday.
Iran and Syria, in the role of Russia
Now that the fighting in Georgia has died down, policy shapers and pundits in the West are free to analyze the maneuvers and results, and draw lessons. The picture that emerges is a dismal one. Vladimir Putin's Russia exercised brutal force with the object of bringing a rebellious neighbor to its knees. The United States, which encouraged Georgian President Mikheil Saakashvili to defy Moscow, did not give him any real support. Former Soviet republics and satellites will now think twice before confronting Russia, or will be tempted to seek shelter beneath the cover of the U.S., NATO or the European Union. Oil is now much less likely to reach the Caspian Sea without Russia's involvement.
Georgia: More trouble in the pipeline
The crisis in Georgia has focused minds on the supply of oil to western Europe via lines that cross - and avoid - Russia.
CNOOC in surprise exit of Nigeria oil block - source
BEIJING (Reuters) - China's CNOOC Ltd has quit most of its 35 percent share in the smaller of its two Nigerian oil stakes even after the Nigerian operator drilled two successful wells, a source close to the matter said.It was not immediately clear why CNOOC decided to relinquish its working interest in oil mining license (OML) 141, formerly oil prospecting license (OPL) 229, after two exploration wells in the shallow-water block sunk last year struck oil.
The move is a rare setback in Chinese state firms' dash into resource-rich Africa, although some are also suffering a rising number of kidnaps of Chinese workers on the continent and growing criticism from rights groups.
Gazprom Neft Cuts Prices for Gasoline and Other Fuels
(Bloomberg) -- OAO Gazprom Neft, the crude oil arm of natural gas exporter OAO Gazprom, lowered prices for oil products sold by its refineries after Prime Minister Vladimir Putin said the authorities should ``wake up'' to the problem of high fuel prices.
BP's troubles in Russia show Big Oil's clout fading
Gone are the days when BP manhandled reserves out of foreign countries, as it did in Iran the early years of the last century. Once the lion of British enterprise, Russia has brushed it aside like a kitten.It's not alone. The rise in oil prices has emboldened foreign governments with petro-fed economies, from Russia to Venezuela. Western oil companies have been shut out of major new oil finds around the globe for years. Now, they're finding it increasingly difficult to hold onto assets they already have.
Even when drilling rights are sold at auction, the majors often lose, outbid by state-owned oil companies that can afford to sacrifice profitability for supply.
In other words, Big Oil doesn't seem so big these days.
Roughly once a week a flotilla of half a dozen or so tankers heaves into the steamy southern Iraqi port of Khur al-Zubar, and the normally sleepy docks jump to life. Teams of workers scramble over ships arriving mainly from Dubai, Bahrain and other points around the Persian Gulf to connect hoses for the flow of diesel, kerosene and gasoline. Old-fashioned gas station tickers beside the ships clatter as thousands of liquid tons begin moving.All that would seem business as usual at a harbor for a major oil producer, except that much of what's flowing through Khur al-Zubar is coming into Iraq rather than heading out.
Turkey: Oil flow to resume to soon
Turkey's energy minister says oil flow in the Baku-Tbilisi-Ceyhan pipeline through Georgia might resume soon.Hilmi Guler said on Monday -- nearly two weeks after the critical pipeline was shut down due to a fire -- that the pipeline was being fixed and the oil flow could resume "in a few days."
Angola oil exports at 1.98 mln bpd in Oct-traders
(Reuters) - Angola is set to export about 1.98 million barrels per day of crude oil in October, traders said on Monday.The October volume is slightly higher than the estimated 1.96 million bpd in September.
Urban planners love to hate the suburbs, but what's going to become of them? Will Bellevue eventually become a post-carbon ghost town or a new urban hybrid? Some reflections on the urban/suburban debate.
Nairobi – Pastoralists in the East Africa region are well placed to adapt to climate, with investment in appropriate policies, Oxfam said today.In a report released today, Survival of the fittest, Oxfam calls for governments and development partners in the region to invest in more sustainable development polices in arid and semi-arid (ASAL) areas, which will ensure pastoralists, cope with the impact of climate change.
Stark warning on Britain's shrinking coast: Abandon homes to the rising sea, warns Britain’s new environment chief
Stretches of Britain's coastline are doomed and plans will soon have to be drawn up to evacuate people from the most threatened areas, the new head of the Environment Agency warns today.In his first interview since taking office, Lord Smith of Finsbury says Britain faces hard choices over which areas of our coast to defend and which to allow the sea to reclaim. He said detailed work was already far advanced on identifying areas of the east and south coasts which were most vulnerable to erosion, and called on ministers to give emergency help to families whose homes will be lost.
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JonFreise and memmel,
After doing a little bit more research, I wish to pull together and add to a scattered discussion that took place on several separate threads last week. It deals with mass balance, the principle stated as follows:
There seems to be a growing problem with the balance between reported production (mass entering the system), reported consumption (mass leaving the system) and reported storage (mass accumulating within the system). Although inconsistencies in this regard appear with both world liquids and domestic natural gas, I wish to focus my interest here more on natural gas.
Last week someone posted a link to this June 11, 2008 EIA Bulletin which asserts there have been huge increases in domestic natural gas production over the past year:
http://tonto.eia.doe.gov/energy_in_brief/natural_gas_production.cfm
memmel responded by posting a chart that showed natural gas storage, which has shown no proportionate increase. Since the extra gas is not going into storage, he posits:
I have an entirely different theory, and that is that there has been no increase in natural gas in storage because the reported increase in natural gas production never existed.
My intentions here are therefore two-fold:
1) To demonstrate that at least some of the production information contained in the EIA bulletin is wrong, and
2) To pose a couple of troubling questions. To wit, could the EIA’s publishing of erroneous data be intentional? What reasons would the EIA have for manipulating data? And why now?
The EIA bulletin makes the following claims:
and
I stated previously that this last statement is false. After doing a little bit more digging into the EIA methodology, I am even more convinced that the EIA figures are in error.
Here are the EIA figures juxtaposed next to the Texas Railroad Commission figures. You can see yourself how they compare. (I have also included production from the Barnett Shale--East Newark Field--since I felt there might be some curiosity about that too):
Texas Natural Gas Production (BCF/day) Month EIA Bulletin Texas RRC Texas RRC (statewide) (statewide) (Barnett Shale) Jan 07 17.64 17.47 2.27 Feb 07 17.82 17.89 2.35 Mar 07 18.37 18.28 2.45 Apr 07 18.26 18.28 2.53 May 07 18.3 18.44 2.62 Jun 07 18.75 18.66 2.70 Jul 07 18.86 18.67 2.76 Aug 07 19.19 18.77 2.84 Sep 07 19.30 18.73 2.84 Oct 07 19.60 18.75 2.95 Nov 07 19.94 18.75 2.82 Dec 07 20.24 18.55 2.70 Jan 08 20.42 18.21 2.59 Feb 08 20.80 18.20 2.49 Mar 08 21.05 17.89 2.36 Apr 08 21.25 17.36 2.26 May 08 21.54 16.58 2.18The Texas Railroad Commission figures can be found here:
http://webapps.rrc.state.tx.us/PDQ/generalReportAction.do
and the EIA figures here:
http://www.eia.doe.gov/oil_gas/natural_gas/data_publications/eia914/gros...
As you can see, the EIA figures began diverging from Texas Railroad Commission figures beginning in July of last year and have progressively grown farther apart.
Texas Railroad Commission figures reflect actual production.
EIA figures reflect estimates, calculated using a mathematical model as described here:
http://www.eia.doe.gov/oil_gas/natural_gas/data_publications/eia914/eia9...
EIA samples well operators. The EIA states that "Production volumes are requested" of the operators, meaning response is totally voluntary. The EIA uses the following survey form:
http://www.eia.doe.gov/pub/oil_gas/natural_gas/survey_forms/eia914f.pdf
This provides for sampling with a very broad brush. Note that the well operators are requested to report only statewide totals, the reporting thus lacking the lease by lease detail that is required in Texas Railroad Commission reports.
The current EIA methodology actually represents a recent change. In switching from using actual production figures (provided by State agencies) to estimates (based on a sampling of well operators), the EIA offered the following justification:
Expanding on the shortcomings of the old methodology, the EIA goes on to explain:
The Texas Railroad Commission figures I believe to be absolutely correct, based on actual production, derived from reports that are a statutory requirement imposed upon the operators. Quoting from the Texas Administrative Code, Title 16, Part 1, Chapter 3, Rule 3.54:
I have several overriding royalty interests in Texas and I can assure you that one can accurately calculate his royalty payments using the Texas Railroad Commission data. And the Texas Railroad Commission always publishes its monthly production figures within 50 to 55 days following the close of the month.
So in those states like Texas that publish accurate and timely production figures, why does the EIA not use actual production instead of estimates, estimates derived from some arcane mathematical model open to manipulation and error?
Just a couple more observations/questions:
It seems the EIA methodology is especially susceptible to manipulation by operators. The EIA may be collecting data faithfully and applying its model without bias. But since the operator responses are voluntary and not mandatory, as is the case with the production reports required by the Texas Railroad Commission, and very vague and lacking in any detail, a handful of large operators could give false data and skew the data, and with no legal repercussions.
Could these inaccurate EIA reports have any effect on the spot and futures prices of natural gas? Of oil?
What does this say about the credibility of EIA reports? If they got this so wrong, what’s to keep them from getting it wrong in other areas, like world oil production? After all, even if there was no intent to deliberately distort the data, they nevertheless are guilty of adopting a shoddy model that allows others to all too easily corrupt the data from without.
SailDog, talking about world liquids, commented:
However, he didn’t go on to explain. SailDog, are you out there? Can you or someone else expand on what you were talking about? Inquiring minds would like to know.
Very good post. BTW, what does the RRC show for the recent decline in Barnett Shale production?
FYI--Texas has shown an increase in annual natural gas production, because of the Barnett Shale, but we are still one-third below our 1972 peak rate, and it took four times as many wells in 2007 as 1972 to bring production up to two-thirds of our peak rate. This is the nationwide problem that we are facing, as we replace large conventional wells with generally lower volume unconventional wells, generally with a faster decline rate.
westexas,
Thanks for the compliment.
I included the production figures for the Barnett Shale in the table, far right column.
Since the Barnett Shale and other resource plays have received so much media attention recently, I thought there might be interest in those.
Sorry, I missed it on the first pass. Wow--from a peak rate of 3.0 BCF per day to 2.2 in less than a year, even as the number of producing wells increased. This is an annualized decline rate of 47% per year.
When I started reading your post DS I figured perhaps the Earth is consuming oil faster than it produces it?
You know, abiotic oil in reverse.
Seriously, that's worthy of a keypost in of itself. That decline in the Barnett Shale is staggering, if this is going on perhaps top down machinations are in play somehow. Caruso is stepping down next month, wonder if he has a skeleton in the closet or whistle to blow here?
This is a piece from Matt Simmons calling into question EIA data: Matthew Simmons on Inventories « Crude Oil, which is excerpted from his PDF Anothern Nail in the Coffin of the Case Against Peak Oil. In case you haven't read these.
Regarding the IEA, Birol has stated in interviews that government intervention will in all likelihood be necessary to cope with supply falling short of demand. SailDog will perhaps expand on that.
GREAT OBSERVATION!!!!
ROFLMAO
Yes, and this gets reflected in the financials of those operators that are heavily committed to the exploitation of these shale plays.
Take Chesapeake Energy, for instance. Direct from its own financial statements, look what is happening to costs:
Investment in Quarter Oper. Costs Property & Equipment (per MCF) (per MCF produced during qtr) Q2-2003 $2.27 $58.86 Q2-2004 2.60 63.54 Q2-2005 3.11 120.80 Q2-2006 3.90 116.52 Q2-2007 4.50 154.00 Q2-2008 4.73 142.71In the last five years, production costs per MCF have increased by 208% while the amount of investment required to produce an equivalent amount of gas is up even more, by 242%. Gas prices, however, have increased only 142%, from $5.64 in Q2-2003 to the current $8.11.
If some pretty hefty increases in the price of natural gas are not in the offing, I would question the continued economic viability of these resource plays.
this is precisely what one would predict in a declining net energy environment. On top of this, there are going to be water (and other environmental) restrictions on some of these unconventional plays, raising costs even more. Even though a discounted cash flow would suggest that Haynesville gas can be produced at $1-2 per mcf - they still need very large upfront capital costs AND permissioning from local authorities (water, etc.)
All this recent news suggests to me new higher floors on the energy commodities, but not necessarily commensurate increases in the energy stocks.
I need to dig up the rig counts again from rigzone. But we have most of our rigs drilling for NG in the shale plays. Given the decline of the Barrnet Shale and the fact that the more of this we bring online the more we have to drill it will be impossible to keep up and the tighter the rig market gets the higher the cost of drilling.
In short these guys are looking at a exponential increase in cost going forward to even keep production levels the same. Throw in a dash of EROI and ...
Next of course we will continue to have production declines in traditional plays.
My opinion is that in time the shale plays will behave pretty much like the tar sands they will be a produced at a fraction of the overall reserve levels. We can and will continue to produce them for value add production like Ammonia synthesis for a long time.
This and the TOD post are really interesting.
Can somebody answer the obvious question?
Assuming declining production, increasing costs, then what sense does it make to inflate production figures too high?
Shouldn't the supposed production glut bring seller prices down, cutting into already diminishing producer margins?
I think the motivation for this gaming of the system is political. In other words, the EIA, IEA and other energy reporting agencies controlled by the West are trying to create a favorable (but false) impression of the world energy/finance picture during the last few months before the US presidential election. Energy producers and refiners sympathetic to Western businesses know that this strategy will cost them money in the short term, but they are looking forward to the long-term "benefit" of helping to elect a president favorable to their interests.
This is why the price of oil in the US has fallen, and why the price of gasoline continues to fall, even though there is abundant evidence that we are draining down our petroleum inventories. But I don't think the game can last much longer. We certainly won't make it to November without a major price spike, in my opinion.
Same opinion here we will not make it to Nov 26 without a price spike so this big game is not directly about the election since it ends before the election. Therefore the only other big thing TM is and attack on Iran.
This would make Mcain very electable as even the dumbest American realizes that we probably just started WW III.
Also my Obama/Hillary prediction was a complete flop.
But besides this we are seeing right now whats probably the last big push to keep the economy going and it has the form of a very short term boost that will not last. I'm convinced it has a reason and that it won't end without some sort of return on investment and I'm also convinced it can't extend past the election.
At least one element of "big money" still seems to think it might happen
Hillary Clinton’s rich friend Lady de Rothschild ambushes Barack Obama
The Rothschilds have agents in both the McCain and Obama camps. They know how to hedge their bets and play both sides. It amazes me that the inbred bas!@#$s are so adept at covering their bases. It could be Hillary.. it would be the smart choice.. BUT Obama basically gave her a public smack down because of her last minute efforts to secure the vice presidential nomination.
My opinion (and as a UK citizen I have no say): Without Hilary, Obama loses. With Hilary he might win. Obama has been deliberately pushed too far too fast. If he's stupid enough to believe it's all about him then so be it. Let's see what happens. I'm not counting Hilary out yet...
Btw, I'm not a particular Hilary fan but Stewart/Colbert 2008 isn't an option :)
Sadly I have to root for Mcain to win. Simply because I believe if it looks like Obama is going to win regardless of the ticket Bush will attack Iran. But even with this Mcain would need to be showing a massive lead to prevent and attack before the elections. I think if the US is in a war situation post and Iranian attack Mcain will win but that does not do us any good.
The best short term outcome is for Bush not to attack and Mcain to enter office since it could then take 1-2 years to set up for and attack on Iran. However I question if the Israelis will hold out that long.
Barring this and Obama win and and attack after the election.
The outcome I of course hope for is and Obama win and no attack.
Personally as far as the Middle East is concerned and its oil I could care less if it get involved in a major war or if Iran gets nuclear weapons etc. We need to look past our oil dependencies and I'm convinced we can put in electric rail at a reasonable rate with basically no ME oil. It may be very tough but it can be done.
Given that our other option is a US/Israeli initiated war I don't see a winner.
The sooner the US turns inward and focuses on its own problems at home the better off every one will be in a bigger sense.
For Iran I really don't see a bright future regardless of the outcomes I think that their exports will continue to dwindle no way they can put in Nuclear Power fast enough to solve their energy problems. Internally the country is in really bad shape.
http://www.tehrantimes.com/index_View.asp?code=175358
http://www.iranfocus.com/en/special-wire/iran-inflation-rate-rising-ten-...
They have 26% inflation rate.
The point is that even if things are left alone Iran is heading for disaster at the moment.
Someone on CNN this morning predicted that McCain would pick T. Boone Pickens as his VP.
Now that might be interesting...
If he picks TBP that would be political suicide. From what I understand TBP doesn't particularly like McCain which is why he isn't swiftboating Obama this time around.
I'm not sure an Obama/Hillary ticket benefits anyone. Including Hillary.
Hillary has high negatives of her own; I think she could lose Obama as many voters as she brings him if she's the VP. Or more. Obama would have to deal with not only Hillary, but Bill, who was far more upset about Hillary losing than Hillary was.
And Hillary is probably better off not being on the ticket. If they lose, or if Obama's first term is a disaster, she's damaged goods if she's VP. If she's not, and Obama goes down in flames, she'll be the "I told you so" candidate - the one the Democrats will be wishing they'd picked.
Its a tough call and to be brutally honest Obama will be a potential target of the lunatic fringe in the US.
Especially if the economy really heads down towards a president.
Hillary as VP stands better odds then normal of becoming president. Knowing what I know about Hillary I'm sure she has considered this.
If she is VP should could easily take and outspoken stance if Obama seems to be foundering and be isolated.
So she could easily play the I told you so ticket as a VP.
Its a tough call but whats important about this election is in my opinion not who the winner is because honestly the problems are overwhelming only a broad scale change can handle what seems to be coming. The right answer or path will if we decide to take it will be taken with our without the presidents help.
Barring this it does not matter really I think who is in office.
The only thing I really give a rip about is getting Bush out of office without and attack on Iran.
Just recently I reach the point that I don't give a rip about the geopolitics of the end of the oil age
all I care about is if the powers that be can be held off long enough for people to realize the real problem is oil and if people can finally start rejecting oil and all its geopolitical woes.
However I'm becoming increasingly concerned that this won't happen and that geopolitical maneuvering will lead to significant reductions in the oil supply and people won't even realize that under this depletion was the real cause.
The problem is that the depletion problem has to become blatantly obvious before we will see support for moving off of oil. Look at our site we routinely get people who review the facts but still feel like some technological solution will save the day. The world has to go through this and it may well take years before they admit that no we don't have enough oil and we need substitutes. All of this has to happen in a incredibly tense geopolitical situation without above ground factors causing major problems.
I don't have a lot of hope but I sure will breath easier once Bush is out of office regardless of who wins that a step in the right direction.
So you don't care about the geopolitics of end of oil age as long as people reject those geopolitics? Works for me, too.
It strikes me that ultimately Bush - or anyone that replaces him - will want to start a world war as a way to stay on top of the heap during the necessary powerdown. A limited world war of course. Start might not be the right word; it has already started.
Obama or Hillary would do the same as Bush or McCain. It's in the national interest for the political class they represent and it's not like any of them are defrocked liberation theologians.
An attack on Iran would do exactly as you describe. Mask the depletion under a long standing war and boost the military-industrial complex at the same time - supporting the existing political class. The downslide will - for those of us in US - look like it's the fault of bad operators around the world. Us against them forever. I don't know if Russia, Chindia and other global players are going along or not; in this game of musical chairs everyone will be cut out sooner or later.
Emmanuel Goldstein
Hillary will never be President. If she couldn't stand up against a black man from a half Muslim family... she will always be too weak to be president. No matter how much support she had, her real problem was how little support she had. She might get the "I told you so" candidate title, but I doubt she will make it beyond Senator. People have rejected what another Clinton presidency represents... and Obama is the name of that rejection.
I was sure that Obama would be the next president since at least last December, but he's made some critical mistakes which is basically all that can keep him out of office. He already lost the support of Israel and Big Oil. The other factor that hasn't been explored much is race. In past elections people have said they would vote for a black candidate, but in the privacy of the voter booth they didn't do it. We'll see in a few months how much of his support remains...
I doubt he'll pick Hillary, but it would be his best bet.
The US economy is going to need a mighty big push if it is to keep going:
http://economistsview.typepad.com/economistsview/2008/08/americas-war-to...
After LBJ and Bush, Texas doesn't have such a hot track record when it comes to presidents.
You have summed up my suspicions about what is happening pretty well. Obama was talking about windfall profit taxes, while McCain was coddling the oil industry. McCain has two very powerful segments of support which are Big Oil and Israel.
As for price spike, I won't guess about the timing of the next big spike... but I think we will hit $200. Unless it turns out that KSA is being honest and everybody here has been making flawed models. Call me a cynic.. :)
Excellent question, SamuM, one for which I have no good answer.
Some, but certainly not all, of the oil and gas producers engage in hedging to soften the effects of the market vagaries. If one goes to Chesapeake's 10Q (Quarterly report) for Q2-2008, for instance, one can find a listing of various kinds of swaps, derivatives, hedges, call options and collars the company has (pp 43-44).
But not all oil and gas producers use these derivative instruments, nor do those companies who do have instruments to protect 100% of their production. So I would say almost all companies have at least some exposure to the market.
Curious...
Chesapeake to spin off midstream natural gas unit
BTW, one point to check on is if the EIA is counting total gas, i.e., gas wells + casinghead gas. However, as you noted, the figures were in agreement in prior periods.
In this regard the EIA is a little vague as to its sampling methodology:
The Texas Reailroad Commission, however, does make the distinction and casinghead gas production constitutes only about 2 BCFPD of total natural gas production, so leaving that out wouldn't be enough to explain the difference.
That is very helpful, because another idea of where the nat gas could come from was blowing off gas caps.
RE: Downsouth's Texas gas production table.
Please forgive my ignorance, but this table, (as is the case with a number of tables, graphs, etc.) does not "fit" in the window that I can see. That is, the right hand portion does not show up, so that I cannot see, in this case, the Barnett shale information.
Does anyone know what I can do to see it all? I am running Windows Vista, and enlarging, etc. does not work.
Jbunt, if you were running XT then you would click on "Start", then "control panel", then "appearance and themes". There set screen resolution to 1280 - 960. That would do it.
However I don't guess that works with Vista. But Vista MUST have a way to change the screen resolution. Try googling "Vista changing screen resolution". That should tell you how to do it.
In MS Explorer, which I'm using, one can go to "view" and reduce the text size from "largest" or "larger" to "medium" -- then the whole chart can be viewed.
Or just type ctrl + (control key and + sign) to Zoom in or ctrl - to Zoom out.
In Explorer? I don't think so. That does work in Firefox, though.
Cheers
In addition to Darwinian's suggestion to up the screen resolution, (apologies if this is obvious) but please also click the Full-screen icon at the top right of the browser screen (between the X to close and _ minimize)if you haven't already done so. This gives the browser more space to display the charts/text.
The reason I mention this is because it is unlikely if you are running Vista on a new machine that you would be at a screen resolution too low to display the above table correctly in full screen mode (I reckon you'd need to be at 800*600 which you wouldn't normally expect a Vista machine to be running at). If you are using full screen mode then follow Darwinian's suggestion or get someone who can help to do it.
If it's not a new machine and you have updated an old machine with Vista it can happen that Windows defaults the resolution to a lower value depending on drivers and questions during setup but you should still be able to change it.
It's also , of course possible, that someone has intentionally adjusted your resolution and/or font (text) size to make it easier to read.
Oh, finally - nearly forgot -if you have a sidebar open (left of browser window) then close it. Hope this makes sense.
Many thanks guys - sorry that it was embarrasingly so simple.
DownSouth - In your first post, you said that you included the East Newark field from the Barnett Shale. When I went to the site, the Texas RR commission listed 13 fields that had Barnett Shale, including the East Newark. Did you add them all up??
DownSouth, I tend to agree with you. I think the EIA often fudges the numbers, or often just makes wild guesses as to crude oil production. OPEC does not publish any official figures about production however they do publish production figures and inform us that they are according to "external sources". The figures the EIA publishes, for crude oil, average average about 1,500,000 barrels per day above what OPEC reports from their "external sources".
Occasionally one can find glaring errors in the EIA figures. In May, Saudi Arabia announced that they were increasing production by 300 thousand barrels per day. They said they had started increasing production on May 10th. They did not say when that extra 300 thousand barrels would be completely on line most expected it to be there by the end of May. However the EIA simply added the 300 thousand barrels per day from the beginning of May. The EIA showed Saudi production increased from 9,100,000 bp/d in April to 9,400,000 bp/d in May. However OPEC's "external sources" reported Saudi production increasing from 8,984,000 bp/d in April to 9,155,000 bp/d in May, an increase of 171 thousand barrels per day.
Ron Patterson
Check out the Saudi news item that Leanan just posted uptop--more reports of fuel shortages in Saudi Arabia. Prior to the reports of fuel shortages, I advanced the theory that Saudi Arabia might be curtailing their domestic refinery runs, in order to boost reported crude exports. My underling premise was that the Saudis prefer to see McCain elected over Obama.
Hi Jeffrey,
re: "My underling premise was that the Saudis prefer to see McCain elected over Obama."
How come?
In June 07 alot of weirdness happened.
In the middle of June we got a 6 mb rise in gasoline inventories.
"Even as Summer driving season kicked off.
AP-updated 6:44 p.m. CT, Thurs., May. 17, 2007
WASHINGTON - Despite record fuel prices above $3 per gallon, more Americans will travel by car over the Memorial Day holiday weekend than a year ago, according to a survey by travel agency AAA."
And no one postulate then that demand destruction was occurring.
Along with 400 k per day in ethanol starting then(which was also denied).
I've been looking for documentation of the last reliable indicator/thermostat
being shot off the wall.
Thanx for that, DS.
James
DownSouth -
It is indeed curious!
While I am not sufficiently knowlegeable on how US government energy statistics are collected and manipulated, from the many years I spent in the environmental consulting field, I can safely say that a lot of the aggregated environmental data collected by the US government, such as air emissions, waste generation rates, and toxic materials inventories, are so loosey-goosey as to be virtually worthless, particularly when making year-to-year comparisons.
What typically happens is that someone fills out a questionnaire where he has to choose say between being in a category spanning 10,000 to 100,000 or a category spanning 100,000 to 1 million, and so he guesses. Then those thousands of questionnaires are compiled to come up with a grand total, usually given to within four significant figures. It looks like real data but it is not.
Now, I don't know whether that sort of thing is happening here, but one can't go too far wrong in distrusting any aggregated statistic generated by some US government agency.
Whenever there is unaudited voluntary data reporting, there is bound to be a bit of 'creativity' injected into the reporting process. Then if you have a government agency on the other end 'correcting' or 'adjusting' the data, you basically are left with garbage.
It raises the question, that maybe word-wide oil production figures are also falsified. Increases in production do not seem to result in increasing exports, even when you account for rising consumption in oil producer countries.
And in the same vein, DEMAND DESTRUCTION, the magic downward driver of energy prices in the MSM of recent, just happens to have the "unimpeachable" source as does DownSouth's culprit.
http://www.theoildrum.com/node/4351#comment-386535
I'm thinking I capitulated too soon.
http://www.theoildrum.com/node/4408#comment-393422
EDIT
In order to clarify my thinking the first link offered points out to Datamunger that the prior(web page updated Aug 12th) head of the Federal Highway Administration was a f*cking LAWYER!
Since I have been watching the trainwreck of Detroits' Kwame Kilpatrick I am convinced that no pile of filth is too foul for our politicians to roll in.
Geez, things just keep getting curiouser and curiouser.
I went to the Texas RRC Production Data Query to get a breakout of statewide casinghead gas vs. gas-well-gas to answer westexas' inquiry regarding these two. And now I'm getting different data than what I did yesterday doing the exact same search. Here are the results yesterday vs. the results today:
Month Texas RRC Texas RRC Texas RRC Texas RRC (statewide) (statewide) (Barnett Shale) (Barnett Shale) 8-18-08 8-17-08 8-18-08 8-17-08 Jan 07 17.48 17.47 2.27 2.27 Feb 07 17.91 17.89 2.35 2.35 Mar 07 18.30 18.28 2.47 2.45 Apr 07 18.30 18.28 2.54 2.53 May 07 18.47 18.44 2.64 2.62 Jun 07 18.71 18.66 2.73 2.70 Jul 07 18.76 18.67 2.84 2.76 Aug 07 18.91 18.77 2.97 2.84 Sep 07 18.92 18.73 3.00 2.84 Oct 07 18.99 18.75 3.04 2.95 Nov 07 19.07 18.75 3.06 2.82 Dec 07 19.04 18.55 3.07 2.70 Jan 08 18.84 18.21 3.07 2.59 Feb 08 18.90 18.20 3.01 2.49 Mar 08 18.64 17.89 2.85 2.36 Apr 08 18.20 17.36 2.71 2.26 May 08 17.70 16.58 2.61 2.18Although this doesn't substantially alter the point I was trying to make, since the discrepencies between the EIA data and Texas RRC data are still quite large, it nevertheless raises some questions about what in the sam hill is going on! Were there some overnight or early-morning revisions in the Texas RRC data? I've always believed that, when it comes to oil and gas production data, the Texas RRC data was like a bible. Could I be mistaken?
I hope you don't think that that Hey-Zeus myth has any credibility. Especially the part about the Earth being formed in 7 days only 6k years BP. But, these days, one must become accustomed to "revisions" of reality in the political/economic realm of the New World Order.
E. Swanson
When I use some source for data, I always save it. On linux I can save easily as a PDF. I don't know if you can do that on Windows or not. But it is good practice for exactly this reason. Make sure to datestamp the file too on way or another.
cfm in Gray, ME
Fantastic Work! This does deserve a keypost. I do have multiple reasons for why a lie would have come out this summer and I will put them in another post.
Let us just assume for a moment that the EIA data is correct. Can we brainstorm the places this production could have come from and then try to figure out how to eliminate those sources? I propose this as "due diligence" just to be sure we did not miss something we will regret later.
Off shore was a prior suggestion. Does nat gas piped from the gulf get counted in the state totals? The EIA seems to have the gulf increases pulled out.
Associated (casing head gas) was another idea. Blowing off gas caps. (but it sounds like this gas is tracked separate so we know it was not this).
Can anyone suggest other possibilities?
The EIA breakdown pretty much deals with the offshore question. The breakdown can be found here:
http://www.eia.doe.gov/oil_gas/natural_gas/data_publications/eia914/gros...
I would be lying if I said what happened this morning--getting different results this morning vs. yesterday from the Texas RRC Oil and Gas Production Data Query--didn't disturb me. I thought I had everything down pretty pat, and then that happened!
That's the reason I immediately posted it. I don't know exactly what to make of it, but each person should be informed so that they can come to their own conclusions.
Have you considered giving the RRC a call and asking about the required reporting time frame for lease production? Since this data is legally required to be reported, I would have more faith in it (a clear threat of criminal proceedings by those who are getting royalties etc based on said data). So if the data can be revised, when is that no longer allowed?
The Texas RRC production data is not used to calculate royalty payments, I only used that as an example of how reliable I beleved the data to be. On my leases, I've never seen the RRC data differ from that used to calculate royalty payments, even though I do recall that on one lease, a month's production was about 30 days late getting posted one time. But State law does require the data to be reported, which gives failure to do so, timely and accurately, exposure to penalty of law.
I suppose I could call the Texas RRC to see what their unwritten policies are (I posted their written policy above). It's just that I have an aversion to these kinds of calls. You can wind up with someone who is kind and helpful, someone who is indifferent, or someone who's a total jerk. I try to avoid unpleasant situations.
The data revisions go back a more than a year. I agree it is pretty odd when only 30 days are allowed for reporting. And the amounts of natural gas are not trivial. I can't think of a reason they would be so delayed, except companies filing more than a year late. Staff shortage issues would impact just a few months. And incorrect data entry would be random up down, not mostly one direction. Something to watch and think about.
I am not normally a conspiracy theory person. But the Bush Administration has shown that it is willing to state outright lies at the very highest level. They buried the Hirsch report, the Climate change impact report, the treasonous Plame outing, authorization of torture, WMD, Iraq buying yellow cake, etc.
Why might the EIA be pushed to lie? Why now? (and why did the head of statistics resign?)
The natural gas industry is in a pinch. Drilling costs are right under prices. EROI is falling. Ever rising prices are needed to keep up this rate of drilling. Any fall back in prices and company profits will tumble.
Industrial uses of nat gas are collapsing as prices rise. The commercial and home heating markets are also in danger with large debt balances at the end of each winter.
The natural gas industry needs another market with a higher willingness to pay. Enter natural gas used for transportation. Gasoline trades at well over $25.00 per mmBTU while nat gas is one third that much at $8.00 per mmBTU. If they can get the marginal buyer of nat gas willing to pay $25.00, well, problem solved.
However that involves convincing Congress to push for CNG. And that means convincing people that there is plenty of natural gas. Which is pretty tricky to do when production has been flat/declining despite a huge drilling increase.
So the nat gas industry releases a new report showing how unconventional natural gas is booming. What they fail to mention is that the "boom" would not even reach half of todays maximum production.
Here is what they claim:
http://www.cleanskies.org/
http://www.cleanskies.org/upload/MediaFiles/Files/Downloads2/finalncippt...
Here is commentary on the Navigant Report from the EIA
So this new "abundance" is really only 43%. When did getting cut in half mean abundance? Clearly this is just spin.
Putting a real downer on this whole planned marketing campaign is the reality that Barnett is now in decline. Millions of dollars of advertising are already being spent. A decline would really sour the unconventional gas party. Need to cover that up, and quick.
So the EIA changes the data and even writes a special press release saying how great production is booming.
The Chairman of the American Clean Skies Foundation is Aubrey K. McClendon who is also CEO, Chairman and Co-Founder of Chesapeake Energy. The Feb 27 press release at the URL below describes a "Multi-Million Dollar Advocacy Campaign on Clean Energy and Natural Gas."
We may be seeing the results of that "Advocacy Campaign."
http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=109&STORY=/www/story/0...
IMHO the rules to the game are simply changing, changing fast.
In financials even faster.
It's war on a certain level.
The first casualty is truth, then morals, ethics, fairness, etc.
I am having trouble visualizing a point at which we learn the truth.
the only hard data, verifiable data point we have is price
over a long term horizon supply and demand will always win out
price will clear the market
all these other fudging shenanigans won't matter
Thanks for that explanation as to the question of "why" and "why now."
I had previously considered the reason articulated upthread by westexas, the influence-the-Novermber-election one:
and especially since I remember reading somewhere something to the effect that "when the bottom fell out of natural gas prices, it was impossible to defend oil prices."
My preferred explanation, however, was it was oil & gas company executives trying to pump the price of their companies' stocks, making it seem like they had all this upside potential in the offing. The internal inconsistency in that explanation is that the perceived "abundance" of natural gas is bound to drive down prices, hurting those companies' short-term profits and thus their share price.
But I had never heard your explanation before. It makes perfect sense, especially seeing it documented so well.
It may very well be there are a number of different groups involved in promoting the myth, each with different reasons and agendas. This is what happened with the proponents of the Iraq war--armaments suppliers wanting to sell their wares, major oil companies wanting access to the oil, the right-wing Jews convinced they were defending Israel, the neo-cons wanting to promote their ideology, Iraqui expatriots thinking they could return to Iraq as rulers, etc.
Just an observation: individual companies do not care about EROEI, they care about profit(margins), but society as a whole (should) care about EROEI. Governments (assuming they are representative of society) are stronger than companies because they determine the legislative/tax framework that energy companies operate within.
Perhaps that is one of the explanations behind the trend towards nationalizations of resource(companies)?
Down South,
Sorry I’m still relatively new here & don’t want to step on any TOD procedures or conventions, but is it possible to make this a key post as a lot hangs on the credibility of EIA data not least the 2005 peak.
Yep, I picture the commodities traders reading this thread, then swigging bigtime from the Mallox bottle. If the EIA data is politically polluted, or just piss-poor from bad collection methods: then someone is consistently getting screwed on the trading markets by those with access to more accurate details. Not much fun if you are trying to hedge crude futures to save/extend an industry or corporation with lots of careers on the line [airlines, for example]. Reminds me of the ending of the Dan Ackroyed/Eddie Murphy film, 'Trading Places'.
A request to all those who use the newfangled "preformatted text" method of posting tables: please make them as narrow as possible, otherwise some of us cannot see the rightmost part of the table. Depending on ones screen resolution, level of nesting of comments, etc, there may not be any way to make the column wider.
And to TOD technical gurus: if there is a way to make the main text column wider, especially when "zoomed in" in the browser, at the expense of the width of the columns on the left and right (which are blank once one scrolls well down into the page, a pure waste of screen area!), I would be grateful.
If you have a request involving site design, e-mail SuperG. I don't think he reads the DrumBeat very often.
If you have an older screen or a smaller screen (like 1024 pixels wide these days) it is a pain to waste all of that space in the left and right columns. Here is a workaround I use when reading through a long DrumBeat on my "old" laptop (Compaq Armada M700).
1. Open the DrumBeat in Firefox version 3
2. Open the Web Developer add-on menu for Firefox (I have version 1.1.5, this is a free download)
3. Select the CSS > Edit CSS menu option
4. Switch to the base.css tab of the CSS window
5. Locate the body CSS config in the base.css tab and change the width to something like this:
body {
min-width: 1374px; /* 2x (LC fullwidth + CC padding) + RC fullwidth */
}
The min-width of 1374px works for my 1024 pixel-wide screen. Basically, I think you could add 350 to the physical width of your display. If you had 800 pixels across, then the number for min-width is 1150.
As you edit, the width of the center column of the Drumbeat will expand to nearly full screen on you 1024 pixel-wide display. You may need to center the middle column by adjusting the horizontal scroll bar that appears when you edit base.css.
6. Minimize the CSS window vertically, don't close it or Firefox will forget what you just did.
7. Now scroll vertically using the entire width of your display for the Drumbeat content. Note that if you reload the page you will need to reapply the edit to base.css.
I am sure that somebody could rig up some Javascript code in GreaseMonkey to do this automatically for Firefox???
In Firefox,
View=>Page Style=>No style
is also possible to temporarily fill the page width.
What is troubling in the Barnett Shale data is that rates declined since October of last year when natural gas prices were rising, and one would expect producers to produce more in a rising pricing environment…
Could it be that the smart money has already found the stinking fish? When I have a look at Chesapeaks share price... They are around 45$. Compared with 75$ just some 4 months back. That's a whopping 40% minus.
euro,
I'm not sure Chesapeake stock is down a whole lot more than that of other domestic independent oil and gas producers. There are very few of them that aren't in the same boat.
That said, here's a repeat of a post from another thread that I think is germane:
I saw that too in one of the World Oil articles you linked. If I'm not mistaken the source was Chesapeake Energy. It's an example of the type of perfidy of which these corporations are capable.
That was back in July 2007 when Chesapeake made that claim--that it had gas production choked back waiting for a better price. The reason they put out this type of false information is so stockholders won't get wind of just how bad things really are. (Bank executives, afterall, aren't the only executives who lie.) I've often said that "resource plays" are the oil industry's answer to "subprime loans." Because of the nature of the production curve, they provide huge immediate profits but, if gas prices don't go up, the long-range profits are pretty grim.
I believe if one does a little research he will find out that Chesapeake's claim that it had production choked back awaiting a price increase was belied by the derivitavie positons it held at the time. You don't commit to sell future production at today's price if you're waiting for prices to go up. But more condemning is its production history:
Again, from the Texas Railroad Commission, statewide monthly gas well gas production for Chesapeake Operating:
and companywide production from Chesapeake quarterly reports:
If Chesapeake indeed had its production choked back in July 07 waiting for a better price, then why didn't it unchoke it when prices soared during Q1 08 and Q2 08? If it had all this production held back, one would have expected to see a huge surge of production beginning in Q1 08. But that surge never happened.
I'm sure the Chesapeake executive that made that claim in July 07 never dreamed that natural gas prices would almost double in the next year.
I suspect that Chesapeake, as well as many other domestice oil and gas producers, may be on the verge of experiencing Peak production.
Great post DS. Not that it couldn't happen but in 33 years I've never seen an operator hold back production waiting on higher prices. This would be even less likely in the resource plays. As you point out the steep decline rates are key. Economic analysis of these plays demand a rapid payout to generate an adequate rate of return. Holding back rate would greatly damage the ROI. And I agree with your assessment of PG being close for many of the resource players. The more high decline rate wells they put on the more they need to drill to avoid a y-o-y decrease in assets volume. I’ve posted elsewhere about a Texas public independent (UPRC) that was a poster child for this sort of corporate suicide over 30 years ago. They drilled over 600 very successful oil wells in a resource play at the time. When they ran out of locations to drill their reserve decline was so quick that they never could recover and eventually were sold for scrap.
Some of the big players, like XTO, are hitting the acquisition fast and hard. If you can’t drill fast enough to prevent corporate PG then you can buy the reserves in the ground to keep the reserve base growing. But that road only runs so long too.
I've got 34 years in the business and I too have never seen any operator intentionally hold back production waiting for a better price.
As you point out, the entire oilfield culture is geared towards doing things as quickly as possible. Everybody wants everything done yesterday. Those who work in the industry know that one is under constant pressure, constant stress, not only to get new wells on production as soon as possible, but to keep them producing at maximum rates thereafter. It's not unlike fighting a war:
We bust our butts every day trying to come up with better completion and stimulation techniques soley for the purpose of accelerating production, and then we're going to intentionally choke back production?
When donkeys fly!
Fantastic post.
SailDog one thing I would like to add is that Gulf Coast injections and storage has been miserable all year and this is the producing region. It fits well with your RailRoad commission numbers.
Long time reader, first time poster.
Regarding the difference between EIA and Texas RRC: Could it be that the EIA is trying to forecast where the Texas RRC number will end up? Reading the EIA methodology, they use current data and try to estimate what future changes will be made to the data. If you look at the difference between RRC and EIA, it is biggest in near months and get smaller the more you go into the past. With time, the 2 series should converge if the EIA forecasting model works.
wow ! that is a bobmshell. as far as i know, this is a standard method the govt uses to collect data. i'm not so sure it is manipulation as much as a lousy model, i wouldnt put manipulation past this administration though.
if i read the govt's reasoning correctly, the individual state's data is too late and not accurate enough ? apparently the govt thinks it is ok to use bogus data as long as it is quick ?
cowboys, often shoot from the hip, or so i have heard.
wyoming data is available here:
http://wogcc.state.wy.us/
but the statewide data is currently not available. for all of 2007, wyoming produced 2.254 tcf. can anyone confirm if wyoming data is reported correctly by the eia ?
You manipulate precisely by creating a lousy model--a la the inflation figures.
When I look at the EIA state data, it isn't just that Texas is increasing fairly rapidly. There are other states that are also increasing rapidly - Wyoming and Other States. I can understand Wyoming and Other States increasing because of the increasing production of unconventional. I agree that Texas does look strange.
I am going to try to contact someone at the EIA to see if I can get an explanation.
If your concerns have a basis in reality, i.e. they are cooking the books, it may be instructive to note it was last June - August that the big reports of Peak Oil finally started hitting the mainstream.
This administration has lied about everything, almost literally, so SailDog may well be right.
Cheers
I did send an e-mail to EIA. I will follow up with a phone call shortly.
My first hypothesis is that the problem is simply an error, rather than conscious manipulation of the numbers. EIA is very underfunded. EIA doesn't have the staff to look into numbers that look "funny", and some of the staff is new and might not even recognize a funny number. There are a lot of people working at EIA who have been there since the agency was started, and are now reaching retirement. When these people leave, there can be big gaps in knowledge levels.
The omnipotence government, at least in my experience, is myth.
- R. J. Hanlon
I talked to a woman at the Texas Railroad Commission this morning. Their statistics for recent months are understated by some unknown amount because production has been growing so rapidly on Barnett Shale that they have not been able to keep up with processing of various paperwork. Until the paperwork gets into the system, the natural gas production cannot get into the system either.
Because of this, it looks to me as though at least part of the problem is with the Texas Railroad Commission data. I have sent e-mails to both the Texas RRC and EIA. I'll see how much more I can figure out.
Thank you Gail!
Did the woman shed any light on why substantial revisions to RRC data go back more than a year? I can understand being behind on the entries and the latest few months ending up short, but it surprises me that the revisions go back so far.
Nice, Gail. It would be a tiny relief to know the tentacles of BuCheney are not everywhere.
Cheers
for the admins of the board
can you please put the "new" text for unread comments after the comment? when searching, hitting the next button brings me at the top of the comment, and i have to scroll down to actually read the text. it's annoying to scroll down 70 times for every new comment
thanks
Had3z, I solved that problem by simply using the "previous" button instead of the "next" button. Therefore I always see the complete post below the "new" flag without having to scroll down.
that would break the flow of ideas :)
the blue color helps a lot, but still
I use a hybrid technique. :)
I use "next," but if the post is too long and I don't want to scroll, I'll hit "next," then "previous."
I don't think it's worth changing, really. If the post is really long, you'll still have to scroll...up, instead of down.
what's the chance of the reply being more than one screen long?
or better yet, pup a "new_up" text above, and a "new_down" below the text. that should make everyone happy :D
Depends on your screen resolution and text size, wouldn't you say?
I find it quite common, especially if images/graphs are posted, or the post is deeply threaded.
Doing all your scrolling with the mouse and the scroll bar is tiring. Some mice have a scroll wheel that you turn to scroll. For many browsers, you can scroll down one screen at a time by pressing the space bar. For all browsers, you can press the Page Down button to scroll down a screen at a time. My favorite is the space bar in Firefox.
I use the Page Down buttons to get through oversized DBs. Used to Search for "new" but don't bother anymore.
Tom Petrie of Merrill Lynch, on CNBC this morning, says oil will hit a bottom of $80 to $90 a barrel. He says we have triggered "Demand Elasticities". His argument seemed to make a lot of sense to me.
A Crude Crumble?
Ron Patterson
Eyballing my daily updated crude price graph (10 years worth of data) I would call at $100-$105 - purely based on previous corrections and pretty lines in funny directions and some of that Elliot wave balony!!!
30-09-08 - $100-$105
After that another wave should start but with lower gradient and longer period than the most recent rally.
But we've triggered supply inelasticities too (e.g. lower net energy)
Two thoughts:
1)ENSCO announced today departure of more rigs from GOM. These are the premium 250-400 foot ILC rigs built in the 80s that can drill an offshore well in less than 30 days. In 06 the Gulf had 43. That went down to 30 in 2007 and now down to 27. Rumours are that several going to mid east. Each rig can drill 10-12 wells per year so that is potentially over 100 well drop from 2 years ago - once they leave its unlikely they come back.
2)I don't think any major wall st firm has done an analysis on how the credit crisis will impact oil SUPPLY (as opposed to demand). If banks start calling small and mid sized E&P companies and saying 'you know what - with commodities where they are (falling) we are dropping your line of credit from $80 million down to $20 million', etc. this could have a huge impact on projected supply. Not to mention if some of these banks actually go under, which I expect. AND, this disproportionately impacts US production vis a vis the ROW, because only 8% or so of global oil reserves are public companies - government owned operators can just throw money at them - US production is all by public companies - if market dries up for funding, our decline rate will steepen compared to other countries, meaning our imports accelerate faster..Someone needs to do this analysis - even at a hypothetical level - the market is much too focused on demand destruction impacts from credit crisis/slowing economy....the impact on energy supply is going to be the larger story IMO
Doesn't this guy understand that people are free to go back to driving when the price drops, that governments can repeal subsidies and then reinstate them if they so choose? Santelli made that point clearly. We'll have permanent shifts in behavior - people who give MT a shot and stick with it, or LDVs that get scrapped - but in the aggregate my bet is on consumption heading on its merry way soon enough.
Tightening credit impacting E&P, yeah. Don't think Gail covered that in her pieces. And since E&P is critical in maintaining unconventional NG at this point, and since it's largely (entirely?) the domain of small operators...I've thought for a while that we'd get blindsided by something like this, had only considered production costs making production uneconomical. Like demand destruction, not the only angle.
As I mentioned a couple weeks ago, Chesapeake (and I believe XTO) are unable to get bank financing except on the portion of forward production that is hedged. These two companies have represented the marginal growth in NG production - not organic growth but growth by acquisition that has been financed by cheap and easily obtainable credit. That era is over.
The issue is not with falling commodity prices making banks less likely to extend credit but that the breadth and scope of the credit crisis results in the destruction of credit and the reduction of bank capital. Banks then become either unable or reluctant to lend. To re-frame this in a familiar context: the US is in the process of experiencing Peak Credit.
If credit becomes scarce then the price of credit (interest) will rise. So there will be a double whammy: 1) any form of credit will be difficult to get; 2) what credit is obtained will be at a high rate of interest.
Such an environment will impact all firms and all economic actviity, not just E&P financing.
At present the US deficit is being funded by China, Russia, and the Gulf States. Should they find an alternate to US Treasuries, or should the international environment (think Georgia) result in a desire to place funds elsewhere than the US then the rate of interst will be forced to rise in order to attract funds.
Oil and energy are the new gold. The link between energy and finance and economic well being is clear. If you read Dimitri Orlov's analysis of the USSR collapse you can see that the US is following the USSR precedent.
The FT has a story which support the potential for an increased price of credit:
Mohamed El-Erian, co-chief executive of Pimco, the asset management group, said: “If banks keep borrowing at these levels, you will get a repricing of credit for the whole economy.”
http://www.ft.com/cms/s/0/e15201ce-6c7e-11dd-96dc-0000779fd18c.html
OPEC needs to trim production by 1M bpd today,and another 900k bpd next year. More if Nigeria brings 500k bpd back online. Meanwhile,Iraq is attempting to increase production 500k bpd in each of the next 5 years. Iraq isn't bound by OPEC quotas. Iran is over their quota by 100k barrels,and has contracts signed to increase production another 500k barrels. North America is expected to increase production of liquid fuels next year,due to tar sands and ethanol. Either Saudi Arabia takes a big hit and cuts production several million barrels....or we've got a huge glut on the way.
We've got 3.5 years of GDP growth to back out first.
FF
Does "North America" include Mexico ?
Even without, an increase seems unlikely (from memory Canada was DOWN last year, and the US up only because of repairs in Alaska and GoM coming back on-line).
North Sea down again, dead certain.
Venezuela down too.
Iran has depletion issues, any new projects will go first to offset depletion. Libya seems to be peaking.
New projects are late most of the time. "Problem" solved with just that.
Etc. Etc.
Alan
More good news on the artificial photosynthesis front:-
http://www.physorg.com/news138179858.html
http://www3.interscience.wiley.com/journal/117943443/grouphome
So this is the Monash University version of the MIT discovery? (Discussed here.)
Oh I'm sold!
Assuming that is sarcasm can I ask if you find the prospect of modern civilization actually having a future even after fossil fuels run out unpalatable for some reason? If you know anything about chemistry and the history of artificial photosynthesis the importance of this research should be obvious.
Bernanke Tries to Define What Institutions Fed Could Let Fail
If that weren't so scary, sad, and true, I would laugh out loud
But it is cosmically comical!
Banks are supposed to open their books, so Bernanke can decide which one Fed can kill?
Now, banks are not prone to openness and truth, but this is laughable.
Everybody's now trying to convince that they are too big to fail, but are surely in no fear of failing, but need the discount and swap windows open nevertheless :)
Lies upon lies upon lies.
How can anybody take the financial industry seriously after this and talk about "rational economic behavior" in "transparent markets".
In the end, people don't care - if they can still make a fast buck.
Ah, to watch vultures kill each other... what a beautiful show :)
With the latest forecast track Fay has officially
become the weirdest TS to a Hurricane storm
that the Forecast Models have ever seen:
http://euler.atmos.colostate.edu/~vigh/guidance/northatlantic/track_earl...
They change with each update.
Nightmare scenario:
Fay hits just North of Tampa moves to Jacksonville, stalls
and moves WSW.
http://euler.atmos.colostate.edu/~vigh/guidance/northatlantic/track_late...
The current track is great news for the areas of GA/SC/NC in drought mode. Would be great if it took a nice slow track over GA.
The GDFL model track looks especially good. GDFL has been pretty accurate in the past.
Hello,
Here is the Aug 17, 2008 SSTs for the area .
http://www.ssd.noaa.gov/PS/TROP/DATA/RT/SST/ATL/20.jpg
f3
removed "current", inserted date, while this is a "current" map it is not "Current" Please excuse the confusing phraseology
I have an idea for a new Rush et. al. slogan: "Drill Florida Offshore, keep Hurricane Season Interesting!"
Time to repost this xkcd comic, as I sit here in Hollywood FL, with the rain coming down in buckets and the big mango tree by my window now creaking in the gusts of intensifying wind.
If you want to see a model on crack check out the GFS run http://www.nco.ncep.noaa.gov/pmb/nwprod/analysis/carib/gfs/18/index_pcp_.... Since this morning this normally reliable model has been suggesting that Fay will cross the FL peninsula ... twice ... end up in the gulf and then pummel the bejeezus out of NOLA on the way out. No way to understand this one.
Wow! What the heck kind of data are they feeding their models nowadays?
I wouldn't say that the model has cracked. Not that reality will show what the model predicted, it never does. But still, it is possible for a tropical storm to say "screw it, let's trash Florida again". I have experienced tropical storms doing that kind of goofy dance, not in Florida, though.
I can't blame the storm for wanting to trash Florida twice, but the third landfall on the gulf coast was just adding insult to injury.
The Denver Post had an(other) article on Sunday about oil shale in western Colorado.
http://www.denverpost.com/ci_10220108
The reporter did a good job of using Shell's positive spin. No hard numbers were given about the number of power plants that would be required (1.2 Gigawatts per 100,000 barrels a day of production according to the Rand report), or the amount of water.
People are using the hope that oil shale will bail us out as justification for business as usual. They skim articles like this and the take away is "Yippee, we're saved." When I tell people the reality of the amount of water and electricity it would take to replace 10% of our current US oil consumption, they think I'm lying to them.
10% = 2 million barrels per day = 20 1.2GW power plants
2,000,000*3*42 = 252 Million gallons of water a day. The yearly average daily flow at Cameo since 2000 ranges from 1751 during drought 2002, to 3628 during wet 2006 (http://waterdata.usgs.gov/nwis/annual?referred_module=sw&site_no=0909550...). So, during 2002, taking that amount of water would mean taking about 23% of the river flow on average, and probably over half during Winter. That just isn't going to happen. Add to that the water needed for the additional population and the power plants themselves, and this is just a pipe dream. Add to the need for 20 power plants, a massive reservoir or two.
I explain to people that even if we got to 2 Million barrels a day, it would only be about 3% of world production and the impact on price would not be that significant, and it would make more sense to put 24 gigawatts into the grid and run electric cars. People STILL think shale is a good idea, because they can't see themselves driving an electric car.
This is what happens when scientific facts become part of politician's rhetorical discourse.
Let me also add (with a running side commentary) that because of the "inefficiency" of the powerplants (sorry you can't double down on Lord Kelvin and beat the odds of the second law of thermodynamics) that EROEI is just about 1 (by itself, not including the energy costs associated with moving so much water. etc).
Well, then we'll just build higher efficiency gas turbines (excuse me, where are you going to get the gas? Oh from the shale you are processing) or nuclear plants (you know them new-fangled pebble bed designs).
This is why drilling offshore makes so much sense... :-) The capital costs are very reasonable with oil at $120/barrel and you can use seawater to flood the fields, thus saving the fresh water for more beneficial uses like allowing me to continue to wash down my driveway in Los Angeles during our drought.
I do have one question Moabite, why the factor of 3 in your water calculation? I'm assuming that once you start flooding a field, you send the separated water back down, so you would then only need what you are removing in oil, plus maybe a little more to keep the field pressurized.
The factor of three for water to oil comes from the article itself, which gets the information from the Rand report:
"But the biggest impact may be on water. Rand estimates that it would take three barrels of water to produce one barrel of shale oil. Although that's significantly less than the amount of water needed to produce a barrel of ethanol, the water would come from the relatively scarce resources of the semi-arid Western Slope, some of which also feeds the Front Range."
Part of the water use is because from what I understand, and I am not a chemist, the Kerogen extracted is a hydrogen atom short of a full hydrocarbon deck, and they expect the hydrogen to come from water input.
The Rand report does indeed talk at length about the need for water. It is interesting reading:
http://www.rand.org/pubs/monographs/2005/RAND_MG414.pdf
All of the water studies on shale in the area were done over 25 years ago, and are useless now, due to growth in the immediate area, as well as greater demands downstream (Las Vegas, Phoenix, SoCal). Certainly the dollar and energy costs of a massive water project should be added in to the equation. I can't imagine damming the Colorado River to go over very well. The last huge dam project in Colorado (Two Forks on the South Platte) went down in flames eighteen years ago after many millions of dollars of contentious legal fights. It is scary that the report mentions that the "gross" amount of river AND groundwater in the area could support 3 million barrels a day. Do they really think they could use ALL of the water from the river and the ground for shale?
I think it is worth posting the Rand conclusions about water availability:
Water Consumption
Challenges. Oil shale extraction and processing operations can involve significant
amounts of water and water availability was and continues to be viewed as a
major constraint on large-scale oil shale development in the Green River Formation
(OTA, Volume I, 1980; Russell, 2005; Smith, 2005).
For mining and surface retorting, water is needed for dust control during materials
extraction, crushing, and transport; for cooling and reclaiming spent shale; for
upgrading raw shale oil; and for various plant utilities associated with power production
and environmental control. Estimates of process water needs and the extent to
which water can be recycled or economically reclaimed vary considerably. For example,
the U.S. Water Resources Council estimated that oil shale development will
increase annual consumptive water use in the Upper Colorado Region by about
150,000 acre-feet per year for each million barrels (oil equivalent) per day of production,
which is the equivalent of about three barrels of water per barrel of oil (U.S.
Water Resources Council, 1981). Other estimates range from 2.1 to 5.2 barrels of
water per barrel of shale oil product (OTA, Volume I, 1980).
In-situ retorting eliminates or reduces a number of these water requirements,
but considerable volumes of water may be required for oil and natural gas extraction,
postextraction cooling, products upgrading and refining, environmental control systems,
and power production. Reliable estimates of water requirements will not be
available until the technology reaches the scale-up and confirmation stage.
The gross amount of water available locally in the Piceance Basin in a typical
year did not appear to be a constraining factor, according to the 1981 water assessment
by the U.S. Water Resources Council. Based on hydrologic understanding at
the time, the council determined that available supplies of ground and surface water
resources could support production of nearly 3 million barrels of shale oil per day.
The most constraining factor appears to be the water supply infrastructure.
Limitations in local water supply systems in place in the late 1970s were expected to
start constraining shale oil production when levels reached 200,000–400,000 barrels
per day (OTA, Volume I, 1980). The Water Resources Council also concluded that
the water supply infrastructure was inadequate, especially in the White River area of
the Piceance and Uinta Basins. Needed infrastructure included reservoirs, pipelines,
and groundwater development. We do not know if these analyses remain valid.
A bigger issue is the impact of a strategic-scale oil shale industry on the greater
Colorado River Basin. The basin’s water resources are tightly regulated and in great
demand. Demands placed on the basin have risen considerably since the 1970s and
1980s, with rapid population growth in the Southwest, rising demand for electric
power, growing recreational use, and increased efforts to maintain and restore the
river’s ecosystems. In recent years, water availability has become particularly acute,
stemming from an extended drought and the subsequent drawdown of reservoirs.
Significant water withdrawals to supply the oil shale industry may conflict with other
uses downstream and may also exacerbate salinity problems. Such demands and pressures
are expected to continue to grow for the foreseeable future, thereby rendering
earlier data and analyses regarding oil shale development out of date.
Opportunities for Action.
Given the long lead times involved in funding and
permitting water-related projects, the constraints in water availability and infrastructure
need to be addressed fairly early in planning for the development of oil shale
resources. Once commercial interests are clear and technology choices become better
defined, water availability for oil shale resource development should be analyzed in
light of current and projected demands in the upper and lower Colorado River
Basins.
The problem of water availability in the Colorado River Basin stems from the fact that the water allocation decades ago was calculated using a base period which was unusually wet. All of that supposed supply was allocated among the various interests. In more recent times, there has been less water captured in the Basin, especially so during drought years. And, if the predictions of Global Warming's impact on Western water supplies is correct, less will be available in future years as mountain precipitation in the form of snow would be reduced and evaporation will increase. Thus, there is likely to be NO extra water which can be used for oil shale processing, without major shortages downstream. As it is, the Colorado River is barely a trickle as it crosses the U.S./Mexican border.
E. Swanson
That just don't sound right. Almost no one produces hydrogen from water electrolysis these days, it is all produced from natural gas. NASA, who uses more hydrogen than anyone on earth, uses natural gas to produce hydrogen. Hydrogen will be produced by electrolysis when natural gas becomse scarce, but not yet. At any rate, it would not take very much water to produce one atom of hydrogen per hydrocarbon string.
But here is the clue to the whole mess:
Obviously they are talking about a mining operation here, not the Shell method of producing a freeze wall then heating the marl for several years. There is a great deal of confusion here. Everyone is talking about water use for a mining operation and confusing that with water use for Shell's scheme. Shell's scheme would require very little extra water.
Ron Patterson
The water is used as a solvent to flush kerogen from the rock. Once its out. It may need hydrogen to upgrade it into useable fuels (at the refinery), but the hydrogen would come from natural gas, not water.
To release Kerogen from rock, they heat the rock to reduce visocity and soak it in water so that it can be separated from the rock. Some of the water becomes trapped in the rock and some of it evaporates. Another issue with the kerogen extraction process is that the size (volume) of processed shale rock doubles. They would also have to lay down a perminate water barrier to prevent water run offs from the shale tails to prevent it from contaminating surface and ground water. Not all of the kerogen will extracted in the process, and normal enviromental processes (rain, sun and wind) will slowly extract the remaining kerogen, as will as any other containments (heavy metals, sulphur, etc)
FWIW: Shale oil is a dead end. If any serious alternative source for oil and gas is ever developed, it would be coal gassification and liquification, using the Fischer-Tropsch method.
Now there may be some shale deposits that are economically recoverable. For instance, in Romania (or some other nation in that region) mines shale like coal and burns shale rock to produce electricity. The Kerogen content in that shale field is rich enough to be burned. However I believe there are few shale field that contain very high levels of kerogen.
I don't understand this. I think the Denver post is a little confused. It would take three barrels of water to produce one barrel of oil if you are talking about mining the kerogen like the tar sands are mined. However the method proprosed by shell would require very little water, at least at first. There would be plenty of natural pressure from the gas created by heating the kerogen. That should be plenty to keep the oil flowing for several years. Hell, even the Saudis take only about one and a half barrels of water per barrel of oil and that includes the water that is reinjected. And they do reinject all the water they recover.
If you notice the diagram in the Denver Post article, there are no water injection wells.
Ron Patterson
WRT tar sands, some of the newer plants recycle most of their water - I've heard recent claims of up to 98%.
Development opponents try to infer high water usage in order to claim that navigation will be affected on the Athabasca river - and then they can invoke federal treaties to halt construction. IMHO, water is a red herring issue for tar sands.
WRT Colorado, AFIK the Shell process uses minimal water for production. However, power plants can use large amounts of water for cooling, so maybe that is a limiting factor.
And whoever made that claim is blowing smoke.
Tar Sands' Profitability Questionable
Ron Patterson
IIRC, it was from an interview with Connacher Petroleum's CEO on BNN Market Update about two months ago. I believe that he was referring to the Algar project which uses an in-situ SAGD process.
Algar Oil Sands Project
Your unbiased data source was published in 2007 and contains these gems:
He's pimping his seminar and trashing the oil sands is just part of the setup.
Keeping the NA economy from imploding is going to require gasoline, diesel, and kerosene which come from *oil* - not geothermal and not wind.
No oil ==> no transportation & no farming ==> social collapse.
Given the enormous amount of foreign oil currently imported into NA and the many ways that it can be cut off, I think that the oil sands are much more important to our collective survival than many people realize.
Not a problem Calgarydude, just post your source for the 98% water reuse rate and we will evaluate that one.
I'm waiting!
Ron Patterson
Great Divide Pod One SAGD
Just as I remembered it - 98%.
"Is targeted at". I wonder what the actual figure is.
Hey, you are talking about only one portion of the recovery. Notice this is from the Canadaina National Energy Board:
Canada's Oil Sands - Opportunities and Challenges to 2015: An Update Questions and Answers
Ron Patterson
The portion that you highlighted is for a mining operation.
According to the source you cite, for an SAGD operation, it requires 0.2 cubic metres of water to produce 1 cubic metre of bitumen. The data compiled for this report probably represents an average value for operations 12-24 months ago, it doesn't represent the best current technology.
About 80% of the resource base in the oilsands is not accessible by surface mining, so some form of it-situ method will be used - and SAGD is just one of those methods.
Terms:
mbpd = million barrels per day
cms = cubic metres per second
1 barrel (oil) = 0.158987294929 cubic metre
minimum flow = 75 cms
sec/day = 86,400
Using the 0.2 figure, 5 mbpd of oil production would require 1 mbpd of water = 158,987 cubic metres of water per day = 1.84 cms of water. The lowest recorded flow of the Athabasca river (Dec 2, 2001) was 75 cms.
Also, take a look at the lakes in the region. Lesser Slave Lake alone is about 70 km long.
I'll repeat what I said earlier - water is not a limiting factor for oil sands production.
Hey, don't shoot the messenger here.
The Rand report states a range of 2.1 to 5.2 barrels of water per barrel of oil, then goes on to say this:
"In-situ retorting eliminates or reduces a number of these water requirements,
but considerable volumes of water may be required for oil and natural gas extraction,
postextraction cooling, products upgrading and refining, environmental control systems,
and power production. Reliable estimates of water requirements will not be
available until the technology reaches the scale-up and confirmation stage."
It specifically mentions "products upgrading and refining" as a water use.
So the bottom line is that if Shell knows accurate numbers, they aren't saying. I read another description of the in situ process somewhere that talked about both water and CO2 injection, which was one of the the reasons for the freeze wall.
I had to laugh at another part of the Rand report that talks about landscape destruction:
"Because in-situ retorting does not involve mining or aboveground spent shale disposal,
it offers an alternative that does not permanently modify land surface topography
and that may be significantly less damaging to the environment."
I guess it is all relative. I would call a 2000 foot hole every 8 feet with a giant heater and the associated cabling and power lines, along with a plant of massive refrigeration compressors, and water pipelines, a little damaging to the environment. The areas they are talking about are currently some of the best wildlife habitat in the lower 48. At least underground shaft mining would have preserved the surface. There is no way to do in situ without total surface disruption.
Unless they have figured out a way to go horizontal....in which case I totally expect them to hold back on the information. When everyone balks at the current design, they pull the horizontal trump card out of their sleeve and make themselves out to be environmental heroes.
My cynicism is showing.
From the Washington Post:
Renewable Power's Growth in Colorado Presages National Debate
Here's an interesting insight:
E. Swanson
From Above - 'Greenberg said, "These speculators sell oil contracts back-and-forth to each other simply to inflate the price and reap windfalls." '
I guess that "you buy my dog for $10,000 and I buy your cat for $10,000, and we both can be rich" is really true.
Dear Abby today has a letter from a man who has started biking to work. He wants to thank all those who make it possible, including the drivers who share the road with bikers.
Abby is favor of biking, but says she's hesitant to encourage people to do it now, because it's not safe.
This guy's round trip would cost about $5.00 in gasoline (about the same as urban transit). The link between bicycling and oil depletion/rising gasoline prices is pretty weak.
Think psychology more than just finance.
People see the world around them changing and want to take a pro-active, positive response (bicycling is good on many levels).
A good thing IMO.
Best Hopes for more positive changes,
Alan
I wrote a piece about my experiment going Without A Car. Yes, it is much more about psychology than finance - though if I'm able to ditch the car entirely there will be a large financial up side. And where I'm trying to make as little money as possible so that I can move into an ELP economy, that matters too.
I work mostly out of my house. So "biking to work" is a misnomer. I'm biking everywhere. I get stopped by thunderclouds and darkness. I have to allow more time. I find myself wanting to spend more time now on the route since I'm never in a rush any more.
What I like best about it - and I didn't predict this - is that it's a way of "walking the walk". It was an experiment at first. My friend Jean told me it would become a matter of principle. The right thing to do is to dump the car - not just to talk about dumping the car. Integrity.
cfm in Gray, ME
The strength of the link between bicycling and rising gas prices depends on relative income and gas prices. At some gas price the link becomes very strong for everybody, but the plethora of news stories about big increases in biking at current gas prices implies the link is already pretty strong at some income levels.
The new cyclists I see riding around on $100 Huffy bikes to minimum wage jobs certainly seem to be responding to gas and car prices, which are also linked.
It may only cost that one person $5.00 round trip (assuming, of course, there is functional MT in their area), but how much is it costing everyone else? Or are your average regional transit authorities making a profit?
It doesn't cost Joe Six Pack anything for somebody else to ride a bike.
(everyone else has mentioned the health benefits of riding a bike vs sitting in a box)
A typical farebox recovery ratio in the USA is on the order of 1/3, and that's for "operating cost" only. On that basis, other folks are typically paying $10 for that person's supposedly $5 round trip, with a range from around $2.50 to over $25.
The recovery ratio does not include capital costs, which are also extremely steep, so other people are probably paying on the order of yet another $10, for a total of $20, for that supposedly $5 trip. For bus systems, there is yet another subsidy, because bus riders pay nothing towards the road wear they incur, since the bus usually runs on untaxed diesel. And since road wear is normally said to go roughly as the fourth power of axle weight, that bus will cause more road wear than would occur if each passenger drove alone in a typical car.
For the time being, it would probably be cheaper to provide car rides for most US transit riders outside of New York City. It's not even worth trying to estimate how expensive fuel would have to be to shift that, because it would have to be so enormously expensive that the world as we know it would have ceased to exist. This is probably why most of the tear-jerker news "reports" that spring up whenever gas prices are rising describe absurdly long commutes, wildly in excess of the median. It would be hard to write purple prose about an average - circa 20-minute - drive because even at $4, the cost of the gas is simply too insignificant to bother about.
Suffice it to say that if you could drive a car on the same basis as Americans pay for transit, you'd get the car and the road for free, and then pay only 1/3 of tax-free gas plus maintenance. It might cost a whole 4 cents a mile, or as much as 8 cents for an SUV. If cars were that heavily subsidized, no one would ever even think of using transit, just because transit is usually so ridiculously time-consuming.
IOW transit is typically, for the moment, little more than a political boondoggle, a source of patronage and Federal largess, urban jewelry. It's something mayors lust after at any cost in order that when they go to "conferences", they can preen about being in charge of 'real cities' instead of, say, evil, wicked suburbs.
Now, of course, things would change drastically if all oil disappeared suddenly tomorrow morning... oops, most US transit is diesel buses or at best diesel trains... aarrgh... you might want to keep that bike in good repair...
Washington Metro has farebox recoveries in the high 80% (they could do 100% but this would dilute the social/environmental value of their services. In New Orleans, streetcars have 80+% to 100+% farebox recoveries, but the best buses are 40%.
Paratransit usually has farebox recoveries of <6%. and public transit was stuck with this unfunded mandate. In DC, paratransit absorbs almost as much public subsidy as the subway. Obviously we need to leave these old cripples at home and stop wasting money on them.
Not all citizens can drive and all but one US city of 100,000 population has some bus service. Libraries are not self supporting either.
But you will note that I am not a major bus supporter. Their poor cost and fuel efficiency is one reason. And public transit in the USA s over 90+% bus.
The best way to raise the farebox recovery is to convert bus routes to Urban Rail. And Urban rail cost effiicenyc increases as the system increases.
Build a new line and ridership density (measured in tennysons after Ed Tennyson) increases on all the existing lines.
Since Urban Rail has a positive cost elasticity of demand (higher density > lower unit costs) the best way to low subsidy public transit is via massive systems of Urban Rail (and leaving the old cripples at home alone).
More later,
Alan
That's a common misconception. The Happy Motoring Infrastructure (HMI) is subsidized in countless different ways. Taxes on diesel are only one of them. Big trucks don't pay their share of road damage either - not directly nor indirectly. [Buses aren't that heavy.] The HMI overall is melting the icecaps and destroying the viability of life on the planet. Do we want more fuel sold so we get more fuel taxes to fix that?
cfm in Gray, ME
Thanks.
I'm not quite sure where I was going with my comment, other than there are always hidden costs. It seems (at least here) the reason there is not more mass transit is that voters refuse funding when it comes up ("we don't need no steenkin' busses").
Likewise, it may take 50 cents in gas to go to the store in my car, but to get to THAT point I have to buy the car, pay insurance, registration, and maintenance for as long as I own it. So every time I drive there is a bit of that overhead that needs to be included.
I've been involved in on-line debates (they always turn into debates, don't they?) with people who do not want busses coming to their town from "the city" because of the fear of criminals who will just hop a bus and come rob them and presumably hop another bus back home. The people who say these type of things have never played Grand Theft Auto, methinks.
Communities need to act now to provide safe bicycle lanes and paths for people trying to conserve gasoline.
I just finished Traffic:Why We Drive the Way We Do (and What It Says About Us) and I recommend it to anyone interested in the psychology of driving.
There is a direct relation between how "safe" a driver feels and how dangerously they drive. The common belief has always been to increase traffic safety, roads should be straighter with greater lines of sight, more signage, wider lanes, lane markings, gentler curves, removal of trees, etc. This correlates to the belief that many people have that a larger vehicle is safer. What is demonstrated time and again is that any benefit that gained from making a road or vehicle "safer" is offset by the tendency for people to become more inattentive or drive more dangerously. A larger vehicle might protect you more in a crash with another vehicle, but the larger vehicle's mass becomes a danger when you crash into a stationary object. A straight road with wide lanes might be safer, but this only leads drivers to pay less attention and to drive at higher rates of speed which make crashes more likely and more hazardous.
In relation to bicyclist safety, much of the danger from the fact that motorists react poorly to things they are not used to seeing. New York has many pedestrians, but fewer pedestrian/automobile collisions than other cities because there are so many pedestrians, drivers are constantly looking for them and they easily recognize them. Cities where bicyclists are more common have fewer bike/car accidents. Segregating cars from pedestrians and cyclists sometimes turns out to be more dangerous for both. Drivers who are segregated are less likely to be on the lookout for said peds/bikes and if pedestrians are forced to walk a longer distances because of said segregation, they are more likely to walk in the roadway.
Another fascinating finding was that drivers tended to be more cautious (driving slower and giving a wider berth) around cyclists who are female or cyclists who are not wearing a helmet. The other day as an experiment, I used my wife's bike to commute leaving my helmet and my clip less shoes at home. Instead of feeling like a road savvy bike commuter, I felt like an insecure dork and the number of people who buzzed by seemed to be greatly reduced. I'm thinking about riding different bike and ditching the helmet altogether but, I feel so naked without it!
Does the dedicated bike lane make me safer? I always thought so but after reading Tom Vanderbilt's thorough analysis, I'm not so sure. I'd rather put our efforts towards road designs and features that make drivers feel more "scared" so they pay attention to what the hell they are doing.
The studies I've seen say "no." Even adjusted for the cyclist's experience.
The reason is presumably because people tend to let their guard down on bike paths.
The biggest safety increment for cyclists comes from the presence of other cyclists. The curve for number of accidents versus number of cyclists is very non-linear, tripling cyclists numbers will result in much less than a tripling of number of accidents. If the bike lane encourages cycling, which studies show bike lanes do, then it may have a large secondary safety effect, even though bike lanes probably do little to directly make cyclists safer.
The safety effect of bike paths and other off-street bike facilities is very design-dependent, especially with regard to the details and number of street-crossings. Poorly designed off-street facilities with many, uncontrolled, poor visibility street crossings can certainly be more dangerous than on-street riding. Conversely, off street paths with few street crossing and good signilization/signage/sight lines at those crossings can be much safer than on-street cycling. Studies tend to combine all kinds of design, resulting in erroneous conclusions.
Thanks, tommy. Useful info.
"Another fascinating finding was that drivers tended to be more cautious (driving slower and giving a wider berth) around cyclists who are female or cyclists who are not wearing a helmet."
I can see it now. Padding to make men look more like women from behind. And helmets with hair sprouting out of them.
Maybe when Halloween comes I'll invest in one of those dreadlock wigs attached to a hat, and transplant the hair to my helmet.
Don't ditch the helmet.You only have one head and it's not very repairable.
Seconded by someone who once spent 6 very long days and nights in the ICU sitting with a head-injured relative. An experience not quite like any other.
"There is a direct relation between how "safe" a driver feels and how dangerously they drive."
This is something I had never thought about. As a cyclist I would like to see all new cars fitted with a nine inch stainless steel spike in the middle of the steering wheel (facing the driver) and no seat-belts.
Yeah... That would do it. :^)
Plenty of studies show the increased life expectancy due to cardiovascular fitness far outweighs the increased risk of accidental death from cycling. Order of magnitude numbers agree (about 600 cyclist deaths a year in the US, but over 1 million annual deaths from heart attack/stroke/other cardiovascular).
So doubling the probability of a 0.00001% likelihood event matters much less than reducing the ~30% probability of cardiovascular death.
Hereby, I proudly present you The New Kids on the Block and the Ironmen.
I’m on my way of finalizing my version of ELM (Based on the great work of westexas & Khebab).
In the past you’ve seen the Marquee Players (Saudi & Russia) and the Divers (Norway, Mexico, Venezuela and Nigeria). The former showed a moderate, the latter a steep decline between 2004-2008.
I’m showing you two other groups now:
1) The New Kids on the Block (Algeria, Angola, Azerbaijan, Canada, Equatorial Guinea & Kazahstan)
2) The Ironmen (Iraq, Iran, UAE, Kuwait, Oman, Qatar, Lybia & Ecuador)
In group #1 there are countries showing a steady increase in exports between 2004-2008. (Note: Canada's tar sands are in this group and any gains are just about to peter out in 2008)
In group #2 there are countries showing steady exports between 2004-2008. (Note: this is just about to come to an end as consumption in this group is growing rapidly and represents an ever greater part of production.)
Here are the graphs:
New Kids on the Block 2001-2008
Exports from New Kids (2004-2008)
Ironmen 2001-2008
Exports from Ironmen (2004-2008)
Finally, let’s take a look at the Divers, the New Kids and the Ironmen altogether!
These three groups represent 18 out of the top20 exporters, and their exports are almost a straight line between 2004-2008. This means that Net Exports of the World are totally dependent on Russia and Saudi Arabia.
I’ll come back with some future projections soon. (Not today, but soon enough.)
Once again, very good work.
Of course, Russia is showing declining exports, and while Saudi Arabia is showing a rebound, some perspective is in order. The actual EIA net export data and my 2008 estimate follow. Also, we have the curiouser and curiouser reports of fuel shortages in Saudi Arabia. Makes one wonder if they are curtailing domestic refinery runs in order to boost reported crude exports (perhaps they planned to boost product imports, but they were unable to import everything they needed).
Saudi Net Oil Exports:
2005: 9.1 mbpd
2006: 8.5
2007: 7.9
2008: 8.4*
*Assumptions: Total Liquids production rate of 10.9 mbpd (versus 11.1 in 2005) and consumption of 2.5 mbpd.
Just an electronic fault! There really is no fuel shortage. ;-)
Marco.
Thanks.
And for more comfort, all the groups (Marquee Players, Divers, New Kids and Ironmen) combined:
But for future projections it is going to be a lot more useful to work with the groups instead of the total.
Now I have all the data, and it isn't hard to make projections. I have one for Russia.....
Are you interested?
Are you kidding? Yes.
Our middle case is that Russia approaches zero around 2025. The wild card is oil from frontier areas, but my guess is that frontier areas are to Russia as Alaska was to the US--it helped, but it was no panacea.
Here is my projection, using HL + ELM
I have 2025. Just as you do.
nice work Eastender. and I know you've done some other analysis on energy intensity of GDP =- please email Euan.
also, unless Russia completely reverts to import substitution policies, if oil production worldwide declines like you are suggesting, their internal use won't increase at that pace. (However if ANY country would be able to have a self contained economy it w.ould be them (or maybe Brazil). (self contained meaning they make their own guns and butter and to hell with comparative advantage)
Thanks, Nate.
OK, I'll write him a letter. But what shall I tell him? :-) GDP-stuff? Also: what's the timeframe? Is Euan waiting for this?
Russia's population growth is extremely negative, and their life expectancy quite short for a developed nation. I'd expect these factors to come into play to some extent.
Just male life expectancy. Drunkenness and suicide make it 61.5 years for men (up from 59 years), but 73.9 years for women.
Of all of the dozens of ethnic groups in Russia, only Jews have lower birth rates than Russians (perhaps due to emigration to Israel). Chechnya has the highest birth rate of any region.
Putin has managed to increase the # of births from 1.4 to 1.6 million (2.08 million deaths). 1.6 million x 67.7 years = 95 million (Russia pop. down to 142 million), but births will shrink from generation to generation, especially of Russians. All good from a food POV.
Ethnic Russians are now just less than 80% or so of all Russian citizens and that ratio should plummet as quickly as the population.
Leaders are typically a generation and a half older than soldiers, and there may develop a half Asiatic Army with Russian leaders. In any case, Russia will run out of soldiers first.
Holding onto Siberia will become more problematic. A separatist movement (perhaps with Chinese support) with nuclear weapons would be very hard to contain by 2060+.
A reformed society can change these trends, but KGB principles and morals are unlikely to do so.
Alan
Putin has managed to increase the # of births from 1.4 to 1.6 million
He's been a busy man... the f***er.
My thoughts exactly alisterC...I guess rank hath it's privileges and all, still must be an awful burden on the man; he's not getting any younger.
Yes please.
And not exactly related, "energy intensity of technology and culture". Does a certain level of technology tend to function more-or-less at one level of energy intensity? One of the things I wonder about a lot - can there be an internet in a culture and society operating at a lower energy intensity? If our technology is largely a function of our energy intensity, then no - and say bye-bye to all those digitized records: medical records, Real ID, internet streaming and pdfs. I can see Internet at 1/2 our current western energy intensity. I don't see it at 1/10. Talk about one of the discontinuities on the way down - losing digital.
cfm in Gray, ME
Eastender,
Going forward, the decline rates and the domestic consumption growth rates would be random variables rather than being deterministic.
Might be helpful to model them as such and then do a Monte Carlo simulation to get a probabalistic model on when zero exports will happen. You will get some distribution around an expected year so that you have a range than a single point estimate.
It might be helpful to document your assumptions on various rates and the bases for these assumptions. Why would Russia e.g. grow steadily from now on? What would a recession in the US and Europe do to the domestic Russian economy (exports falling?)?
Regards,
Srivathsa
Eastender - Great work. Thankyou
I can SEE clearly now.
P.S. You are having way too much fun with this. LOL!
You have to find *something* you think is worth working on. Having *some* fun? Sure. I had depression in the first years (2005-2006). I've started working on some projects last year and it turned out to have been a great decision.
So yes, you are right. I'm having moderate fun. (Not 'real' fun if you know what I mean.)
If you want some real (sobering) 'fun' do the same charts using just crude instead of all liquids!
There are some big unknowns in the 'all liquids' numbers - I expect elements of 'other liquids' such as NGLs (currently ~2/3 of unconventional production!) to peak at some stage (but when?) and that will likely be a big problem!
Absolutely. You can also convert everything to BTUs or [boe] and look at it that way. Or even account for EROEI in the case of tar sands and Venezuelan heavy oil (where Ein is a large portion of Eout).
The only prblem is that I don't know C&C for all the countries. In some cases I only have all iquids data (called C&C in the table, but I suspect it's all liquids anyway.)
Do you know where I can get C&C data?
I agree the data such as EIA or IEA is poor - garbage in, garbage out - in my opinion this is deliberate.
IMO the data is so poor that people getting fixated on one month's EIA data, claiming peak or not peak, is a waste of time. Let your computer draw some kind of average through the data for a clearer picture of what is going on. Timescales of one day or one month are too short for source data this poor.
The data straight from individual countries or companies tells a somewhat different (nearly always worse) picture.
IMO, with oil, accurately seeing where we have been is difficult enough, seeing where we are going more than a few months ahead (other than the rough general direction) is almost impossible. Sadly, it seems the rough general direction is not where most people hope we are going!
What? A depressed Hungarian? Never heard of such a thing, other than myself of course ;-)
From above, Sri Lanka expert says solar energy too costly without subsidy, the author and "expert" obviously aren't aware of the efforts of Neville Williams to bring solar electric systems to thousands of the poor in Sri Lanka as documented in his book, Chasing the Sun.
His efforts in Sri Lanka live on through the Solar Electric Light Fund (http://www.self.org/srilanka.shtml). I believe over 100,000 solar electric systems have been purchased by very low income people through simple economics.
just received a reply from Neville... 250,000 families now have solar power in Sri Lanka providing electricity to those that the government couldn't
The Putin System
Last night, I watched this documentary on the rise to power of Vladimir Putin. When you see his history presented in a cohesive manner, it is really quite scary.
He has three major levers of power:
Putin, of course, is a product of the KGB. But he seems to have a politicians instincts as well. Some revealing scenes were:
One think that you take away from this documenary is that, when it comes to playing hardball, Putin wrote the book.
1. The Russian Federation and Mr. Putin have been pumping precious and non-renewable fossil fuels at full capacity in order to satisfy American-Joe-Six-pack's desire to strut around in 6000 lb vehicles.
2. They get worthless US dollars in return - of which they clearly have plenty.
3. They get lectured, have nuclear missiles placed at their doorstep.
4. Clinton led the Bombings in Serbia (a close Russian ally)
-----
Playing hardball - hardly
The question is - why do they give a f**k about Joe Sixpack and fuel for his 6000 lb vehicle.
The answer is we are helping finance whatever Putin's wants. If he can keep us in gas guzzling mode, then the price of oil will stay high. As prices fall, I would not be surprised to see most of the exporting countries dial back their production just a bit. Selling oil at $140/BBL can get pretty addictive. We’ve been focusing on Demand Destruction and I think there will be a responding “Supply Destruction” as well. Since we've all shown we can survive $140/BBL, he and other exporting countries will try to keep prices & their profits as high as possible without sending the world's economy into a recession.
The next move in the Putin/US chess game will be when someone here suggests "punishing" Russia for behaving like the U.S. with something silly like kicking it out of the G8 - Bishop to King 3, and while laughing, Putin responds with reduced European deliveries, due to mechanical/maintenance problems, of course. Then they'll realize he's not playing chess - Chainsaw to King 8.
I am not sure what Putin is up to either, but on the surface it appears that they have legitimate grievances (& probably some nostalgia for the old superpower days)
For e.g.: Ukraine siphons off a huge amount of Natural gas as transit fees, on its way to Germany. (The Germans are paying customers). So there is talk of placing Nukes in Ukraine, aimed at Russia, and demand that Ukraine be allowed to siphon off as much gas as it damn well pleases.
I am having a hard time seeing the Russians as villains in any of this - they appear to be victims. In addition, we have continued to block Russia's entry into the WTO - the only major country so blocked - but one, whose currency floats in the capital markets. - in contrast with Saudi Arabia and China - two major trading partners, whose currencies do not float.
They have confiscated properties of Shell, BP (others) - but these are natural resource plays (is that a mitigating factor?) and I think that Shell in particular go greedy.
I think the Russian people have legitimate grievances, but they must stop assuming that the American people understand them. Americans know nothing about what it's like to have powerful enemies on one's borders. It is the responsibility of Russia's leaders to lay out the case that the US oversaw a program in the 1990s to keep Russia backward and hungry on the Latin American model. Maybe Putin could use that oil money to print up and mail 100 million copies of Naomi Klein's "The Shock Doctrine" to educate Americans on how these things happen.
In the absence of an understanding of Russia's historic red lines, Americans will only see Russia's retaliation, not the cheap shot that provoked it.
If we kick Russia out of the G8, will China allow Russia to revamp the Shanghai Cooperation Organization into a more far-reaching alliance? Maybe Russia should make up its mind where that Siberian pipeline ends.
An artillery and MLRS barrage of a city is no "cheap shot" it is a war crime. The hate-filled west is up to its standard tactics of counting Ossetian dead as the fault of Russians. Russian forces were not in South Ossetia on the night of the 7th of August when butcher Saakashvili launched his campaign of extermination. How is Russia supposed to reach the American public when CNN shows images of Tskhinvali and claims it is Gori? All you hear is tie-eater Saakashvili's claims and those of prime-hypocrite Bush. Russia was too quick to agree to a ceasefire. Where was all the concern during the Israeli invasion of Lebanon during 2006? (Although the Israelis were not bent on slaughtering civilians at the rate of 3000 per 24 hours like Saakashvili the "democrat"). No ceasefire requirements for the USA's and Israel's punitive military campaigns so no such requirements for Russia.
The G8 is a joke of no substance for Russia and makes it look like part of the imperialist pack to the third world. If Russia is blocked from the WTO then that will be ideal as free trade and monetarist voodoo is not what its economy needs (the USA, western Europe, Japan and South Korea were all protectionist during their development stages).
http://www.spiegel.de/international/world/0,1518,572811,00.html
U239 to Playa Girón, Moskit to Hormuz, Checkmate!
Putin doesn't give a damn about Joe Sixpack.
By producing energy he has managed to get both European and Asian economies dependent upon Russia. The dollars that he gets are then used to buy western technology to improve the Russion economy and its military.
IIRC, they also plan to open a new energy exchange in St. Petersburg which will use the ruble as its reference currency.
Russia is resurgent, but it has fundamental demographic problems. Things will be much more interesting when the Chinese (and maybe the Indians) start to reclaim their own traditional spheres of influence.
You might want to look up the real numbers at IEA,for example, to learn were Mr Sixpacks gasoline came from: Canada, S-Arabia, Mexico, Venezuela.
Russia is a major exporter to Europe, not to the US.
Note that all four showed lower net oil exports last year. Of course, while Saudi Arabia has shown a rebound, as noted above it is less than it appears (on a net export basis). And of course, combined oil shipments from Venezuela and Mexico to the US (which accounted for more than one-fourth of US oil imports in 5/07) dropped at an annualized rate of 27% from 5/07 to 5/08.
But, apart from that, all is well! Party on!
Winter is coming.
We Europeans will find out soon enough.
Or maybe next winter.
Or the winter after that.
But we will find out if recent political rhetoric can heat houses as well as Russian gas can.
Watch this space. Our nuts are in a vice.
It will be soon. Ukraine's Saakashvili clone, Yuschenko, is already breaking the Black Sea Fleet treaty of 1997 (that transferred Sevastopol to Ukraine since it was a formally distinct district from Crimea so not part of Khruschev's gift). Since Russia will not be keen to feed this maggot he will next start blackmailing Russia by siphoning gas from the trans-Ukraine pipeline. The propaganda joke that is the western media will jump up and start screaming "Russians are cutting off our gas". Russia has zero leverage on the west but the west thinks it has infinite leverage on Russia. All one needs is the western media to create Rove's reality. We live in times nuttier than the 1930s.
Remember though it might only take demand destruction of about 10-15% to restore our oil balance to zero import.
I would not say the same about gas though!
Reminds me of Cheney and his monkey. Engraved daggers is a nice touch that our dynamic duo hasn't thought of. Yet.
cfm in Gray, ME
Re manipulation of the commodity markets, supposedly there is currently a huge unprecedented gap between the actual price of gold and silver and the spot price, which is causing shortages. Financialsense was talking about this on the weekend and now George Ure-maybe Congress should investigate http://www.urbansurvival.com/week.htm
I expect we will see a similar situation develop in the oil markets over the coming weeks.
No real oil is actually available at our new low price.
Hello TODers,
A few weblinks on I-NPK problems with the resultant Overshoot demand destruction of those at the bottom:
http://www.hindustantimes.com/StoryPage/StoryPage.aspx?sectionName=&id=6...
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Nepal has fared badly even among the 50 Least Developed Countries (LDCs), a UN report has said...
...One third of Nepal's population continue to live in some of the worst conditions to be found on the planet, Piper said.
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When the nearest seaport is over 750 miles away and arable farmland and pasture is among the highest elevation on the planet: it is just really tough to get the goods uphill to where they need to be. I hope the Swiss have a better postPeak plan than Nepal.
http://thepost.com.pk/NatNewsT.aspx?dtlid=178350&catid=2
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Protest against urea shortage [Pakistan]
Scores of paddy growers and farmers Monday staged a protest demonstration in Satrah-Daska against a marked shortage of urea and other fertilizers.
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http://www.freshnews.in/12-farm-suicides-in-four-days-in-vidarbha-despit...
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12 farm suicides in four days in Vidarbha despite loan waiver [India]
...The farmers were also badly stressed because of the inadequate or spurious supply of fertilizers, particularly di-ammonium phosphate (DAP)...
...The latest 12 suicides have taken this year’s toll in Vidarbha to 534, Tiwari said, quoting from the figures available on the state government website.
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Since job specialization is dependent upon food surpluses, it difficult to build a job-pyramid if the bottom farmer blocks keep crumbling.
http://www.abs-cbnnews.com/storypage.aspx?StoryId=128596
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The Philippines' annual rice and corn production this year is likely to fall short of targets as rising costs of fertilizer inputs bite, new forecasts from the government's agriculture statistics office showed on Monday.
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Recall that the Philippines are already the world's largest grain importer.
http://www.billingsgazette.net/articles/2008/08/18/news/wyoming/25-incre...
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Input costs double, triple [Wyoming]
"Oh, boy," he said, and repeated, "Oh, boy. I'm getting ready to order red diesel, and I don't know how much it will be. That's scary."
Fred Hopkin, who runs a large farming operation in Park County, said fuel prices have doubled in the last three years, and some fertilizer prices have tripled...
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Sadly, he seems measurably stressed to me. Don't forget that some I-NPK products have been on limited allocation for some time. This can be very upsetting if you miss the optimal planting and fertilization timeslots. Have you hugged your bag of NPK today?
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
http://business.timesonline.co.uk/tol/business/industry_sectors/natural_...
Rollerball - 1975
Hi DaveMart,
He may be right too.
At least in the gold mining business, reserve growth is not keeping up with production. But I wonder whether mergers and takeovers really help. Say Barrick buys Newmont(or visa versa), the combined company now has twice the reserves, but also has twice the rate of production. No significant efficiency gains can be had from the merger and no new exploration plays result from it.
It looks like cannibalism to me.
For the most part, big companies are pretty hapless when it comes to exploration; corporate culture or something.
Hi Bryant,
I found a couple of things interesting in this:
It is yet another confirmation from a top man who is part of the system that peak oil and other resources are part of the thinking, not fringe anymore.
It is also a classic response which has already taken place in the oil industry - if you don't think that you can find new resources at any reasonable extraction cost, you buy back your own shares, merge and so on.
If you thought that you could find new resources relatively easily, they would be pouring money into that and trying to grab as much as they could for their own organisation.
A little more hardship in Fuji, some of whose problems have been noted on the DB recently.
Exports to the US are up 34% this year, with mineral water leading the pack. In fact, Fuji is the 2nd largest supplier of imported water to the US.
Meanwhile, residents are going without water, and being asked to ration it, due to the dry spell. They await foreign engineers but:
"He said the department cannot guarantee whether the residents would get any tap water in the afternoon but reassured them that water trucks would come around to their areas.
He said they could not confirm when the situation is going to normalise. "
http://www.fijitimes.com.fj/story.aspx?id=98258
New York Times article by Jad Mouawad, August 18, 2008, of which a version appeared in print on August 19, 2008, on the front page of the New York edition.
As Oil Giants Lose Influence, Supply Drops
http://www.nytimes.com/2008/08/19/business/19oil.html?hp
Excerpts: (bold is mine)
Re. the mysterious ailments related to wind farms:
I wonder: what about "the medical thing" related to freezing in the dark? The end of MRI? No refrigeration for vaccines? We have indeed become a nation of whiners.
Dick Lawrence
Well, at least running out of electricity might help cure the sleep disorders, childhood night terrors and lack of equillibrium caused by our excessive TV watching. Funny how those millions of electrical devices installed near where we sleep haven't been as vilified as windpower. Shocking!
Still, I'm sure there will be many installed soon that will be too close for comfort. If you've stood underneath or even very near to one of the bigger ones, you suddenly have more appreciation for how Ants must see us.
http://www.canada.com/topics/news/national/story.html?id=66e11c80-9593-4...
http://www.bloomberg.com/apps/news?pid=20601101&sid=aGUjcc_ymdyg&refer=j...
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Japanese Banks Halt Lending as Bounced Checks Rise to Record
...The banks stopped doing business with 475 companies, whose liabilities rose 35 percent to 143.8 billion yen ($1.3 billion), the Japanese Bankers Association said in a statement yesterday. Banks stop lending to and doing business with companies that bounce checks twice within a six-month period....
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