Drumbeat: March 21, 2009

Probe Finds Exxon Exposed Workers to Hurricane Hazards

HOUSTON -- Exxon Mobil Corp. exposed its employees at the second-largest oil refinery in the nation to life-threatening conditions by failing to implement an emergency plan when Hurricane Gustav struck the U.S. Gulf Coast last year, according to findings of a federal investigation released Friday afternoon.

Exxon did not shut down the Baton Rouge, La., refinery prior to the hurricane's landfall and they had to do an emergency shutdown of the plant during the brunt of the storm, according to a local representative with the United Steel Workers. The refinery was closed for several days after the Gustav hit Sept. 1

The Occupational Safety and Health Administration board has proposed a penalty of $5,000 and categorized the violation as "serious."

Petrobras's Brazilian oil and gas production up in February

Brazilian energy major Petrobras has said that its average oil and gas production in Brazil, in February 2009, topped out at 2.247 million barrel equivalents per day, 5.6% more than a year ago and 1.3% above the January 2009 mark.

According to the company, the exclusive domestic field oil production, of 1.94 million barrels per day (bpd), was 6.5% higher than the same month a year ago and 0.9% more than the 1.92 million bpd extracted in January 2009.

Pemex upbeat about Mexico's oil production goals

Despite the evident downturn, however, Mexican officials remain optimistic that Cantarell will average 756,000 b/d in 2009 due to increased investment in drilling and well maintenance.

Mexican officials also believe they can slow, and even reverse, the country's declining production over time due to increased production from other regions, especially Chicontepec. . .

Meanwhile, Gil Morales said the current production schedule for Chicontepec calls for the conventional drilling of more than 17,000 wells in 29 fields with the eventual goal of producing around 100 b/d oil from each one of them.

China's CNOOC starts new Baohai field production

Chinese main offshore oil firm CNOOC Ltd (0883.HK) said on Thursday that it started production from its Bozhong (BZ) 28-2S oil field with 4,000 barrels of oil per day via four wells. BZ28-2S, located in the south of Bohai Bay with a water depth of 21 metres, is the largest field among all the oil projects expected to come on stream this year offshore China, CNOOC said in a press statement.

The production is expected to ramp up to an average 25,000 barrels of oil per day by 2011, it added.

Maple Energy Denies It Is Planning to Cut Peru Oil Production

Maple Energy Plc, a crude and natural-gas producer with operations in Peru, denied it is planning to cut production in the country on low oil prices.

Gestion today reported that the company is planning to seal heavy-crude wells if oil prices remain below $60 a barrel, citing General Manager Guillermo Ferreyros.

Ferreyros told Bloomberg News in an interview he was speaking hypothetically about the impact of low prices on the industry.

“This was completely taken out of context,” Ferreyros said. Maple is not planning to close wells in Peru “by any means.”

Brazil Petrobras Sets Record For Deep

Petrobras pumped oil from the 7-MLL-54HP well at Jabuti from a water depth of 1,413 meters, establishing a fresh record for oil production in relation to water depth, the company said. Output at the well started Feb. 26.

The well is currently producing about 35,000 barrels a day, and was the first well connected to the FPSO "Cidade de Niteroi" floating production, storage and offloading vessel.

Natural Gas, Suddenly Abundant, Is Cheaper

Six giant plants capable of cooling and liquefying gas for export are due to come on line this year just as the economies of the Asian and European countries that import the most gas to run their industries are slowing.

Energy experts and company executives say that means loads of gas from Qatar, Egypt, Nigeria and Algeria that otherwise would be going to Japan, Korea, Taiwan and Spain are beginning to arrive in supertankers in the United States, even though there is a gas glut here, too. . .

Rodney Waller, a senior vice president at the oil and gas company Range Resources, called the expected surge in liquefied natural gas imports part of a “pile on” of problems including plummeting demand, prices and credit besetting companies that stretched their exploration and production budgets in recent years to meet expanding demand.

“Any time you push the price down, you push down the ability of U.S. independents to add reserves and production domestically,” he said. He warned that some small and midsize oil and gas companies “with debt that are in trouble now will simply get pushed over the brink.”

RPT-US spring nuclear refueling seen lowest in a decade

The number of U.S. nuclear reactors expected to shut this spring for planned refueling will likely be the lowest in at least a decade, which couldweigh on natural gas prices, already hovering near six-year lows, traders said on Friday.

At the height of the spring 2009 season in mid-April, just 15,200 megawatts will likely be out, compared with about 22,900 MW out last year, which would be the fewest megawatts shut for spring refueling since the Nuclear Regulatory Commission started posting outages on its website in 1999.

Baker Hughes: US Oil, Gas Rig Count Down 41 To 1,085 This Week

The number of oil and gas rigs fell to 1,085, down 41 from the previous week, according to rig data from oil-field services company Baker Hughes (BHI). The number of gas rigs was down to 857, a drop of 27 rigs from last week, while the oil-rig count dropped by 13 to 215. The rig count includes 13 miscellaneous rigs.

The number of gas rigs in use peaked at 1,606 in September.

News Tip: Oil Problems Persist 20 Years After Exxon Valdez Spill in Alaska, Duke University Expert Says

A silver lining from the Exxon Valdez spill, if there can be one, has been the intense scientific research that followed it, Chameides said.

As a result of this research, he said, “we have a much keener understanding of oil spills. Before the Exxon Valdez, oils spills were widely thought to present an acute, short-term environmental threat that would rapidly disperse and subside. Now we know it’s not that simple. The oil lingers, just beneath the surface, threatening wildlife and transforming the lives of area residents.”

Petrobras Sees ‘No Chance’ Strike to Cut Fuel Supply (Update1)

Petroleo Brasileiro SA, Brazil’s state-controlled oil company, said there is “no chance” a planned strike by its workers will limit the country’s fuel supply.

Petrobras, as the company is known, is ready to maintain fuel supplies during a walkout, refining and petrochemicals chief Paulo Roberto da Costa told reporters today in Rio de Janeiro. While there may be a temporary drop in output because of a strike, fuel stockpiles will guarantee supply, he said.

U.S. navy vessels collide in Gulf, causing large fuel spill

Two U.S. Navy vessels have collided in the Strait of Hormuz off the coast of Iran, slightly injuring 15 sailors and creating a heavy fuel spill in the Persian Gulf. . .

Both ships were heading to port and were going in the same direction in the narrow strait. The submarine was submerged when the accident occurred just after midnight.

Iraqi budget woes force security hiring freeze

Anthony Cordesman, a national security analyst at the Center for Strategic and International Studies in Washington, said much depends on how long the budget crisis lasts.

"It's going to be a problem in terms of equipment, in terms of sustainability, in terms of construction," he said in a telephone interview. "It is a symptom of the fact that one of the things that holds the country together ... has been large flows of oil."

He also noted that the drop in oil prices coincides with an overall reduction in international aid for Iraq due to the global economic crisis.

"Nobody basically is budgeting large amounts of aid for the coming year. So they're getting hit from two directions, not just one," Cordesman said. "This budget squeeze is going to affect every aspect of Iraqi stability."

Oil conversion plant, 60 jobs, comes to SC

South Carolina is getting a new $29 million plant to convert algae into fuel oil and with the plant, 60 new jobs.

The state Commerce Department and Georgetown County announced Friday that Renewed World Energies will locate its new plant in the county.

The company has a proprietary technology to convert cultivated algae into oil for diesel fuel and jet fuel. The company also plans to build an oil processing plant.

NRC decision on depleted uranium draws rebuke on Hill

The Nuclear Regulatory Commission's decision classifying depleted uranium as the least hazardous type of radioactive material is "unsupportable," the chairman of the House Environment and Energy Subcommittee said yesterday. . .

Depleted uranium is mainly a byproduct from uranium enrichment facilities. It is a unique waste stream as it actually gets more radioactive the longer it sits -- unlike most radioactive materials, which become less hazardous as they decay.

Depleted uranium has a concentration that exceeds by 10 times the Class A waste limit of 0.05 microcuries per cubic centimeter recommended by NRC staff in a 1981 draft environmental impact statement, according to the Institute for Energy and Environmental Research, a nuclear watchdog group.

Organic price tags may be hard to swallow

People have been buying and selling organic food for decades. But until recently, most of that activity was done on a local scale for a limited number of customers. In the past decade, organic food has exploded in popularity, evolving into an industry that resembles the traditional grocery model, complete with frozen-food aisles, weekly flyers and rows of cashiers.

The current crisis marks the first time organic retailers will have to face a sharp economic downturn since the industry's boom began. "Organic food has a huge problem," said Marcia Mogelonsky, senior research analyst with Mintel International Group Ltd., a global consumer-research firm. "It's always been premium-priced."

While many Canadians were willing to shell out for organic nachos and macaroni and cheese when times were good, suddenly the cheaper grocery-store brands aren't looking so bad.

Side Trip to South Africa (Jim Kuntzler)

This white minority appears to carry on with the "normal" tasks of daily life not unlike what you would see in Europe and North America. But close to the surface you detect a resigned fatalism. Their old center has not held and things for them could fall apart at any time. The evacuations of whites that occurred with the shift to black-majority government in the 1990s have tailed down. I'm not even sure how conscious the whites are of their own base-line nervousness, though the multi-layered apparatus of security, with all the locks, gates, and video cameras speaks for itself.

The combination of the fortification mentality with compulsory motoring has left Johannesburg with a conspicuous scarcity of shared civic space. It's hard to beat the USA for this, but South Africa has managed to. The architects and developers who designed the Melrose Arch project tried to supply something that was otherwise non-existent in the country and they did a very good job. All the classes of the various races were present there -- whites, blacks, and Asians -- sitting in the outdoor cafes, often at mixed tables, while the virtually all-black service class puttered and watched in the background. The nicely-scaled main square felt like the only tranquil, open, safe public gathering place in the entire metroplex. The health club down the street where I dropped in three times in a week reflected the mix of races, too, as did the offices and business establishments.

The role of religious communities in the Long Emergency
by Sharon Astyk

There is also likely to be a retreat to the familiar, the comforting and the ritualized, and the need for community structures. Many of the changes in our economic, energy and ecologic life demand that people reconsider what they’ve assumed and believed. For better or worse (and what kind of faith we retreat to will depend on which one this is), For many of us, after we leave school, work provides our social and communal structures - we socialize with coworkers, work organizes our lives. But when jobs are lost or transient, it becomes harder to rely on that for community. Where do we find social supports, people to talk to, common values? Again, for many of us, this is our religious community.

This, of course, presents a dilemma for people who are not religious, or who belong to a religious denomination not represented. Do you join a group with which you do not share all your beliefs, or any? What happens when church is how social life is conducted, and you aren’t religious?

I think the answer depends on your faith and your relationship to it - I think someone who believes that faith is fundamentally false should probably work on establishing useful secular institutions that do what religious ones do. I think someone with fairly minor theological differences, or a mild case of agnosticism should find the most compatible possibilities, if they want to work with a religious community, and then ask that community’s leader whether it would be ok for them to participate. My guess is that you’ll find more difference in individual believers in most communities than you think. It really depends on the community though - for some people there are basic statements of faith you must make to participate, in other cases, some groups are open to people they believe may sincerely evolve in their commitment. Some places won’t ask you what you believe at all. Some religious communities may have evolved roles for those who cannot fully adhere but are supportive - high rates of Jewish intermarriage, for example, have forced many Jewish communities to evolve places for non-Jewish spouses, and many religous communities with high bars to participation (say, celibacy) have committed supporters who cannot be full members.

Energy Limits to Growth Part III: Integrating Energy Sources (Richard Heinberg)

A process for designing the energy system to meet society's future needs must start by recognizing the practical limits and potentials of the available energy sources. Since primary energy sources will be the most crucial ones for meeting those needs, it is important to identify those first, with the understanding that secondary sources will also play their roles, along with energy carriers (forms of energy that make energy from primary sources more readily useful—as electricity makes the energy from coal useful in millions of homes).

We can define a future primary energy source as one that meets, at a minimum, these make-or-break standards discussed above:

• It must be capable of providing a substantial amount of energy—perhaps a quarter of all the energy currently used nationally;
• It must have a net energy yield of 10:1 or more;
• It cannot have unacceptable environmental impacts; and
• It must be renewable.

HIGH SPEED PASSENGER RAIL Future Development Will Depend on
Addressing Financial and Other Challenges and Establishing a Clear Federal Role

Once projects are deemed economically viable, project sponsors face the challenging tasks of securing the up-front investment for construction costs and sustaining public and political support and stakeholder consensus. In the three countries GAO visited, the central government generally funded the majority of the up-front costs of high speed rail lines. By contrast, federal funding for high speed rail has been derived from general revenues, not from trust funds or other dedicated funding sources. Consequently, high speed rail projects must compete with other nontransportation demands on federal funds (e.g., national defense or health care) as opposed to being compared with other alternative transportation investments in a corridor. Available federal loan programs can support only a fraction of potential high speed rail project costs. Without substantial public sector commitment, private sector participation is difficult to secure. The challenge of sustaining public support and stakeholder consensus is compounded by long project lead times, by
numerous stakeholders, and by the absence of an established institutional framework.

U.S. Sets Plan for Toxic Assets

The federal government will announce as soon as Monday a three-pronged plan to rid the financial system of toxic assets, betting that investors will be attracted to the combination of discount prices and government assistance.

But the framework, designed to expand existing programs and create new ones, relies heavily on participation from private-sector investors. They've been the target of a virulent anti-Wall Street backlash from Washington in the wake of the American International Group Inc. bonus furor. As a result, many investors have expressed concern about doing business with the government in this climate -- potentially casting a cloud over the program's prospects.

The administration plans to contribute between $75 billion and $100 billion in new capital to the effort, although that amount could expand down the road.

The plan, which has been eagerly awaited by jittery investors, includes creating an entity, backed by the Federal Deposit Insurance Corp., to purchase and hold loans. In addition, the Treasury Department intends to expand a Federal Reserve facility to include older, so-called "legacy" assets. Currently, the program, known as the Term Asset-Backed Securities Loan Facility, or TALF, was set up to buy newly issued securities backing all manner of consumer and small-business loans. But some of the most toxic assets are securities created in 2005 and 2006, which the TALF will now be able to absorb.

Finally, the government is moving ahead with plans, sketched out by Treasury Secretary Timothy Geithner last month, to establish public-private investment funds to purchase mortgage-backed and other securities. These funds would be run by private investment managers but be financed with a combination of private money and capital from the government, which would share in any profit or loss.

All told, the three efforts are designed to unglue markets that have seized up as investors have stood on the sidelines. One big problem is that many of these assets no longer trade, which means it's very hard to put a price on them. Banks are unwilling to sell at too low a price, and investors are unwilling to take the risk.

There's more about AIG in today's NYT.

Coupled with yesterday's mention of a story in Rolling Stone, I think the public may be just beginning to understand what's happening. One wonders where the outrage will end...

E. Swanson

The Times article was interesting-what was left unsaid is that many large publicly traded financial firms are not businesses. In many cases the bonuses paid out exceed the profits-the shareholders do not control the business in any way. Theoretically, there should never be a need for the public or politicians to complain about excessive employee compensation at a business-upper management would control expenses (including payroll) as they manage the business-this is not happening and not just at AIG. This really cannot be fixed-it is the Wall Street culture-were this to infect XOM, CVX or COP, as an example, billions of dollars in bonuses would be paid out (looted from the owners) and those would need bailouts-it hasn't happened as the corporate culture is different. Basically, Wall Street is based on the Scam, the Grift and when you hire Grifters to work for you or watch over your capital they will do their best to steal it every time. So now the money isn't just being stolen from the owners, now the taxpayers are being looted, with the promise from the Chosen One that someday this will end when the Grifters are finally sated. Maybe, but by that time the USA will have been permanently wounded economically.

"Theoretically, there should never be a need for the public or politicians to complain about excessive employee compensation at a business-upper management would control expenses (including payroll) as they manage the business-this is not happening and not just at AIG."

So the US owns these businesses in all but name.

If the US formally states ownership, all toxic (fraud)
assets (horse race tickets) would be immmediately priced to market.

That would be $1.5 trillion for AIG alone.

The fraud here is AIG replaced "insurance" with "swap"
purposefully negating regulation and having only $100
million to back them.

I think arresting Cheney would buy us 6 more months.

Mac, many governments will not allow a foreign corporation to operate inside it's soverignty if the foreign corporation is more than 79.9% owned by a foreign government.

That is one reason that the US Gov does not totally own some corporations that it has taken a large ownership in. As you pointed out there are other reasons.

BrianT: This really cannot be fixed-it is the Wall Street culture-were this to infect XOM, CVX or COP, as an example, billions of dollars in bonuses would be paid out (looted from the owners) and those would need bailouts-it hasn't happened as the corporate culture is different.

You're kidding, right?

Exxon Chairman Got Retirement Package Worth at Least $398 Million

XOM currently is valued at approx 100X the value of AIG (as an example). This headline therefore would be comparable to "AIG Chairman gets retirement package worth $3.98 million dollars"-you won't see that headline-even the traders that wrecked the company would laugh at such a trivial sum. Why do you think XOM is worth so much-one of the reasons is that management has resisted the temptation to gut the company as the financials have been gutted.

That "Trivial Sum" is more than both my parents made over their entire working lives.

Some trivia, eh?

As a follow up, today it is announced that Obama will attempt to control executive compensation at all Wall Street firms and financial institutions. This appears to be an admission that because of the combination of impotent shareholders (they can sell or sell short, either way management continues looting), corrupt management and lax regulation there is no viable way to prevent these firms from imploding even after they are rescued (short of some sort of government oversight). Now the CEOs whine, but nodbody told them to piss in the pool. I guess they feel we should have told them they shouldn't.

I think the public may be just beginning to understand what's happening. One wonders where the outrage will end...

With the Banksters having all the money and assets and the working stiffs still mumbling and grumbling as they walk to the unemployment office?

The story no longer works:

"Before we become too alarmed about the impending giveaway of $8 trillion dollars on top of the $2 trillion we have already given to the wealthy, let us touch back again upon the reality of money. What actually happens when this money is given away? Almost nothing happens. What happens is that bits change in computers, and the few people who understand the interpretations of those bits declare that money has been transferred. Those bits are the symbolic representation of an agreement about a story. This story includes who is rich and who is poor, who owns and who owes. It is said that our children and grandchildren will be paying these bailout and stimulus debts, but they could also simply be declared into non-existence. They are only as real as the story we agree on that contains them. Our grandchildren will pay them only if the story, the system of meanings, that defines those debts still exists. But I think more and more people sense that the federal debt, the U.S. foreign debt, and a lot of our private mortgage and credit card debts will never be repaid."


From the Rolling Stone Article cited above:

Meet your shaman:

"the Accounting and Auditing Act of 1950. The relevant section, 31 USC 714(b), dictated that congressional audits of the Federal Reserve may not include "deliberations, decisions and actions on monetary policy matters." The exemption, as Foss notes, "basically includes everything." According to the law, in other words, the Fed simply cannot be audited by Congress. Or by anyone else, for that matter...."

This is a political crisis.

I would highly recommend reading the Rolling Stone story The Big Takeover. An excerpt:

In essence, Paulson and his cronies turned the federal government into one gigantic, half-opaque holding company, one whose balance sheet includes the world's most appallingly large and risky hedge fund, a controlling stake in a dying insurance giant, huge investments in a group of teetering megabanks, and shares here and there in various auto-finance companies, student loans, and other failing businesses. Like AIG, this new federal holding company is a firm that has no mechanism for auditing itself and is run by leaders who have very little grasp of the daily operations of its disparate subsidiary operations.

In other words, it's AIG's rip-roaringly shitty business model writ almost inconceivably massive — to echo Geithner, a huge, complex global company attached to a very complicated investment bank/hedge fund that's been allowed to build up without adult supervision. How much of what kinds of crap is actually on our balance sheet, and what did we pay for it? When exactly will the rent come due, when will the money run out? Does anyone know what the hell is going on? And on the linear spectrum of capitalism to socialism, where exactly are we now? Is there a dictionary word that even describes what we are now? It would be funny, if it weren't such a nightmare.

(Moving up my comment to a current thread)

It took some time to read the http://www.rollingstone.com/politics/story/26793903/the_big_takeover
article and I forgot where the original link were but it fits this subject.

How much substance is there in the article?

Is it correct that government bailouts and federal bank lending is creating a disadvantage for small banks with lower credit risks and a higher portion of staff that keeps track of their customers and a very large advantage for giant banks with large credit risks and very little personal knowledge about their customers?

Is your financial system realy contracting around your least efficient entities?

I dont care much about who runs the show in USA but if someting like this is correct you ought to get a concentration of power and responsibility that no human or single company can handle. If such a trend runs to completion it would result in the extinction of one of the major feedback mechanisms that creates the complex free market that fine tunes the US economy and a large part of the global economy.

Supreme power withouth the ability to rule wisely since it is beyond the capacity of a human or a group of humans to do what a diverse market full of manny humans do. This is realy scary stuff if you are headed anyway near this direction!

Overshoot: It's not just about lions on the Serengeti, deer on an island or people on the planet.

Complexity: It's not just about social structure, computer networks, and machines.

Chaos: It's not just about drips from a faucet, the fish populations in a pond or fractals.

Greed for power and money? Those never change.


General Growth defaults on some malls repayments

NEW YORK (Reuters) - A Louisiana court issued an order to seize and sell a General Growth Properties Inc GGP.N shopping center in a New Orleans suburb after the No. 2 U.S. mall owner failed to repay a $95 million loan, a Citigroup Inc (C.N) unit said on Friday.

The Oakwood Shopping Center in the town of Gretna is the fourth mall loan that General Growth has said over the past few days it would not be able to repay.

But it is unclear what the effect the relatively small foreclosure and defaults will have on the overall financial outlook for the company, which has said it may have to file for bankruptcy protection if it cannot refinance its much larger debt.

The Chicago-based company, which owns or operates more than 200 U.S. malls, has $1.18 billion in past due debt and additional $4.09 billion of debt that could be accelerated by its lenders. It is trying to garner the support of holders of notes from Rouse Co, which General Growth acquired in 2004, for support that would allow it skip the payments on $2.25 billion of notes this year.

Stop the presses, Peak Oil has been cancelled:

Exxon Mobil's Brazil 'very huge' oil discovery runs counter 'peak oil'

New discoveries in Brazil and other parts of the world have pushed Some industry analysts to re-think 'global peak oil', or the idea that global production is near an apex after which it will decline sharply.

They say they have no idea how big the new discovery really is but it may contain as much as 8 billion barrels of recoverable oil. That is enough to last the world another 100 days.

Ron P.

As I said the other day, it appears that both the Democrats and Republicans believe the ExxonMobil, et al, party line that Peak Oil is--worst case--decades away, and that when it comes we will see something more like CERA's "Undulating Plateau."

The Democrats, generally more concerned about GW, want to gradually transition away from abundant fossil fuels to abundant sources of alternative energy.

The Republicans, generally not concerned about GW, propose that we implement "Drill Baby Drill."

Both parties therefore generally think that there is no problem with the US auto centric suburban way of life--it's just a question of how we power our lifestyle. So, the GOP would have us drive over the edge of the canyon in an SUV, while the Democrats propose that we drive over the edge of the canyon in a plug-in hybrid.

Regarding the GOP point of view:

Michael Steele: ‘We Are Not Warming’

Mr. Steele -– the originator of the “drill baby drill” slogan that dominated last year’s Republican National Convention — appears to be aligning himself with Senator James Inhofe of Oklahoma, also a Republican, who has denounced the idea of a global warming catastrophe as “the greatest hoax ever perpetrated on the American people,” and said that many of the Obama administration’s early moves amounted to “environmental thuggery.”

"So, the GOP would have us drive over the edge of the canyon in an SUV, while the Democrats propose that we drive over the edge of the canyon in a plug-in hybrid."

Great line, westexas!

Alan Drake proposes that we ride away from the edge of the canyon in an electrified train.

Maybe we should just walk, via switchbacks, down the canyon.

Great idea, Nate, but far too sensible to ever be enacted.

There's more than one way to get to the bottom of the Olduvai Gorge.

Thanks, But think "I" deserve a golden parachute to get me to the bottom of the canyon. (big Grin)

You can have the golden one if i get the silk one :P

The gorge was so narrow my dog had to wag his tail up and down.

I'm inclined to agree, especially since Alan's railway isn't modeling what people do, but what policy-makers do and leaves much out while shooting far too low.

But walking down is no panacea. If you're not going to ride, you'll need sturdy boots, canteens for water, non-perishable food, a bed roll, a first aid kid, a wide-brimmed hat, etc.

Walking down doesn't solve our problems, but I do think it's a better set of problems to have to deal with.


It seems the plan is to fill the canyon with corpses so that one can walk down on the corpses.

"So, the GOP would have us drive over the edge of the canyon in an SUV, while the Democrats propose that we drive over the edge of the canyon in a plug-in hybrid."

Great line, westexas!

The Democrats, generally more concerned about GW,...

Not exactly, just a slight different set of corpos backing the Dems. Endless prosperity - whether brought to you by Democrats or Republicans or anyone else - is equally absurd. Bipartisan lunacy.

Sadly, light sweet onshore oil in porous rock is nothing like as hard to exploit as heavy sour offshore oil in tight rock, for an example - the costs of exploiting each type are very different, the lowest cost oil has been exploited first.

World Peak oil is a peak flow rate and has nothing to do with the size of world reserves, it has to do with the cost of exploiting the reserves - size and cost are not the same thing!

Brazil has been able to grow production with 5%. If they can keep that up for the next 75 years they will be producing 85 million barrels by then. Enough to supply the current world production.

Thanks for the reminder that the conventional wisdom is that we can have an infinite rate of increase in our consumption of a finite fossil fuel resource base. I am assuming that you are not being sarcastic.

In any case, let's look at Brazil. Here are the EIA total liquids numbers for 2006 and 2007:

Production: 2.17 mbpd
Consumption: 2.26
Net Oil Imports: 0.09

2007 (Rate of change relative to 2006):
Production: 2.28 mbpd (+4.9%/year)
Consumption: 2.40 (+6.0%/year)
Net Oil Imports: 0.12 (+29%/year)

First, your math is off a little bit. A +5%/year rate of increase would boost total liquids production to about 97 mbpd in 75 years.

But let's extrapolate the 2006 to 2007 data. Here is what we would have in 2082 (rate of change relative to 2007):

Production: 90 mbpd (+4.9%/year)
Consumption: 216 (+6%/year)
Net Oil Imports: 126 (+9.3%/year)

So, if we extrapolate 2007 data for Brazil, their net oil imports in 2082 would exceed current total world liquids production by about 50%.

Exponentials are scary aren't they?

Hello Gail,

Fascinating toplink of the US Navy sub & ship colliding.

Why was the sub even submerged in the narrow and shallow Hormuz stait to begin with? Afterall, it was dark [1am local collision time]: it could have easily run topside beside or behind the ship. This would have made it much easier to coordinate simultaneous movements by radio to maintain a safe separation distance. One would think that you wouldn't want to take any unnecessary chances with a very high $$$$ nuke attack sub.

I would say the sub was very lucky to just hit the ship in the middle: resulting in just puncturing the ship's diesel tank. Although I am not an expert: having a sub cleaved in two by the ship's bow, or the conning tower cutoff by the ship's propellers would have been much, much worse. My guess is the sub commander will be flying a desk for the rest of his naval career.

My guess was that the U.S. didn't want the Iranians to know there was a U.S. sub sitting on the bottom in the middle of the Persian Gulf. The sub was probably hiding under the surface ship as the two entered together. Obviously, it was a tricky maneuver, whatever the reason. Of course, the story after the accident is that the two vessels were headed toward port. If the U.S. had wanted to "show the flag" to the Iranians, the sub would have entered on the surface, IMHO...

E. Swanson

Hello Black_Dog,

Interesting analysis! If you think about it, there really is no obvious reason for an attack sub to enter the gulf except to enter on the surface, show the flag, and then make a port call. It can easily torpedo any ship it wants once the ship enters the Indian Ocean south of Hormuz.

I bet it would be interesting to read the Iranian reaction to this collision.

So your theory may hold true: they were making some kind of covert movement. Perhaps releasing Navy Seals and/or robotic minisubs for Recon, or dare I say it: the sub was supposed to 'false flag' attack/sink something, with the blame subsequently placed on Iran?

This would clear the political way for Israel and/or the US to attack Iran. Too conspiratorial?

It was most likely navel seal's. Newer subs have special chamber's to allow them to exit the sub with out them going all the way up to the surface.

Ashkenazi Returns from D.C. Empty-Handed on Iran
Mar 17th, 2009 by Richard Silverstein | 4

Thanks to reader Walter Ballin for pointing me to Robert Dreyfuss’ new Nation piece about Gabi Askhenazi’s first visit to Washington, D.C. as Israeli chief of staff. He’d hoped to meet at least with defense secretary Gates, if not Obama or Biden themselves to enlist their support for an Israeli confrontation with Iran. Apparently, he was shut down. Not only did he not meet with them, those he did meet with like national security advisor James Jones reminded him that the U.S. is far more interested in discussing progress on the Palestinian issue than Iran.

Combine with MR O's message to Iran.

And Israel gets the short end of the stick.


Nothing personal for the Israeli's but the whole fooking world is finding the best place to jump out of the frying pan and into the fire. Both the Israeli's and Palestinians should wake up and realize they are no longer the worlds favorite problem children.

Hello TODers,

Are there any experts here on the economics of extracting uranium from phosphate ores vs standard uranium ore mining?

There seems to be a lot of agreements signed over the past few years to get uranium from phosphates. Here is another recent one:

Jordan, Russia sign nuclear deal--Feb 26, 2009

Russia, which is helping Iran build its first nuclear plant, inked a preliminary cooperation deal with Jordan on Thursday to pave the way for producing nuclear power in the energy-poor kingdom.

Under the agreement, Russia will help Jordan, which imports around 95 percent of its energy needs, build power and desalination plants as well as research centres, Jordan Atomic Energy Commission head Khaled Tukan said.

..Jordan's 1.2 billion tonnes of phosphate reserves are estimated to contain 130,000 tonnes of uranium, whose enriched form provides fuel for nuclear plants. The government wants the first such plant to be ready by 2015.

The kingdom is the latest Arab country, including Egypt and pro-Western Gulf states, to announce plans for nuclear power programmes in the face of Shiite Iran's controversial atomic drive.
From memory: France's AREVA has also inked deals with Morocco, Tunisia, Libya, and Algeria to extract uranium from phosphate ores,too.

IMO, this will be staggeringly expensive for Jordan, who also has quite severe water shortages too. If I was the Jordanian leader: I would insist on a best-in-class ERoEI and resource assessment before I would commit to this plan.

Does it take a lot more additional water, chemicals, equipment, and energy to get this uranium out of the phosphate? Or just a relatively modest extra investment to get a two Elements for the price of one bang? The enrichment process would be the same for either mining method mentioned above, so this processing step would be equivalent.

I can't imagine that its a huge issue I know little about the actual chemistry but I recall that most Uranium ores are actually shales or other sedimentary rocks where the ore body is more of a concentration issue. I'm to lazy to look it all up but depending on the concentration I can't see the nature of the rock being a huge issue. If the uranium concentration is high enough then its worth mining.

I suspect these are probably marginally profitable deposits thus its more of a political game then a particularly lucrative economic move. Fights go back in forth periodically on the oildrum but yes there seems to be plenty of lower grade uranium ore deposits. Although probably not really profitable the probably have decent EROEI. By this I mean for uranium we are still working the best deposits.


Sounds like 9% of uranium production is already a byproduct of phosphate mining.

And I'm again being lazy so this could be wrong but its basically converted to the oxide by roasting the ore. You can read the links off of this but I just don't see the source rock as being super important since your going right to the oxide in the refining process.

hello Memmel,

Thxs for the reply. BTW, I avidly follow your posts as they are very thought-provoking.

March 28th will mark the thirtieth anniversary of the Three Mile Island accident. The PBS documentary, Meltdown at Three Mile Island, is a detailed and chilling account of the events that began on this early spring day.

Part 1 is available at: http://www.youtube.com/watch?v=tpiR7mZ6I0k&feature=related and the other five segments are accessible through the side bar.

Draw your own conclusions, but I was left numb with disbelief. The parallels to the movie The China Syndrome, released in theatres just twelve days earlier, reinforce the notion that life does indeed mimic art.

For anyone unfamiliar with this film (Jack Lemmon's performance is brilliant), see: http://www.youtube.com/watch?v=Iu3_3sN1O_g


Results 1 - 10 of about 127,000 for France nuclear industry meltdown

Harvey Wasserman: The Crash of France's Nuclear Poster Child
Areva's Money Meltdown. The Crash of France's Nuclear Poster Child. By HARVEY WASSERMAN. The myth of a successful nuclear power industry in France has ...

An excerpt:

The myth of a successful nuclear power industry in France has melted into financial chaos.

With it dies the corporate-hyped poster child for a "nuclear renaissance" of new reactor construction that is drowning in red ink and radioactive waste.

Areva, France's nationally-owned corporate atomic façade, has plunged into a deep financial crisis led by a devastating shortage of cash.

Electricite de France, the French national utility, has been raided by European Union officials charging that its price-fixing may be undermining competition throughout the continent.

Delays and cost overruns continue to escalate at Areva's catastrophic Olkiluoto reactor construction project in Finland. Areva has admitted to a $2.2 billion, or 55%, cost increase in the Finnish building site after three and a half years. The Flamanville project---the only one now being built in France---is already over $1 billion more expensive than projected after a single year under construction.

What strikes me is that the poor much maligned Mr. Carter walked into the maw to show leadership and be with his threatened people. As 9/11 unfolded Bush hid in a hole so to speak.

TMI also fits into the general rule that with any major technology be it civil engineering, ships, trains, aircraft or space craft, safe designs and procedures are always based upon disasters.

Very seldom has humanity's first try at complex technologies not lead to disasterous failures that motivated either real improvements or abandonment.

Secretaría de EnergíaPetróleos Mexicanos

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Pemex released the Feb numbers yesterday. It was down 246,000 b/d, 2,909 m/b/d b/d from Feb. 08 to 2,663 m/b/d. in Feb 09. Marine production was reported down 271,000 b/d from 08 even though KMZ production was up 138,000 b/d in the same period. The article about Pemex production above state EIA forecasts of 2.9 m/b/d for 2009. This is difficult to reconcile based on production facts over the last four years. Cantarell is falling faster than was forecast. KMZ is lower grade oil than Cantarell. Even with the higher production of lower grade oil from KMZ, production from Pemex in averaging 2,672 in 09 to date. It is hard to believe that the article above is any more than a pipe dream

The annual rate of decline in Cantarell's production, based on Jan/Feb 2008 to Jan/Feb 2009, was -47%/year. As I noted yesterday, it makes you wonder what is happening at North Ghawar. Stuart et al, exhaustively looked at the water encroachment on the north end of Ghawar (which has by far and away the best reservoir properties in the field) and Peter Wells, at ASPO-USA, opined that North Ghawar would be "Effectively watered out" by the end of 2010.

In 2005, North Ghawar and Cantarall were the two largest producing fields in the world.

IEA Sees Massive Fall at Mexico's Cantarell Oil Field in 2009
by Peter Millard Dow Jones Newswires Friday, March 13, 2009

MEXICO CITY (Dow Jones Newswires), March 13, 2009

Mexico's state oil company has an overly optimistic outlook for the giant Cantarell oil field this year, the Paris-based International Energy Agency said on Friday.

Cantarell, one of the largest oil fields ever discovered and which provided 60% of Mexican production at its peak, has declined faster than expected in recent years. This has eroded Mexico's overall crude output and exports. State-run Petroleos Mexicanos is now scrambling to find and develop new pools of oil to compensate.

Related Pictures

Chicontepec and Cantarell
(Click to Enlarge)

The IEA, a think-tank for oil-consuming countries, predicts average production of around 600,000 barrels a day at Cantarell in 2009, compared with Pemex' target of 756,000 barrels a day, according to the IEA's monthly Oil Market Report.

Last year Cantarell output fell by one-third to an average of 1 million barrels a day, dragging down overall Mexican production by 9% to a 13-year low of 2.79 million barrels a day.

Pemex continues to shut in wells at Cantarell that produce too much natural gas or water. As the oil layer of the reservoir recedes after decades of exploitation, wells higher up start to pump natural gas, while wells lower down extract more water.

Pemex has invested in infrastructure to separate the gas and water from the oil, but it is still insufficient. Industry executives say Pemex has already had to shut down water and gas producing wells at Cantarell this year.

At Cantarell, Pemex plans to invest $3.6 billion this year, up from the $3.4 billion spent in 2008.

The 2009 investment involves 16 new wells and 14 well completions. Pemex also plans to add more water-separation equipment and build three new drilling platforms.

Pemex expects to produce an overall average of 2.75 million barrels a day this year, even though the company has fallen short of its production targets since 2004. In January crude output slipped to 2.69 million barrels a day, with Cantarell producing 772,000 barrels a day.

Copyright (c) 2009 Dow Jones & Company, Inc.

This IEA view here is also hard to reconcile with Pemex's and the EIA forecast in the article above.

One point to keep in mind with fast decliners (and declining production in general) is the difference between an annual decline rate, from month to month, and the annual decline rate based on average annual production. The former will be a higher decline rate than the latter.

For example, assume one mbpd on December 31st, with a -50%/year decline rate (month to month), resulting in a production rate of about 600,000 bpd on December 31st of the next year. Then let's assume that the average production rate was one mbpd for the prior year and 800,000 bpd for the second year. The decline rate based on average annual production would be about -22%/year.

It will take more than a little time and money to drill the supposed 17,000 new wells each producing 100 barrels of oil a day, under the best of circumstances.

No, the CO of the ship and the sub will be lucky to still have a career and will be facing charges and possibly fines. The "Rules of the Road" are very specific and the only way to pass the tests is basically to quote them word for word from the text so leaves very little room or tolerance for error. Additionally, unlike our road driving rules, there is always blame assigned to both parties and the only question is what % of blame to assign to whom.

The only reason for a close quarter’s maneuver like that would be to hide the sub and being on the surface or not should not have been an issue. Night ops/exercises are done in black out conditions with only red lights to assist (they don't hurt your night vision the same as other colours) with blinds over any windows. All operations are then run by GPS/gyro and radar/sonar. Based on what is being acknowledged they screwed up in a close quarter’s situation and that is all.

However, the really question is what the US was really up to when trying to slip a sub in or out of the strait?

Interesting article in Tikkun: "Rethinking American Capitalism."


The author argues that Obama and all leadership will need to level with everyone about the reality of "tightening constraints" and basically remake the capitalist economic system to reflect democratic values in order to keep the peace.

Here's the conclusion, for those wwho want to get the essence of the article.

"Note also that the logic of the tight constraints facing Obama as he assumes the presidency will almost certainly force Obama in this direction: if the resources needed to carry out health care reform and other expensive proposals are to be garnered, the natural place to start is with the incomes and estates of the super-rich. But Obama will not be able to tap that vast well of resources too often so long as he appeals only to pragmatic arguments to explain why.

At some point, he must exercise the same kind of leadership he carried out with respect to America's racial divide during the primary campaign, and explain to the American people that the vast fortunes accumulated by America's wealthiest are not the product so much of their holder's individual virtues but of the supportive environment provided by the United States and by the long accumulation of human knowledge that undergirds our current wealth. There is no reason, Obama might argue, why continued expansion of our technological capacities should have the effect of hardening economic inequalities, rather than being harnessed toward the common good and (as called for in his Inaugural Address) the extension of "the reach of our prosperity" to "every willing heart."

The very rich will not like it, and the right wing will predictably cry "socialism." But a President Obama willing to withstand the criticism and make the case would not only bolster his prospects for getting the resources needed to fund his programs; it would also help alter our public understanding of wealth and how it is created, steering us away from the myth that individuals create wealth simply through their individual efforts and toward recognition of the central role of community, extending across both time and space, in making prosperity possible."

In other words, we are in for a radical change, whether we like it or not. Will the right-wing demagogues be able to keep manipulating the masses in the face of those same masses starving while a shrinking class lives in luxury? I don't think the Limbaughesque psy-ops will help so much then. Either brute force will enforce the division of wealth, or the government monopoly on violence will enforce some form of redistribution and reformation of capitalism to make it democratic.

Post peak politics, anyone?

debtinator says:
This is like re-writing the end of the "Wall Street" movie: Gekko gets bailed out and bonused and Bud's dad is bankrupted and dies.

The elephant got bagged and the elephant is you.

I am not sure which is more shocking in the light of current events-that such an article could be written or read. The latest Obama/Geithner team garbage asset scam will be unveiled next week-early details are it is a doozy. Investors (hedge funds) put up 3% in capital in return for all of the upside-the taxpayer gets to pay for the party.

Higher taxes on the wealthy is just America going back to it's roots. Today's "socialism" for the rich through lower total tax rates and bailouts/subsidies is not new, but the hard line against "socialism" for those at the bottom is. It started with Reagan and is now reaching its climax, hopefully.

In the 1800's railroads which were the among the dominant economic forces of their day were given property grants along lines which they developed. But along with these came homesteading which gave land to those who would settle on it. Today giving that much wealth to those near the bottom would cause apoplexy amount the Republican elite. And the tariffs of the 1800's which protected American workers and small businesses would today be rejected completely even though they enabled the United States to grow rapidly for over 100 years and absorb millions of immigrants.

Now we have a situation where immigration is permitted at a high rate but employment opportunities are exported by corporations in a low/no tariff globalized environment. The lower levels of income must now compete with all the world, pay a higher total tax rate than upper levels and at the same time be reprimanded for any assistance they get.

I read an opinion piece in the Wall Street Journal bemoaning the fact the highest income group pays most of the country's taxes. They should. If for example the top 10 percent have 90 percent of the wealth and 90 percent of the income they should pay 90 percent of the taxes even under a non socialist system.

To say otherwise is to propose that those with less should have a heavier burden that those with more. That is the situation we have now. Over the long term an economy with such egregious wealth distribution and unfair tax system will cease to function properly. It will, over time, become so imbalanced that it collapses. It happened in 1929. It happened in the former Soviet Union with wealth concentrated in the the Central Committee. And it happened in France with Marie Antoinette's famous "let them eat cake" attitude.

High concentration of wealth/income at the top makes for instability.
It makes no difference whether the system is capitalist, socialist or feudal. A tax system that reinforces concentration of wealth/income at the top is dysfunctional since over time it will bring about the collapse of the very system it is suppose to support. Socialism for the rich only accelerates the collapse if it is not offset with even more socialism at the lower income levels.

The key to stopping/reversing the accumulation of wealth at the top is an overall tax system that serves to at least maintain the current distribution and hopefully over time make wealth/income distribution more equitable so that the economy can function without crises like the one we are now experiencing.

It is very important that the top 10% of USA wage earners pay higher taxes so that the connected will be able to feed at the trough continually. After all, somebody has to pay if everyone agrees that the Treasury should be looted to the tune of trillions of dollars annually. Those foreign banks that the USA taxpayer is subsidizing-how much should their new tax burden be?

Meanwhile, Gil Morales said the current production schedule for Chicontepec calls for the conventional drilling of more than 17,000 wells in 29 fields with the eventual goal of producing around 100 b/d oil from each one of them.

Could those of you with more knowledge of drilling rigs available and how fast they can complete a well and move to the next one give some estimate of how long it might take them to complete 17,000 wells?
Also, what might the payback be in terms of months or years be to drill and complete a well pumping only 100 barrels per day?
Maybe a graph showing oil coming on stream from these wells vs the estimated decline of Cantrell? (ie can they really bring enough on fast enough to stem the total decline in Mexican production?

Could those of you with more knowledge of drilling rigs available and how fast they can complete a well and move to the next one give some estimate of how long it might take them to complete 17,000 wells?

I don't have that knowledge, but the article below from 2007 claims they will be drilling 1000 wells per year in that field, so 17 years at that rate. Perhaps someone with more expertise could comment on the expected decline profiles for these type of wells and how much production they are likely to add incrementally over time? 1000 per year at 100bpd gives 100k bpd/yr, Canterell is declining at around 500k bpd/yr at the moment, so it won't come close to closing the gap even if the wells maintain that production rate for several years.


Pemex also plans to increase drilling in Chicontepec, a field located across four southern states characterized by small pockets of oil that require thousands of wells to exploit. Last month, Pemex said it plans to increase the number of wells it drills there to 1,000 per year from about 200 annually.

Does anyone have Cantarell's actual February production numbers?

Copy of my post from yesterday (showing average production for Jan/Feb 2009):

Combined VenMex net exports were 4.2 mbpd in 2004 (EIA). I estimate that they fell to 2.7 mbpd in 2008, a decline rate of -11%/year.

Mexico's Pemex Jan-Feb Crude Output Down To 2.68M B/D

The biggest decline in production continued to come from the offshore Cantarell fields, which produced 759,000 barrels a day in the first two months, Pemex said, 459,000 barrels a day fewer than in the like 2008 period.

1,218,000 bpd to 759,000 bpd, a decline rate of -47%/year (month to month). Makes you wonder what has been happening at North Ghawar. . .

Cantarell produced 772k in January, so by the average, I calculated Feb. production at 746,000 bpd. I went back to old news releases and got the output profile for the past year:

1243000 1.2008
1192000 2.2008
1110000 3.2008
1074000 4.2008
1038000 5.2008
1017000 6.2008
1010000 7.2008
988100 8.2008
940020 9.2008
901796 10.2008
862060 11.2008
811000 12.2008
772000 1.2009
746000 2.2009

If we look at the first half of the 2/08 to 2/09 period, the annualized decline rate was -38%/year, while the second half was -56%/year, i.e., the decline rate accelerated (again, monthly data, not average annual). As goes the #2 field in 2005, so goes the #1 field in 2005, North Ghawar?

There were two other fields making one mbpd or more of crude oil in 2005, Burgan and Daqing. Apparently, Burgan--an old field in any case--is declining, while Daqing is declining, with something like a 90% water cut.

BTW, as I noted in Ace's post on a near term peak, mathematically, the world (in regard to conventional crude reserves) is to 2009, as the North Sea was 2003 as the Lower 48 was to 1974. 2003 and 1974 were inflection points points at which the North Sea and the Lower 48 respectively went from low, around one percent, annual decline rates to much higher annual decline rates.

The question is what will Mexico do to preserve its oil for the near, medium and long term future? The present government seems bent on damning the future of the 97 million Mexicans who are not rich or have the means to deal with an oil poor future. Another government might be more inclined to protect its oil for domestic needs in the future so that the country does not go over the proverbial cliff. Even this government could see the light.
What then would be the export model?

I expect Mexico to be approaching zero net oil exports by the end of 2012.

i get 43% annual (effective) decline for the last 6 mos. about the same for the 13 months with an ogee about mid '08.

effective annual decline can be calculated by:

de(%) =[1-(qt/qo)^(1/t)] x 100

this works for any time period, as long as de and t are consistant.

effective decline is easy to relate to , nominal decline is abstract - nominal decline can exceed 1 (100%).

But to accurately calculate the volume at a future point in time, don't you need to use the nominal decline rate, using the exponential function?

But I do agree with you about having to explain 100%+ decline rates (a 100%/year decline rate causes a 63% reduction in volume in one year, while a 100% decline takes you to zero). That is why we showed year over year percentage changes when we compared the net export declines for the ELM, Indonesia and the UK.

nominal decline simplifies the calculation of future volume. future rate can be calculated accurately by qt=qi*(1-de)^t.

yes, the most direct way to calculate future volume(reserves) is by:


a substitution of d=-ln(1-de) gives

np=(qi-qt)/-ln(1-de). d and de expressed as decimal fractions, (not %).

a nominal decline in excess of 100% just makes me nervous, i suppose. the texaco way was to read the (effective)decline rate directly off a semi-log plot of rate(logarithmic) vs time.

I don't know very much about the situation. What little I do know is that companies generally contract for a specific number of drilling rigs, say 10. The type of drilling rigs will depends on the geology of the wells to be drilled.

Normally, each drilling rig drills a well, then is taken apart, moved to a new location, and reassembled, so it can drill another well. This whole operation takes several days.

I am sure the people planning this know what the specifics would be--whether one can plan on an average of two wells per month per rig, or what. Clearly, if the wells are very deep, it would take longer than if they are shallow. There may also be a way to get around the take apart/reassemble routine, especially if the wells are offshore (I should know, but I don't, clearly haven't studied this at all).

Gail – I’ve found a few details on the drilling potential. The most interesting is a clip from a RigZone article:
Both drilling contracts are for the Chicontepec area in northern Mexico, where Schlumberger has been drilling since mid-2007 and Weatherford since mid-2008. This means they have already learned the ropes in an area industry experts describe as one of the most difficult oil projects on land worldwide.
One industry executive who participated in the drilling tender said Schlumberger submitted the lowest bid, $689 million, for the first 500-well contract. The highest bid came from Baker Hughes Inc. at $1.2 billion. Weatherford submitted the lowest bid of $650 million for the second 500-well tender.
"Weatherford and Schlumberger are already involved in the (Chicontepec) business," said the industry executive, who asked not to be named because he is not authorized to speak to the media. "They are defending their market with low prices." He said his company would like to test out some of its drilling technologies at Chicontepec, but only with an adequate return on its investment. "We're trying to get involved, but without working for free."

The numbers equate to $1.4 million per horizontal well. I’ve found no info on the depth or length of the laterals. Even f the BH bid at $2.8 million/well is a closer to reality it would represent a relatively shallow/short lateral. For argument, let’s us $2 million/well which would have to include all the surface production equipment. I’ve read the typical new wells can expect to produce around 100 bopd. As always, the reserve estimates mean nothing without a pricing assumption. High prices = big proven reserves: low prices = very little proven reserves. Any in ground reserve numbers are completely useless. But I did the D&M audit expected about a 15% recovery rate. That’s fairly typical of heavy crude reservoirs.
Back to the economics. Very rough number: at 100 bopd/well at $2 million/well at $50/bo = 400 days to payout if you take 100% of the revenue. The contract operators may be getting a cut of the production…not enough details to know. Less then a 1.5 year payout is very good for any project. Even at $25/bo and a 3 year p/o isn’t a bad rate of return. But there could be a lot of things wrong with this number. First, it assumes a 100% success rate with all wells averaging 100 bopd. I have no idea what the success rate might be but all folks pitching oil deal over estimate positive results. Exxon, Shell Oil. PEMEX….I expect too much optimism from all of them. Only half the wells might be successful and produce only 50 bopd on average. This could push p/o to 5 years or so at $40/bo. This is getting a little slim on the economics.

Thanks for your calculations!

I hate myself for posting this and trust you'll find it in your hearts to forgive me....

The year is 1979 and America is in the grip of its second major energy shock. Allied Chemical, a major energy consumer and good corporate citizen, is concerned that Americans are not using energy wisely. The head honchos come up with a plan. They'll make a PSA, but it won't be boring like this: http://www.youtube.com/watch?v=oXZeY7k9ZlQ. Far too cerebral. It would have to be catchy and hip, more along the lines of a musical. So they hire a couple moolighting writers from the Brady Bunch Hour and release this:


I feel so unclean....


You're forgiven-Jet Blue is after the bailout babies http://www.youtube.com/watch?v=OmDiDJ7QrdU

Hello TODers,

It appears that population is growing faster as we go postPeak. I guess, in the future, a lot of mothers will cry as their babies die..

U.N. Raises “Low” Population Projection for 2050

..In a biennial report released last week, the U.N. Population Division increased slightly a projection it uses to forecast the size of the human population. The "low-variant" scenario of population growth now foresees 117 million more people on the planet in 2050 than it did two years ago.

..Yet Zlotnik said that overall population growth "is inevitable." As a result, natural resources such as fossil fuels, timber, minerals, and water will likely be severely depleted in many regions. Population growth also compounds global challenges like climate change and biodiversity loss.
Too bad more people are not reading Malthus, Dieoff.org, and viewing the Bartlett Exponential Video, then changing their procreative habits.

From now on, think of the US as a bigger Zimbabwe

"I've been condemned by traditional economists who say printing money drives inflation," observed Gideon Gono last month. "But once the IMF advised America to print money, I decided God was on my side and had come to vindicate me."
I got a kick out of the comment section:

Mr Mugabe robbed the private sector and printed money to pay patronage to his client state.

Mr. Brown robs the private sector and prints money to pay patronage to his client state.

Mr. Obama robs the private sector and prints money to pay his client state.

Can you spot the difference? - I can't

Mr. Cameron refuses to reduce patronage payments to the UK's client state, approves of the printing of money and will raise taxes on the private sector.

Can you spot the difference? - I cant

Cameron = Brown = Obama = Mugabe

obama didn't invent printing money, i think that was invented about 1984.

see trickle down: