Drumbeat: September 22, 2009

Rediscovering Natural Gas By Hitting Rock Bottom

In recent years, natural gas producers in the United States have struggled, mostly in vain, to be taken more seriously in the energy world. Big oil companies like Exxon had concluded that natural gas reserves in the United States were not sufficiently abundant to warrant big investments in exploration and drilling. When small independent gas producers argued otherwise, they were often ridiculed.

"I once had to tell the Exxon people in front of a congressional committee that I respectfully disagreed with every single thing they had presented," recalls Robert Hefner, 74, a veteran gas producer from Oklahoma.

But the natural gas folks now have numbers on their side due to new successes in getting gas out of shale rock. Geologists have always known that shale rock, often found in combination with coal and oil deposits, holds substantial amounts of natural gas. If a piece of shale rock is broken and lit with a match, it will actually burn for a few moments with a small flame.

Petrobras Pre-Salt Stake Appropriate Size, Rousseff Says

(Bloomberg) -- Brazil’s Cabinet Chief Dilma Rousseff said a bill in congress to reserve a 30 percent stake of pre-salt oil fields for state-controlled producer Petroleo Brasileiro SA is in “line with best practices.”

Iran, Venezuela plan to build refinery in Syria

TEHRAN - An Iran-Venezuela joint oil company plans to build a refinery in Syria as its first international venture with a capacity of 140,000 barrels of oil per day, Iran’s Oil Ministry website SHANA reported on Tuesday.

Total’s Chief Says Oil Is Overvalued Based on Current Supply

(Bloomberg) -- Total SA Chief Executive Officer Christophe de Margerie said recent gains in oil prices reflect market anticipation of a supply shortfall within five years rather than current demand.

“If it was purely offer and demand, prices would be lower than the $60 we are seeing,” de Margerie said today in a Bloomberg Television interview in New York. “The market is anticipating in the long term there won’t be enough oil, some people would say speculating.”

Saudi Oil Minister Expects to Maintain Current Output Level

Despite all the unused capacity, Mr. Naimi also said the kingdom was committed to investing heavily in the oil sector going forward. He reiterated that Saudi Arabia was interested in diversifying its energy resources into alternative industries like solar power, but that it was committed to its traditional investment in fossil fuels.

"There is no let up in our investment in traditional energy sectors," Mr. Naimi said. Saudi has most recently committed to spending $60 billion over the next five years in oil-field and other energy infrastructure.

"We are continuously investing because we believe that it is the right thing," Mr. Naimi said. Many analysts say much of this investment will go toward maintaining output at existing fields and not toward building new capacity.

Refitted to Bury Emissions, Plant Draws Attention

NEW HAVEN, W.Va. — Poking out of the ground near the smokestacks of the Mountaineer power plant here are two wells that look much like those that draw natural gas to the surface. But these are about to do something new: inject a power plant’s carbon dioxide into the earth.

A behemoth built in 1980, long before global warming stirred broad concern, Mountaineer is poised to become the world’s first coal-fired power plant to capture and bury some of the carbon dioxide it churns out. The hope is that the gas will stay deep underground for millennia rather than entering the atmosphere as a heat-trapping pollutant.

The experiment, which the company says could begin in the next few days, is riveting the world’s coal-fired electricity sector, which is under growing pressure to develop technology to capture and store carbon dioxide. Visitors from as far as China and India, which are struggling with their own coal-related pollution, have been trooping through the plant.

China pledges climate action

UNITED NATIONS (Reuters) - Chinese President Hu Jintao announced new goals on Tuesday to slow the growth in his country's carbon dioxide emissions while U.S. President Barack Obama warned time was short to act on global warming.

Obama warns recession makes climate change fight harder

UNITED NATIONS (CNN) -- President Obama warned Tuesday that the global economic recession could hinder the ability of countries to take necessary steps to combat climate change.

Hummer Owners Claim Moral High Ground To Excuse Overconsumption

Hummer drivers believe they are defending America's frontier lifestyle against anti-American critics, according to a new study in the Journal of Consumer Research.

..."As we studied American Hummer owners and their ideological beliefs, we found that they consider Hummer driving a highly moral consumption choice," write the authors. "For Hummer owners it is possible to claim the moral high ground."

The authors explain that Hummer owners employ the ideology of American foundational myths, such as the "rugged individual," and the "boundless frontier" to construct themselves as moral protagonists. They often believe they represent a bastion again anti-American discourses evoked by their critics.

Kuwait Oil Field, World's 2nd Largest Needs IOCs

Production from the world's second-largest oil field in Kuwait may decline without the help of international oil companies to boost crude output, a member of Kuwait's Supreme Petroleum Council said.

Kuwait, which pumps about 2.2 million barrels a day of oil, has failed to renew service agreements with several international oil companies, including BP PLC (BP.LN) and Chevron Corp. (CVX), raising concern about the future output from the country's largest fields.

Kuwait's Burgan field, the world's second-largest oil field after Saudi Arabia's Ghawar field, supplies a big slice of the country's current production. Many of Kuwait's fields have been in operation for 60 years.

Six Questions for Peter Maass on the Violent Twilight of Oil

Is the American lifestyle, based on cheap fossil fuels, coupled with the political power of corporations like Chevron and ExxonMobil, enough to prevent the U.S. from significantly reducing its dependency on petroleum?

This lifestyle is going to change, whether we want it to or not, whether Chevron and Exxon want it to or not (and for what it’s worth, I think Big Oil’s power is on the wane). The question is whether this lifestyle will change with extreme disruption when the price of oil returns to triple digits and goes beyond the $147-a-barrel record set in 2008, or when global warming means a portion of Manhattan is under water, or–and this is what I hope happens–our society truly recognizes these threats and begins the painful and costly adjustments necessary for radical shifts toward renewable energy as well as conservation and efficiency.

Oil Nationalism in Latin America

Latin America is endowed with 132 billion barrels of "proven" oil. Venezuela, Brazil, Mexico, and Ecuador have significant reserves and strong state involvement in the exploration and production of oil through their nationalized companies Petróleos de Venezuela (PdVSA), Petrobras, Pemex, and Petroecuador, respectively. There have been several notable legal developments this year in all four nations, which will have consequences for U.S. energy policy and thus its relations with oil providers overseas.

A Few Truths About Oil

The last chart shows how remarkable all of this is. Despite the fact that the U.S. economy has more than doubled in size since 1980 and the population has increased by some 35%, we consume about the same amount of oil today as we did back then. That's a truly remarkable fact: U.S. oil consumption has not changed on balance for the past two decades.

Oil prices risk rising above $100: Total CEO

“The reserves of oil are there but if you don’t invest they don’t come on the market.” Margerie said oil producers, including the world’s second biggest Saudi Arabia, needed help from non-producers. “You cannot ask those countries which also are facing the (economic) crisis ... you cannot ask them to continue to invest for a potential recovery of the demand and in between doing this for the benefit of the rest of the world,” said the Total chief. “We cannot put all the responsibility on producing countries (...) Now we have to sit and discuss... if we don’t move (on investment) there will be a problem.”

Saudi Aramco Commits to More Gas Exploration

Saudi Arabian Oil Co., the world's biggest oil company, will continue exploring for natural gas resources in the country as it seeks to meet rapidly rising demand in the Middle East's largest economy, its top executive said Tuesday.

"The kingdom is committed to further natural gas exploration because the kingdom needs more gas" for its own internal consumption and demand, Saudi Aramco's chief executive Khalid Al Falih said, speaking at the new King Abdullah University for Science and Technology campus, located north of Jeddah on the Red Sea coast.

Russia said confident of $2bn Saudi arms deal with Russia

Saudi Arabia appears on the verge of signing a groundbreaking, US$2 billion (Dh7.3bn) arms deal with Russia.

Although the Saudis refuse to confirm or deny that negotiations are going on, the Russians appear confident the deal will go through in the coming months, sending a shiver through the ranks of conservative commentators in the United States.

Venezuela Aims to Build an $80/Barrel Floor on Oil Prices

Venezuela aims to double its oil production to more than 6 million barrels a day by 2030, Oil Minister Rafael Ramirez said Tuesday.

Speaking at a heavy crude oil conference, Ramirez said current production in Venezuela stands at about 3 million barrels a day, but that by 2015 the government aims for production to reach 4.7 million barrels a day. By 2030, production could reach 6 million barrels a day, he added.

To reach these goals, Ramirez said state oil firm Petroleos de Venezuela aims to "build a floor" on oil prices at $80 a barrel.

API's President Urges Administration to Support Offshore O&G Devt

American Petroleum Institute President Jack Gerard made the following comments on the closing of the Minerals Management Service's five-year plan comment period:

"In about a week's time, we will mark the one-year anniversary of the end of the moratoria for new oil and natural gas leasing in federal waters off our Atlantic and Pacific coasts. Despite the public's clear desire for more domestic energy development and the industry's years of experience operating offshore in an environmentally sensitive way, this administration repeatedly has slow-pedaled this plan which would benefit all Americans, especially in these tough economic times. New oil and gas development could create thousands of jobs, add over a trillion dollars to government coffers, strengthen America's energy security and encourage our economic recovery.

Special Report: OGJ100 firms log increases in 2008 earnings, capex

Oil & Gas Journal's survey of the 100 leading oil and gas producers based outside the US shows that most of these firms posted improved financial results from a year earlier. Higher operating costs offset strong oil and gas prices, though, for some of the companies.

Exxon to Expand Chemicals Business in Bet on China

(Bloomberg) -- Exxon Mobil Corp., the world’s biggest maker of chemicals used in plastic bottles, is boosting investment in Asian plants on expectations Chinese demand will increase faster than sales of gasoline and diesel.

Competing Projects in Alaska on Schedule But Bumps Lie Ahead

Competing projects to build a $30 billion-plus North Slope natural gas pipeline are on schedule to complete cost estimates and hold open seasons to solicit customers next year, managers of both consortiums told an energy conference in Anchorage.

Both groups expressed concerns over progress of talks with First Nation groups in Canada.

Kyrgyzstan: The rotating outage is effective again as of October 1

As of October 1, Kyrgyzstan launches rotating outages of electricity. This was announced on September 22 by Ilias Davydov, the Minister of Industry, Energy and Fuel, at the session of the committee for fuel and energy sector and subsoil use of Jogorku Kenesh (the parliament of Kyrgyzstan), 24.kg news agency reports.

The time of general rolling blackouts is 24.00-5.00 except for such social targets as schools and hospitals and small and medium enterprises.

Growing shortage of materials causes great hardship

SEPTEMBER 22ND, 1941: Facing into the third winter of the second World War in 1941, a government minister, Seán MacEntee, warned people to expect greater hardship because of growing shortages of materials that were outside the country’s ability to produce, chiefly oil and coal. The extent of those hardships could be gauged from the existing difficulties catalogued in the same newspaper in a letter from Mary Frances Keating, later a columnist with the paper, listing the conditions of some people in the Portobello and North Frederick Street areas of Dublin.

Trailing Indicators: Out of a Job, Some Decide to Take a Hike

NoBos and SoBos are reminiscent of the hobos of the Great Depression, though there aren't so many of them this time. Moreover, they're a throwback to a simpler economy, where swapping short-term labor for food and shelter was common.

That barter system remains today. Dozens of "Trail Angels" provide free meals and lodging to hikers who are short of cash. "I was shooting pool in Duncannon, Pa., with a hiker named Big Camera. I heard a guy at the bar offering $12 an hour to clean his yard," recalls Jack Magullian, a 55-year-old through-hiker whose trail name is Archaeopterix.

States Can Sue Utilities Over Emissions

A two-judge panel of a federal appeals court has ruled that big power companies can be sued by states and land trusts for emitting carbon dioxide. The decision, issued Monday, overturns a 2005 District Court decision that the question was political, not judicial.

Diesels in America - 3 decades of amnesia

During our first energy crisis, General Motors tried a shortcut solution to its sorely underdeveloped engine program. It took a 350 CID Oldsmobile V-8 gasoline engine and diesel-ized it -- with predictably disastrous results. (Remember all the stalled New York taxicabs?)

To divert attention from its engineering failure and the resulting massive lawsuits, the 14th floor of the old GM building directed its PR machinery to declare diesel yesterday's technology. In those days, GM enjoyed enormous marketing clout with its roughly 50 percent market share, and it didn't take long before other manufacturers pulled their diesel engine programs and the gas stations pulled their diesel tanks, leaving consumers to go hunting for truck stops.

Largely because of that, we Americans have had a frozen image of diesel-powered vehicles unalterably etched on our brains ever since: They were slow, noisy and smelly.

Dubious Green Schemes: The Solar Roadway

Those issues notwithstanding, Solar Roadways is engineering PV panels to withstand 40-ton vehicles going 80 miles an hour over them day and night for decades. How much more does it cost to make solar panels–already a bit pricey–totally indestructible? We’re guessing a lot. And this all so we can avoid putting them someplace sensible, like on all those empty rooftops in America’s sunnier climes, where cars and trucks don’t drive and where there also happens to be an existing electrical grid for them to hook into.

Should the U.S. Build Its Next Coal Plants Underground?

Might burning coal thousands of feet below the surface be the secret to making coal climate friendly?

That's what fans of underground coal gasification will be saying this week at several sessions and in the keynote speech at the International Pittsburgh Coal Conference, which goes through Wednesday. Momentum is growing worldwide to look closely at the idea, a 150-year-old technique of igniting seams of coal deep under the ground to produce electrical power or chemicals. It's a proven technology: Joseph Stalin launched the first national research program into the idea in 1928 and the Soviets used it for 40 years to produce power. Since then, cheap natural gas and shallow, easy-to-mine coal burned in traditional power plants have prevented the technique from taking off. (graphic courtesy Lawrence Livermore National Laboratory)

Tiny technologies could produce big energy solutions

(CNN) -- Forgot to charge your cell phone last night? Imagine that you could power it by walking. Weirder still, you might be able to just spray a new battery on.

Saudi Aramco Sees Idle Oil Fields Through 2010 on Weak Demand

(Bloomberg) -- Saudi Aramco, the state-run oil monopoly, sees little chance of pumping crude from idle fields next year because a recovery in world demand has yet to begin, its chief executive officer said.

Saudi Arabia has idled about 4 million barrels a day, or about one third of its crude-oil production capacity, according to the oil ministry. The Dhahran-based company, the biggest exporter of unrefined crude oil, is spending $90 billion to develop new reserves and refineries over five years to 2012.

The world’s most influential oil producer is leading OPEC members cutting a record 14 percent of daily output, contributing to the 56 percent rally in crude prices since December. Global demand for oil is expected to rise by 1.27 million barrels a day, or 1.5 percent, next year, according to the International Energy Agency, not enough for Saudi Arabia to resume all of its idled fields.

Driving habits alter during recession, Census reports

The share of households having one car or no car at all rose to 42.2% from 41.8%.

Last week, Michelle and Justin Forkner of Indianapolis traded in both their cars — her 2006 Mini Cooper and his 2004 Honda Accord — and bought a 2009 Toyota Highlander hybrid.

"We work within five minutes of each other and attend law school at night, so we really didn't need two cars," Michelle Forkner says, adding that the changes "clearly make economic sense." They also find satisfaction in having a new hybrid vehicle.

Some of the decline in car ownership may be driven by younger people putting off getting their driver's licenses or buying their first cars, Goldberg says. "We've seen a cultural shift."

Is globalization's day in the sun over?

Any discussion of "post-globalization" worth its salt must include a dash of peak oil and hyper-complexity talk. James Kunstler, author of "The Long Emergency" and "The Geography of Nowhere," envisions a not-too-distant future when natural resources are scarce and transporting cheap goods over long distances will become impractical, if not impossible.

Under such a scenario, "post-globalization" doesn't represent some esoteric changes in banking regulations; it's a real change in the way we live, eat, and consume energy.

Australia: Peak oil bid slump

THE Shire of Yarra Ranges has been divided over the need for a peak oil contingency response plan.

Lyster Ward councillor Samantha Dunn called for the plan at a council meeting recently.

The plan is expected to cost more than $20,000.

Cr Dunn said the issue had recently been raised at a Municipal Association of Victoria (MAV) conference, alerting local government to the trends in peak oil and the issues of declining supplies across the world.

She said at worst oil supplies would start to diminish by 2013 and at best 2020. “I see this as a really critical issue for council considering we use oil in a range a ways in the shire… whether it’s meals on wheels or repairing roads there is a whole lot of different ways it will impact on us,” Cr Dunn said.

But councillors Richard Higgins, Graham Warren and Chris Templer disagreed, saying it wasn’t council’s responsibility to plan for such contingencies.

Can a city feed itself?

Ambitious? Impossible? Pie-in-the sky? Or an issue that we need to seriously explore?

Producing more food in the city is the aim of Harvest Brighton and Hove, a new project launching on Monday 21st September. Brighton and Hove aims to become the growing capital of the UK – encouraging residents to start growing fruit and vegetables wherever there is an empty space – on balconies, rooftops, by the side of roads, on housing estates and in public spaces. The project will last for three years and is a Beacon project funded by the Big Lottery’s local food fund. The project is led by the Brighton and Hove Food Partnership working with partners across the city including Food Matters, the University of Brighton, the City Council and the NHS Brighton and Hove.

INTERVIEW - Naimi does not expect 2010 OPEC cut

JEDDAH, Saudi Arabia (Reuters) - OPEC does not need to cut output next year, according to the latest oil supply and demand estimates, the oil minister of top exporter Saudi Arabia told Reuters on Tuesday.

Demand for Saudi crude was increasing, and this was evidence the world's economy was recovering from recession, Ali al-Naimi said in an interview on Tuesday.

China increases appetite for oil

China's apparent oil demand rose 2.9% in August from a year earlier, the fifth consecutive rise, as refiners kept production at robust rates and proactive economic policies continue to propel industrial activities.

The August rate, on a high base a year earlier when implied oil demand jumped 7%, offers fresh evidence that fuel demand in the world's second-largest energy-consuming country is recovering further.

Opponents ask Salazar to halt offshore drilling

WASHINGTON – Opponents of offshore drilling — including some dressed as salmon and a polar bear — delivered more than 250,000 postcards and letters to the Interior Department Monday on a proposal to open vast waters off the Pacific and Atlantic coasts to oil and gas drilling.

Interior Secretary Ken Salazar invited public comments on a sweeping blueprint for expanded offshore drilling that was initially proposed in the final days of the Bush administration. He didn't rule out expanded offshore drilling. But he criticized "the enormous sweep" of the Bush proposal, which envisioned energy development from New England to Alaska, including lease sales in areas off California and in the North Atlantic that have been off-limits for a quarter century.

China's largest oil producer vows for another 50 yrs prominence

Daqing Oilfield, China's largest oil producer, vows for another 50 years prominence in the country's petroleum industry.

Wang Yongchun, general manager of Daqing Oilfield Co Ltd, said Tuesday the oilfield would remain an important energy base and continue to contribute a large proportion of China's energy supplies up to 2060.

Wang said factors such as adequate underground fossil resources, scientific progress and well-trained personnel would help achieve this end.

DNO Share Suspension Extended Amid Kurdistan Dispute

(Bloomberg) -- DNO International ASA, the first foreign company to pump oil in Iraq since the 1970s, will be suspended from Oslo trading through tomorrow after Kurdish authorities halted operations amid dispute over a stock sale.

Turkmenistan to talk gas with Russia

Russia and Turkmenistan will hold another round of talks soon aimed at restarting supplies of Turkmen gas to Russia, Turkmen President Kurbanguly Berdymukhamedov said.

Supplies stopped in April after a pipeline explosion but the link has been repaired, he said at a government meeting shown on state television late yesterday.

Former Pariah Qaddafi’s U.S. Trip Seals Courtship of Libyan Oil

(Bloomberg) -- The families of Americans killed in the bombing of a jetliner over Lockerbie, Scotland, in 1988 will protest Libyan leader Muammar Qaddafi’s visit to New York this week. His United Nations counterparts may be more welcoming.

Qaddafi, who speaks at the UN tomorrow, has cemented ties with countries that shunned him for three decades and are now lured by Africa’s biggest oil reserves and a 150 billion-dinar ($123 billion), five-year government infrastructure-investment plan.

Russia to Resume State Asset Sales to Bolster Budget

(Bloomberg) -- Russia will resume asset sales as the government struggles with its first budget deficit in a decade, First Deputy Prime Minister Igor Shuvalov said.

The government has about 5,500 enterprises that can be converted into joint stock companies and sold starting as early as this year, Shuvalov said in an interview with Bloomberg Television in Washington. Russia may also sell part of its stakes in companies that are already publicly traded, including OAO Rosneft, the country’s biggest oil producer, he said.

Venezuela to pay off $4.6bn debts

Venezuela will pay off more than $4.6bn (£2.8bn) in debts owed by its state-run oil producer in an attempt to boost its slowing economy.

President Hugo Chavez said Petroleos de Venezuela (PDVSA) will pay the debts it has accumulated with oil contractors by the end of the year.

Amaranth Advisors Seeks at Least $350 Million From Touradji

(Bloomberg) -- Amaranth Advisors LLC, the hedge fund that lost $6.6 billion three years ago this month, sued Paul Touradji and his employees, seeking at least $350 million for claims including breach of contract and misappropriation of trade secrets.

Heating Oil Margins May Double to $10, Merrill Says

(Bloomberg) -- Refinery profits from producing heating oil may double to $10 a barrel as the global economy recovers, Banc of America-Merrill Lynch said in a report.

Demand for distillate fuels, which include heating oil and diesel, is rising as car sales pick up and industrial activity accelerates, Merrill said in a report dated Sept. 18. Refiners will soon need to produce more distillate after curbing output when profits were weak, the bank said.

China’s Coal Imports Fall on Costs, Local Supply

(Bloomberg) -- China, the world’s largest coal user and producer, cut imports of the fuel for a second month after global costs rose and domestic supplies increased.

Purchases fell 15 percent to 11.77 million metric tons last month from July, data from the customs office showed today. Imports are still higher than the 3.79 million tons reported a year earlier.

Aussie oil spill set to continue leaking: company

SYDNEY (AFP) – The company at the centre of a massive oil spill off Australia's northwest said Tuesday it was still about two weeks away from plugging the leak, which has already been gushing for more than a month.

An estimated 400 barrels of oil has spilled daily into the Timor Sea since the West Atlas drilling rig began leaking on August 21, forcing the evacuation of 69 workers, according to Bangkok-headquartered PTTEP Australasia.

New Tire Rack Test Confirms Low Rolling Resistance Tires Equal Increased Fuel Efficiency, Reduced Emissions

"Low rolling resistance tires represent the most environmentally-focused development in tire technology today," said John Rastetter, director of tire information, Tire Rack. "Every gallon of gasoline saved not only reduces each driver's personal fuel costs and America's dependence on foreign oil, but it also releases 20 fewer pounds of CO2 gas into the atmosphere from the tailpipe. Our tests proved that vehicles equipped with these tires can achieve better fuel economy."

While the low-tech ways of achieving lower tire rolling resistance has usually traded off wet traction and/or treadwear, further controlled testing at Tire Rack's test track has also shown that the newest high-tech, fuel-efficient tires have achieved it without compromising traction thanks to the introduction of new tread compounds, tire designs and weight optimizing manufacturing processes.

Rolls-Royce expanding fuel cell research in Ohio

NORTH CANTON, Ohio - Rolls-Royce says it is expanding its fuel cell research division in Ohio.

Company officials say they will invest $3 million in processing and testing equipment at Stark State College of Technology in North Canton, where Rolls-Royce Fuel Cell Systems established its North American headquarters in 2006.

GE Appears to Stress Windmills Over Nuclear Power, Senator Says

(Bloomberg) -- General Electric Co., the biggest maker of power-generation equipment, appears to be focused on renewable energy sources such as windmills rather than the nuclear power needed to combat global warming, Senator Lamar Alexander said.

The Tennessee Republican is a nuclear-power booster who has called for 100 reactors in the next 20 years as the Senate weighs legislation to cut greenhouse gas emissions. Fairfield, Connecticut-based GE said it remains committed to nuclear energy.

U.K. Power for October Falls to Record as Spare Capacity Grows

(Bloomberg) -- U.K. power for October 2009 declined to a record low as increasing power generation availability boosted the margin of spare production capacity.

October baseload power fell as much as 0.7 percent to 34.10 pounds ($55.63) a megawatt hour and was at 34.15 pounds as of 10:15 a.m. in London, according to GFI Group Inc. Baseload electricity is delivered around the clock.

BOLI Commissioner Awards $127,713 in Sex Harassment Case

(PORTLAND, Ore.) - State Labor Commissioner Brad Avakian has issued a final order in the sexual harassment case against From the Wilderness, Inc. (FTWI) and Michael Ruppert of Ashland.

In addition to awarding lost wages, Comm. Avakian ordered $125,000 in mental and emotional suffering damages paid to Lindsay Gerken for the workplace harassment and retaliation she suffered during her less than three months of employment at FTWI. The damage award reflects the egregious conduct of Ruppert as well as the reinvigoration of civil rights enforcement by Commissioner Avakian.

Canada should put oil sands on hold: climate change expert

MONTREAL - Canada should be doing much more to tackle climate change, and consider closing down the oilsands projects in northern Alberta, the head of an international scientific panel on climate change said Monday.

Canada should follow the European Union, which has pledged to cut its greenhouse gas emissions by 25% below 1990 levels by 2020, said Rajendra Pachauri, head of the Intergovernmental Panel on Climate Change.

Fake NY Post draws attention to global warming

NEW YORK – A day before a U.N. summit on climate change, an activist prankster group distributed copies of a fake newspaper mimicking the New York Post to draw attention to global warming.

The front-page story in the newspaper parody Monday warned of "massive climate catastrophes" and "public health disasters."

The Greenhouse Gas Dilemma

So, how do we comply with MRR? Do we cobble together statistics and spreadsheets and load them into the system the EPA is building for electronic capture of this information? Do we buy a bare-bones system to help us track the data and report automatically? Do we buy a large system that helps with the MRR but also provides assistance in getting a better handle on the larger issue of carbon management in the context of the looming cap and trade regime?

U.N. seeks momentum in climate talks as Obama, Hu speak

UNITED NATIONS (Reuters) – China and the United States, the world's top greenhouse gas emitters, will try to ignite efforts on Tuesday to secure a U.N. global warming pact as worries grow of a "dangerously close" deadlock in talks.

On Global Warming, an Ambitious Agenda

The United Nations' commitment to securing an international climate deal will be on full display Tuesday, as world leaders come together in New York to discuss how best to address global warming. But the event, arranged by Secretary General Ban Ki-moon, highlights both the possibilities and obstacles Ban and his deputies face in orchestrating the historic pact.

As U.N. Meets on Climate, Momentum on Pact Is Elusive

The world leaders who are meeting at the United Nations to discuss climate change on Tuesday, are faced with an intricate challenge: building momentum for an international climate treaty at a time when global temperatures have been stable for a decade and may even drop in the next few years.

Business chiefs urge 'robust' climate change deal

LONDON (AFP) – The chiefs of more than 500 global companies called on Tuesday for an "ambitious, robust and equitable" climate change deal, in the spotlight in New York ahead of a landmark meeting in Copenhagen.

The business leaders from over 50 countries including Brazil, Britain, China, Japan, Russia and the United States said measures to spur recovery from the global downturn must be environmentally sustainable.

Airlines vow to cut carbon output by 2050: report

LONDON (AFP) – The aviation industry is set to make a dramatic pledge to slash carbon dioxide emissions in half by 2050, as key climate change talks get underway at the United Nations, a report said.

British Airways chief executive Willie Walsh will unveil an agreement between airlines, airports and aircraft companies to cut emissions to 50 percent below 2005 levels by 2050, the Guardian said.

Population growth driving climate change, poverty: experts

PARIS (AFP) – Unchecked population growth is speeding climate change, damaging life-nurturing ecosystems and dooming many countries to poverty, experts concluded in a conference report released Monday.

Unless birth rates are lowered sharply through voluntary family-planning programmes and easy access to contraceptives, the tally of humans on Earth could swell to an unsustainable 11 billion by 2050, they warned.

I know a few people have posted opinions recently that 'entities with financial influence' are arranging gimmicks so as to get government subsidies in lieu of the missing profits that won't be arriving in this economy.

Any thoughts on how this will play out in the near future?

Just curious.

There seems to be a shift underway to offload liabilities on government sponsored entities like Fannie, Freddie and the like. I don't doubt that the deal has been done and future losses for those who can hope to find cover here, will be dropped into the taxpayer's laps. The greatest value of financial operations like GMAC or GE Money to their parent operations may lie in their ability to serve as a conduit for shedding financial losses incurred by other sectors of the organization.

Politically the anger at the financial sector dumping this onto the taxpayers lap is fueling a lot of crazy and not so crazy thinking. Populist anger is being discounted by the elites; they hope to redirect it to the current President. I think they have to the hardcore Glen Beck disciples but not to the rest of America per say.

Just today on the MSM Beck says in his opinion Obama is better for the job than McCain would have been. A disinterested observer IMO would conclude that the Obama disciples are at least as fanatical as Beck's crew-because Beck is criticizing Obama obviously he must be a shill for the Republicans-the guy was a big critic of George Bush also. When I have seen his show he appears to be selling the message that overall, with a few notable exceptions, both Dem and Repub politicians are absolute dog dirt. Somehow the fanatics hear this and interpret this as a sign that Beck is an enemy of Obama.

Populist anger is being discounted by the elites

Alas "we" do not have a good working definition of 'populist' and 'elites', yet I'd say that evidence exists that 'the people in power' are not discounting.

And example:
Why the report of the sonic pain machines on US streets if the various parties did not think it would be needed?

One man's elite is another man's working stiff. One man's populist is anothers mob.

As a bit of short hand

Elites + the ones who benefited the most from the Bush tax and spend policys and who are bankrolling the current GOP for the most part

Populist element = the ones laid off at the rate of 700.000 per month, they are not Obama maniacs

and a mob is right, the anger is diffuse but its in the air

Any thoughts on how this will play out in the near future?

LOL! With more cases like this...

Swedish police couldn't pursue the thieves because a bag marked "bomb" had been placed outside the police heliport, and officers had to deal with the bag before they could enter the heliport.


This is not me by the way but great minds do think alike.


Also, I have seen a number of comments that reference Assburger (Asperger) syndrome.
From my little understanding it is basically mild autism like Rainman light.
I will say that I have had a bunch of WTF?? reactions to comments here and I am sure others have reacted the same to many of my own(and there are many).
Anyway maybe a good future topic?

A popular movie out now, regarding Aspergers...


Your reference to "Rainman light" is a little derogatory.

I have this condition. Read up.

I was just kidding. I think I have it as well. I apologize for any insult.

To be honest all of my sibling might qualify to varying degrees.

Thanks for the link.

Apology accepted. The movie is called "Adam"
I'd give it a C+..

I've always wondered where the "normal" people -- people who after all invented such things as napalm, nuclear weapons and gas chambers -- got off classifying someone as "abnormal" or worse, "handicapped" in some way. The "tyranny of the majority", as they say.

I dunno, were these things invented by neurotypicals or just put to use by them?

It isn't at all unusual for AS individuals talented in a practical art to create things without a thought to knock-on effects.

"If the rockets go up,
who cares where they come down?
That's not my department."
Said Werner von Braun
-- Tom Lehrer

I, on the other hand, am absolutely fascinated by interactions and consequences.

You can never do just one thing.

Indeed they are quite interesting, especially in situations where "in the wrong hands".

Werner von Braun obviously made a (cold?) calculation - if I can advance the science of something and people get killed in the process, so be it.

This specific debate aside, more seemingly innocuous things like having a child can have major consequences on a grand scale. The reason why Werner is more amusing is because if he and his rocket team had screwed around (not even open revolt - just stalling) he could have saved lives.

But maybe that's the problem... maybe Werner didn't work hard enough and prolong the war! While amusing, such "what if's" are generally silly - the only thing is too see what the result was/is...

Indeed, and though I used him as an example I have absolutely no evidence that Herr von Braun was anywhere on the autistic spectrum.

The logic illustrated by Tom Lehrer's lyrics, however, is totally typical to what I have seen. This is, of course, assuming that the concept that whatever project they are engrossed in might have unfortunate consequences even comes up.

The reason why Werner is more amusing is because if he and his rocket team had screwed around (not even open revolt - just stalling) he could have saved lives.

I'm certainly not an apologist for Werner's moral lapses (which are glaringly large. His creations did indeed kill people (IIRC more people -mostly slave labour died making the rockets than the actual targets of them). But military analysts think the diversion of resources to the V2 program probably shortened the war. Hitler would have done more damage with his limited resources with conventional weapons. -So on net, via uninteneded consequences, he probably saved many more lives then he took via intended consequences. Still I have to hold my nose when I see pictures of him.

Emily Dickinson said it best:

MUCH madness is divinest sense
To a discerning eye;
Much sense the starkest madness.
’T is the majority
In this, as all, prevails.
Assent, and you are sane;
Demur,—you ’re straightway dangerous,
And handled with a chain.

From my little understanding it is basically mild autism like Rainman light.

True, Aspergers is considered to be part of the autistic spectrum.

As the father of a highly intelligent kid with Aspergers I'd say your understanding is significantly lacking.

Edit: I just saw your other comment so disregard this.

I think the next predicted event is coming... last week I've noticed a sudden and large increase in commercial property "for sale/lease" signs popping up... and yet they are still building!

I wonder how long before these wave of loans start to pop?

P.S. How come nobody uses the analogy of rising bread and slamming doors anymore?

What city?

I like that analogy but I think no one uses it anymore because they don't understand it.
I mean who actually makes bread at home any longer?
That is going to change.........back to basics baby.

Last night, four loaves of rye/wheat bread baked by my roommate :-) Before that, pumpkin bread.

Best Hopes for Home Baked Bread,


I just started baking bread myself.

Look up a Struan bread recipe... great stuff!


Iggy -- Sorry I didn't save the link but some months ago I saw an update on commercial loan failures. I forget the absolute percentages but the rate was up about 50% y-o-y. Still in the low single digits but growing. I suspect if the trend continues it will still be a while before it becomes front page news. The MSM seems content to not focus on too much negative economic news at the moment. But I suspect that honeymoon attitude will disolve in time. The MSM can't escape the nature for ever.

Something of a connect-the-dots thought regarding the story above re: Venezuela's paying off debt to foreign oil contractors. One might wonder how Chavez came up with the almost $5 billion after the collapse of oil prices earlier this year. Short on details as they haven't been released but China has been pumping many billion's of $'s into Vz buying long term crude contracts as well as in ground reserves. China has been following this path around the globe for at least 15 years. And just yesterday I saw a headline indicating the prime minister of Aruba will approve the sale of Valero's huge refinery there to the Chinese. This is one of the largest refineries in the western hemisphere and a big source of products for the U.S. On the same day saw another headline re: China buying another $16 billion of crude from Vz. No details on exactly how this crude is banked. A connection to Aruba? Gulf Coast refiners have lone assumed that Vz heavy crude would be theirs for the asking when the sweeter stuff (like Cantrell's quickly disappearing flow) started running short. Also, earlier this year Vz announced another deal with China: the Chinese gov't would build a small fleet of tankers designed specifically to carry Vz heavy crude to three new refineries in China that will be designed to process the same. I don't recall the volumes involved but obviously it has the be huge given the size of the Chinese investment.
We've devoted a lot of discussion on TOD re: the decline of Mexican crude imports. Perhaps it appropriate to open the discussion to the potential decline in Vz imports (one of our big suppliers) not as a result of production declines but forward thinking purchases by the Chinese. BTW : the Chinese are also quickly tying up huge amounts of Australian LNG. They definitely seem to have a focus on securing future FF resources. They are also chatting with Turkmenistan about a very expensive pipeline to haul NG back to China. Turk has been a big source of EU NG flowing through Russia. A clear pattern of securing China's energy future.

Great observations ROCKMAN -

The US power elites are incapable of having rational discussions with our neighbors. Anyone think the senate would countenance a chat with Castro and/or Chavez or Morales? We're going to jump up and down, call people names, and screw ourselves in the long run (Thanks, Republicans!).

Thomas Friedman (no time for a link, sorry) who I seldom fully agree with, NAILS IT 100% in his latest column. The Euro's aren't wimps, we are. It's on the topic of developing alternatives to oil...

The US power elites are incapable of having rational discussions with our neighbors.

Could you have a rational discussion with your neighbors?

I can only think of one direct neighbor where hot buttons of race/class/religion/money/guns we could have a non-hot headded talk. How many of your neighbors would that apply to? How many have you actually talked to?

Could you have a rational discussion with your neighbors?

Yes, except the across the street one with a PhD from Harvard in GeoPhysics when we talk Peak Oil >:-)


Well, Eric,

I haven't spoken with all of my neighbors, yet, (I moved recently), but I've had great conversations with several of my new neighbors. We're friends now.

But think about it: If I funded death squads to kill my neighbors' kids/wives/daughters think they'd wanna talk? If I bombed their house and kidnapped the patriarch who was on my payroll previously think they'd wanna talk? If I moved new residents into their homes and had them kicked out and tortured, think they'd wanna talk?

You can get my point?

Don't you think it would be nice to cooperate with Cuba instead of embargo them? Don't you think we could use Venezuela's hydrocarbons in the future?

As long as it is an article of faith that the market will supply whatever we need, there is no need for long term contracts.

Also, what do you think we would pay for the long term contracts with? IOUs?

Hi Gail,

Have you looked in any detail - or, do you know of anyone who has (and written about it) - at the totality of China's contract approach?

Do you believe that the other parties would not make contracts with the US, although they do/would with China?

What is China offering as tender for these contracts? It seems to be a multi-faceted approach. It would be interesting to break it down into present costs v. future promises.

Aniya -- I'm not sure I get the gist of your discussion with Gail. But I can offer a little detail on some of China's approaches to accessing future FF resources. For 15+ years they have been injecting cash directly into FF development projects in many country. Angola is a current example. At last report China was the biggest spender there. The contract terms are never revealed but pretty sure how they are structured. They are actually assigned ownership of the crude in the ground. Of course, Angola, Venezuela or any other participant cannot honor those deals in the future. But such violations are not as easy to get away with now as it was in the bad ole days. Many don't realize how powerful the courts (including the World court) are today. My wife's daughter is an lawyer who works on such cases. Though they seldom hit the front pages but most who sue over such violations win today. It may take 10 years but they win. What's makes enforcement even easier is the common practice of making purchasers of such illegally sold crude a party to the lawsuit. Exxon might want to but crude oil from Angola that's legally titled to China but they don't want to have to pay part of a multibillion judgment (plus interest) 10 or 15 years down the road. The same rules applies to crude China has contracted to buy but not as clear cut as when they are assigned actual title to the crude. Even in the U.S. today there are occasional title questions over the ownership of domestic crude. No crude buyer in the U.S. will disburse a penny until all parties have approved and signed off on the ownership title. I'm not certain but I think our laws have often been used as basis for international rulings.

Not sure if this addresses your debate but it does tie to comments I've been making recently about China's every expanding efforts to tie up large volumes of the remaining FF in the world.

Saudi Arabia: International bankers outraged at rumored secret Algosaibi - al Saad bailout

A rumored secret bailout that took place days ago in Saudi Arabia has International bankers up in arms. No official details have been released, but it is said that the government-frozen assets of troubled Saudi financial groups Algosaibi and Saad (Al Sanea) have been used to pay off their debts to local creditors, at the expense of foreign firms now left with billions of dollars of unsecured debt.

The same thing has been going on in Albuquerque since the financial recession/depression has started. More and more legacy office space now empty/for lease, with more and more new office/commercial plazas/buildings completed, and also vacant.

Strange indeed.

Denninger has weighed in on that "free houses" thing. Mortgages have been sliced and diced to the point that no one has the standing to foreclose. Denninger thinks this was intentional, and that the missing documents are missing because they would show widespread fraud.

Reading Denninger's comments, I wonder what the folks at Harvard and the other big name universities are doing about the losses to their pension and endowment funds? Don't these outfits have some high powered lawyers working for them? Don't they care that they might have lost $Billions?

E. Swanson

They didn't lose any money-the endowment funds lost money-there is a big difference between the two.

Also remember, many of these documents were never in the banking system, they were with mortgage borkers, many of who are bankrupt. As a general rule, it is impossible to get papers from a company that has been bankrupt for a few years.

Think of this hypothetical case. A few buddies and I started a mortgage brokerage in the boom times. We made money for a few years doing mostly subprime. We then went bankrupt. One of use may or maynot have the paper work. (We have to be insane to keep the paperwork, since without the paper work, we are law suit proof.)

IMO, if force to actually go to court, most mortgages could not be proven to exists.

And also, there is the common law rule that real estate contracts have to be written to be enforceable.

I believe many of these foreclosed properties will go back for there taxes as ruined homes.

A friend of mine walked away from the mortgage on his house some years ago because the bank lost the documents. He went to renegotiate it, and they couldn't find it.

So, he had his lawyer file suit against them, demanding that they produce the mortgage documents or abandon all claims against his house. At the end of it all, the judge agreed. If they don't have a written document, then they don't have a mortgage.

This is a result of something called the "Statute of Frauds". It goes back to 1677 England, and arose because people were obtaining the title to land by lying in court. As a result, documents regarding ownership of land have to be in writing, or they are invalid. Most jurisdictions have a Statute of Frauds, or something equivalent.

Statute of Frauds

If the matter of mortgage foreclosure arises, mention that Olde English phrase to your lawyer ASAP, and don't admit that anybody has a mortgage on your house until they produce a signed document proving it.

It could be a problem for these financial institutions if they haven't been properly transferring the ownership of these mortgages. They could find they own no mortgages.

If no one can provide the documents saying you have a mortgage can you keep the house for free?

In the U.S. how do you keep track of who owns the house?

By deeds recorded in the County Office usually called "Register or Deeds" or "Recorder of Deeds". Unrecorded deeds can also exist but in most states a previous unrecorded deed would lose in a title contest to a later recorded deed.

Leanan -- Some time ago I saw a story re: a Florida law firm that was sending their staff around the country to teach other lawyers how to fight title cases on behalf of homeowners. They've have won cases based on a simple question: if the mortgage company says you owe them for your home then show us the original paper work signed by the homeowner acknowledging that debt. No original paper work? No debt. Case closed.

As you say there are a lot of missing documents out there. It would be interest to hear how mortgage holders are reacting to this ploy. Or, perhaps as you imply, they would be just as happy to let sleeping dogs stay buried.

That's the "produce the note" strategy. It's more of an urban legend than reality. While it's worked for some people (at least to delay foreclosure), as Denninger says, it's been ignored in many states.


NPR ran a story on a lawyer who was using this strategy in Southern Florida. A lot of banks couldn't produce the title.

Even if only 1/3 of states follow the rules, it is a huge amount of money.

Denniger listed two states, New York and Florida.

It is in New York's financial sector interested to have easily enforceable titles. This interest is not shared by many states.

Also, a say 12 month delay is still 12 months free rent.

On a side note: If courts do not require the orginal contract, what is to prevent a fraudster/mobster from trying to claim the payment instead of the real bank.

According to this shyster:

Occasionally it does work in judicial foreclosure states, but in non-judicial states there is no one to demand it of.

I suspect this is correct, or a lot more people would be doing it, and we'd be hearing a lot more about it.

While this may prevent foreclosure, it would leave the homeowner in a legal limbo. The deed will still show a lien against it that would need to be dealt with at some point in the future before the property can be sold again.

There is also the theoretical possibility that someone will come up with the papers at some point in the future, at which point foreclosure can proceed..

I am guessing that at this point people are more concerned about preventing foreclosure - they will deal with this other issue later, I suppose.

Robert Rapier has a great book review out this morning:
Book Review: Crude World by Robert Rapier

Crude World was released today, September 22, 2009. The general theme of the book is that the world's dependence on oil has come at a very high price. This is not a book on peak oil, climate change, or renewable energy. It is not a technical book on the oil industry (for that see Morgan Downey's Oil 101). The book covers the misery - the wars, the corruption, and the ruined lives - brought about primarily by greed from the lure of black gold. The book highlights the irony that oil could be used to improve the lives of a country's citizens, but in far too many cases a country's citizens end up being worse off after oil is discovered.

Also, Amazon.com has a great interview with the author:

Crude World: The Violent Twilight of Oil

Peter Maass: My subject wouldn’t speak to me! Okay, that’s a joke. But seriously, oil, as the topic of a book, defied the norms of interrogation. It doesn’t have a voice, body, army or dogma of its own. How do you coax secrets from a liquid? I had to travel around the world and talk to all sorts of people--oilmen, warlords, politicians, economists, geologists, environmentalists, sheikhs, lobbyists, and roughnecks (that’s a partial list). The subjects we discussed ranged from history to law, corruption, engineering, culture, psychology, and justice (another partial list). I was prepared for complexity, but the reality I encountered was a multi-dimensional web of facts, ideas and guesses. I was journeying through an intellectual as much as a physical world.

Looks like a great read. Thanks Robert for calling this to our attention.

Ron P.

I didn't post that review link because it will be a key post here, presumably later today.

Also...there's an excerpt from the book, linked in a previous DrumBeat, here.

That saves me some time; another review would probably be redundant. I also got an advance copy and the book is a very good read, with a wealth of information. His concluding chapter is very poignant, with two contrasting symbols of our energy future--windpower versus US military forces.

Saudi Arabia has idled about 4 million barrels a day

So why were these 4 mb/d not pumped last year when they were needed most?

We can clearly see that Saudi Arabia's maximum production in 2008 was not higher than in 2005. Only the new member Angola brought growth.

Visit my new web site for more details

My guess is that Saudi Arabia can increase production, but it's not as simple as turning a tap.

Saudi has neither boosted production much, nor has it "nosedived into the desert." I suspect what that means is that they could increase production, but it would take a lot of time and money. They need to build infrastructure, drill new wells, etc.

But if that is the case then it would take time for them to increase production, while depletion and declines marched on. They would essentially need an untapped Super Giant at their disposal to pull that off today if the analysis I've seen around here for the past few years is anywhere remotely close to the mark.

So it is really a matter of "where in the curve are they really?"

Of course Saudi can increase production, probably to about where they were last year. They have brought Khurais on line but their aging fields have declined about the same amount. In another year they will not be able to get back to last years level. The claimed 4 million barrels of spare capacity is as big a joke as their 260 billion barrels of proven reserves.

I am alarmed at how many economists, news organizations and even oil people, simply take the Saudi's word for this. Have they no knowledge as to how Arabs use language? They are prone to gross exaggeration and they expect the people they are addressing to be aware of this predilection. Of course other Arabs are but Westerners seem to be totally in the dark concerning this feature of how the Arabs use language.

I worked for ARAMCO and lived in Saudi for five years. I went through indoctrination in Houston by ARAMCO and this tendency for exaggeration was one of the first things they taught us before we entered the kingdom. This fact was taught to us by none other than ARAMCO itself. What people don't understand is all Arabs think this is just normal behavior. They don't apologize for it because they think everyone does it. And they expect you to know that.

Saudi Arabia, as pointed out in the article above, is investing in solar power. Why! They are searching for oil in the Red Sea? Aramco boosts drilling in seismically tough Red Sea

London: Saudi Aramco, the world's largest state-owned oil company, has boosted exploration in the Red Sea, seeking deepwater reserves away from its historical focus in the east of the nation, according to its area exploration manager.

The Red Sea is two kilometers deep in places with a 7,000-foot thick salt sequence which can distort seismic images, according to the magazine.

Two kilometers of water, then through the sea floor until they reach a mile and one third thick layer of salt, then below that for how far? If they do find any oil here it will be some of the most expensive oil in the world to produce. Yet they have 260 billion barrels on the other side of the nation just waiting for cheap shallow wells to be drilled to pull it out?

Come on world, wake up and smell the coffee. Last year there was no spare capacity. Now, due to the OPEC cuts OPEC has about 2.5 mb/d of spare capacity, give or take about .5 mb/d. That will entirely disappear in less than three years.

Ron P.

I think the Saudi's where as surprised as most when the oil price went to $147 last year -and for a time they probably looked in glee at all the Shekels piling in but seeing the devastation wreaked they will rpobably bring that spare capacity back in when prices get too painful next time. It will probably create a ceiling between $80-$100 for a good few years... Then when that's used up its off to the races again... 2012 anyone?


True, I've read reports that in Afghanistan, the general rule of thumb is that enemy forces inflate their numbers by an order of magnitude.

I don't think Afganis are Arab. Neither does the CIA:

Ethnic Groups:Pashtun 42%, Tajik 27%, Hazara 9%, Uzbek 9%, Aimak 4%, Turkmen 3%, Baloch 2%, other 4%

Languages:Afghan Persian or Dari (official) 50%, Pashto (official) 35%, Turkic languages (primarily Uzbek and Turkmen) 11%, 30 minor languages (primarily Balochi and Pashai) 4%, much bilingualism

Has anyone considered the possibility that the Saudis have made a deliberate decision to plateau production in order to stretch it out as long as possible?

Sounds reasonable to me WNC. As the export ability of the other OPEC members declines the KSA has ever increasing control of the world market place. Given the continued decline of all reservoirs and the effect of ELM it's just a question of when this happens. The rate of global economic rebound will also factor in, of course. Just a WAG but I would imagine that the KSA may have a significant degree of control in 4 or 5 years. They've obviously learned a hard lesson about drastic price spikes and the resultant downward push on demand. Given the merging above and below ground factors this will likely be a difficult balance to maintain.

There's another factor in addition to natural decline and ELM that I'm beginning to give greater weight to: the global Chinese effort to secure future crude production. They have clearly tied up a great deal of future flow rate but I can't begin to estimate the magnitude. To what ever degree this impacts FF access in the next 4 or 5 years it certainly is pushing the KSA closer to real market control IMO.

Rockman you have put a very ugly thought in my head.

Above your comment there is a lot of discussion about China buying a lot of ff resources in fairly distant locations such as Venezuela.

Can you imagine a better justification for a military attack by China than one of these suppliers deciding that they need those resources for their own populations?

The sequence goes something like this:

- oil becomes scarce, prices rocket.
- certain western powers (cough) decide to start throwing military might around to intimidate.
- countries become worried
- China says, don't worry, we can help protect you, pay the full amount and let you continue as always, here are some high tech weapons and some soldiers to man them.
- oil becomes scarcer
- country tries to reduce delivery on its contract with China
- military coup.

Don't forget two mottos:

"Keep you friends close and your enemies closer."
"The Chinese always play the long game."

This is a relatively popular scenario-the question is: how much money would China have to cough up to convince the most powerful and influential Americans to act against the interests of the USA? IMHO it wouldn't be very much at all, which is why I don't see these scenarios playing out. Again IMHO China and the USA and EU will decide where the oil goes, and it won't be pretty for the USA as a whole even though the elite will benefit from the arrangement.

Wouldn't that be the ultimate irony.
The US would get taken down the same way it took down many resource rich nations.
Economic Hit Man.

The theory used to be that the USA federal government was the major threat to the global banking elite power. That threat appears to be overcome, barring unforeseen circumstances. IMO China now exists as the major threat, Germany lurks in the background as a troublemaker. The USA is being looted just like Argentina was looted. Obama's comments the other day were classic-why should bankers making millions in bonuses (from taxpayer money) be subject to compensation controls and unemployment reaches record levels? His Marie Antoinette act shows a lot of hutzpah.

jj -- I'm betting the attack will come from lawyers representing the Chinese long before we get to overt military action. I've commented elsewhere that it's not like the bad old days when a sovereign could throw away contracts without penalty. The World court does have teeth these days. Enough to give even the U.S. gov't pause.

But I think the U.S. and China will replace Mutually Assured Destruction (MAD) with MADOR: Mutually Assured Distribution Of Resources. My bet is that the EU will be the big loser in this game. China is quickly gaining control of many export sources of EU oil and the U.S. can probably out bid the EU when push comes to shove. Additionally we'll continue exporting "freedom" to other oil exporters who will naturally support our needs as we continue to safeguard their fields from the terrorist threat.

Also known as "resting fields". Yes, I have considered this.

Well, hell, it's no secret. The king said they'll be shutting in new discoveries for future use. They've stated they will never go above 12.5. Al Husseini said that, too.


"I don’t expect a major shift in demand unless we see an acceleration of the economic recovery, which is not yet apparent," said al-Falih, who took over as Aramco president and CEO from Abdallah Jum’ah in January.

But look at what the other Saudi talking head said:

JEDDAH, Saudi Arabia (Reuters) - OPEC does not need to cut output next year, according to the latest oil supply and demand estimates, the oil minister of top exporter Saudi Arabia told Reuters on Tuesday.

Demand for Saudi crude was increasing, and this was evidence the world's economy was recovering from recession, Ali al-Naimi said in an interview on Tuesday.

"No, based on the current (demand and supply estimates), there is no need of course, right now," Naimi said ahead of the inauguration of the King Abdullah University of Science and Technology (KAUST) in Jeddah.

"But you never know, this is a moving target, it is a very active market. The world economy seems to be recovering. I hope it will recover fast and therefore it will impact demand. If demand rises of course supply has to match it... Demand for our oil is rising, and so we are -- at least I am -- convinced that economic growth is started and will continue."

The question, of course, is which Saudi is delivering the punchline.

Two "If's and a Then"

If the 2010 average annual oil price is above the average 2009 price,


If Saudi 2010 average annual crude production is still below the 2005 rate,

Then, Saudi Arabia would have shown five years of annual crude production below their 2005 rate, with four of the five years showing year over year increases in oil prices.

If the two "If's and a then" come to pass, I would think that the "It's almost all voluntary" story will be getting a little hard to support. In any case, I think that it is extremely unlikely that Saudi Arabia will ever again exceed their 2005 annual net export rate of 9.1 mbpd.

Regarding the Saudi's surge capacity, obviously there is some, but I suspect that a lot of it consists of what Matt Simmons calls "Oil stained brine."

WT -- Regarding expectations of future changes in production capacity I just ran across an interesting story about the second largest oil field in the world: Kuwait's Burgan Field. I was not aware the Kuwait had laws similar to Mexico's barring outside investment in their fields. How does this story fit with your models?


If memory serves, a HL plot that Stuart Staniford did showed that Kuwait is pretty close to the 50% depleted mark. But regarding the Burgan Field, it's part of the "Oil stained brine" giant oil field story. At one time, I believe that there were about 14 oil fields that had actually produced one mbpd or more of crude oil. Presently, I believe that we are down to two actually producing one mbpd or more, Ghawar & Burgan, with Cantarell and Daqing being the most recent fields to slip below the one mbpd mark. There are of course a couple of giant fields coming on line, but I think that the Kashagan Field for example is not expected to hit one mbpd plus until some time after 2020.

Stuart's 2006 article, in which he did a HL plot showing Kuwait to be about 47% depleted:


If the Petroleum Intelligence Weekly report* is correct, and Kuwait had 48 billion barrels of reserves left in March of 2001, then they have about 40 billion barrels left and are producing about 2.5 percent of their remaining reserves each year, about the same percentage as the rest of the world is producing.

*URL posted by Frugal below.

Table 1: Kuwait Oil Reserves As Of Mar. 31, 2001 						
(million bbl) Initial Oil	 Original    Cumulative	Remaining Reserves		
Area	      In Place	Reserves Production  Proven	Nonproven   Total
South 	      88,480	46,435	 26,209	     14,912	5,314	    20,226
North	      41,038	21,610	 4,532	     4,336	12,742	    17,078
West	      29,888	9,613	 1,104	     4,281	4,228	     8,509
Divided Zone   9,503	3,547	 1,244	     677	1,626	     2,303
Total	     168,909	81,204	 33,088	     24,205	23,911	    48,116

Notice that only 24.2 billion barrels are actually proven. And also notice that this was as of 8.5 years ago. Since then, cumulative production would have risen above combined, proven and nonproven, reserves.

Ron P.

Hello Darwinian,

Recall all my earlier postings on how OPEC is trying to figure out tarmat extraction, too. This is obviously the dregs at the very bottom of their reservoirs. How do you get something similar to asphalt to flow in useful quantities up a well? Recall that Matt Simmons believes this is also included in their reserve estimates.

Dubai workshop will lay out the tar mat issues [June 2008]

An emerging topic in the Middle East and elsewhere is the technical and economical feasibility of converting tar mats (non-movable hydrocarbon saturation) into new reserves.

..Tar mats are encountered throughout the world and are quite common in carbonate reservoirs in the Middle East, including several of the 10 largest reservoirs in the world.

..Probably the key question is to identify which are the best enhanced oil recovery and production methods appropriate for extracting heavy oil from tar mat layers?

[Jan 2009] The technical workshop on 'Maximizing Recovery from Reservoirs with Tar Mats: from Characterization to Production' was held in November, jointly organized by EAGE and SPE. Co-chaired by Ali Al Meshari/Hussain Al Otaibi (Saudi Aramco) and Bernard Montaron (Schlumberger), the event was held in Dubai in the Middle East where tar mats are quite commonly found in the carbonate reservoirs of the region. We summarize here some of the proceedings and pointers for the future.

The word tar is commonly applied to any of the black, sticky, liquid, or solid residues produced in petroleum refining, and this is the picture people may have in mind when talking about tar/tar mats. In fact, tar mats are a dark brown to black, thick, semisolid to viscous mixture of heavy hydrocarbons that occurs naturally, they are considered extra heavy oil zones usually separates between aquifers and oil columns. They isolate either partially or completely an oil reservoir from its aquifer...
Of course, Michael Lynch would argue that all we have to do to rapidly ramp flowrates is just send Jed Clampett to the MidEast and have him start randomly shooting at the sand dunes for some bubblin' crude, "thanks to the miracles of advancing knowledge and ever more sophisticated tools".

I hope OPEC tarmats come up for discussion at the Denver ASPO.

Bob Shaw in Phx,Az Are Humans Smarter than Yeast?

Dubai, et al, could always take the easy way out and start an aggressive microbe program. It is effective on tars as well as parafins. Of course, the softer the better, but them little bugs make quick work of heavy ends. Of course, I know not what size of program it would take for that sized field, but as long as they have heavy ends, they thrive. They live in the water and eat the heavy ends of the chain, but if it is a oil coated brine, the microbes would be in the perfect environment.

Well Westexas my best guess is that Ghawar is producing about 2.5mbd having started to decline in 2003 and probably now getting into the double digit decline rates say 10-15%. Burgan almost certainly crashed so we are probably down to one field producing over 1mbd.

So its a case of then there was one. Ghawar should however stay over 1mbd for a few years probably 4 before it drops below 1mbd.

I'll shoot you a private email on Ghawar.

westexas -

do you happen to have any figures on the Saudi internal demand? What is their ELM stats?

thanks in advance...

thanks Pollux -

so 2.5 MB/d and rising... great. So as far as KSA's exports, they must have peaked already?

Looking at that graph it looks like Saudi production peaked in 2003.
I suspect thats when Ghawar started to crash.

And yes I know its supposed to be a internal demand graph but oil demand increases linearly with population that went exponential. Its hiding a 500kbd decline in supposed internal demand.

Here are the rates of change that the EIA shows for the (2005) top three net oil exporters, relative to recent production peaks, which may or may not be final production peaks:

Saudi Arabia (2005-2008)
-1.0%/year (Prod.) & -2.7%/year (Net Oil Exports)
Con: +6.4%/year

Russia (2007-2008)
-0.9%year (Prod.) & -2.4%/year (Net Oil Exports)
Con: +2.8%/year

Norway (2001-2008)
-4.7%/year (Prod.) & -5.1%/year (Net Oil Exports)
Con: +0.2%/year

Don't we have to attribute at least some of these reductions to reduced demand?

And why is demand down?

Because we're in a recession.

And why are we in a recession?

Because fuel prices were through the roof last year.

And why were prices so high?

Because there wasn't enough oil.

Now, perhaps some folks are taking advantage of an overshoot situation to rest some fields, they'd be wise to, but I'd say that demand is being driven by supply more than supply is being driven by demand at this point.

Nice article, one minor nit:

The only way to square that circle and maintain the conventional wisdom blinders is to pretend that "demand" is down and to ignore that the high prices for oil in a reduced demand market seems to suggest that the law of supply and demand has been repealed.

"The law of supply and demand" is commonly interpreted as meaning that supply will rise to meet demand at a given price, demand dropping to meet the available supply works just as well and appears to be the current case for crude oil (as you note).

From the Energy Export Databrowser:

The trend in consumption is clearly up but the trend in production is not at all clear. You get a different answer depending on whether you take 2, 3, 5, 10 or 20 years. To my way of thinking this implies there is no reliable trend in the production stats.

If I had to describe what the chart says I would desribe it thusly:

"Over the last 20 years, Saudi production and exports of petroleum have been in a slight upward trend despite increased internal consumption."

Anyone familiar with the Nyquist Frequency will tell you that you get a better picture of the overall shape of a function the more points you sample. I would suggest that the same approach applies to oil production and consumption curves.

We can of course also use geological information, rig counts, etc. to asertain that a field is near the end of its life and about to decline. But if we are only going to use historical statistics to say something then we should present all of them and not cherry pick.

Happy Exploring!

-- jon

IMO, 2005 was probably the final Saudi production peak, although I could of course be wrong. In any case, as noted above, I seriously doubt that they will ever again exceed their 2005 net export rate of 9.1 mbpd.

We are working on graphically showing 21 net export case histories. As previously discussed, I have not found any example, so far, of any net oil exporter reducing their consumption enough so that their net export decline rate fell below their production decline rate. We are looking at three groups of net exporters (production peaks for current exporters may or may not be final production peaks):

(1) Seven current net exporters with production peaks in 2005 or later (near decline term group);

(2) 11 current net exporters with production peaks in 2004 or earlier (intermediate decline term group);

(3) Three former net oil exporters.

The median net export rates of change for the three groups are as follows:

(1) Saudi Arabia (-2.7%/year, 2005-2008, versus production rate of change of -1.0%/year)

(2) Colombia (-8.3%/year, 1999-2008, versus production rate of change of -3.6%/year)

(3) Egypt (-37.1%/year, 1999-2006, versus production rate of change of -3.8%/year)

Note the tendency to show an accelerating rate of decline in net oil exports, versus a low single digit production decline rate, which is what the ELM showed.

BTW, in contrast to the Saudi -2.7%/year and -1.0%/year rates of change in net exports and production respectively from 2005 to 2008, their net export and production rates of change were respectively +8.2%/year and +7.7%/year from 2002 to 2005 (EIA).

It is my understanding (from too much reading of TOD, can't remember where) that Abqaiq is the most depleted Saudi field (80+% of recoverable) and is held in reserve for surge production (250,000 to 400,000 b/day).

It can produce at that rate for about 1/4th of the time. One to two months to bring on-line. Then it needs time (3X) for pressure to rebuild after producing for X months and the water/oil column to sort things out.

Good for multi-month surges in emergencies. Long term sustained production, figure 75,000 b/day average.

Best deal for Aramco, buy NG from Qatar and stop burning crude for electricity.


Best deal for Aramco, buy NG from Qatar and stop burning crude for electricity

..not so good for the UK! Qatar is supposed to be one of our LNG buddies.

Best deal for Aramco, buy NG from Qatar and stop burning crude for electricity.

Now, why is it that the people who think fission power is a good idea arn't pitching the solution of fission power for this application?

It would work, but there are obvious political issues that make proposing it at this time pointless.

If somebody gets reasonable production rates and costs on those fancy 4G thorium breeders some folks like to talk up, or any similar tech, I'm sure the Saudis will be quite happy to buy a few.

If somebody gets reasonable production rates and costs on those fancy 4G thorium breeders some folks like to talk up

Don't they always need a few more years, no matter when you enter the picture (1955 or 2009).
They are as constant as the speed of light.

New tech takes some time to ramp up. 4G breeders are really new, so I'm not going to write them off completely for another 5 years or so.

It might not prove to be as good as the advocates claim, but that is a completely separate issue. There are PWR designs that can be standardized and mass produced (relatively) if it comes down to it.

Wasn't it about halfway through last year that SA announced new production capacity of about a million barrels a day? That took them up to @ 11mb/d, maybe 11.5, if I recall correctly.

Make sure you're factoring this in.


Kuwait Oil Field, World's 2nd Largest Needs IOCs

Production from the world's second-largest oil field in Kuwait may decline without the help of international oil companies to boost crude output, a member of Kuwait's Supreme Petroleum Council said.

So Kuwait has trouble maintaining current oil production.

I wonder if this has anything to do with their exagerated oil reserve claims?

Oil Reserves Accounting: The Case Of Kuwait

The most striking statistic in the report is that as of March 2001, Kuwait's remaining oil reserves stood at just 48 billion bbl.

I doubt it. I think most of the OPEC countries have exaggerated their reserves. Supposedly because their quota is linked to reserves. Iraq is rumored to have half the reserves claimed, and Iran, too, has much less than officially reported.

"So Kuwait has trouble maintaining current oil production."

Recall my prior posting on tarmat migration in Kuwait.

The next link talks about how KSA can't even get the easiest stuff out from some of their anticline crests because peripheral water injection can't move across tarmats on the flanks:



Tarmats are a drag, but that just means (and the article discusses) they have to 1) find out where they are, and 2) drill the injectors updip from them. This is more work, but they do manage to get the oil flowing. They had similar problems in Qatif, but they (at least claim to) be making their intended production level.


Hello JoulesBurn,

Thxs for your reply--I gathered the same thing, too, but again it indicates declining ERoEI because work is never energy-free.

BTW, have you ever tried to figure out the number of ESPs currently in KSA & OPEC, and what kind of projected ESP-ramp will be required ahead?

Remember, ESPs won't be seen by your overhead satellite runs. I would think that would be an important plus for OPEC secrecy versus you later easily counting up nodding horseheads, then projecting even lower ERoEI.

Also, due to increasing sand scouring ESPs reducing MTBF, plus other problems, I would imagine they are increasingly moving towards downhole jetpumps, which are also good for quickly sending and removing frac-fluids and annulus adjustments. From the Middle East Artifical Lift Forum [MEALF]:

http://www.mealf.com/programme.html [source link]

http://www.mealf.com/pdf/conference%20programme/conference_programme9.pdf [embedded link]

A down hole jet pump for production of fluid from a well with the jet pump being powered from a pressure source at the surface and discharging production fluid through production tubing to the surface. The down hole jet pump of this invention is retrievable by reverse flow of fluid down the production tubing to move the jet pump upwardly through the power fluid tubing to the surface. The components of the jet pump are removable and adjustable in the field without the use of special tools thereby enabling the pump to be adjusted to provide optimum operating conditions for each installation and enable interchange and replacement of parts...
EDIT: Just the fact that MEALF exists shows that Jed Clampett-holes and normal, secondary EOR is becoming a vanishing extraction method in OPEC.

On the brink of implosion
What became of the Arab state? In one way or another, argues Khalil El-Anani*, it has managed not just to fail, but to fail miserably

But what about birth rates?? Is that not part of the problem??

Could a wise geologist help me out with something please. I know that this might be a bit like asking how long is a piece of string but here goes anyway.

What is the volume of reservoir rock that is needed to hold one barrel of crude? I'm guessing this is all down to the type of reservoir but is there a rule of thumb? I'm trying to get some kind of a handle on the numbers here so that I can visualize the amount of space that is depleted every day from a given field.


There are approximately 6.3 barrels in a cubic meter.

The oil comes from pore space, which is 35% of the rock volume for a really good reservoir, and under 5% for a really marginal reservoir.

Pore space always contains some water, typically at least 20%, and (in the case of old fields producing oily brine) as much as 99%.

Depleted reservoirs always contain some unrecoverable oil, usually at least 20% of the original in place, often as much as 75%.

Oil in the reservoir shrinks when it is brought to the surface, by a factor of perhaps 1.2.

Running all of these figures through a calculator will give you about 0.8 cubic meters of rock per barrel for a really, really good reservoir, and perhaps 10 cubic meters per barrel for a marginal reservoir.

There are quite a few variables, as one would expect.

Let's assume a reservoir covering an area of 640 acres, with an average thickness of 20'. The total volume of the reservoir is 640 acres X 43,560 square feet/acre X 20', about 560 million cubic feet. The cubic feet to barrels conversion is about 5.6, so this would be about 100 million barrels of reservoir rock.

Now, only part of the rock is porous and permeable. Let's assume high porosity of 25%. So the porous volume would be 25 million barrels.

Generally, the porosity consists of water + oil. Let's assume a 40% water saturation, and ignore Formation Volume Factor (FVF) for now. We would have 15 mb of oil and 10 mb of water in the porous space in the rock.

Then we have to address recovery factor. Let's assume a high quality partial water drive reservoir, with a pressure maintenance program, and let's assume a 40% recovery factor, or about 6 mb. You would need to plug in a FVF, which accounts for the tendency of oil to "shrink," as solution gas is released, but let's assume a low Gas/Oil ratio, and ignore the FVF.

So, with the above assumptions, with a high quality reservoir, we would recover 6 mb of oil from 100 mb of reservoir rock.

BTW, one shortcut for recovery estimates is to use known recovery factors, based on existing fields (of course the key input is the assumption of average net pay X field area). For example, some high quality reservoirs in my area have shown recovery factors of up to 500 BO/acre-ft. So, 640 acres X 20 feet X 500 BO/acre-ft would yield estimated recoverable reserves of 6.4 mb.

HA -- WT et al offer great explanations. Now for the rest of the story as Paul Harvey would say: estimate how much oil you need to recover to make drilling the well profitable. Then back calculate how much porosity, oil saturation, net feet of pay, recovery factor, etc you'll need to produce that number of bbls of oil. And now you know how many folks estimate future recoverable reserves from fields yet found. Still not economic then just double the thickness of the oil pay you hope to find. After all, it hasn't been drilled yet so who's to say you're wrong.

I know WT is smiling right now. And I know it sounds silly but the above process has been used more times in the oil patch then I could guess. Just part of that life experience which makes me question any and all reserve numbers folks throw around. Especially for fields yet drilled.

Of course I always assume East Texas size reserves, until proven otherwise, which reminds me of a project I spent some time on in Australia about 20 years ago. We had about 4 million acres in the concession and about four well control points, some photogeologic data, some surface geochemical data and a small amount of seismic. So, I took two control points a zillion miles apart, and mapped in an East Texas analogue. An Aussie I talked to responded as follows: "Yeah, you Yanks are always coming down here and telling us you are going to find another East Texas Oil Field. I'll believe when I see it."

As I mentioned before WT...you exploration geologists are all the same. Then we development geologists get chewed out when we don't find all those reserves you've claimed to discover. Truly no justice in the world.

We had a joint venture with a local office of the Sun Oil Company back in the early Eighties, and it was really kind of bizarre. They had one company for exploration and one company for development, both subsidiaries of Sun Oil. If memory serves, the development company got credit for proven reserves resulting from direct offsets, while the exploration company got credit for proven reserves resulting from diagonal offsets, stepouts and exploratory wells, and it seemed like the two subsidiaries were always squabbling over who got credit for the reserves, and the development guys were always trying to get the exploration guys to maximize Sun's interest in exploratory wells (because exploratory dry holes didn't come out of the development budget, and if there was a discovery, they wanted the largest possible interest, i.e., more reserves).

I am not a wise geologist, but my Google-Fu is strong today:

Not a direct answer, but I don't think there really is one.

This seems to have got very little coverage. It's not that big a deal but if it were good news I suspect there would be more prominent coverage.
U.S. mortgage delinquencies set record

U.S. mortgage delinquencies set record

Among U.S. homeowners with mortgages, a record 7.58 percent were at least 30 days late on payments in August, up from 7.32 percent in July, according to the data obtained exclusively by Reuters.

An increase of .26 in a month is pretty terrible. If that rate of increase kept up for another year, the delinquency rate would be 10.7%.

Some here may recaall the saga of FBI Whistleblower Sibel Edmonds, who was "state-secrets-gagged" by BushCo. One bit of change we can give Obama credit for is her ungagging, which resulted in her testifying in a civil case, the transcript of which contains some real doozies. This interview distills that testimony into an easier to understand narrative, which provides the rationale for her being gagged. The revelations are sordid, but not surprising. And there's likely much more, which would explain why the Propaganda System refuses to let her story see the light of day.

It doesn't matter, because this will never be in the NY Times. The bottom line is that nobody cares.

Thanks karlof. Very interesting story. Nothing really surprising given my low expectations of our political power structure. My only surpise is that you seem to think such ativities are confined to just one political party. From my view the system is corrupt. Who benefits at anyone moment just depends on who's in power at that time. I really believe it is just as simple as the old and worn out saying: power currupts.

Interesting interview, especially the last part: EDMONDS: Well, even during Obama’s presidential campaign, I did not buy into his slogan of “change” being promoted by the media and, unfortunately, by the naïve blogosphere. First of all, Obama’s record as a senator, short as it was, spoke clearly. For all those changes that he was promising, he had done nothing. In fact, he had taken the opposite position, whether it was regarding the NSA’s wiretapping or the issue of national-security whistleblowers. We whistleblowers had written to his Senate office. He never responded, even though he was on the relevant committees.

As soon as Obama became president, he showed us that the State Secrets Privilege was going to continue to be a tool of choice. It’s an arcane executive privilege to cover up wrongdoing—in many cases, criminal activities. And the Obama administration has not only defended using the State Secrets Privilege, it has been trying to take it even further than the previous terrible administration by maintaining that the U.S. government has sovereign immunity. This is Obama’s change: his administration seems to think it doesn’t even have to invoke state secrets as our leaders are emperors who possess this sovereign immunity. This is not the kind of language that anybody in a democracy would use.

The other thing I noticed is how Chicago, with its culture of political corruption, is central to the new administration. When I saw that Obama’s choice of chief of staff was Rahm Emanuel, knowing his relationship with Mayor Richard Daley and with the Hastert crowd, I knew we were not going to see positive changes. Changes possibly, but changes for the worse. It was no coincidence that the Turkish criminal entity’s operation centered on Chicago.

Damn Brian...I thought I would catch some heat for taking a shot at both the Reds and Blue but now you've provided enough cover for me and a small army. Thanks.

But, seriously, it truly is very sad to see how the political system has evolved into an almost impenetrable sphere. Combine that we the lack of insight and focus by our fellow citizens it's difficult to expect change anytime soon.

I don't belong to either party, and if you noticed, not all the congresscritters or federal govt employees were GOP. Yes, too much power resides in DC, and this episode bolsters my changing the acronym DC to mean Depravity Central

It's clear that People "care"; the three of you proved that by responding.

Depravity Central!!! Luv that karlof. Have to steal that from you. Like you there are many here that care but unfortunately I see us a vast and powerless minority. I know that sounds defeatous but I truly don't see any tools available to us to change the system. I've retreated (rightly or wrongly) to impacting just my own tiny sphere.


Yeah, I understand your frustration. At least we can choose our own battleground. Mine is the central coast of Oregon.

I occasionally pick up the Alaska Journal of Commerce (www.alaskajournal.com). The week of September 13th has the following articles (articles not available on website).

Enstar aims to store gas
Southcentral Alaska (Anchorage region) is running out of natural gas and peak shortages may happen this winter so Enstar NG Co., the monopoly gas utility plans to build 10Bcf of storage rather than petition to shut down the LNG export plant. Even with storage, a shortfall will develop between 2012 and 2014. Meanwhile COP, which owns 70% of the LNG plant and produces most of the gas, is considering applying for another extension of the LNG export license, which expires in 2011. Another option is a 24” spur pipeline from the North Slope which would not be available before 2018-20. Enstar supply will be 25% below demand on the first day of 2011.

New gas contract for Chugach Electric may be no bargain
COP signed a contract to supply 66Bcf to Chugach Electric which will meet 100% of expected demand through 4/2011, 50% through 12/2015, and 25% in 2016. 90% of the gas will be priced off of Lower 48 points and 10% will be at peak price. Prices go up after 3/2011. Chugach purchases 27Bcf/yr and produces electricity, 90% gas and 10% hydro. New gas purchased under this contract is expected to cost $6.06 per tcf.

Editorial: Energy conservation, personal sacrifice has become a necessity
Matanuska Electric Association warns of possible rolling outages this winter due to a lack of natural gas.

Flint Hills shuts down production unit
The drop in demand for jet fuel at the Anchorage International Airport has caused the largest refinery in Alaska to shutter 1/3 of production capacity. The financial future of the refinery is in doubt.

State offers Asian airline $1M incentive to stay
China Airlines will receive a $1 million incentive to add a fourth weekly winter passenger flight between Taipei and Anchorage. Recent major construction and loss of international traffic at the airport threaten to make the airport a ghost facility. On average, 40 passengers from China Air’s present 4 summer and 3 winter weekly flights debark in Anchorage, most go on to New York.

As consumers slow down, FedEx and UPS adapt
FedEx and UPS are suffering from the same problems as Anchorage (which is one of the 10 top airports for cargo worldwide).

Parnell: state will promote OCS development
Alaska OCS holds an estimated 27Bboe of oil and 130Tcf of gas, 1/3 of the estimated undiscovered U.S. oil and gas resources said the governor.

Meanwhile 110 Notice of Default and Sale ads were placed, 7 pages.

Alaska is so messed up. On average Alaskans are rich, educated, surrounded by natural resources, and we are in the front of the bus going off the cliff. I thought you ought to know.

Four years ago I attended a real estate seminar for a peak oil discussion and learned all about the impending gas crisis, which would never have happened if the fertilizer and LNG permits had not been repeatedly renewed. The Anchorage airport is already huge, having received so much federal money it was recently named after our recent federal senator. It was expanded to allow massive capacity increases over the peak. Maintenance will be a killer. Juneau’s airport is doing the same thing (capacity increases with declining passengers). But we’ll all be saved by the MASSIVE undiscovered resources. Heck the biggest oil field in North America got us into this fix.

Cold Camel

Chugach purchases 27Bcf/yr and produces electricity, 90% gas and 10% hydro.

I never did understand why Alaskans did not build a variety of small hydropower plants around the state with their oil wealth. Ensure a perpetual source of low cost electricity.

Enough hydro for 95% to 105% of today's demand seems a far wiser investment with slightly smaller checks mailed to everybody every year.


Alan, I've been thinking about that since the last time you made a similar comment to another one of my posts. You are absolutely correct, there were/are no physical/financial barriers to significant hydro development in Alaska. So my guess is that it is a mental block. TPTB presume the bounty will never end.

If so, it doesn't matter where you live; Export Land will suffer about as much as Import Land with only a slight delay. As the internal economies of the Import Lands collapse, Export Lands will focus on maintaining BAU in their internal economies rather than taking the steps to protect their economy that the Import Lands failed to take. Like hydro and rail for instance. The obvious physical advantages are offset by a universal PTB mental block. I don't believe a single fiscally prudent oil exporter has proven and drilled reserves but not developed them. Or started a crash hydro/rail program....

Cold Camel

Dubai has started a fast and massive Metro build-out with a proposed regional railroad that will eventually hook-up with Saudi railroads and then Iraq and the rest of world.

Venezuela and Iran have decent subway expansions.

After a series of massive hydroelectric projects in the east (Guri 10.6 GW, twice the proposed Rampart in Alaska, Macagua 3.1 GW, Caruachi 2.1 GW, Tocoma (under construction) 2.1 GW), Venezuela gets 82% of it's electricity from hydro.

Iran is just finishing up a massive hydro build-out (100+ powerplants, all sizes).

Didn't Gov. Palin cut the hydro development fund of Alaska ?


Norway developed their hydro before oil, but added light rail in Bergen and some small rail improvements.

Camel -- Thanks for the insights. Distrubing but understandable. Alan's point is well taken also. I'm sure 30 or 40 years down the road the historians will be able to point to hundreds of examples of missed opportunities by TPTB to amend our lack of planning. At least I know of one good example of taking care of your own: many decades ago the state of Texas directed all revenue from state mineral leases to the state's education system. For many years this kept the cost of higher education here very affordable. I'm not sure where we are today but I think we're still well below average cost thanls to state minerals.

I worry about the refinery bankruptcy issue. Once a refinery goes bankrupt in remote area, it seems like it is going to be a lot harder to get the refined oil products that are needed. The refineries act like a magnet for crude oil, and put out a whole range of products that can be used locally.

1) Bankruptcy only describes the method by which the assets are transferred to a new ownership structure. It does not imply shutdown. If a facility is still economically viable, it would continue to operate post bankruptcy.

2) It is very difficult to locate and operate a refinery in anything like a remote area because the cost of offloading crude becomes prohibitive. I once modeled financial statements for a refinery in a major city that couldn't directly receive crude from tankers but was within a few kilometers of other major facilities. We estimated the additional cost at near $1/bbl.

3) I don't think new refineries put out significant byproducts that have useful applications. Almost all refined products have major commercial markets. Perhaps low value waste products need to be used locally, but I don't think refinery shutdowns represent major loss to localities outside of taxes and employment.

Dang. No comments on the NPR natural gas piece?

Is extracting natural gas from US east coast shale split with water any different from cornucopian Canadian oil sands promises?
Or should we throw a never-ending housewarming party now?

Here's an excerpt dealing with this new "abundance" of NG. It's from a longer unpublished article that I'm working on:

The trouble with gas

There are a couple of flies in this particular ointment. All of that new drilling did, indeed, have results. Domestic gas production was heading up, allowing imports from Canada to drop. But the surpluses we're now seeing and the plunge in gas prices were unexpected. They were created by a sudden drop in demand following the economic meltdown. And that drop is savaging those who invested heavily in gas wells. It turns out they really needed those record high NG prices to make a profit.

Shale gas is not the shiny silver bullet many would like to believe. The wells are expensive, deplete fast, and deliver only modest returns of gas. Analyst Arthur Berman, writing in his Petroleum Truth Report, cites an average EUR for wells in the Haynesville shale of 3.6 Bcf per well. But the “E” in EUR stands for “expected”, and actual returns appear to be lower. Drilling and completion costs vary from $7.5 million to $10.5 million per well. Berman figures that the marginal cost for operators to find and develop gas reserves in that play are $7 to $8 / Mcf – and the spot market is now yielding only half that. Or less.

What's more, natural gas in general – and shale gas in particular – is not all that clean and green. Yes, it burns cleanly, and CNG vehicles themselves average only about half the grams CO2 per mile of gasoline vehicles. However, their net carbon footprint is about the same or even higher. For every cubic foot of natural gas produced, a cubic foot or more of CO2 is also produced. Much of it is present in gas from the well, and the rest is from diesel fuel burned by the trucks, drill rigs, pumps, and road building and pipe laying equipment.

CO2 content is a long term environmental problem for all natural gas, but there are more immediate problems for shale gas wells. They draw heavily on water resources, can contaminate aquifers, and produce a good deal of toxic waste water that is hard to dispose of. Much of it sits in holding ponds near the wells. It hasn't attracted much attention as a problem, because it has yet to cause any environmental disasters that make the news. But if gas shale formations become our main source of natural gas – as it seems they will – then the sheer number of new wells that must be drilled each year will almost certainly spell Trouble in River City.

One of the reasons I haven't submitted the article for publication anywhere is that I'd like to have references that can quantify the environmental impact of shale gas a bit better. I'd also like to find more specific data on costs and depletion rates. So if anyone can suggest anything, please post it here.

The best article I've found on the recent NG production, from which I took some of the specifics above, is at http://www.aspousa.org/index.php/2009/06/a-shale-gas-boom/

OK, I'll bite.

Shale gas could be part of the answer, but much complexity lurks here, even based on my simple understanding of events thus far.

The production profile of shale gas looks like a nightmare for producers. It comes out fast and declines quickly, leading to a very steep boom/bust cycle (we are on the 'bust' side at the moment). By the time prices recover, volumes will be down. And by the way they need a price north of $7/mcf to earn a decent return on their investment - it costs a lot of money to drill through rock and pump water and sand down the resulting holes.

A lot of resource is there, but making money from shale gas is proving complicated. What is a producer to do? (1) Seek specialized tax treatment for shale investments, such as accelerated depreciation, to help manage the early period of losses; (2) Seek market growth by advocating policies that attack other fuels such as cap-and-trade that cuts into coal, or CNG vehicles that cuts into oil.

In a growing economy, natural gas, coal, and oil investors could all be brother in arms. In a stagnant economy, your 'housewarming party' (with the irony fully understood) could turn into a knife fight quickly...

All very valid points Steve. Having worked for one of the big SG players last year I can promise that when prices do get high enough to resume development we won't see the rush as we did before. Two good reasons. Above all else the current/future cash flows of the SG companies won't support it. Drilling/completion cost will be lower but will still add up. Secondly, as you point out, the decline rates of the play, even with the latest frac technology, is well established (far better then the public knows). Companies won't be counting on a continued growth is NG prices to justify pushing too fast. My company went from 18 SG drilling rigs to 4 in just 6 weeks. And paid $40 million in penalties to do so. It will take many years for that bad memory to fade away. They'll make investments at a rate where profit recovery won't get to far ahead of the expendatures. The boom/bust cycle used to take 10+ years. Now it seems as though 3 to 5 will be the norm. I doubt few companies will throw money to quickly into such a system.

This is interesting.
Martial Law without declaring it.

The aviation industry is set to make a dramatic pledge to slash carbon dioxide emissions in half by 2050

Ha! At least.

I'm thinking a lot closer to 100%.

Pretty easy to reduce your emissions when you're out of business.

Interesting Krugman article-the quote by Obama is literally unbelievable-something, that if it had been uttered by George Bush (or any Rethug pol for that matter) would have sparked outrage http://www.nytimes.com/2009/09/21/opinion/21krugman.html?_r=1&hp

Thxs for the linky. Bankers and Wall Street pay should be based on quality of life for everyone. Since the economy sucks for so many right now: it seems logical to me that these topdogs should be very happy to have their wallets vacuumed so that they are immediately incentivized to equalize MPP and move towards Optimal Overshoot Decline Strategies.

Instead, we are moving towards timely confirmation of Jay's Thermo/Gene Collision prediction, and maybe future downslope-sharkfin validation of my [19 @ '19]:


In short: A tragic, mass balance move towards machete' moshpits vs towards Foundation recognition of Asimov's Bio-Elemental List and peacefully sitting down at the Periodic Table for commonsense application of Alan's standard gauge RR & TOD, narrow gauge SpiderWebRiding for O-NPK recycling, minimal water usage strategies/watershed polity, permaculture, birth control, and Kunstlerization, plus much more as outlined by my previous postings in the TOD archives.

A decrease of 33 BOE/C in ten years is a reduction of 33 x 42 gals/bbl = 1,386 gal/C. So for a family of four, this is 5,544 gals-equiv. less by 2019, or 369.6 15-gallon gasoline vehicle refills [roughly not-burning the equiv. of a gastank/day].

Compare to Duncan's US '73 peak:

'73 BOE/C of 62.09
62 x 42 = 2,604 gal/C, or 10,416 gals-equiv. for a family of four. If my WAG is correct for '09 @ 52 [we won't know until sometime in 2010], then 52 x 42 = 2,184. Thus, we have already structurally adjusted to using 10 BOE/C less or 420 gallons less/C. For a family of four again: 4 x 420 = 1,680 gals less all while climbing the upslope and traversing the plateau.

5,544/1680 gals or 33/10 BOE/c = 3.3==> we need to pickup the conservation pace 3.3 times faster than we have done in the painless past as we go postPeak. IMO, an even faster pace would be better for reducing the species extinction rate.

So the questions remains: will we do it by reducing both BOE & C by top-down Peak Outreach for immediate birth controls plus conservation [methods listed above]? Or will C continue to birth & immigration ramp for the next say 8,9 years, then C is drastically and dramatically reduced in 2018,2019 for fast Re-Equilibration?

In my feeble mind: My WAG accounts for all possibilties. But I currently have 10 fingers, one per year for Base-10 math to 2019. I reserve the future right for recalculation if we go to Base-9...but I don't think Obama, Putin, Brown, Sarkosy, Hu, et al, are interested in volunteering for 'digitization' for exosomatic reduction matching for the postPeak Countdown to speed up the eco-protection and energy-conservation pace.

Bob Shaw in Phx,Az Are Humans Smarter than Yeast?

Or will C continue to birth & immigration ramp for the next say 8,9 years, then C is drastically and dramatically reduced in 2018,2019 for fast Re-Equilibration?

According to an NPR broadcast I was listening to the other day, at least here in South Florida, where I live the numbers are beginning to show a clear trend in a reduction of the population both because of the existing population exodus and the significant drop in new immigration and migration.

Interestingly the commentator was saying that if this becomes a permanent trend it would be very bad news indeed for the growth based housing and commercial real estate and construction business model on which much of the South Florida economy depends. I almost expected him to put in a plug for the TOD website at the end of his report.

The property taxes and hurricane insurance add up to a hefty burden for fixed income seniors or lower wage employees.

CDC Weekly Flu Update for the week ending 9/12 (the flu season doesn't "officially" begin until 10/4):

Shows the effect of media hype more than anything.

Tell that to the 2,500 people who ended up in hospital with swine flu in the US last week (up from about 1,000 the week before). US Deaths are probably currently running at about 200 per week now (last week a change was made and extra deaths from previous weeks were added in but this week's report still showed a similar number without the backdates). Almost all relatively young.

And what media hype. Google trends can't find any increase in media coverage.

Well, by that graph, we have already passed the flu peak of 2 out of the last 3 years. Without a doubt, within 3 weeks, it will be widespread in all fifty states -- quite amazing. Mexico and Canada are also seeing increasing spread.

I don't think it has increased in virulence in this second coming, however, it may be resistant to Tamiflu. It will be interesting to see how hospitals handle the load. I hope I don't end up in an overcrowded emergency room.

Doesn't seem like we would need to get the seasonal vaccine this year with H1N1 being completely dominant -- I don't get the shot, anyway, since I am not young or old.

There have recently been some unexpected trial results showing that at least some seasonal vaccines are providing a little (but significant) cross-reactivity protection to swine flu. However these were trials and we are not told further details of the seasonal vaccine. Previous trials had suggested the seasonal vaccine provided no protection.

For this reason it seems the advice is to still get the annual flu shot for those who normally would.

Just got this in my email inbox and so I am sharing it with you all:

"Because of your interest in sustainable living, I’m asking you to participate in a survey on behavior and lifestyle changes that you may be making in response to climate change, peak oil and other environmental concerns.

The 30-question survey should take you about 5 to 10 minutes to complete. All personal information will be kept confidential and the survey's findings will be shared with you and other participants.

The survey is aimed at finding out what similar motivations, struggles and actions sustainable living advocates share.

Please consider passing on the survey to your contacts and lists. This project is part of my graduate studies at Wright State University in southwestern Ohio,and is entitled "Living With Less: Choices and Challenges of a Low Energy Lifestyle."

Thank you ahead of time for contributing.

Please follow the link to the survey here:


Megan Quinn Bachman

This invitation was sent by Community Solutions - 114 E. Whiteman Yellow Springs, Ohio 45387 USA."

Ok. Have at it!

Megan Quinn got married?

That's gonna leave a lot of peak oilers broken-hearted. ;-)

This article about the San Francisco Bay Area was linked on Calculated Risk, as part of a post that explains the difference between interest rate resets and mortgage recasts, i.e., when the borrower has to start making full interest and principal payments. I remember a post from a couple of years ago by a guy who was completely unconcerned about buying a million dollar SF home. Doesn't look like a good idea right now. Analysts are predicting a flood of foreclosures on higher end bay area homes as underwater borrowers get hit with huge increases in monthly mortgage payments, for properties that are worth far less than the mortgage balance.

$30 billion home loan time bomb set for 2010

Average option ARM loan in 5-county S.F. metro region: $584,000

Number of option ARMs in Bay Area: 54,000

Bay Area option ARM loan balance: $30.9 billion

Borrowers who make minimum monthly payments: 94%

Average loan-to-value ratio when loans were made: 79%

Average loan-to-value ratio now: 126%

Option ARM borrowers who are 60+ days delinquent: 39.3%

I am going to post this again on tomorrow's DB.


There's an interesting little piece on he Automatic earth site today about the clunkers program and its effects on car sales.

"Crude oil futures for delivery in 2015 are currently trading near $85 a barrel on the New York Mercantile Exchange. "


Any thoughts about this: normally peakoilers complain that they are not heard in the media. What about if they UNDER-estimated their influence, and traders and investors become afraid from all the predictions that have been made in the media and start buying up more future stocks of oil, and driving up current prices with it. Peakoilers would see in the rising prices a scarcity that they have predicted. But in fact, what they see is the result of what they partly have been causing themselves.

I say this because it reminds me on what happened with the "multiculturalism debate" in the Netherlands. You know this debate went totally wrong, resulting in a transformation of a tolerant country to one of the most hostile ones in Europe towards immigrants. What went wrong here is that the proponents of multiculturalism have too long profiled themselves as underdogs, because they felt that they were not heard, while in fact a lot of policy attention was paid towards it. The problems of "integration" (in the beginning still a very not-political correct term in the NL) were in fact so huge, that it seemed like that the government did nothing to help to close the gap between newly immigrated people and the established Dutch. This was utterly condemned by the "new right", who believed that all the governmental support just aggravated the problem: it prevented that immigrants were confronted with "necessity" that they should "integrate". Like I said: this was in the beginning language only expressed by extreme right in the NL, now it is common sense (and I emigrated to France...)

Anyway, back to oil: the biggest hatred and accusation from "oilpeak-deniers" or "climate change deniers" come from the fact that "money-squandering schemes" or "taxpayer money" are spilled to create a "no-growth" scenario, while in fact according to them this money should be spent on stimulating growth, because only growth can compensate for pollution.

Now, I don't predict that the whole climate debate will finally come back this ideology, but maybe if peakoilers would reflect more about their own position in the debate, there would be less an ideological war as I can see right now between them and its "debunkers".

I think the Oil Drum and Peak Oil Debunked are already doing a relatively good job in trying to stay "objective". And although I agree it is like fighting a war, which necessitates scientific theory to back up eachothers' ideological and moral standpoints, both parties need people who are above the party lines.

Personally I am in favor for searching for no-growth scenarios (and for a world without borders ;-) but I did some economics on my university and with this background I can't see yet a serious theory that can guide a transformation. The Stiglitz commission might be a beginning. But massively claiming no-growth already as an ideology, because we feel have not enough (media/governmental) support might make its own fear come true: indeed no-growth but one without solidarity.