Drumbeat: April 23, 2010

Peak oil predictions

At the launch of BP's most recent Statistical Review of World Energy in early June 2009, BP's chief executive, Tony Hayward, said that as the oil price went over $90, consumers "began to change their behaviour" and that there was significant "elasticity of demand above $100 a barrel". In other words, if it costs too much, we can't – and won't – buy it.

The difference between the recovery periods following previous oil shocks and the current one is that a significant proportion of today's oil demand is in permanent decline. This particularly applies to developed countries where demand for oil is past its peak. In other words, this recession has triggered demand destruction, not demand suppression.

It's possible the day of "peak oil" has arrived – but not in the way everyone expected. Instead of peak oil, we're looking at a peak in demand for oil. The oil age won't end tomorrow, but the idea that it will go on for ever – with its attendant catastrophes and tragedies – is seriously in question.

Phil Flynn: Deepwater Horizon - Triumph and Tragedy

In September of last year, Deepwater Horizon made history by drilling the deepest oil well in history. This was an achievement not unlike landing a man on the moon or a successful space shuttle. An achievement that in another era would have inspired the passion and the imagination of the nation in a nation that has become accustomed to great achievements. Think about the implications of drilling for oil in an area of the ocean where no man dared drill before. Think of the impact it could have on a world that is not satisfied with surrendering to the sentence of peak oil but to expand our imagination and our desires to overcome the status quo and do what those who think small said was impossible. Instead of surrendering to the prospect that the world and the economy was doomed because of peak oil, there are those who say we have not even begun to tap the earth’s possibilities.

Obama unchanged on offshore drilling despite spill

WASHINGTON (Reuters) - President Barack Obama has no plans to reconsider his proposal for new offshore oil drilling in the aftermath of an oil spill in the Gulf of Mexico, the White House said on Friday.

White House spokesman Robert Gibbs said the administration had taken swift action to ensure the safety of workers and the environment after the spill, which on Thursday measured one mile by five miles.

Asked whether Obama had second thoughts on offshore drilling, Gibbs said, "No."

China's $20B Loan to Venezuela to Be Paid with Oil

Oil-rich Venezuela will send resource-hungry China 100,000 barrels a day of crude oil for the next 10 years to pay for a $20 billion loan agreed to over the weekend, Venezuela Oil Minister Rafael Ramirez said Thursday.

Ramirez, who is also the president of state-run Petroleos de Venezuela, or PDVSA, didn't indicate any specific price for the oil that may have been agreed to by the two nations. The average price for Venezuela's basket of crude oil and refined products began this week at about $75 a barrel.

Stuart Staniford: When does surplus = resilience?

In this post, I want to explore the idea that there is at least one important class of threats where we might expect modern civilization to be much more resilient than past civilizations. Specifically, modern civilization operates at far higher levels of economic surplus than past civilizations, and this means that it is in a position to devote far higher levels of economic resources on solving certain kinds of problems.

Come to the largest climate rally ever on the D.C. mall on April 25

Earth Day Network is organizing a huge event on the Mall in Washington D.C. on April 25. The goal is to demand tough, effective climate legislation and a swift transition away from 19th century energy sources.

"So what?" you may be asking yourself. There have been a lot of climate rallies over the last 25 years and Congress still hasn't managed to pass a law. Why should I come to this one?

Let me count the ways ...

Zimbabwe: Energy crisis set to worsen

ENERGY problems besetting the country are set to worsen for the rest of this month as it emerged yesterday that only one unit at Hwange Thermal Power Station is operational. According to a recent power generation status report, Hwange Power Station is producing a mere 70 Megawatts against an installed capacity of 750 megawatts owing to breakdowns in other five units.

South Africa - National integrated resource plan for electricity: a document to shape our future

The document describes the current state of the South African electricity supply industry as characterised by inefficiencies in the current electricity structure, a lack of transparency, inefficient regulation, a lack of competition and conflicts of interest.

The document also argues that independence from ownership and control by market participants is key to the success of an independent system operator, so the operator does not favour one over another and independence is not just a matter of fairness – it has real consequences - and the transmission network must also be independent from the participants.

Bangladesh: Coal seen as panacea to power crisis

The participants were unanimous on establishing coal-based power projects when other hydrocarbon resources on sharp decline.

Observing coal the only adequate natural resources for generating power to feed the ever growing demands, they recommended formulation of a coal policy to accelerate coal mining for power plants.

Earth Day energy crisis: Pakistan plans shorter work week, curfews

Amid fears that severe energy shortages could touch off riots, Pakistan will announce drastic measures this week to save electricity, including a shorter workweek and restrictions on nighttime wedding celebrations, government officials said Wednesday.

With power outages lasting up to 20 hours a day in cities and villages, halting industry and even farming in some places, the electricity crisis could further destabilize a vital U.S. ally. Already this year, there have been streets protests, some violent, resulting in at least one death, over the electricity stoppages.

Pakistan: Public disappointed over govt decision on two holidays

The general public believes the decision would have little impact on the issue of loadshedding, as the shortage of energy production units would further worsen the situation instead of improving it.

As for the two weekly holidays, the people see the government employees as being the only beneficiary in this regard while the common man would suffer further, as the speed of work at government offices is already agonisingly slow and two weekly holidays would just add fuel to fire.

Karachi upset: Power share cut stuns city

KARACHI: The government’s announcement to cut down city’s power quota from 650 megawatts (MW) to 350MW under the national energy policy has left the citizens in a state of shock, despair and uncertainty.

Energy efficiency is part of the solution to New Jersey’s clean energy future

Energy efficient buildings, industrial processes and transportations can reduce the world's energy needs in 2050 by one third, and help control global emissions of greenhouse gases, according to the International Energy Agency. Making homes, vehicles, and businesses more energy efficient is seen as a largely untapped solution to addressing the problems of pollution, global warming, energy security, and fossil fuel depletion. Many of these ideas have been discussed for years, since the 1973 Energy crisis brought energy issues to the forefront. In the late 1970s, physicist Amory Lovins popularized the notion of a "soft energy path ", with a strong focus on energy efficiency. Among other things, Lovins popularized the notion of "negawatts"-the idea of meeting energy needs by increasing efficiency instead of increasing energy production.

How To Start Cutting Energy Losses in Your Home

"See that trap door?" Archibald asked. "I think you'll see a lot of leakage out of that trap door."

He says this just before Todd Menzies, the proprietor of U.S. Renewable and Efficient Energy near Birmingham, runs some tests to determine just how much energy is seeping out of Archibald's home.

"It adds up," Menzies said. "The leaks around the access attic way are the equivalent of having a seven-inch square hole in the ceiling."

Scientists: EPA ‘Distorting’ Biofuels Reality

According to Jeremy Martin, a senior analyst with the Union of Concerned Scientists’ Clean Vehicles Program, EPA’s decision to focus on anticipated biofuel emissions as of 2022 “distorts the picture of today’s biofuels.” By 2022, the theory goes, corn crop yields will have increased and biorefining technology will be more efficient and green than it is today. But for now, according to Joe Fargione, a scientist with the Nature Conservancy, “in the near term, natural-gas-powered, dry-milled corn ethanol production results in an increase of greenhouse gas emissions of 12 to 33 percent compared to gasoline.” Worse yet, EPA’s analysis recognizes this. However, ethanol has been redesignated, despite such indicators that it does not meet the renewable fuels criteria.

Mideast nuclear drive picks up speed

RIYADH, Saudi Arabia (UPI) -- Saudi Arabia, the world's leading oil producer, says it's setting up a center to develop nuclear technology as part of an $80 billion drive to boost power generation over the next eight years.

Saudi Minister for Water and Electricity Abdullah al-Hussein said last August that the kingdom was working on plans for its first nuclear power plant, although he gave no timetable.

This is part of an accelerating region-wide shift toward nuclear energy, which is led by the United Arab Emirates, another major oil producer in the Gulf. And it's a trend providing a bonanza for U.S., British, French, Russian, South Korean and Japanese companies that specialize in reactor construction.

Sino-Saudi Axis on the Horizon?

Nowhere better illustrates the growing importance of China on the international stage than in the Middle East, and especially in connection to Saudi Arabia. Long gone are the days in which the Saudi royal family perceived communism as the number one enemy and dedicated much efforts and resources to curb its influence inside and outside the kingdom. While China has not exactly shed all its communist feathers, it has given a new meaning to the term “state capitalism.” Today’s China is a vibrant economic player with an attractive long term economic growth backed by growing political influence and military might. Lured by its wealth and power Saudi Arabia sees China as a strategic friend.

The turning point was 1993, when China became a net oil-importer. China’s quest for deep oil wells to meet its veracious appetite met Saudi Arabia’s need for an energy-thirsty market. Their partnership is more than just a question of demand and supply, but a matter of political and economic survival. Without oil rent the Saudi state forsakes about 75 percent of its national income and runs massive political deficit—with the risk of defaulting on its societal pact of no-taxation and wealth distribution. For its part, without steady and sufficient supply of oil, China can hardly maintain the rate of economic growth needed to ensure internal political stability.

The 2 Biggest Carbon Emitters Find Common Ground in Clean Energy Technology

America's relationship with China may be a swinging pendulum, but energy cooperation between the two greenhouse gas-spewing giants appears to be on a steady track, Energy Department officials and others familiar with the programs say.

The Peak Oil Side of Volcanoes

Right now the volcano is creating a “peak airspace” condition that is driving down the price of oil…but which almost perversely mimics the effects of Peak Oil. How’s that for irony? Sure the price of oil is dropping as a consequence of the eruption. But this same scenario of curtailed world trade is what will result when the price of oil rises and forces world trade to slow down.

Bolivia, water wars and climate change

Bolivian President Evo Morales calls Cochabamba the heart of Bolivia. It was here, 10 years ago this month, that, as one observer put it, “the first rebellion of the 21st century” took place. Dubbed the Water Wars, people from around Bolivia converged on Cochabamba to overturn the privatization of the public water system. As Jim Shultz, founder of the Cochabamba-based Democracy Center, told me, “People like a good David-and-Goliath story, and the water revolt is David not just beating one Goliath, but three. We call them the three B's: Bechtel, Banzer and the Bank.” The World Bank, Shultz explained, coerced the Bolivian government, under President Hugo Banzer, who had ruled as a dictator in the 1970s, to privatize Cochabamba's water system. The multinational corporation Bechtel, the sole bidder, took control of the public water system.

Big Coal Booming on Earth Day

Just a quick note to those seeking a rapid decline in emissions of greenhouse gases (and other pollution) from coal combustion: The challenge, in a world with rising populations and energy appetites, is getting harder by the day.

Petrobras May Have to Review Share Sale Plan, CEO Tells Estado

(Bloomberg) -- Petroleo Brasileiro SA may have to find another way to raise capital if a plan isn’t approved by Brazil’s congress by June, Chief Executive Officer Jose Sergio Gabrielli told O Estado de S. Paulo in an interview.

The capitalization plan is likely to be voted on and sent to the lower house at the end of May and the process should be completed by June, the newspaper said, citing Gabrielli. The CEO said he won’t look at alternatives to the plan until congress makes a decision, Estado said.

GM unveils SUV version of the Volt

NEW YORK (CNNMoney.com) -- General Motors is preparing to unveil a five-seat crossover SUV based on the Chevrolet Volt electric. The vehicle, which GM is calling a "concept," was unveiled at a car show in China.

A Greener Humvee?

A green trajectory can involve twists and turns. Take TPI Composites, now based in Phoenix, which started out building yacht hulls but branched out into blades for wind turbines and then into bus bodies. The buses were thousands of pounds lighter and therefore more fuel-efficient. An all-composite Humvee, a military spinoff of an environmental technology, wind turbine blades.TPI Composites An all-composite Humvee, a military spinoff of an environmental technology, wind turbine blades.

Now TPI is beating a plowshare into a sword, so to speak, by setting out to supply the Pentagon with a composite Humvee.

Could you live without electricity?

Earth Day has come and gone, but it's a fact of daily — and especially nightly — life that 1.6 billion people around the globe have no electricity in their homes. Instead, most use wood, coal or even dung to heat and cook their homes — resulting in indoor air pollution that kills 1.6 million people a year.

It's not expected to improve much, and in Africa it's predicted to worsen.

Long Island’s Ticking Energy Clock

America uses 21 million barrels of oil a day. Even if President Obama’s plan to open several gigantic off-shore areas to drilling pans out in full, it will only satisfy 10 percent of this country’s current oil needs, and not earlier than 2020.

The implications are grave for Long Island, once one of America’s major breadbaskets and now an importer by truck of almost everything. Change is coming, whether we want it to or not.

Is it time to limit growth?

York University economics professor Peter Victor takes up the idea, writing Managing Without Growth: Slower by Design, Not Disaster. He argues that growth isn’t achieving expected goals: eliminating or reducing poverty, protecting the environment, and providing full employment.

Instead, poverty remains a continuing scourge, unemployment is a nagging problem, the gap between the wealthy and poor grows ever wider, and the earth’s resources are quickly being depleted. The idea of peak oil, for instance, where the extraction of oil is slowing down, was once laughed at. Now it has become accepted government policy. Climate change has become a matter of public debate, the oceans are turning more acidic, there are more chemicals in the air, water and land, and plant and animal species are dying off in record numbers every year. Canadians have seen first hand the limits of growth with the social dislocation caused by the collapse of cod fishing. What happens when all the fish in the seas are gone?

Inside the “Blue Economy” with Gunter Pauli

ECO: Of the 100 technologies, which do you personally think are the most promising?

GP: The ones where you substitute something with nothing, the ones where you eliminate something from the business. Where you eliminate a battery, rather than replace it with a green battery. That’s the good stuff. Another one is using wind energy without having to use wind turbines. They can be built into existing pylons. A lesson of nature is to use what we already have.

Climate science's chinese whispers: The books that separate global warming fact from fiction

David Goodstein's On Fact and Fraud (Princeton, £15.95) comes as a gentle relief after the relentless clause-by-clause disputation between Friel and Lomborg. Yet, paradoxically, it is actual cases of scientific fraud he is talking about. Goodstein is both a hands-on practitioner of science and for many years the officer at the California Institute of Technology charged with maintaining scientific ethics. A genial guide, he shows that sometimes the deciding line between fact, self-delusion and outright fraud is hard to spot. He gives two examples. One is of a science that seemed to flout all the principles of physics and is almost certainly wrong: the widely reported cold fusion, or harnessing the power of the sun or an H-Bomb in a simple test-tube experiment at room temperature. The other is the counterintuitive principle of superconductivity: electric currents that flow for ever in perpetual motion. This definitely works but no one quite knows why.

In all the recent controversies the phrase "peer review" has been on everyone's lips. Of course, peer review is a vital part of the scientific process but it is not the final guarantor of scientific veracity and probity. The best review of a scientific paper is the work that follows, when researchers try to replicate or build on the findings. Some recent cases of scientific fraud were published in the best peer-reviewed journals. As for one of the greatest discoveries of all time, John Maddox, editor of Nature for 22 years, said: "the Watson and Crick paper was not peer-reviewed by Nature... its correctness is self-evident. No referee working in the field could have kept his mouth shut once he saw the structure."

Shouldering Waste on the Trek Down Mount Everest

In 1963 — just 10 years after the first ascent of Mount Everest by Sir Edmund Hillary and Tenzing Norgay, a Sherpa guide -– a fellow climber, Dr. Barry Bishop, wrote in National Geographic that parts of the mountain had become “the highest junkyard on the face of the Earth.” Expedition teams were trashing Everest by wantonly disposing of empty oxygen canisters, torn tents and other rubbish at base camp and just a few thousand feet below the summit, Dr. Bishop reported.

Decades later, the world’s tallest peak remains under siege. Dozens of expedition teams attack the summit every year, carrying tons of gear and provisions and enlisting thousands of guides, porters and pack animals. Adding to the pressure on the greater Everest region are growing numbers of tourists who trek for weeks over ancient footpaths to the foot of the mountain, where they gaze up in awe at the roof of the world.

Oil Producers Risk Blowouts, Blazes in Search for Deeper Fields

(Bloomberg) -- Energy companies delving miles beneath the seafloor for oil are risking pressure surges like the one this week that may have sparked the deadliest U.S. rig accident in 23 years.

Explorers began work on 17 new Gulf of Mexico wells last week in waters deeper than 1,000 feet (305 meters), spurred in part by a tripling in crude prices in the past decade. The threat of pressure surges, or blowouts, that can smash steel equipment and create gushing columns of fire increases as drillers probe deeper, Neal Dingmann, an analyst at Wunderlich Securities, said.

...“Offshore drilling has always been high risk, but when you talk about wells going to these kinds of depths, the risks go even higher,” Dingmann said in a telephone interview from Houston. “Once you go anywhere below 10,000 feet, all of a sudden the pressure and temperature become a lot more difficult to contend with.”

Accidents Don’t Slow Gulf of Mexico Drilling

As the Coast Guard was trying to assess the potential environmental effect of the oil rig explosion near Louisiana, industry officials said Thursday that they did not expect drilling in the Gulf of Mexico’s deep waters to be curtailed.

“It’s a tragedy, but at the end of the day we are not going to stop doing things that need to be done,” said Larry Goldstein, a director of the Energy Policy Research Foundation. Eleven workers remained missing Thursday, and several others were injured seriously.

BP pledges to clean up Gulf spill

LONDON - Oil company BP PLC says it is doing everything it can to contain an oil spill from the drilling rig in the Gulf of Mexico that exploded into flames before sinking.

The British firm said Friday it has "activated an extensive oil spill response," including using remotely operated vehicles to assess the sub-sea well and 32 vessels to mop up the spill.

Blazing oil rig in Gulf of Mexico could be environmental disaster

NEW ORLEANS, Louisiana -- A blazing oil rig has sunk into the Gulf of Mexico, sparking fears of an environmental disaster two days after a massive blast that left 11 workers missing.

With no sign of the missing workers, rescuers looked likely to abandon their search for survivors.

U.S. maritime authorities said crude oil was pouring into the sea at the site where the hulking Deepwater Horizon rig once stood, though they were unable to determine at what rate.

Peak Oil Era: Why the Cost and Risk of Oil Exploration Will Keep Rising

Rigs like Deepwater Horizon will continue to push drilling depths merely because the company has to. The days of easy-to-access oil are gone. Now, companies like BP are faced with oil and gas exploration projects that require operating in politically unstable regions or working in technologically complex areas like the deep waters of the Gulf or offshore Brazil. Protectionist measures from countries like Russia have forced companies to look at friendlier, albeit more difficult and costly, areas including the Canadian oil sands.

Financial impact of Transocean's rig loss mulled

SAN FRANCISCO -- Analysts believe the financial impact for offshore drilling contractor Transocean Ltd. of its rig lost in the Gulf of Mexico depends on whether it can be replaced, and how much oil is spilled.

Oil Spill From Rig Blast Is 10 Miles Wide, U.S. Says

(Bloomberg) -- An oil spill near the site where Transocean Ltd.’s Deepwater Horizon rig caught fire April 20 and sank yesterday has spread over an area of 100 square miles in the Gulf of Mexico and is drifting northeast toward shore.

The spill measures 10 miles (16 kilometers) by 10 miles, about four times the area of Manhattan, and is comprised of a “light sheen with a few patches of thicker crude,” U.S. Coast Guard Lieutenant Commander Cheri Ben-Iesau said today. The Coast Guard’s search continues for 11 rig workers who are still missing, she said in a telephone interview.

Deepwater Horizon Accident Foreshadows a Potential Disaster Waiting to Happen in the Gulf

WASHINGTON - Following Tuesday's explosion on the Deepwater Horizon Platform, leased and operated by British Petroleum (BP) in the Gulf of Mexico, the national consumer advocacy group Food & Water Watch is warning of the possibility of a similarly tragic disaster involving the company's Atlantis Project- one of the world's deepest semi-submersible oil and natural gas platforms, located 150 miles south of New Orleans in the Gulf of Mexico.

Last year, a whistleblower and former company contractor alleged that the Atlantis platform has been operating without a large percentage of the engineer-approved documents needed for it to operate safely. An independent engineer later substantiated these concerns, concluding that a BP database showed that over 85 percent of the Atlantis Project's Piping and Instrument drawings lacked final engineer-approval, and that the project should be immediately shut down until those documents could be accounted for and are independently verified.

Shell shuts oil pipeline near Transocean fire

NEW YORK -- Shell Oil Co said Thursday it temporarily shut down a 75,000 barrel-per-day crude oil pipeline in the Gulf of Mexico as a precautionary measure due to its proximity to the Transocean rig fire. The pipeline known as Nakika supplies the larger Delta pipeline system and Motiva's Norco, Louisiana, refinery.

The pipeline was closed because it is located about a mile away from the now-submerged Transocean Horizon rig, which suffered an explosion on Tuesday.

The incident at the Transocean rig also forced the temporary shut-in of oil production at a Shell-operated Nakika platform nearby, a Shell spokeswoman said.

Crude Oil Little Changed as Dollar Pares Gains, Equities Rise

(Bloomberg) -- Crude oil traded little changed, erasing earlier losses as the dollar gave up gains against the euro, making commodities more appealing to investors, and equities rose.

Oil rebounded as the euro rose from the lowest in almost a year against the U.S. currency. A weaker dollar encourages investors to buy oil as an inflation hedge.

“The euro-dollar relationship is driving crude prices,” said Hannes Loacker, an analyst at Raiffeisen Zentralbank Oesterreich in Vienna. “Rallying stock markets should also be quite supportive for oil and OPEC should deliver slightly less in May.”

Russia to Consume More Saudi Oil

PARIS — Ibrahim al-Muhanna, an adviser to Saudi Arabia’s Petroleum Ministry, said India, Russia and Brazil would become “major” oil consumers over this decade and that the share of Saudi crude shipped to Europe will decrease.

“Within 10 years, if the trend of current economic growth continues, there are likely to be three additional major consumption centers: India, Russia and Brazil,” al-Muhanna said. “International oil demand will become more highly diversified.”

Schlumberger’s Profit Falls on Oil-Spending Cuts

(Bloomberg) -- Schlumberger Ltd., the world’s largest oilfield contractor, said first-quarter profit fell 28 percent after producers cut spending on drilling because of reduced energy demand.

BG, Eni Venture Said to Face $2.5 Billion of Kazakh Claims

(Bloomberg) -- The Kazakh government is demanding at least $2.5 billion from an oil venture led by BG Group Plc and Eni SpA after talks stalled on the state’s entry into the project, said two people with knowledge of the matter.

Syria inaugurates Canadian built gas processing plant

DAMASCUS (AFP) – Syrian President Bashar al-Assad on Thursday inaugurated a natural gas processing plant in the central Homs region with a production capacity of 2.5 million cubic metres (88 million cubic feet) per day.

The Ebla plant, built by PetroCanada at a cost of more than one billion dollars, has boosted Syria's gas production capacity to around 28 million cubic metres per day, Oil Minister Soufian Allaou was quoted as saying by state news agency SANA.

Mountaintop Coal Rules May Send More U.S. Miners Underground

(Bloomberg) -- A U.S. crackdown on mountaintop mining in Appalachia may force coal producers to rely increasingly on underground sites such as the Massey Energy Co. mine where 29 workers were killed this month in West Virginia.

Wind-Farm Boom Backfires in Germany as Consumers Get Cash to Keep the Lights On

(Bloomberg) -- On windy nights in northern Germany, consumers are paid to keep the lights on.

Twice this year the nation’s 21,000 wind turbines pumped out so much power that utilities lowered customer bills for using the surplus electricity. Since the first rebate came with little fanfare at 5 a.m. one October day in 2008, payments have risen as high as 500.02 euros ($665) a megawatt-hour, about as much as a small factory or 1,000 homes uses in 60 minutes.

U.K. Offshore Wind Power Reaches 1 Gigawatt on E.ON, Dong Farms

Bloomberg) -- U.K. offshore wind power now has 1 gigawatt of generating capacity after projects by E.ON AG and Dong Energy A/S began producing electricity, the industry group RenewableUK said.

The “landmark” figure -- enough to power 653,000 homes -- was reached this week when E.ON’s Robin Rigg and Dong’s Gunfleet Sands wind parks started operating, the group said today in an e-mailed statement.

A Big Bet on Solar Technology

In one of the biggest green technology deals of the year, a prominent Silicon Valley venture capital firm is leading a $129.4 million investment in a long-promising solar technology that is starting to gain traction in the United States.

The venture firm, Kleiner Perkins Caufield & Byers, and other investors are making a big bet on Amonix, a company in southern California that has spent 20 years developing concentrating photovoltaic power systems that resemble gigantic solar panels.

India’s Largest Bank Seeks 25 Million Credits From Cow Dung Gas

(Bloomberg) -- State Bank of India, the nation’s largest, plans to help farmers buy fuel-saving equipment that could generate as many as 25 million carbon credits, potentially one of the country’s biggest offset projects to date.

F.D.R.’s Brief Dip Into Tidal Energy

Eastport, a city of about 1,600 people that is about as down east in Maine as you can get, has seen better days. At one point in its history it was the sardine capital of the East, but overfishing and resulting catch restrictions led to that industry’s long slow death. The old canneries along the shore are shuttered and decaying, and the last one in the region — indeed, in the country — about 50 miles to the southeast in Prospect Harbor, closed just last week.

Now, as I write in Thursday’s Business of Green section, a start-up company, Ocean Renewable Power, is hoping to bring some economic renewal to Eastport with a tidal energy project. Their goal is to install underwater turbines that would spin in the tidal currents, generating power. The company is one of a handful in the United States working to develop tidal power as another alternative to fossil-fuel plants.

In Earth Day setback, Brazil OKs dam that will flood swath of Amazon

São Paulo, Brazil – Environmentalists preparing to celebrate Earth Day received a hefty setback this week when the Brazilian government gave the green light for plans to build the world’s third biggest dam that will flood a large swath of the Amazon rainforest.

The decision to grant a construction license for the Belo Monte hydroelectric plant came after a series of tense legal battles fought between environmental and indigenous rights groups and lawyers representing the government of President Luiz Inacio Lula da Silva.

In Venezuela’s Savanna, Clash of Science and Fire

The Pemón Indian tradition of burning grassland and forest to hunt and grow food is dividing scientists in Venezuela and beyond.

On Earth Day's 40th anniversary, a different world

When millions of environmental activists gathered on college campuses and in major cities 40 years ago for the first Earth Day, the rallies, teach-ins and organizing helped galvanize action on a historic scale — including passage of the Clean Air and Clean Water acts and creation of the Environmental Protection Agency.

But even the most optimistic organizers of Thursday's anniversary celebrations in Los Angeles, Chicago and other major cities — and the major rally scheduled in Washington on Sunday — might concede that there's little immediate prospect of matching such watershed achievements.

Climate scientist sues Canadian newspaper

Climate modeller at the University of Victoria launches libel lawsuit against the National Post for "poisoning" the debate on global warming, reports the Guardian.

Four articles in the paper, published from December to February, claimed that Andrew Weaver chose exactly what data to use for supporting his research. They also claimed he tried to divert attention from reported mistakes in the 2007 report of the Intergovernmental Panel on Climate Change (IPCC), by blaming the "evil fossil fuel" industry for break-ins at his office in 2008.

Climate Compromise Assembled, Redrawn in Year of Senate Talks

The measure by Democrat Kerry of Massachusetts, Republican Graham of South Carolina and independent Joe Lieberman of Connecticut will scale back legislation that passed the U.S. House of Representatives last year. Instead of a cap-and-trade program covering almost every part of the U.S. economy, as the House proposed, only power plants would be covered initially. Other industries such as manufacturers would be phased in later.

Dem leader makes immigration bill bigger priority

WASHINGTON – Senate Majority Leader Harry Reid, trailing in polls in heavily Hispanic Nevada, wants to pursue legislation to provide legal status for many unlawful immigrants before the Senate tackles a climate change and energy bill and as Democrats defend their congressional majorities ahead of the November congressional elections.

Like Sept.11, volcano plane ban may hold climate clue

OSLO (Reuters) – Plane-free skies over Europe during Iceland's volcanic eruption may yield rare clues about how flights stoke climate change, adding to evidence from a closure of U.S. airspace after September 11, 2001, experts say.

The climate effects of jet fuel burned at high altitude are poorly understood, partly because scientists cannot often compare plane-free skies with days when many regions are criss-crossed by white vapor trails.

Confessions of a Former Oil Industry Consultant

Jeremy Leggett has undergone quite a few large career changes, from oil industry consultant to Greenpeace scientist to solar power entrepreneur. A geologist by training, he worked with the oil industry until his studies brought him face-to-face with the growing evidence of climate change. In an industry refusing to change, Leggett went to work for Greenpeace and was part of the first Intergovernmental Panel on Climate Change (IPCC) talks up to the non-binding, international climate change treaty, the Kyoto Protocol. Seeing the strong resistance to renewable energy, Leggett decided to move in that direction himself, setting up SolarCentury, the UK's largest solar energy company, which helps support the sustainable development organization, SolarAid. In this interview, Leggett discusses his thoughts on the latest IPCC meeting in Copenhagen and impending US greenhouse gas legislation, what he sees as promising developments for renewable energy, and why he regards culture as the key to adequately tackling climate change.

Oil has stopped flowing from Transocean well

The flow of oil appears to have stopped from the undersea well connected to the sunken Transocean Horizon drilling rig, according to a Coast Guard spokesman.

Senior Chief Petty Officer Mike O'Berry said remote controlled submarines have been unable to shut the valves on equipment at the wellhead on the sea floor, but it appears the flow of oil from subsurface reservoirs has stopped on its own.

"This could just be temporary, so we're not letting our guard down," O'Berry said.

Why would it stop flowing "on its own"?

There's a comment over at the Houston Chronicle blog, suggesting that when the rig collapsed, it crimped the riser shut. Not a long-term fix, but preventing an immediate disaster.

Comments just up at gcaptain say


From what I just heard. When the rig went down the riser collapsed and actuated the BOP shutting the well in. I am not exactly sure how that would have happened but it is a pretty reliable source.


Highly reliable! Appears that the DeadMan finally engaged. I can only wonder why it didn't engage before.

Whatever the reason this would appear to be the first good news from the event. Let's hope the reports do not turn out to be overly optimistic assessments.

BOP apparently means "blow out preventer."

Still getting conflicting reports, as usual. Above:

Blazing oil rig in Gulf of Mexico could be environmental disaster

U.S. maritime authorities said crude oil was pouring into the sea at the site where the hulking Deepwater Horizon rig once stood, though they were unable to determine at what rate.

There was a comment on the blog claiming to be from a Transocean employee saying that a software lockout was in place for the BOP at the time of the incident. Claimed this was at the request of BP and with Transoceans's agreement.

However that comment has since been removed and may well be completely untrue. Poster "John" claimed BP had done this before. Anyone think this sounds possible? Why would you want to lockout blow-out prevention?

tow -- Not my area of specialty but I've never heard the term lockout with respect to a BOP. But there are processors that control BOP functioning. But there are times when the BOP is engaged and times when it cant' be depending upon the current activity. There are actually times whent the BOP stack is removed. Obviously such moments are kept to a minimum and not done at times of higher risk of a well coming in. If the right hands survived the explosion then the truth will come out. Everyone will testify under federal oath when the describe their part of the story. Take my word: no blue collar hand is going to lie for any company under such circumstances.

Everyone will testify under federal oath when the describe their part of the story. Take my word: no blue collar hand is going to lie for any company under such circumstances.

I note a USCG official investigating has requested any info over at gcaptain.

Both BP and Transocean have put out new statements now that the missing are officially presumed dead. However still no confirmation from them that the well is sealed. Taking Admiral Landry's exact words (not words of those at lower levels) there appears to be some wiggle room. What is being said for definite (that I've heard) is that no oil is leaking from the wellhead/BOP or the "riser adjacent". This would leave open the possibility that something is coming out of the riser at a point not adjacent to the BOP and this would fit in with her earlier statement that "We are not saying nothing is coming out. We are saying we can't see it." I hope it's totally closed for the moment and stays that way but it would be nice to see some confirmation video from the ROVs of how it looks down there.

PS The jack-up rig from a couple of days ago masquerading as the DWH appears to be


Rig: GSF Adriatic IV Jack-Up
Date: 10 August 2004
Location: Temsah, Mediterranean Sea, Egypt
Operator: latform run by Petrobel


In August 2004, the Adriatic IV was on location over the Temsah gas production platform, off Port Said, Egypt in the Mediterranean. The rig was drilling a natural gas well when a gas blowout occurred during drilling ops.

tow -- It's called "bridging over". The well bore and/or casing collapsed due to the sediments being eroded by the flow stream. But it can sometime be just a temp stoppagre. Pressure can break thru again.

Just wondering. If the well was still actually dumping 8000 barrels per day of crude one mile below the surface, do you think it would look at the surface much different than it does now after less than a day since the rig sunk?

In any case it seems from reports at gcaptain that the Development Driller III is preparing to move to the site.

At the time of writing I note that neither BP or Transocean have confirmed that the well is sealed.

BP Statement

BP is assisting Transocean in an assessment of the well and subsea blow out preventer with remotely operated vehicles.

BP has also initiated a plan for the drilling of a relief well, if required. A nearby drilling rig will be used to drill the well. The rig is available to begin activity immediately

Transocean Statement

The combined response team was not able to stem the flow of hydrocarbons prior to the rig sinking, and we are working closely with BP Exploration & Production, Inc. and the U.S. Coast Guard to determine the impact from the sinking of the rig and the plans going forward.

Maybe this will change later today but you would think they would announce the "good news" themselves quicker than this.

Maybe this will change later today but you would think they would announce the "good news" themselves quicker than this.

And conversely, bad news takes a long time to come out. I remain astonished that--so far at least--I have not found a single MSM or industry reference to the rapid increase in the water cut from the main Thunder Horse structure.

tow -- I;m not surprised to hear they may be mobilizing a relief rig. To one degree or another the subsea BOP stack failed. Even if it has actuated and cut the flow off it probably can't be reentered until the well is "killed". And I'm 98% sure that will take a relief well be drilled: expensive, time consuming and certainly not risk free. Just a guess but I've probably seen more hands injured/killed fighting a wild well as got it when the well first came in.

For a light hearted look at blow outs folks can rent "Hellfighters"...a 1968 John Wayne movie based on the life of Red Adair, Houston blow out fighter.

I've seen Hellfighters on UK TV way back in the mists of time. We've had him over here twice that I recall. First for the Bravo blow-out in 1977 and then for the Piper Alpha disaster in 1988.

Still no confirmation from BP or Transocean that the well is (at least for the moment) sealed. Which is very strange if it is.

For a light hearted look at blow outs folks can rent "Hellfighters"...a 1968 John Wayne movie based on the life of Red Adair, Houston blow out fighter.

Oh, my brother had some much more exciting videos. He was engineer on call when a deep gas well blew out. Extremely high pressures and volumes. The well was blowing 100 million cubic feet per day of natural gas, and it was 80% hydrogen sulfide (very deadly poison gas, for the uninitiated). You could smell it 500 miles downwind (pure unadulterated essence of rotten eggs, for the uninitiated). The well blew for months and covered the entire area knee-deep in condensate (unrefined gasoline, for the uninitiated).

So, big day arrived, they moved up the equipment, and two guys in asbestos suits got on the platform to release the pipe brakes and drop the drill string down the well so they could cap it. Video cameras start rolling.

It did not go according to plan. Rather than the drill string dropping down the well, the well blew it 400 feet in the air. The pipe hit the rig on the way up, the spark ignited the natural gas, and 1/4 square mile of forest went up in flames.

you've never seen two guys in asbestos suits run so fast in your life. Much more realistic action than a Hollywood movie. The well burned for several months before they capped it and you could see the flames from hundreds of miles away. The videos of them moving in with the tracked equipment and capping the blazing well were also great from a special effects standpoint.

This spectacular not coming to a theater anywhere you anytime soon. Big companies don't like to talk about this sort of thing.

However, environmentalists do. This is actually where the Pembina Institute originated, which you may hear of from time to time in regard to the oil sands. Some locals got upset and started an institute. However, it had nothing to do with the oil sands, it was just one of the things that happens when you're drilling deep wells.

Rocky -- That brings back to mind a very bad memory. Just as I started my career the rig I was on took a short non-explosive kick that ejected a short lenght of drill pipe. Killed a youg floor hand instantly. The company man had me help carry his body off the drill floor while the tool pusher hosed the blood off. They made the rest of the hands go out into the field while we did this (back in the bad old days when you didn't have amandatory shut down after a fatal accident). The company man asked me to help instead of a drilling hand because he didn't want them upset any more then they were already. Had to get back to work and get the well under control. As bad as that was it was even worse when I had to drive the tool pusher back to town while he tried to control a very upset floor hand -- he was the twin brother of the hand killed. Rocky knows but for the others here back in the "bad old days" loosing a finger, hand or life was just a part of buisiness as normal.

Rocky knows but for the others here back in the "bad old days" loosing a finger, hand or life was just a part of buisiness as normal.

Actually, in the Canadian industry the rules were a lot tighter than down in Texas. The big killer then, as now, was driving on the highway to work. Nowadays it is the highway to Fort McMurray that is killing oil workers, back then it was the highways to Swan Hills and Rainbow Lake. The highways are okay, it's just that the drivers need a brain transplant.

The companies I worked for put a lot of effort into keeping their employees alive. Long before the government passed laws they made seat belts mandatory for company workers, put daytime running lights on all the vehicles, gave the workers a 50 mph speed limit, banned smoking in the buildings and vehicles, etc. etc. Drinking on the job got you fired, instantly. All the safety rules had their effect - people used to walk away from the most incredible accidents.

Since H2S is so lethal, we put a lot of effort into monitoring systems. I helped design one system for a gas plant where the gas was 30% H2S. The computer monitored every employee in the field, and each one had to push a button every three minutes. If he didn't, an alarm went off and the computer operator radioed him. He had an additional two minutes to radio back, or the computer closed the valves on the wells and pipelines in the area, and called out an ambulance.

It worked pretty well. One day a slug of liquid came down the line, blew the cylinder head off one of the compressors, and the compressor building filled up with gas. Inevitably a spark set it off and BOOM! there went the compressor building. The computer shut down the plant, closed the surface and subsurface valves on all the wells, closed the block valves on all the pipelines, and called out the fire department. Even the old-timers were impressed and we got an "Attaboy!" from management. Nobody had ever seen anything like that before.

Two people were injured, but that was because they were pushing a truck away from the compressor building when it blew. They were smart enough not to start it (it would have triggered an explosion), but they weren't smart enough to just abandon it and run. Some people get focused on the immediate crisis and forget the basic principle that vehicles are replaceable but people are not. We had to drum it into their heads over and over: When things go south in a big way, forget the equipment, hit the big red ESD (Emergency Shut Down) button next to the door, and run as fast as you can far, far away. The computers will take care of the rest.

I guess you are referring to the Lodgepole, Alberta blowout? I remember it well... it went on for 68 days.
According to this, they could smell it 1500 miles away in Winnipeg.

Yes, it was the Lodgepole blowout. I suppose it is true they could smell it 1500 miles downwind. You should have smelled it close up. After it caught fire, it didn't smell nearly as bad, but you could see the flame for hundreds of miles.

The really bad thing about it was that it was the second big blowout that Amoco had in the area. The first one was bad enough, but the second convinced a lot of people that the company wasn't being sufficiently careful.

The two people killed were workers for a well control company they brought in to bring the blowout under control. For unknown reasons, they took their gas masks off - a spectacularly stupid thing to do when a well is blowing H2S into the air. The only conclusion I can think of is that the well control company didn't train their workers properly. Normal procedure is to never take your mask off until someone with an H2S monitor tells you it is okay.

Anyone seen FIRES OF KUWAIT on IMAX?


I have on DVD, you can't put it on pause.
Perhaps they will release on BluRay.


Was the rig insured? By whom?

Rockman has to answer anything and everything :-) Go Rockman, who has to cough up?

My guess, without knowing anything about it, is that the costs were spread around. Transocean probably a pretty good sized layer for itself (perhaps through a self-insurance mechanism) and upper layers were spread to other traditional insurers/reinsurers. Or there might be an industry insurance program that has been set up to handle lower layers.

These ideas are just based on a knowledge how insurance seems to work on other coverages. I don't really know here.

Thanks for your response. Can you point to some reading on 'layers'?

I seem to recall that the Gulf oil industry is self-insured.

For sure toil. Everything operating off shore is insured and possible bonded also. Even spill damage is covered and bonded. I beleive the standard area wide bond coverage with the Feds is $50 million per company. Underwriting done by all ther big standard writters including Lloyds, Wells Fargo, etc.

It is not at all surprising to see the risks of offshore drilling become greater as more remote and technically difficult resources are exploited, even with increased attention to safety. The Bloomberg article also points out that drilling in deeper waters is something that has only really come about in the past decade or so, which gives an indication of the very low relative level of experience predicting and managing hazards (pressure surges, ocean floor subsidence, etc.) compared to conventional offshore drilling. And it is quite misleading for oil and gas companies to claim, as they do in advertisements, that deepwater drilling is simply the next logical step, without mentioning anything about the added challenges, not to mention price, of developing these resources. Do you suppose API and other industry groups may be taking advantage of widespread energy illiteracy to reassure us that "everything is fine?"

A parallel can certainly be found with other fossil fuels, e.g. as more coal mining shifts underground the risk of mine collapses goes up, again despite industry efforts toward increased automation and improved safety practices. I'd be curious to see safety figures for drilling unconventional (shale/deepwater etc.) gas resources as well, and for mining nuclear fuel (historically at least, a very dangerous job). The idea of diminishing returns on investments in technological improvements and increasingly complex systems, e.g. for energy efficiency, is well noted by Tainter and others in the peak oil discussion. My question is, does this logic apply to safety measures as well? Does the second billion spent on improving safety in offshore drilling or coal mining only reduce injury and fatality rates by half as much as the first, and so forth?

At what point will "we" quietly view failed, leaking deepwater wells as acceptable risks, the way we do burning coal mines? Is there a point/depth where it is impossible/too expensive to stem the flow from these failures?

At what point will "we" quietly view failed, leaking deepwater wells as acceptable risks, the way we do burning coal mines?

Probably right now, or at least as soon as the histrionics die down and we fall back to observing that the short-term alternative of doing without will be even less acceptable to most people, especially with the recession uppermost in mind. It's no different in principle than taking the risk of falling by getting out of bed in the morning, rather than spend one's life strapped in bed or confined in a banana cart. Or taking the risk of flying, driving, or riding in a train to get somewhere rather than locking oneself forever amidst the same four walls. If one is so puritanical as to find nothing acceptable save for the ultimate absolute zero of risk, one will need to seek that nirvana in some other universe. In this universe, the mortality rate even from life itself appears to be 100%. Sorry about that.

I think in the case of uranium, we have pushed production off shore, where we are not as concerned with safety. According to the World Nuclear Association, Kazakhstan is the new big producer. Namibia is another growing area of supply. Canada and Australia are big producers, but I am sure the production is far from populated areas. US production is very low--something like 10% of our use, so we are more dependent on uranium imports than on oil imports.

US injury rates in general (especially death rates) tend to be declining, for almost all kinds of industrial activity, according to insurance data. Companies have many motivations for safe operations--high cost of injuries, need to keep trained workers, bad PR if there are problems. Where I might expect injuries to rise is with "Ma and Pop" operations, that don't really pay as much attention to detail. These are especially common in gas drilling.

Thanks Gail - yeah, it makes sense that uranium mining would have shifted overseas, I cannot imagine very many Americans wanting that job, and all its externalities are perhaps more easily handled from a PR standpoint if they are "out of sight, out of mind." I'm sure, as you mentioned, there are small accidents that happen all the time too, they just do not make headlines like the big disasters. For my part, I have seen injury and fatality statistics within the solid waste sector drop and then climb back up over the last couple of years - I think it is in part due to budget cuts in for employee safety training, but also may be related to an increase in long hauling of trash (i.e., peak landfill capacity).

it makes sense that uranium mining would have shifted overseas, I cannot imagine very many Americans wanting that job

I'm curious. I tried to find any reliable reference on "dangers of uranium mining" and am unable to come up with anything beyond anectdotal. Could you provide the reference you're basing your statements on?

Well, these are the kinds of hazards I'm talking about, historically:


Looking at some more recent mining:


Seems like the largest hazards are exposure to radon and radioactive dust, the major health risks are lung cancer and other pulmonary disorders. Although this is just what a quick Google search turned up, so I can't speak to the credibility of these sites in particular.

Thank you. The second one is excellent. I note that most of the medical studies covered provide little support for "uranium mining is hazardous to miners as mining is carried out in the 21st century". I'm interested because as a Canadian I believe I have a responsibility to oppose such an activity if it can be shown that present standard practices jeopardize worker's health in any significant way. Your reference appears to justify simply remaining vigilant that best practices as at present remain standard.

CONCLUSIONS: The results suggest that an elevated risk for leukemia is restricted to employees with a very long occupational career in underground uranium mining or uranium processing. Moreover, the study does not support the hypothesis of an association between exposure to short-lived radon progeny and leukemia risk.

CONCLUSIONS: Chromosomal aberrations in WUM are not induced by radioactive particles inhaled during underground mining but as in RCM rather result from factors such as age, lifestyle, illnesses, medications and diagnostic irradiations."

It concludes that it is not scientifically feasible to conduct a study of present and future miners who work in modern Saskatchewan uranium mines (1975 onward). Today’s Saskatchewan uranium miners have radon exposures that are between 100 and 1000 times lower than those of past uranium miners, such as miners from Beaverlodge, because of dose limits, improved mining techniques, and other radiation protection practices. Any higher-than-normal rates of lung cancer from such workplace exposures would be virtually impossible to measure. The feasibility study was completed in October 2003 and it was then reviewed by three internationally respected radiation researchers.

I agree there is some evidence that many western US underground miners from the WWII period exhibit somewhat increased incidences of effects of radon exposure, though it appears that none of the studies controlled for variations in smoking habits or other lifestyle issues.

This is anecdotal at this point...

But I recall the chain of death beginning with the miners but also extending to the rail workers who moved the ore, and especially the folks in the towns along the trains' route. Native Americans in the reports I heard. Then also the processors, then the handlers at the power plants. Oh, and the folks we dropped the bombs on, and the ones where we tested the bombs...

You wouldn't believe some of the things they did in the early days of the uranium industry.

Moab, Utah was a major center of uranium mining. The mines were south of town and the uranium mill was north of it. The uranium trucks used to run bumper to bumper down the middle of the main street to get to the mill. They didn't take any precautions to prevent uranium ore from falling off the trucks. One truck had ore from a particularly high-grade deposit, and they were hoping to get a $1000 bonus for the richest ore ever delivered to the plant, but when it got to the mill, it was empty. All the ore had leaked out through holes in the truck bed and was scattered on the highway and town streets leading to the mill.

The mill just stacked its uranium waste on the banks of the Colorado River. The US government is currently spending about $1 billion to clean up the tailings because, if there was a flood on the Colorado, it could sweep the residual uranium downriver and into the water systems of Phoenix, Las Vegas, Los Angeles, and numerous other cities.

I learned all this while mountain biking there. We stayed in a house about 6 blocks from the old uranium mill and could watch the earth movers scoop up the old uranium ore and load it on railroad cars for shipment to a disposal site.

it makes sense that uranium mining would have shifted overseas, I cannot imagine very many Americans wanting that job,

Oh, having traveled in uranium country in Utah, I can assure you that there are many Americans who would want that job. The guides leading us through the Escalante River were not at all afraid of the rattlesnakes, scorpions, quicksand, flash floods, bad water, rockslides, and other hazards of the area, most of which we encountered. When we asked them why they weren't afraid of them, they had to go and look up "afraid" in the dictionary because they didn't understand the word.

They only reason they gave up uranium mining was that the uranium ran out. If there was any uranium left to mine, they would be mining it.


I wonder if US injury rates are really declining as much as insurance data shows. Illegal immigrants have taken a lot of jobs in the US and I know that some of them are off the books. I also know of one serious accident by an illegal which was never reported.

I also know of two cases where accidents by documented workers were suppressed by the employer. In one case this was done with the help of a Doctor.

This is anecdotal and not statistical but if this is widespread enough Insurance data may be deceptive.

In almost any situation involving workplace injury the level of reporting declines as the injuries become less severe. People normally follow procedure for reporting serious injuries because records are kept of ambulance callouts and work insurance claims. Less serious injuries are not always reported.
Anecdotal example, I had a needlestick injury at work at Christmas and reported it, had blood test, then had 2 further needlestick injuries in the following month and didn't want to waste hours on further bloodtests so I didn't report them. When a senior manager in charge of occupational safety came to site and gave the companywide stats on injuries I pointed out to him the huge number of injuries not reported.

WE -- First off I don't bother reading press releases from the API or other "industry reps" as they like to be called. Tells you something how at least one insiders views their words.

Prior to my current gig I was a pore pressure analyst tasked with monitoring pressures in Deep Water GOM wells. Actually the level of experience of folks doing this is very high. Not meaning to make this sound so dramatic but this process can truly be a life and death issue. At least it can be the difference between drilling a well that makes $800 million of oil or losing a $150 million investment. A tad stressful to say the least, the PPA monitors a variety of data to calculate transitions into such abnormally pressured zones. Then it's up to the drilling engineers to modify their ops to deal with it. Failure on either side makes for a very bad day.

But here's the part of the story that supports your reservations. We are very skilled at dealing with these situations. But the situations can be very difficult to analyze and predict. And when the SHTF sometimes the best engineering designs and equipment won't change the course of events. IMHO we've reached the point where we really can't mitigate the risk any better. So no matter how skilled and diligent the effort such catastrophic failures cannot be avoid all the time. We either have to accept the risks or abandone the effort. More times than I care to remember I've gone back to my bunk room and shoved my car keys and wallet into my overalls. That's all you can do when you think you might be getting close to a tipping point. Won't be time to make that side trip when you're running to your escape capsule.

You can color me dumb but one reason I switched from geologist to PPA was that I was bored with geology after some 30 years. Never had a close call as a PPA in my short career. Worst scare I ever had was a nightmare on a drillship off the coast of Africa. Dreamed we took a kick and the ship was rolling over. How real did the dream feel? I was sleeping in a top bunk and kicked a hole in the ceiling tile while try to right myself from the ship roll (which was occurring only in my mind, of course). Made for a funny story that morning at breakfast. The main reason I gave it up because my young daughter asked me to after she began to grasp the potential risks. Actually I now have better odds of being killed by a drunk driver taking her to a movie on Saturday night then getting it in a blow out. But that's difficult to explain that to an 8 yo with tears in her eyes. So I didn't try.

Slideshow of steps in growing new, easier PV Cells. (Also, note bootstrapping, building is partially powered by PV!


Kandahar, Afghanistan - Diesel or Hydro electricity ?



PS: Why not some solar cells and limited battery storage for daytime electricity ?

Both at the military base and the city. Good enough for refrigeration, computers, TVs, factories & stores and a/c during the daytime. Run diesel for off/on nighttime use in the city and full time for the military.

For those with the time, I recommend reading "The Places In Between" by Rory Stewart. Chronicles the Scotsman's solo walk across Afghanistan in Jan 2002. Traveled parts of the old Silk Road, staying in village private homes each night, where much of the travel is still by foot or mule, village distance apart reflecting a days walkable distance. It in some regards, reminds one of pre REA in rural America, with life made much harsher by the barren soils, steep topography, and high mountain passes. And the nearly feudal control over small areas by "chiefs" or religious mullahs.

I find myself wondering if bringing electricity to the region is such a good idea....

Urban Makeover in Tyson's Corner (suburb of DC)


As "proof of concept", we did detailed "Urban Rail Saturation" studies for two cities, Washington DC and Los Angeles. The criteria was all Urban Rail lines justified at $30 oil.

Tyson's Corner would have had the planned Metro Line (though extended past the airport to Leesburg, VA) and been the terminus for three Light Rail lines. One to Bethesda, MD (extension of planned Purple Light Rail Line), one to the Pentagon/Crystal City area and a third further to the SouthEast (forgot details).

Bethesda and Tyson's Corner would have been the two major hubs outside DC proper (we also added a second "Red Line" from Bethesda to Union Passenger Terminal, hitting Georgetown, Dupont Circle and the other circle).

Best Hopes for TOD and Urban Rail,


One of the best and clearest articles I have read on modern gold washing.


This is a clear demonstration of how derivatives and synthetic securities have been used to create imaginary value out of thin air. More triple A CDOs were created than there were underlying triple A assets. This was done on a large scale in spite of the fact that all of the parties involved were sophisticated investors. The process went on for years and culminated in a crash that caused wealth destruction amounting to trillions of dollars. It cannot be allowed to continue.

Basically right now the truth is there was nothing there and instead of settling the accounts what has happened is massive government intervention has allowed the mirage to briefly remain in place.

Indeed this magic money creation machine has probably continued to expand.


You might like "The Big Short" by Michael Lewis...the best I've read on the topic and entertaining too.

I've reached the point I'm not sure I want to learn more :)

However as a follow on point one thing I think people miss is that oil usage was tied to the original wealth creation even if inflated this was the first mortgage not the follow on financial games. I've argued that they will have little bearing on oil usage as the fail in the future since they where not fundamental in the first place. Next of course actual housing construction has already collapsed and thus will not be a major influence on oil usage going forward again regardless of what financial games are played.

We can also I argue expect that governments will be forced to take ever more dramatic measures to prevent financial collapse as the games unwind however by preventing collapse they also eliminate the possibility that follow on real economic collapse will happen as the various money games unwind.

This of course works to insulate the oil using economy from the financial economy regardless of what direction it takes as the government printing presses insulate the daily oil economy from the economic games.

The problem is of course this ensures intrinsic demand remains relatively high even as government debt levels soar. The overlying monetary mischief ensures that real austerity measures are impossible as the vast amounts of fake financial instruments in existence force continued financial bailouts.

Because of them we can do nothing to really address intrinsic oil demand. So in my opinion we are now in a paradoxical situation where financial policy can no longer cool the real economy to spur demand constraint as this would require a collapse of the overlying financial ponzi scheme which would itself simply collapse the real economy.

Thus we have no choice but to keep revving it until it hits the wall.

Hi Mike,

Welcome back - I missed your comments.

At some point I would like to understand your idea about why renewables aren't a good idea in a net energy-declining environment. Limited energy, low eroei, something like that...

Maybe a blog post?

Glad you're back on solid ground.

I'm not saying that they are not a good idea. And yes perhaps I should blog it.

Look we have have had access to and abundant cheap fantastic fuel for decades in the form of oil. Effectively unbounded and on top of this we had major increases in fuel production etc.

And look where we are.

Now what the hell do renewable energy sources have to do with our problems. Absolutely nothing.
We got ourselves into a terrible situation with one of the best energy sources available alternative ones do nothing to change this.

People that argue they are some sort of solution are simply complete frigging idiots and yes give me crap for saying that I don't care they are. I'm tired of watching the stupidity of the world pass in front of me at some point people need to wake up and realize what we have done and understand it. And its far far from pretty.

As far as renewable energy itself goes its of little importance for decades at least we don't need it indeed we need only a fraction of our current fossil fuel usage. Longer term looking out decades from now it can and should grow in importance but right now and for at least a decade its of little importance we have far far bigger problems we need to solve in the interim. In solving them conservation of our existing resource base is more than enough to provide energy for our society as it transforms itself. Right now people that trumpet them as some sort of solution to our problems are doing far more damage than good as our real problems go unsolved and of course population is at the root.

Its just more stupidity piled on top of the chain of stupid actions that have gotten us to this point at some point people need to simply stop and act responsibly.

"And look where we are."

Profound and well said.

Just checked out your blog. Wish you would write more.

Re: Russia to consume more Saudi oil?


Right now, Russia is exporting 70% of its 10 MM bpd production. So either Russia's consumption has to rise by that much, or its production decline (or a combination) over the next decade. Saudi certainly cannot contribute 7 MM bpd extra (over and above what China, India, the rest of us, and KSA itself, are getting). Somebody will have to go hungry.

What do they know that we don't know, that Russia with its current 7 mbd oil exportation, would become a net importer within 10 years? In any case, I would say if that occurred, then world oil production would have declined so much from the reduction in Russia output, and increasing demand from Saudi oil, that it would be game over.

I'd think maybe the FSU could become products consumers out of necessity due to lack of domestic capacity ala Iran or Mexico, but the latest year for Russian product production in EIA data is 2006 at 4617.54 kb/d, a rebound to 1993 levels; FSU is listed at 10.3 mb/d in 1986; summing up component countries for 2006 we get 6382.37 kb/d, a number which has been on the up and up all decade.

FSU imports are listed as 30 kb/d in 1991, next year when we sum up those member countries again we get 587.67 kb/d, more evidence of EIA serving up whatever figures they're handed out of political necessity. This number bottoms out at 248.3 in 2003 but is back up to 358.35 in 2006. Note however that Russia's 2006 imports were 0.96 kb/d - zilch.

Windmill Boom Curbs Electric Power Prices for RWE

“We’re seeing that wind energy lowers prices, which is great for the consumers,” Kjaer said at his group’s conference in Warsaw this week. “We as producers have to acknowledge that this means operating the existing plant fewer hours a year, and this has an effect on investors” and profit.

Twice this year the nation’s 21,000 wind turbines pumped out so much power that utilities lowered customer bills for using the surplus electricity.

Now this is ironic, German wind turbines sometimes produce two much electricity. Isn't there some way to either store the excess power or cut back on other types power generators? Wasting wind power seems like such a waste.

They use pumped storage in Germany, IIRC, but that is limited by reservoir size.

Switzerland is in the midst of building an additional 12 GW of pumped storage. Normally, they buy French nuke power for almost free @ 3 AM and sell for 4+x the price at peak. But they can and will buy surplus wind power as well.

The massive increase in Swiss pumped storage was expected to increase late night prices for French nuke power as there would be more pumped storage than surplus power on most weekdays (still a surplus on weekends, mild May weekdays, etc.).

Best Hopes for Pumped Storage,


Luxembourg also has 1 GW of pumped storage, France 4+ GW, Austria, etc. None in the Netherlands :-)

Green shoots?

As consumers get more optimistic, they go shopping

Cheryl Stewart got laid off a year ago, so she and her husband slowed their spending. Recently, she started buying clothes and redecorating her daughter's room, and is preparing to buy furniture.

She's on a budget, but the Baltimore mother of two says though she is still not working, she's simply tired of "denying myself for so long."

New-home sales see biggest jump in 47 years

WASHINGTON - Sales of new homes surged 27 percent last month, bouncing off the previous month's record low and blowing past expectations as better weather and government incentives boosted sales.

I'm still undecided as to whether the economy will recover enough to cause another oil price spike. My guess is that Obama and Congress will do their best to juice the economy at least up until the elections this fall.

Green shoots?

The bigger question is where consumers are getting the money to buy all this stuff. I suspect they don't really have the money, they're just charging it on their credit cards. How long can that be sustained ?

Some of us are finally coming out the other side of debt paydowns and actually have cash to buy stuff.

If you are speaking personally R4ndom, then I congratulate you. Getting out of credit card/revolving debt is one of the best financial moves you can make.

I'm not sure. I'm a Realtor in DE, and the spring market has been VERY busy. (I haven't had a day off since the second big blizzard in Feb.) I'm curious to see what will happen after Apr. 30th. People who want to take advantage of the home buyer's tax credit must be under contract by that date. Lots of buyers in the $100K-$300K market have enabled sellers in that range to move up market. If buying at the lower end falls off, the rest of the chain likely will, too.

I think it's real hard to tell from our neck of the woods, damac.
As I'm sure you are aware, Newcastle Co., is one of the more affluent counties in the country and DE as a whole is pretty well off. I'm just over the border here in Chester Co., and the same thing here. We haven't been hit nearly as hard as the rest of the country by the Great Recession.
So it's hard to tell exactly what's going on from here. But I think we are seeing that the economy indeed does possess a certain resiliency; probably largely the result of the heavy dose of drugs injected by the Government, and not to be very long lived.

I don't think there is any question that toward the end of the year (if not sooner) we're going to see some significant flight out of the equity markets. This thing is getting long in the tooth and there is no sense what-so-ever in hanging around and getting whacked real good by higher cap. gains taxes next year. Money has got to come out of both equities AND commodities before then in my view.

Is there anything in congress to try to prevent the increase capital gains taxes next year? If not, yeh, we are in bubblicious territory.

Lots of buyers in the $100K-$300K market have enabled sellers in that range to move up market.

Can you say anything about how the local market is for existing homes versus new ones? Calculated Risk has been tracking the "distressing gap" between recovery in sales of existing homes and new homes -- nationally, new home sales have barely budged from the market bottom. A number of economists have regularly pointed out that increased sales of existing home have little impact on the economy. Historically, increased sales of new homes have signaled the beginning of the recovery in employment following a recession.

Heard this today from a buddy in Ak

Been working long hard hours- 14 hour days. Market is on fire.

We have as many pendings as we do houses on the market.

People are flooding into Juneau because we have work and a safe environment to live in.

I cannot keep up.

I think the global economy certainly has the momentum to cause another spike (that is, bigger than the one already formed). But in my view, that will probably be over the coming year or so, not necessarily in 2010. The U.S. economy does not have the moxie to do it alone.

I don't know what means O & C have to "juice the economy", since new fiscal stimulus appears off the table. Obama will continue to play his role in the shared effort to increase confidence (con-game?), but otherwise they are relying on the hope that the stimulus package has provided enough heat to ignite private sector investment, it seems to me.

I believe Obama is successfully laying some groundwork for his own re-election: the healthcare reform, though barely a half-measure, has improved his leadership credentials; ditto for financial reform (half-measure as well) which the Repugnants will support given the level of anger among crazed white persons against the financial hooligans; and his drill-a-little-bit policy, which as of the last couple of days is going to look even better on the left coast, while still undermining the palinistas' platform (no fun intended).

It's off the table because it looks like it's not needed at the moment. My guess is that will be back on the table if that changes.

Say...a huge bank needing a bailout. A state running out of money for basic services. Or airlines, claiming volcano losses? If needed, I expect more auto and home buying incentives as well.

I wonder if any work stimulus at this point has enough time for passage, implementation, and final cycling to affect fall elections. Certainly by June that window is closing.

They can get things done pretty fast when they want to. Remember how quickly Dubya got those stimulus checks in the mail?

I was thinking of those checks as I wrote the post, and inserted "work" into the comment. But do you really think this president could get that thru this Congress? Such blatant giveaways seem reserved these days for a Republican president, ala Nixon opening up to Communist China.

Responding to your story at the top of this thread, that seems fairly accurate to me. Makes you wonder again how much of the recession was not due to lost jobs and wages, but rather fear in the population as a whole. The bottom did not fall out, we will spend, forget saving. And the economy rolls along again, but those jettisoned are lost and forgotten.

It reminds me so much of the mid eighties.

But do you really think this president could get that thru this Congress?

Yes. Or rather, Congress would do it and Obama will go along. All the incumbents, D, R, and I, know that it's their head on the block if the economy's bad leading up to an election.

Perspective on the new home sales:


With one more 23% increase next month, we can party like it was 1991!!

Thanks for that graph! A little backstory sure does put things in perspective.

The other issue is the tax credit for new home buyers and repeat home buyers that runs out April 30. Everyone is running to get their tax credit, before it disappears. This is what realtors have told me is causing the run-up in sales now. A big dip is likely after the tax credits go away.

Just a little more perspective.... what's been going on in our tiny little part of the country:


Over the last 25 years realestate/building became the main industry/employer in our little county (by far). One can see the fix we're in. I'm sure that there are many areas in the same situation. It's going to take one helluva turn-around to get us out of this hole. Prime mountain property, cheap, anyone?

Most of the sales in '09 and this year have been fire sales and sales of forclosed properties. Prices have dropped fast....but they raise our property taxes to try and cover budget shortfalls. Help!


Now that's interesting stuff! The number that jumps out at me is the highest sold price..$365k. I realize that this is an extremely small sample size, but that just smacks between the eyes.

It doesn't matter how much propaganda is thrown out there, if you know where to look (real sales tax revenues, federal witholding tax, etc.)you can put the pieces together.

People are just hunkering down. All kinds of people.

With one more 23% increase next month, we can party like it was 1991!!

This is what can be so misleading about statistics. Thanks by the way for the graph, which clearly indicates an increase is only as dramatic as what its being compared to.

Statistics don't mislead. People do.
-National Statistics Association

... tired of "denying myself for so long."

right, because you sure can wear out a lot of furniture in a year...

ah, the American "consumer" - the most well trained beast on the planet - ready to resume spending as if they never missed a beat

don't deny yourself any longer - of course you DESERVE anything your precious heart desires...

just like the recovering alcoholic - "I'm tired of denying myself just one little beer for so long..."

Now, now. She's fixing up her kids' rooms. She just had a new baby, and her older kid's room was unfurnished.

I found this bit interesting:

"Interestingly, the approach is for better, higher-priced items chosen for longevity, quality and design, and less in quantity."

Are middle class people choosing to buy higher-quality items because they realize it's cheaper in the long run? Or does that means it's really the rich who doing the shopping these days?

Someone posted an old man's "Depression tips" here awhile back. He recommended not buying anything if it wasn't necessary, but if you did buy something, to buy the highest quality you could afford.

There is a constant barrage from the news media telling everyone the crisis is ended and the recovery is here. Advertising hasn't slackened by much. In the USA, if you don't buy things you are a loser.

I think it's fine that some people are acting like doofuses. Makes it easier for those who choose not to.

This is simply the eye of the hurricane ... the first eye of the first hurricane.

I think what's happening in the U.S. is really, really sick.

The fed has decided to be omnipotent and just flood the economy with money and guarantees for banks. This has goosed the stock market and made banks' balance sheets appear better than they are. The name of the game is confidence - just enough to make people spend alot of money on stuff they don't need and houses which are too big, too far from jobs, and energy inefficient. This is big brother, psychological warfare type of stuff, folks.

Meanwhile, the government passes a healthcare bill that rewards private insurers with new customers. It continues to spend trillions of dollars on the Afghan sinkhole. The government refuses to control the Mexican border because corporations like cheap labor. So states like Arizona are taking extremely draconian measures. The states are also going bankrupt and its community services like schools etc. which feel the pain.

None of this even attempts to address the fundamentals of what caused the 2008 crash in the first place - financial chicanery and the worldwide oil production plateau. Which means that the next crash is guaranteed, and may be worse.

As long as we are confident that the production plateau will end at some point and the downslope begins, this is all futile. All of the money in the world can't solve the problem. Food and energy prices will go up while everything else will deflate. You need real communities with alternative means of transport, high income jobs and good government, and we have none of the above.

The timeframe up until 2020 is going to be critical. Watch for signs of fascism/civil war and plan accordingly.

With electricity crises in sensitive countries like Kenya, South Africa, Pakistan, etc, wouldn't these be great markets for US alternative energy? With Pakistan being a US ally and having riots in the streets, wouldn't strong export subsidies and low interest financing for say 50 MW of solar and 100 MW of wind every year for the next 5 years for American made products be a win-win? It wouldn't turn their situation around hugely, but it would help.

Neo-liberal "globalization" philosophy currently in vogue does not allow for attaching "for American made products" to any initiative. If the US opened that door to WTO "agreements", there would be a worldwide mass exodus thru it.

I think it does. We've done it before.

Whether it's a good idea or actually works is another story.

Almost anything would help some, but it is a complicated problem. One factor that makes the shortages and outages more harmful to the economies of these countries is that they are unscheduled. A second is that in most cases, there isn't much in the way of a national grid. Both of these make it much harder for industrial/commercial customers to get things done; they need to have both workers and electricity together in one place to make things. And these countries are generally much more concerned with idled production equipment than they are with dark houses.

Reliable reasonably-local baseload generation is what they really need, and neither wind nor solar really fit into that category (absent a big smart national grid that can shunt power from where it's possible to generate it at a given time to where it's needed). China serves as a useful example. Yes, they are deploying wind and solar. But they are also planning to build hydro, 30-some nukes, and hundreds of coal-fired plants. Smaller countries like Kenya would arguably be better served if the US could offer them attractive financing on nukes that were modular (say 100-300 MWe), long-refueling-interval (say 20 years), proliferation resistant, needed minimal operating adjustments, used little cooling water, etc.

Such units exist on paper. Perhaps in 20 years the US will be ready to produce them. Japan, South Korea, China, India, or Russia are likely to get to market first.

Energy Headlines -- Russia consuming Saudi oil???

The article Russia to Consume More Saudi Oil contains the following quote from an 'adviser to Saudi Arabia’s Petroleum Ministry':

Within 10 years, if the trend of current economic growth continues, there are likely to be three additional major consumption centers: India, Russia and Brazil,” al-Muhanna said. “International oil demand will become more highly diversified.

The mention of Russia in this context has to be one of the more bizarre statements to come out of Saudi Arabia recently. Suggesting increased demand for imports from India is a no-brainer. Suggesting the same for Brazil requires one to believe that their nascent offshore oil boom will be insufficient to meet rising demand. Suggesting that Russia will become an oil importer is a giant leap of faith. It seems more likely that Saudi Arabia itself will become a net importer of oil before Russia does!

Let's review the situation with plots from the Energy Export Databrowser:

In India we see a simple story of rapid growth in demand combined with a lengthy production plateau. India currently imports over 2 million barrels per day and that will certainly increase as demand growth continues and production eventually subsides.

Brazil is a little trickier to predict. Demand for oil will certainly increase in this rapidly growing, developing nation but the Tupi oil field is not to be ignored. Neither is Brazilian ethanol production. Brazil is a current importer of perhaps 1/2 million barrels per day but one can imagine that they could produce enough oil to be self sufficient by 2020.

Looking at Russia the only thing that is clear is that their oil production has largely rebounded from the collapse of the Soviet Union while their oil consumption has not. Add in the fact that Russia is one of those countries with a declining overall population and it is not clear how they are going to go from producing about 10 million barrels per day and exporting 7 to being a net oil importer in 10 years without another political and economic collapse.

Saudi Arabia
A look at the Saudi profile makes me think that we have the pot calling the kettle black. Their production profile shows the collapse in oil prices and throttling back of Saudi fields during the 1980's But the consumption trend is what is more frightening -- it shows the exponential growth typical of developing nations.

Saudi Arabia also has one of the world's fastest growing populations going from 4 million in 1960 to 16 million in 1990 to 25 million people today. Russia, by comparison went from 120 million in 1960 to 148 million in 1990 and the back down to 142 million people today. Saudi Arabia currently produces around 10 million barrels per day of which it consumes 2 (1.5 for desalinating water) and exports around 8. Even without Twilight in the Desert, it is clear that Saudi Arabia's internal demand will go up enough to crimp their ability to export over the next decade.

I cannot speculate as to the motivation for making the claim found in the article above. All I can say is that a careful look at the data suggest that the al-Muhanna has a lot more explaining to do about how he arrived at his conclusion. Although some of the blame definitely lies with the person writing the headline. That's why it's important to look a little deeper.

Happy Exploring!

-- Jon

Sam's best case for Saudi Arabia approaching zero net oil exports is around 2037, and for Russia, around 2029:


However, the Russian projection is primarily based on mature basins; the frontier basins are a wild card.

2029 is 18+ years away.

It appears that Kashagan will take about that long to go from first wildcat to full production. And the Russians have not yet spudded those wildcats in frontier areas.

Best hopes for Russian Oil Self-Sufficiency (where can they import from ?)


PS: The Russian population should be down @ 10 million by 2029 (from memory). Good for reduced oil consumption.


I agree completely with the take home message in the article you linked but I do take issue with the use of Hubbert Linearization when applied to production profiles like those of Saudi Arabia and Russia. The production statistics in these nations are driven largely by above ground factors such as market prices, political dissolution, economic collapse, oilfield engineering decisions, nearby wars, etc.

While HL is a great tool for a place like Norway, it is difficult to make any argument for why a logistic curve is appropriate for modeling Saudi oil production. Saudi Arabia is a case where, instead of simple mathematical models, we need more complex 'story-telling' models that use input from oil field geologists like yourself but also from economists and demographers and perhaps even historians. I just don't believe that HL has any predictive value in a case like Saudi Arabia.

Besides that, we also need to take into account other sources of energy like coal and natural gas. As we know with these two countries, production stats are determined by more than geology. I think a case could be made that Russia will convert some of their internal demand to coal and gas in order to earn more cash by exporting increasingly expensive oil. In my estimation, Russia will be a net energy exporter and probably a net oil exporter for decades to come.

Saudi Arabia, on the other hand, is barely self sufficient in natural gas and has no coal whatsoever. As their energy needs increase they will use what they have at hand. I fully expect Saudi Arabia to be only a minor energy exporter by the end of the current decade unless there are significant breakthroughs in the price of solar energy.

My 2¢

- Jon

Here was our first detailed attempt to model Saudi (C+C) production (in early 2006):


I thought it interesting that the Saudi HL plot was showing a fairly linear projection from 1991 on. Interestingly enough, Stuart Staniford's objection to the Saudi HL plot, in early 2007, was that the observed rate of decline in Saudi production was greater than what the HL model predicted. One could then infer that if the HL model was approximately correct, one would expect to see a rebound in production, which we saw in 2008.

In any case, assuming that 2010 oil prices are higher than 2009, and assuming that 2010 Saudi crude oil production is once again below their 2005 rate of 9.6 mbpd, we will have gone five years with Saudi crude oil production below their 2005 rate, with four of the five years showing year over year increases in oil prices. This is in marked contrast to the pattern of rising production in response to rising oil prices that we saw from 2002 to 2005.

Regarding net oil exports (calculated in terms of total liquids), the 2007 and 2008 data points fell between Sam's middle case and best case for Saudi net oil exports:

In 2020, his best case for Saudi net oil exports is 7 mbpd, middle case 4 mbpd--versus 9.1 mbpd in 2005.

Regarding Russia, the HL projection was heavily weighted toward the pre-1990 data, since the HL plot was showing a steady linear progression, up until the fall of the Soviet Union. Our premise was that a good deal of the rebound in Russian production was largely just making up for what was not produced after the fall of the Soviet Union.

Here is a short essay focused on Russia;

June, 2007

In 2006, Russia "caught up" to where it should be. Now, as Russia has approached the 100% mark (100% of what it should have produced based on the HL model), its year over year increase in production has been slowing appreciably, and since October, 2006, the EIA has been showing basically flat production for Russia.

In my opinion, the mature Russian basins are in an advanced stage of depletion. Note that the EIA has 39 monthly data points after October, 2006, when Russian production hit 9.45 mbpd (C+C). The average monthly production for those 39 months is 9.43 mbpd (although the recent data are of course slightly above that).

Saudi's net export of liquids is actually a bit too rosy considering they've been using a lot of natural gas for a lot of their domestic use, but even they admit they're maxed out of. Their NG consumption is about 1.5 mmboe. They're building new oil fired power plants (shudder), they have a rapidly increasing population, horribly inefficient useage, etc. Bad news all around.

Jon, great graphics as usual.

Since you mention population growth, have you thought about producing the same sort of graphs for oil production, only plotting per capita production? Just knowing that the population of Saudi Arabia, Indonesia or India is increasing doesn't give the same impact as a graph of the same data. Such graphs would give Jeffery Brown's work on Oil Export Land even more impact. You might add an option to plot mbbl/year/population to the others listed under Units...

E. Swanson

Yes, adding support for per capita versions of all the plots is on the list. As is adding support for converting at least oil into monetary units like dollars and my own favorite: grams of gold.

Actually I'd like to create another entire databrowser based on the US Census Bureau's International Data Base, They have a ton of fantastic data all nicely organized that could be used to make numerous excellent graphs.

Unfortunately all this takes time and I have to devote most of my energy now into securing the next couple of contracts. Management has decided that it's OK for the marketing team to write blog posts demonstrating the explanatory power of this type of databrowser. But the development team has been furloughed for a while. 8-(


You wrote:

Saudi Arabia currently produces around 10 million barrels per day of which it consumes 2 (1.5 for desalinating water) and exports around 8.

That number for desalination is erroneous (despite the source). In 2006, KSA produced 3 million m^3/day of desal:


This was predicted to be up to 4.6 MM m^3/day by now, so we'll use that.

Most of the desal in KSA is produced from Multi-stage Flash Distillation cogeneration facilities where electricity is a product and excess heat is used for pre-heating the water. But lets assume that all the input fossil energy goes into desalination. MSFD reportedly uses 23-27 kwh/m^3. Assume the high number and also assume that we are only 28% efficient at using the heat in a barrel of oil (such as, if we were going to generate electricity to do the heating). A barrel of oil has 1700 kwh of energy, we get about 600 kwh/barrel. Multiplying the daily desal production by the desal energy usage and then dividing by the energy from a barrel of oil yields around 200,000 barrels/day. And given all of the inflated assumptions above plus ignoring the cogeneration aspect and the number of such plants that run on gas, the amount of crude that goes into making fresh water is much less than 200,000 b/d.


Without better numbers myself I'll put my faith in yours and your growing expertise in all things Saudi Arabia. Though I did see reports of MSFD efficiencies in newer plants as low as 17 kWh / m3.

But the Saudis are also planning on building lots more desal plants this decade. It'll be a close race between efficiency and demand. (They may even have to go so far as metering their water. )

Their herculean efforts to supply water to a growing population living in a desert are worthy of some serious study. Here are a couple of links to get folks started:

Figuring out where the energy flows within Saudi Arabia is important. Their stated intention is to develop their own "downstream" for their oil, as in a petrochemicals industry. Export energy in value-added form, and pocket the extra profit. Given everything they use oil for, burning 3/4 of what they keep just for water seemed high. I was surprised to discover awhile ago that their desal plants were substantial net producers of electricity (>15% of KSA total), but I haven't found anything which details their FF consumption -- the specs for each plant don't provide that info. Even if they did, doing the accounting to decide how much to allocate for the desalination is problematic. Here is info for one large plant:


Interesting commentary on CNN front page:


Is the Earth striking back?

Both Iceland and the United States exalt democracy as a social achievement worthy of lasting an eternity. Yet the latter's unprecedented strength has derived not just from enlightened government, but from the release of its own hot clouds: exhaust from its vast industries, fleets and mechanized agriculture.

As we have learned, these gases form an invisible barrier that, like a greenhouse's glass ceiling, keeps reflected heat of the sun from escaping our atmosphere. The denser that gaseous barrier grows, the hotter things get and the faster glaciers melt.

As they flow off the land, we are warned, seas rise. Yet something else is lately worrying geologists: the likelihood that the Earth's crust, relieved of so much formidable weight of ice borne for many thousands of years, has begun to stretch and rebound.

As it does, a volcano awakens in Iceland (with another, larger and adjacent to still-erupting Eyjafjallajokull, threatening to detonate next). The Earth shudders in Haiti. Then Chile. Then western China. Mexicali-Calexico. The Solomon Islands. Spain. New Guinea. And those are just the big ones, 6+ on the Richter scale, and just in 2010. And it's only April.

It's looking like this may be a long decade. And if we don't pull carbon out of the way we energize our lives soon, a small clump of our not-too-distant surviving descendants may find themselves, as Gaia scientist James Lovelock has direly predicted, like the first Icelanders: gathered on some near-barren hunk of rock near one of the still-habitable poles, trying yet anew to eke out a plan for human civilization.

Not all that interesting really, just yet another "arthur" flogging another book. And yet another headline writer catching the eye by appealing to magical thinking, as if an inanimate object could "strike back". Yawn.

It would be entirely uninteresting if there weren't so many of them saying the same thing, all correct.

What I found interesting was the question of melting of large amounts of ice on this planet and its possible effects to the underlying geology. Is this a possibility geologists? What effect does the melting of our polar ice caps have on the pressure points between tectonic plates? I'm not saying I think it is a forgone conclusion that the recent geologic activity around the globe is due to this, but I think the idea would warrant further exploration.

What I found interesting was the question of melting of large amounts of ice on this planet and its possible effects to the underlying geology.

Lowering of confinement pressure on magma chambers is not a good thing to do. Apparently in addition to the possibility of allowing volatiles to come out of solution there is an effect of magma generation. Magma is formed by partial melts, and it is a competition between pressure and temperature, so removing overburden ought to result is more magme being formed. There was a paper (I didn't read it), but the general synopsis estimated an additional .014 KM cubed of magma was being generated per year under Katla by deglaciation pressure release. That is probably comparable to the historic rate of eruption of it, so perhaps we have doubled the eruption rate of this particular volcanoe. But, this is only going to be a local effect, 99plus percent of the planet isn't experiencing rapid deglaciation, so I don't think that globally this is significant. I am very very skeptical of claims GW affects earthquake activity.

Now, if the planet really was run by a GAIA goddess, then she would be giving us our just deserts. But, that is just magical thinking breaking out.

I've got a very vague memory of a paper about 5 years ago in an AGU journal arguing increased vulcanism/earthquakes around the time of the collapse of the last glacial maximum. Very speculative and controversal, but a reasonable argument was made for it. Given that Jeff Severinghaus' result of a first major collapse taking place within a decade or less is still holding up as far as I know (sorry its been awhile since I crawled thru the early Holocene/late Pleistocene literature), that quick a release of ice weight might well cause a fair amount of hell to break loose volcanically. All hell certainly broke loose ecologically at that time.

The continental glaciers were two miles thick in places and the resulting sea level rise was 200 feet.

First we were worrying about a snowball's chances when down there in hell ...

Now we're worrying about hell's chances while under a snowball

Krugman has come out swinging today.

On Thursday, President Obama went to Manhattan, where he urged an audience drawn largely from Wall Street to back financial reform. “I believe,” he declared, “that these reforms are, in the end, not only in the best interest of our country, but in the best interest of the financial sector.”

Well, I wish he hadn’t said that — and not just because he really needs, as a political matter, to take a populist stance, to put some public distance between himself and the bankers. The fact is that Mr. Obama should be trying to do what’s right for the country — full stop. If doing so hurts the bankers, that’s O.K.

More than that, reform actually should hurt the bankers. A growing body of analysis suggests that an oversized financial industry is hurting the broader economy. Shrinking that oversized industry won’t make Wall Street happy, but what’s bad for Wall Street would be good for America.


If one agrees that there are theoretical limits to returns on 401-k and IRA investments, then you have to agree that there are also theoretical limits as to the number of people you can employ in the financial sector before they begin to "eat all of the pie," leaving nothing for those whose monies are invested. Judging from my returns over the past ten years or so, I'd say we are "there."

I think it's more like a practical limit to the number of people who are not only not adding any value to the economy, but whose actions threaten the stability of the financial system.

The economy would be better served if governments paid people to build sandstone pyramids on the great plains, rather than permitting more pyramid schemes.

The other thing is that a lot of financial work is increasingly based on "being smarter than the other guys in order to take money from them" rather than "becoming smart enough to acheive something new in the physical world" of many other endeavours. Since the other guys will then try and become smarter, this seems to me to imply that even if some investor is always making a profit in the financial world at any given instant, it's going to become more and more oscillatory and extreme. As such it's going to have more and more bad effects (bailouts, companies collapsing from failed financial transactions, etc) whilst having fewer of the beneficial ones (being able to pay to dilute risk, etc). One of the things that I suspect a viable future is going to need is a financial rethink motivated fundamentally not on "the flawedness of interest" or the other popular bugbears but on how to create incentives that lead to human responses maximising stability.

[Just to clarify my difference with toilforoil: I think there are a few genuinely useful things a financial system might do, just that the system can spiral away into primarily zero-sum-game territory incredibly easily.]

Very very well put. I doubt these are actually zero sum games. There is enough friction and collateral damage when things go wrong that if you push the boundaries out to cover all of society they must be strongly into negative sum territory.

I'm all for a useful financial system. Just not one that consumes too many resources while eroding its own resilience.

Today is a GREAT day !

N.S. charges ahead on renewable energy
Big shift from coal

Nova Scotians can expect to pay more for power as the province ramps up its green energy program.

The government announced Friday it plans for 40 per cent of all electricity to come from renewable sources by 2020. That would supply as many as 500,000 homes.

The NDP government has already set a goal of 25 per cent by 2015, and now plans to make that law.

Currently, only 12 per cent of Nova Scotia's power comes from renewable sources such as wind turbines. Most of the province's electricity is generated in coal-fired plants.

Read more: http://www.cbc.ca/canada/nova-scotia/story/2010/04/23/ns-renewable-energ...

CanWEA Applauds Nova Scotia's Move to Capitalize on its Wind Energy Potential

he Canadian Wind Energy Association (CanWEA) today applauded the announcement by Nova Scotia Premier Darrell Dexter that commits to law a target of satisfying 25 percent of electricity demand from renewable sources by 2015, and establishes a new goal to raise this level to 40 per cent by 2020. This move will drive new investment and create green-collar jobs while positioning Nova Scotia as a leader in the production of clean, emissions-free energy.

"We are greatly encouraged by this important step towards realizing Nova Scotia's abundant wind energy potential," said Robert Hornung, president of CanWEA. "Today's announcement provides the necessary framework to ensure development of all types of wind by all types of proponents, from large-scale utility projects to medium-scale community projects, to small wind turbines for farmers and homeowners. CanWEA looks forward to working with the government and Nova Scotia Power to ensure the successful rollout of this program."

See: http://www.newswire.ca/en/releases/archive/April2010/23/c5368.html

And on the DSM side, one of our lighting retrofit clients, Atlantic Fabrics, is featured on Nova Scotia Power's home page.

See: http://www.nspower.ca/en/home/default.aspx

No more coal-fired power plants !


Sounds like good intentions, but be sure to hold their feet to the fire on the promises. Ontario is approaching 10 years overdue on the promise to shut down all coal-fired generation, and is still at now not very close.

Hi Len,

Point taken, but my impression is that NSP is committed to reducing its dependence on coal; I think everyone acknowledges it's a dead-end proposition. There's 116 MW of wind capacity now in place and another 200 or so MW currently under construction, and this announcement kicks things up another notch or two. NSP wants to build a 60 MW biomass co-generation plant (http://www.nspower.ca/en/home/aboutnspi/mediacentre/NewsRelease/2010/bio...) and it's looking to expand its tidal resources as well (http://www.nspower.ca/en/home/environment/renewableenergy/tidal/projecto...).

Nova Scotia has great wind potential and our electricity demands are not even one-tenth that of Ontario (it's 17h00, local time, and our total provincial load as we approach the supper time peak is just 1,207.8 MW). In many ways, it's not as big a hurdle for us as it is for you.


Paul, I've been thinking about DSM in an industry that really is getting (s)toked up. The bud industry in Canada is bigger than the wheat industry, employs more people than mining and forestry combined and is mostly indoors. It ranges from mama and papa operations to industrial size efforts (remember the old brewery in Ontario which had about $30 million in product under lights when the state ruthlessly smashed down the doors). Man, it's like one huge draw on the grid. Talk about bogarting.

So what can be done? Is LED lighting an option?


Hi toil,

A friend of mine is a line man in rural Cape Breton and he told me about the time he had to replace a blown fuse on a residential transformer. The transformer served a single home on a back road and he thought it odd that it would fail. Then he noticed several extension cords running from the house to a couple sheds out back with their windows painted black. Apparently, these extension cords ran hot enough to melt through snow. He said he was in and out of there at breakneck speed.

Utility losses from grow-ops are not insignificant; in the case of BC Hydro, I'm guessing it's in the range of $20 million/year, perhaps more. But to answer your question, a 315-watt Philips Master Colour Elite CDM driven by an electronic ballast would be my first choice -- 120 lumens/watt, 90 CRI, 30,000 hour average service life and 80 per cent end-of-life lumen maintenance. In fact, this lamp cranks out more light at the end of its life than any of its competitors fresh from the box. It's a beautiful clean, crisp white light, rich in the reds, which is presumably important in this line of work.

See: http://www.ecat.lighting.philips.com/l/catalog/catalog.jsp?ctn=928601164...

Does this make me an accessory to a crime?


Does this make me an accessory to a crime?

I dunno.

Since I watched the 'Cannabiz' documentary, I've been thinking about setting up a grow-op technical consultancy, though I suppose the Hell's Angels who, I hear, are the main financiers of the industry in these parts, might insist on imposing a tax on any such business. There's always some kind of government interference in the free market! Oh well, at least they're good at law enforcement and don't waste money on prisons.

By the way, if you watch the documentary, there are a couple of scenes showing the farm near Grand Forks, BC, where I built an outbuilding for tractor, truck and other farmstuff last year. At least I thought it was for farm equipment.

Phil Flynn: Deepwater Horizon - Triumph and Tragedy

In September of last year, Deepwater Horizon made history by drilling the deepest oil well in history. This was an achievement not unlike landing a man on the moon or a successful space shuttle. An achievement that in another era would have inspired the passion and the imagination of the nation in a nation that has become accustomed to great achievements. Think about the implications of drilling for oil in an area of the ocean where no man dared drill before. Think of the impact it could have on a world that is not satisfied with surrendering to the sentence of peak oil but to expand our imagination and our desires to overcome the status quo and do what those who think small said was impossible. Instead of surrendering to the prospect that the world and the economy was doomed because of peak oil, there are those who say we have not even begun to tap the earth’s possibilities.

Hmmm. Last man on the moon forty years ago. Last space shuttle just around the corner. Deepwater Horizon in Davy Jones' locker.

Is there a message in all this?


. . . there are those who say we have not even begun to tap the earth’s possibilities.

It's always nice when another resident of Fantasy Island checks in with us.

Look Boss, the plane, the plane!

If we are just beginning our rape of the Earth, that is indeed scary. Best hopes for decreased testosterone for the humanoids.

Man's capacity for hubris is unlimited. There will be no peak hubris.

Yes toil: given enough money,expendable young bodies and acceptable environmental loses and anything is possible. Wait...on second thought that didn't work too well in Viet Nam.

or a successful space shuttle.

The fact that the writer uses the "successful" qualifier says quite a lot too, sadly, I woulda thought. And it's equally sad that all the stuff that was promised in both EPCOT and especially the Jetson's - hasn't come to pass. We wuz robbed of our own future.

Up top: Peak Oil Energy Recession.

I've been wondering if anyone on this site knows of a micro study of what happens with this demand destruction. I imagine truckers account for some of it but then what happens to the commerce supported by trucking? Are these companies switching to some other mode of transportation?

I'd be curious to know exactly how the lower demand for oil is translating into decline in business, if it is. Or how are businesses managing to keep up with less oil. I know a few of you are going to point out how much waste we had in the system, or how much discretionary driving could be eliminated. But I suspect that even after subtracting out these factors there is still something else in the reduced demand that has to do with reduced accomplishment of work. Is anyone looking at these details?

That the unemployed do not need oil to go to work explains a lot of the lower demand. Also so many jobs in manufacturing have be sent to China et al, that the oil that would have been used to produce products in America is now consumed in China or other low wage countries.

This applies even to service jobs that have been sent to India for example. Those poor English speakers who do telemarketing which has been outsourced to India probably get to work by foot, bike or motorbike.

Also ethanol is near the 10 percent blend limit. This has got to have some effect on oil demand.

I have commented that cellulosic ethanol is dead, but Jeff Broin of Poet doesn't think so:


Talk about Fantasy Land. Would any sane business person approve his cellulosic ethanol plant business plan?

He plans to sell ethanol currently priced at about $1.50 in Iowa that costs him $2.00 per gallon to make. The ethanol market is nearly maxed out by the blend ceiling so the only growth has to be E85 which requires flex fuel vehicles.

But wait, there's more: He claims that he has commitments, some verbal, for about a third of the biomass (corn cobs) that he will need for the pint sized (for Iowa) 25 million gallon facility:

“We’ll be able to cut costs from over $4 a gallon to $2.35 a gallon,” Broin said. The company’s goal is $2.00 a gallon by the time its first corn cob-fed 25 million gallon a year commercial scale facility goes online in 2012.

Broin added, “We’re in the process of signing multi-year contracts with this fall being our first commercial harvest. We already have contracts signed or verbal commitments for 25,000 tons of biomass, which is a third of what we’ll need.”

I suppose he's counting on the blend rate ceiling being raised to 15%, but that ceiling may not be as high as it looks. With falling oil demand the actual amount of ethanol that can be blended with gasoline may reach 15% quickly.

Don't forget corn ethanol is not standing still. It's production is likely to increase. So the space between production and the ceiling will likely close rather quickly. Throw in Brazilian ethanol imports and watch out for a bump against the 15% ceiling.

But just the logistics of gathering, storing and handling the amount of corn cobs needed to make 25 million gallons of ethanol will be a wonder to behold if it happens which I do not think it will.

If it does I will make a trip to Emmetsburg and report on how they do it. It's only about 75 miles away on Highway 18.

Jeff Broin has bit off more than he can chew this time.


Of all the people hyping cellulosic ethanol, Jeff broin is the only one I will give any credence to. he has been in the ethanol industry for decades, and has actually delivered on all his past commitments.

Now, he may still have bitten off more than he can chew, but he may yet pull it off. he is at least of the old school way of actually trying to produce a workable business model, rather than just always asking government to pitch in (like Range Fuels)

Certainly worth watching...

Demand destruction in the OECD won't always equal global demand destruction either.

No offense x and Complex, but I was asking for pointers to studies, not speculations. I've already constructed a list of possible explanations, I am looking for data. Thanks for the ideas though.

how the lower demand for oil is translating into decline in business

It may not be a straight forward model such as: less business = less demand = even less business

At least here in Northern California, a government supported passenger rail (CalTrain) is heading towards bankruptcy because unemployment means fewer passengers, which means fewer revenues for the rail line, which means less demand for oil, and once the rail does go bankrupt there will be even less demand for oil (diesel) and even more unemployment because now, after CalTrain goes under, far away workers can't get a job that relies on the train for getting to work: It becomes a vicious cycle of one decline leading staircase wise to the next.

(Left click on image for news story)

Thanks. That story certainly points toward fuel as being a factor. It would be nice to know just how much of a factor it is.

I'm surprised that there isn't some study of this. I smell a business school PhD dissertation possibility (or maybe sociology or economics).

Actually 7 so far.

All of them in Illinois. It's like the FDIC is a rock band on tour. When they rent office space in Boston, it will be time for me to start worrying.

Just thought I'd share a couple of headlines from one of the local news papers in my neck of the woods to add to the one Leanan posted on April 16 about the fuel bill for the fire service not being paid. From today,

Azan demands day in court over Trinidad energy subsidy

Omar Azan, president of the Jamaica Manufacturers' Association (JMA), wants the Jamaican Government to haul Trinidad and Tobago before the Caribbean Court of Justice (CCJ) over what he claims is the discriminating pricing policy of its oil to its population.

The twin-island's manufacturers reportedly pay US three cents per kilowatt hour for electricity; Jamaicans pay US 30 cents.

I'm grabbing some popcorn cuz this isn't even started yet!

From the Sunday paper a couple of weeks ago

Utility companies get tough on disconnections, JPS owed $9b; NWC $3b

Local utility companies say they are owed billions of dollars by delinquent customers for electricity, water and telephone services, and two of them have now tightened up already strict disconnection policies.

Now, instead of entreaties to pay, service is disconnected within days after the due date if monthly bills go unpaid.

The interesting thing is that the water utility is the largest single customer of the electricity utility! What do they use all that electricity for? To pump water of course.

Now, with the increase in energy/fuel costs over the past few years, the average Jamaican(world) consumer finds more and more of their formerly disposable income going to pay for the essential basics, transportation, food, water and energy(cooking gas/electricity). Nobody's telling the average consumer about limits to growth, ELP or the westexas edict (Cut thy spending and get thee to the non-discretionary side of the economy.), the prevailing media/advertising message being party on! Of course, under the circumstances, something's gotta give and the above article reports that at least one of the utilities is experiencing increased delinquency.

I see some (s#!t)storm clouds gathering on the horizon! I guess it's the same all over really.

Alan from the islands

That is a sort of interesting angle I hadn't really thought about much - the idea that as the world economy and its many regions are being strained for money via a longterm recession (due in part to high oil prices by way of peak oil) the lack of ability to pay for utilities, leads to people and businesses being disconnected, in effect acting as a catalyst for the leading edge of a collapse.

If enough customers are displaced by ongoing or recurring deep recessions, then at the point where there are not enough people paying for their utilities it reaches a threshold where the utility company can no longer make a profit by distributing power to their part of the grid, that section of the grid goes down. So blackouts start to occur in patches at first, then that strains the remaining parts of the grid economically and at some threshold the whole system fails.

Plunged into darkness, that is unless customers have solar, in which some people still have some power. Wow, if that doesn't provide an incentive to get a solar system for your home or business, then what does? Because after the collapse, there will be no economy in place to purchase a solar system.

In many parts of Africa, wealthier people have their own backup petroleum powered generators, because of the frequent blackouts.

In many parts of Africa, wealthier people have their own backup petroleum powered generators, because of the frequent blackouts.

It's not just Africa. I was in Nepal a couple of years ago, and in the capital city, Kathmandu, the power was out for 8 hours a day. All the hotels and restaurants in the tourist district ran on backup generators until the power came back on. I hear that now they are up to 12 hours of blackouts per day.

The really unfortunate thing about it is that Nepal has huge hydroelectric potential in the big rivers that cascade out of the Himalayas. Nepal gets monsoon rains like India, and many of the rivers descend two or three miles vertically as they drop from the mountains to the lowlands. However, between assassinations in the royal palace and Maoist revolutionaries in the mountains, they haven't done much to develop it.

I just did the math regarding the $20 Billion Chinese loan to Venezuela to be repaid with crude oil (no grade specification) at 100,000BPD for ten years. So, 365 Million barrels of oil are to repay $20 Billion, which means the oil was "sold" to China for $54.79452/bbl. That's one hell of a deal. Does anyone know if China has made similar "loans" to other oil producers aside from directly investing in oil production and refining?

Karlof -- China has done numerous deals that amount to the same end game. More commonly they’ve bought a working interest in developing projects in places like Angola. They might pay a front end fee of $x million and then pay, let’s say, 50% of the development cost. Thus when the field comes on production they receive 50% of the produced oil . The net cost of the oil to China will obviously depend on how much is produced. Another trade angle is the right of first refusal. Here the Chinese have the right to buy X millions of bbls of oil at whatever the market price might be. Not sure but I suspect they got a ROFR on the loan to Brazil. So they don’t necessarily get the oil cheap but it represents a guaranteed source of oil/

Thanks for your reply Rockman. Awhile ago, I mused about the amount of oil and NG the Chinese had locked up by the various arrangements it's entered into in order to arrive at a better look at the ramifications of Net Exports, but to-date it appears that nobody has done the work. I addressed this to westexas on a thread some time back, too, and received no reply as he probably never saw it. Then there are other countries, Japan for example, who have locked up a certain amount of exports in a similar fashion that must also be included when determining how much of the export market is "shut-in." IMO, a significant amount of future net exports are shut-in, which will hasten the onset of the ELM and its effects. Furthermore, since the USA has no similar NOC like China's, there is no possibility for the USA to lock-in future oil deliveries unless US IOCs get nationalized. I wrote a bit about this on today's (Saturday) Drumbeat. Even if the Chinese have only locked-in 3% of futre oil exports, that's 3% which will be shut-in from the global market and cause its price to be higher than it might be.

That's been the problem all along karlof with quantifying the Chinese effort. We see the press releases in general terms but never enough details for a quantitative analysis.

As for as nationalizing the US oil companies I'm not even sure what that means. The major oil companies are owned by the shareholders including US and foreign pension holders, private citizens, insurance companies, foreign gov'ts. So the US gov't takes ownership away from all those folks? And if that did happen then what? The US gov't now mananges and FUNDS the operations of these companies? So they do for the oil industry what they've done for the Social Security System? Folks use the term "nationalize" from time to time but I've never seen it explained what that means. can you offer a complete vision?

Rockman, I get the impression that most people here don't really understand these big Chinese oil companies. If anything, they are more capitalistic than the American and European oil companies. Even the government owned ones behave like good old fashioned 19th century robber barons.

They will quite cheerfully sell oil to Americans, if the price is right. In fact, they are already selling a lot of oil to Americans. However, it's not a matter of generosity - a lot of the money Americans pay for oil is starting to go to China.

However, if there is a supply shortfall, you can count on them diverting the oil they control to their own refineries. There's little or nothing the US can do about it because it's not American oil. If people think the US could send aircraft carriers to stop supertankers going to China, they have no idea what the latest generation of Chinese supersonic surface-skimming missiles could do to an aircraft carrier. The Chinese don't actually have to use the missiles themselves, they can just sell them to the oil-exporting country and say to the US, "Well, don't blame us, WE didn't sink your aircraft carrier".

The days of gunboat diplomacy are history for the US. Nowadays, money is what talks and the Chinese have a lot of it.

Rocky -- I still have hopes of a MADR protocol between us and China. This Mutually Assured Diastribution of Resources would be an unofficial cooperation between the two countries. As we slide deeper into PO there will not be enough for all countries IF it's shared. But if the US and China can control the flow for the most part then China could assits in US deliveries so we can continjues as a sbig market for Chinese products. The EU and others get screwed but who cares? Certainly not our greedy populace and the ambitious Chinese population. If China and the US combine their political, military and commercial forces to dominate oil acquisition just who will try to stand in our way? France? Ohhhh....I'm scared now.

Rockman, I think that the possibilities of mutual cooperation between the US and China for buying resources are slim - the two countries have their own agendas which are mutually contradictory. Essential, the US is losing control of the world's resources, and China has aspirations of taking them over.

For countries on the other side of the supply/demand equation, there is a vested interested in preventing the US and China from establishing a monopsony (a buyer's monopoly) and playing the two countries off against each other for the best price.

Also, the Chinese know the game is played like chess, in which you have to look many moves into the future, while Americans seem to think it is some form of checkers.

Thanks for the comeback, Rockman. What I'm getting at is the fact that the populace of the USA has no guaranteor when it comes to being supplied with fossil fuels. No US consumer can be assured that Exxon will have the fuel required at some future point. Perhaps it's easier to understand from the other point-of-view: the Chinese National Oil Company has no choice about supplying China first and perhaps selling some excess on the open market. The USA has no such entity; therefore, the USA has no real control over its future regarding oil and other fossil fuel acquisition.

I agree karlof. The oil companies can't compete with the Chinese companies on any level: they can outspend them since they have the cash and, more importantly, aren't profit centric. They also have the advantage that they are not just free to bribe their way into good deals but are supported in that effort by their gov't. US comopanies are barred from such approaches. A moral highground for sure but doesn't get you the oil deal with a corrupt gov't.

Some might say the gov't should fund out oil companies efforts to acquire foreign oil. As much as I would like to get my hands on that easy gov't cash. But IMHO it would be a total waste of money and little chance of getting the job done. I'll skip the long explanation and let's just imagine FEMA "helping" take over the managment of the Red Cross...or the Boy Scouts...or major league baseball.

The oil companies can't compete with the Chinese companies on any level: they can outspend them since they have the cash and, more importantly, aren't profit centric. They also have the advantage that they are not just free to bribe their way into good deals but are supported in that effort by their gov't.

Rockman, I think the Chinese oil companies are almost as profit-centric as western oil companies, but they have much longer planning horizons. They don't have to look good on the quarterly profit/loss statement. They can plan for the profits to occur decades in the futures, and they have investors and banks which will go along with that time frame.

And they have no qualms about bribing government bureaucrats in other countries, which is why they will win out against western countries in the third-world kleptocracies where much of the world's oil is found.

Expecting US government bureaucrats to acquire foreign oil for American consumers is naive. The foreign oil companies will just take them to the cleaners. Remember, the Arabs have long been renowned for their camel-trading skills, and there's not really a lot of difference between trading camels and trading oil.

I remember the Canadian government bureaucrats being taken to the cleaners by Mexico many years ago. The bureaucrats went looking for "secure" oil supplies, and the Mexicans were willing to sign long-term contracts. The Canadian negotiators failed to realize that crude oil comes in different grades, and Eastern Canadian refineries could only handle sweet, light oil.

Mexico shipped them bottom-of-the-barrel, high-sulfur, low-API crude oil at the same price they were selling the US sweet, light oil, and they locked in the price at the top of the market for years after the world price collapsed. Canadian refineries were horrified. The oil was so thick they couldn't even get it out of the tankers, and when they finally got it out, and diluted it with enough light oil to get it to flow, the gasoline cut was close to zero. They refined most of it into bunker fuel oil and sold it to US power plants at less than the cost of the original crude oil. They would have lost their shirts, except that Canada was subsidizing imports down to about half of world price, so it was the taxpayers that lost their shirts.

Also, Canada has far more high-sulfur, low-API oil than Mexico has, so there was no point in buying Mexican oil in the first place. They could have just upgraded the refineries to handle low-quality Canadian oil (the same stuff Canada now sells to the US).

One of the bureaucrats involved in the transaction was none other than Ed Clark currently CEO of Toronto Dominion Bank when he worked for the National Energy Program. who turned out to be a lot better banker than oil man given his bank is one of the last in the world to have a AAA rating if it still means anything. I am curious in the present day what the Eastern Canadian refineries can process. My understanding is that at least the Irving refinery in Saint John's can take just about anything and frequently receives shipments of High Sulphur Arab Heavy by VLCC, Irving is one of the few refineries on the East Coast of Canada or the US that can recieve VLCC's. I suspect the Shell refinery on Montreal being closed down is not that sophisticated as were the ones that have already been closed over the years in Montreal. I know there is a lot of talk of reversing the Portland Montreal Sarnia pipeline that currently takes light crudes from the ocean terminal in Portland, ME to Sarnia and reversing it to take Western Canadian Heavy out to the Atlantic basin but there are issues with finding refining capacity for Western Canadian Heavy on the Eastern Seaboard.

I'm sure many of the bureaucrats involved in the oil decisions back then would have been far better at doing something else. It scares the wits out of me when doctors and dentists tell me they're investing in oil futures, because I know the guys on the other end of these trades. They know the market like the back of their hands, and they are utterly ruthless when they've got you over a barrel (joke).

I think the Irving refinery in New Brunswick has been upgraded to handle the most distressed grades of Arab crude and turn it into boutique gasoline and diesel fuel for the US market. The ones in Montreal (there used to be 6 of them) were just teakettle affairs that were designed at minimum cost to turn sweet light Arabian crude into as much gasoline as they could get without doing anything expensive, and selling the rest as bunker fuel for ships and power plants. When OPEC raised the price of Arabian crude back in the 70s, it completely wrecked their economics and a lot of the NEP was really oriented to bailing out the Quebec refineries, since their owners had a lot of political stroke in Ottawa.

Reversing the pipeline to Portland is an option, but there's an awful lot of capacity in place now to take Canadian Heavy to the US (as far south as Houston), and the Chinese are busy buying up control of the reserves in the ground, which implies they might want to take it to their refineries in China. Once those markets are satisfied, there's nothing left for Eastern Canada.