Drumbeat: September 26, 2010

Optimism, worries amid rush to tap oil in West

Not many wells have been drilled yet, but just about everything else is in place for an oil boom in eastern Wyoming, northern Colorado and western Nebraska, where the Niobrara Shale and its hard-to-tap crude lay nearly two miles underground.

Preliminary work is under way to map underground geological formations to figure out the best places to drill. Oil prospectors are poring over courthouse records to see who holds mineral rights so they can negotiate deals.

Companies large and small are betting millions that the Niobrara holds gobs of recoverable oil like the similar -- and booming -- Bakken Shale field in western North Dakota. With oil money leading the way, North Dakota has coasted through the recession with 3.6 percent unemployment, lowest of any state, and a budget surplus of over $500 million.

BP says company's oil spill study had limitations

BP's lead investigator into the Gulf of Mexico oil spill told an independent panel of experts Sunday that the company's internal probe had limitations.

Mark Bly, head of safety and operations for BP PLC, said a lack of physical evidence and interviews with employees from other companies limited BP's study.

"It doesn't include the integrated understanding from other companies involved," Bly said.

Peak Oil Demand: The Beginning and End of Oil

It is demand for oil that may peak as governments adapt to the problems of global warming, security of supply and an amplitude of market volatility that could bring economic ruin to nations and then the world. Oil-demand may be reduced preemptively to the production peak (peak oil) through more efficient vehicle technologies and finding alternative energy sources. Ultimately electricity is seen as the best "supply vector" for delivering energy to users. Probably it is a game of "tag" between reducing demand and falling supply; whichever comes first will win-out.

NOAA Launches Mission to Solve BP Oil Mystery

The NOAA research ship Pisces set off on a new mission today to search for oil that a University of Georgia biologist reported finding on the floor of the Gulf of Mexico earlier this month.

The trip is part of an initiative launched by the National Oceanic and Atmospheric Administration to sort out the contradictory findings by the government's chief science agency and independent scientists who have been studying what's left of the oil from BP's now-dead Macondo well.

Big oil refinery loads spark big battle

The dispute involves two different projects. ConocoPhillips is seeking an oversized load permit to ship four coke drums - huge pressure vessels that refineries use to make gasoline and coke - to its operations in Billings, Mont., and that case is currently in court.

But locals are much more worried about efforts by ExxonMobil Canada and some subsidiaries to get permission to ship 207 mega-loads of refinery equipment through the two states to the controversial Kearl Oil Sands in Alberta, Canada. Those loads will take a year and force temporary closures of U.S. 12 five nights a week.

All of the equipment is built in South Korea and would be barged up the Columbia and Snake rivers to Lewiston, Idaho, the most inland seaport on the West Coast. From there, it would be loaded on special transports so wide they cover both lanes of the shoulderless road.

Natural Gas Production Growth Keep Stable (China)

Gas usage demand increased apparent. August consumption 8.8 billion cubic meters increased 23.8%. 1-8 months consumption was 69.2 billion cubic meters, year-on-year increased 21%. Storage gas resources is obviously increase, end in later August, gas storage recoverable reserves were 1.6 billion cubic meters, year-on-year increase of 4 million cubic meters.

Enbridge Gets Regulator Approval to Restart Oil Pipe (Update1)

Enbridge Energy Partners LP’s plan to resume oil flow on a pipeline that was shut July 26 near Marshall, Michigan, after it ruptured, has been approved by U.S. regulators.

The company’s plan “is approved to commence no earlier than the morning of Monday, September 27,” David Barrett, a director at the Pipeline and Hazardous Material Safety Administration said in a letter today to Enbridge.

ONGC begins Shale Gas exploration in West Bengal

Continuing its untiring efforts to explore natural hydrocarbons in unconventional reservoirs, ONGC has ventured into Shale Gas exploration by spudding the first Shale Gas well RNSG 1 in Ichapur village near Durgapur in Burdwan District of West Bengal on September 21st 2010. The well is targeted to a depth of 2000 meters and will be assessing the Shale Gas potential of about 700 meters thick shale of Permian age which is about 250 to 300 million years old. As its R&D efforts, ONGC plans to drill three more wells in Damodar Valley by end of XI Plan.

David Kamm: Let data tell the story, you just draw the conclusions

Part of the current problems we face is determining what data is meaningful. Take the following from adjacent paragraphs in the Sept. 15 issue of Peak Oil Review:

"Given that crude inventories are close to a 27-year high and the outlook for increasing economic growth is not good, most oil analysts are talking about further declines in oil prices. Some even talk of substantial declines.

"Goldman Sachs, on the other hand, says world oil demand is up by 2.4 million b/d in August over last year and that rising demand in Asia has led to a 600,000 b/d global supply deficit since May. This deficit is thought to be covered by selling off oil from floating storage. If this analysis is correct, Goldman foresees a substantial rise in energy prices over the next 12 months."

Both statements contain accurate data, but they reach diametrically opposite conclusions!

Venezuela comfortable with global oil prices

Venezuela is comfortable with global oil prices and will call for current production levels to be maintained at an OPEC meeting in Vienna next month, Oil Minister Rafael Ramirez said on Sunday.

Earlier this month, he said prices should rise to $100 per barrel to help producers keep up output. On Sunday, he said that was a long-term goal for South America's biggest oil exporter, and that this year's aim was stability.

Lukoil Buys Back Shares From Conoco

Russian oil company OAO Lukoil Holdings said it used an option to purchase back 5% of its own shares from U.S. oil company Conoco Phillips Co. for $2.38 billion.

Lukoil had a one-time option to buy 11.6% of its shares, or 98.7 million ordinary shares, in the form of American depositary receipts, at $56 a share. . .

Analysts had expected Lukoil to buy the whole stake from Conoco to avoid putting additional pressure on its stock. . .

Credit-ratings service Standard & Poor's has said Lukoil could lose its credit rating if it raises new debt to buy the remaining stake.

Australian protesters paralyze coal port

Australian police arrested more than 40 environmental protesters Sunday north of Sydney after they stormed the world's largest coal exporting seaport.

The protest was staged by the Rising Tide environmental group, which claims the port serves to "export global warming to the world," the Australian Broadcasting Corp. reported.

Dana sale to spur flurry of energy takeover moves

D'Ath argues the Korea National Oil Corporation's acquisition of Dana highlights the attraction of oil and gas firms, particularly to potential buyers from the East.

"The likes of the Koreans and the Chinese are keen on acquiring energy and raw material assets but are also looking to diversify away from holding US government bonds given concerns about the US economy."

Chile miners: Family joy as rescue capsule arrives

A cage specially built to help rescue 33 men trapped underground in a mine in Chile has arrived at the mine head.

The steel capsule will be used to pull the men to safety one by one, once a rescue shaft wide enough to haul them up has been drilled.

Feinberg creates industry-specific formulas to adjust claims process

Oil spill claims czar Ken Feinberg said today that he is seeing enough consistency in business claims that he will give owners more benefit of the doubt when reviewing their finances, which he said should result in bigger checks and faster payments.

After a month of reviewing claims, Feinberg said he has noticed businesses in the same industry are making similar assumptions when calculating losses. For example, he cited the importance that beach businesses place on summer income.

Up to this point, Feinberg said, his adjusters at the Gulf Coast Claims Facility were reviewing each claim on its own, and may not have agreed with those assumptions.

Now he will be clustering claims by industry and applying the same formula to each claim.

Some business owners who have gotten small checks may get supplemental payments to bring them up to par with others, he said.

BP fund czar promises bigger, faster claims

Victims of the Gulf of Mexico oil spill should start getting bigger payments faster, the administrator of the fund set up to help them said Saturday.

Kenneth Feinberg said he was responding to criticism from residents and businesses.

"Over the past few weeks, I have heard from the people of the Gulf, elected officials, and others that payments remain too slow and not generous enough," Feinberg said in a statement. "I am implementing new procedures that will make this program more efficient, more accelerated and more generous."

Activists end protest on Chevron oil ship in North Sea

Greenpeace campaigners who attached themselves to an oil drilling ship in the North Sea ended their protest Saturday after the ship's operator, Chevron, won a court injunction ordering them to leave.

Ethanol backers cite need for wider U.S. support

Ethanol industry leaders said on Thursday federal action is crucial to the industry's future, and they urged U.S. regulators and lawmakers to move forward with proposed increased blending levels as well as greater investment in broad biofuel infrastructure improvements.

Currently, U.S. law provides a 45 cent per gallon tax credit to refiners who blend ethanol with gasoline, and imposes an import tariff as a deterrent to foreign competition.

But the tax credit, worth an estimated $4.7 billion last year, expires on December 31. The tariff will also end at the same time.

With Congress due to recess next week and mid-term congressional races consuming lawmakers attention into November, ethanol backers have diminishing hopes that U.S. lawmakers will restore the industry subsidies.

Deficit Hawks Threaten Ethanol's Future

The tax credit, worth more than $4.7 billion last year, expires on Dec. 31, as does the protective tariff. If Republicans control the House after the Nov. 2 elections, the renewal of those measures will be in doubt. Ethanol could go the way of biodiesel, an alternative fuel made from soybeans, whose production has ground to a near-halt since biodiesel's $1-a-gallon incentive expired at the end of last year, according to the National Biodiesel Board.

Failure to renew the tax credit would drain a key driver of growth from an industry that has seen at least a dozen companies seek bankruptcy protection in the past two years.

Brazil Opens Pioneering Factory Producing Eco-friendly Plastic

President Luiz Inacio Lula da Silva says a pioneering factory in southern Brazil that produces "green" plastic clearly shows the value of sugarcane-based ethanol.

"It demonstrates to the world that ethanol can find an important place even in sectors that once depended solely on oil," the president said Friday during the opening of the factory.

Local test project would use solar power to aid in oil production

Kern County may soon be home to another renewable energy project, this one geared toward oil producers who use steam to extract more crude from local oil wells.

Fremont-based GlassPoint Solar announced this week that it has received $3.5 million from a consortium of major oil companies interested in the company's solar technology, which is designed to help oil producers control their costs and extend the life of their oil fields.

GlassPoint said the investment allows it to move forward with a demonstration project in western Kern.

Karachi facing shortage of 70 million gallons of water

He said a pump ceased to function on September 21 depriving the city of 35 million gallons water per day, while another pump went out of order on September 25, due to which the total water shortage rose to 70 million gallons per day.

Sources siad the KWSB contractors have refused to continue the repair and maintenance work as their outstanding bills of around Rs 2 billion have not been settled, he claimed.

High grain prices may provoke world food crisis

Bread, meat, milk, eggs and vegetable oil cost more today than in spring this year. The situation will deal a heavy blow at the importer-nation budgets. The poor countries will be the hardest hit, since they have to rely on international loans to settle their food programme-related problems. Mass-scale unrest has already flared up in Mozambique in the face of a threat of famine owing to growth in foodstuff prices.

What the world needs now: coal, sweet coal

The energy leaders have seized on the plight of the “energy poor” in their effort to beat back critics who would drive up the cost of their energy, block their projects and force reductions in their greenhouse-gas emissions.

Google’s vision of the Future? Bicycle Meets Monorail

Quite simply, Google must have gotten 149,996 stupid suggestions for this to have gotten funding. Monorails are kind-of cool in that Disney-theme-park way, and recumbents are efficient bicycles — if entirely unsuitable for daily, urban cycling. But combining the two is something not even the worst sci-fi writer would conjure up.

In Arabian Desert, a Sustainable City Rises

Designed by Foster & Partners, a firm known for feats of technological wizardry, the city, called Masdar, would be a perfect square, nearly a mile on each side, raised on a 23-foot-high base to capture desert breezes. Beneath its labyrinth of pedestrian streets, a fleet of driverless electric cars would navigate silently through dimly lit tunnels. The project conjured both a walled medieval fortress and an upgraded version of the Magic Kingdom’s Tomorrowland.

Fiorina’s billionaire backers

After a good deal of back and forth, Fiorina — who also supports offshore oil drilling, another Koch favorite — recently endorsed Proposition 23, just as the Koch brothers' company pumped $1 million into its campaign. This month, Sacramento Bee columnist Dan Morain noted that, while the brothers' oil companies stand to profit mightily from Proposition 23's passage, they also have an interest in seeing that other states don't emulate California's attempt to reduce carbon emissions. Two years ago, this state adopted model air-quality regulations curbing cancer-causing emissions of formaldehyde in the forest products industry. Federal interest in adopting similar curbs is causing Georgia-Pacific no end of grief.

The Larry Summers hall of shame

5. Blaming the California energy crisis on excessive regulation: In 2000, Summers and Alan Greenspan improperly identified the government, not Enron, as the main culprit in the California energy crisis. Together, they argued that only through deregulation and unconditional support for energy companies would the state possibly curb rapidly rising energy costs. They were wrong -- it was Enron, of course -- but the larger problem was Summers' unwillingness to question the cure-all powers of the market.

LA, Beijing to exchange ideas on solving traffic

While the notion of the car capital of the world teaching China's capital how to handle traffic seems far fetched, experts say the two cities can benefit from the partnership.

"Beijing planners are desperately trying to adjust to an increasingly car-oriented world, where people don't live where they work. At the same time, LA wishes it had as good of a transit infrastructure - and as many people wanting to take transit."

Starting today: MARTA cutting part of bus and rail service

MARTA decided to impose the significant service cuts amidst declining sales tax revenues from Fulton and DeKalb Counties, its major source of funding. Even with the cuts, MARTA will be $69 million short of covering its $109 million budget deficit. The transit agency will use reserve funds to address the difference. These reserves funds are expected to run out by 2013.

Also see Job Loss Looms as Part of Stimulus Act Set to Expire

Tens of thousands of people will lose their jobs within weeks unless Congress extends one of the more effective job-creating programs in the $787 billion stimulus act: a $1 billion New Deal-style program that directly paid the salaries of unemployed people so they could get jobs in government, at nonprofit organizations and at many small businesses.

The money came from a pot of $5 billion that was included in the stimulus package as an emergency fund for the Temporary Assistance for Needy Families program, the main cash welfare program for families with children. Of the $4.3 billion that has been approved so far, $1.4 billion has gone toward basic assistance, $1.8 billion has been used to help families pay one-time emergency expenses like rent and utility bills, and a little over $1 billion has been used to subsidize jobs.

I think people will look back and wonder why we didn't do more for struggling families while bailing out the banks that were largely responsible for the mess in the first place.

For other ideas on what the response of those looking back on this time may be:


"Once, pretty much everywhere, beating your wife and children was regarded as a father’s duty, homosexuality was a hanging offense, and waterboarding was approved — in fact, invented — by the Catholic Church. Through the middle of the 19th century, the United States and other nations in the Americas condoned plantation slavery. Many of our grandparents were born in states where women were forbidden to vote. And well into the 20th century, lynch mobs in this country stripped, tortured, hanged and burned human beings at picnics.

Looking back at such horrors, it is easy to ask: What were people thinking?

Yet, the chances are that our own descendants will ask the same question, with the same incomprehension, about some of our practices today.

Is there a way to guess which ones?"

Religion and faith as a virtue

Regarding the potential loss of ethanol subsidies and import taxes, it's interesting how the article seems to shoot itself in it's own foot: "Failure to renew the tax credit would drain a key driver of growth from an industry that has seen at least a dozen companies seek bankruptcy protection in the past two years". So by spending over $12 billion of tax payer money over the last several years and increasing the cost of imported ethanol (thus increasing the end costs to the tax payers) domestic producers were going belly up left and right.

And it would be a bad thing not to perpetuate this plan????

And it would be a bad thing not to perpetuate this plan????

It depends on how you feel about energy independence for the USA.
Many folks at TOD believe ethanol/energy subsidies are a total waste of money; we should buy from whoever (Brazil) sells at the cheapest price and US farmers who can't compete should go belly up or grow other things.
Of course this fantasy ignores the fact that the reason Brazil has an ethanol industry is because of state policy started back in the 1970s to reduce their dependence on foreign oil.

Take US oil for instance.
Saudis can produce oil for $5 a barrel and in the US is costs $30 per barrel; should the US producers get subsidies?
Well, for one thing if they stopped producing based on the law of comparative advantage even Saudi oil prices would be MUCH higher as the overall quantity of oil would shrink.

Even the ethanol industry would be willing to let the credit expire if the government agreed to a new E15 limit and more support for E85--particularly to stimulate cellulosic ethanol
which is a new different industry from corn ethanol and needs support.

maj -- I agree that if the feds demanded a higher consumption of e than it would increase production. But producing a product that costs more than the commodity it's replacing (and reducing the amount of food supplies in the process) isn't sustainable IMHO. I don't see much advantage in replacing one unsustainable process with another.

We can keep hoping for the magic ethanol bullet that will make it an economic susbstitute for oil. Drop me a line when it's developed. We've been hearing our political leaders promising such changes for over 40 years. I don't hear such promises anymore. The words are completely meaningless at this point IMHO.

Your assumption is wrong.
The present wholesale price of ethanol is $1.58 per gallon and pre-tax wholesale gasoline is $1.95 per gallon.


E15 has 95% of the energy of straight gasoline E0 but price of 97% as much, only a slight difference favoring E0 on a pretax, pre-subsidy basis.
E85 has 72% of the energy of E0 but costs 83% as much, again a bit more expensive than gasoline.
But if the price of gasoline were to rise to a wholesale price of $2.35 per gallon and ethanol were to stay the same,a $1 of E85 and E0 products would both contain the same amount of energy.

The production of ethanol in the US has been strongly rising for years and gasoline production post-Peak should fall, at that point
ethanol will win the debate.
We also pay a hidden subsidy of billions of dollars to maintain military control over part of the world's oil supplies.

Frankly,I don't understand why you're feeling betrayed by political leaders because ethanol hasn't yet replaced oil. Haven't you oil guys been looking for oil day and night to put off the inevitable Peak? I imagine that at least some of you feel your efforts have contributed to society by finding more energy. Had you given up a while ago the US would probably have embraced ethanol as did the Brazilians who only recently discovered offshore giants.

Now if you can assure me that you can meet our US petroleum needs for the next few decades then perhaps we can forgo ethanol but I have this chart of US oil production that has been trending down for ~40 years(scratches head).....

maj - Perhaps you're mistaken me for someone else. "...assure me that you can meet our US petroleum needs for the next few decades". IMHO that that won't happen even if we plant every acre in this country with corn and drill every new hole the "drill, baby, drill" indiots propose. AFAIK conservation is the best bet. And I don't see that getting us anywhere close to indepedence unless we're rationed so severely it pushes us unto a severe economic downturn.

Yes...IMHO this a problem with no solution. Just better and worse responses.

But if the price of gasoline were to rise to a wholesale price of $2.35 per gallon and ethanol were to stay the same,...

I would predict that the two will not be independent. If the FF prices rise, so will the price of ethanol, as today it seems a significant fraction of the growing and harvesting of ethanol feedstock in the US is powered by FF.

The fundamental problem with energy self-sufficiency for the US is that it is fundamentally impossible given the energy demands of the US. If the US wants to continue to consume energy at the rate it is currently doing, then it has to import it. The US simply does not have the resources to produce all the energy it is currently consuming.

The Brazilian ethanol industry results from the fact that Brazil is an ideal place to grow sugar cane, and it's not hard to ferment sugar into ethanol. However, Brazil is relatively unique in that regard, so it probably won't work for any other country. And, Brazil also has massive new oil discoveries, so really their ethanol production is just a convenient way to use up surplus sugar cane production.

The US is not Brazil. It does not have massive new oil discoveries, and its surplus corn production is best consumed as food for animals and people. Turning it into ethanol is a money-losing and energy-wasting proposition. And the money issue is critical. The US does not have the money to do that kind of thing any more.

The fundamental problem with energy self-sufficiency for the US is that it is fundamentally impossible given the energy demands of the US. If the US wants to continue to consume energy at the rate it is currently doing, then it has to import it.

Your absolute statement misses the key point that changing energy sources also results in changing the applications which use energy. I think that your statement may be correct in the short term, however, speaking as an engineer, I know ways to reduce the consumption of energy, while providing the energy services needed by the population. I also know how to produce renewable energy to provide much of the remaining energy needs.

Isn't this the basic problem which has been discussed here on TOD numerous times? We adapted our economy and lifestyles to take advantage of the energy which was available from fossil fuels. Oil is particularly useful and while it was abundant and cheap, our use of it grew wildly. After Peak Oil, that source of energy won't be abundant and cheap going forward, thus your average person will adapt. That we aren't in the midst of a massive national effort to make the transition is the result of the fact that the people in the US were able to supply our energy needs by importing cheap oil from outside the country. Not to mention the lack of awareness of science and engineering among the general public, especially about the future lack of oil, which we so often discuss on TOD.

Ethanol is not going to totally replace the oil we use in transportation, simply because the land area for agricultural production is limited. However, if vehicles were built which achieved 100 MPG or more, much less ethanol would be required. If a way can be found to produce biodiesel from algae, that would also be added to the fuel needed for transport. Then too, there are electric cars for situations which do not require long distance travel, which includes many commuting problems. If the price of housing dropped, people might simply move closer to where they work, swapping houses with others whose job was closer to the first person's house. The solutions are numerous and thus it is wrongheaded to simply ignore the alternatives out of hand while rejecting the possibility of a successful transition.

E. Swanson

I think that's an accurate view of things.

The current economy will shrink while we keep working on replacements for our current fuel sources. The only open question is where the two curves below meet: Point A or Point B?

Economy vs Renewable Energy

Obviously you've never read the billion ton study which states
1.9 billion boe could be sustainably harvested as cellulosic ethanol (or you have and merely dismissed it in your omniscience.)


Now 1.9 billion boe of biofuels isn't 4.2 billion gallons of oil
that fuels our personal transport(cars and light trucks) we use now but we could easily double our fuel efficiency with small efficient cars, hybrids, etc. and just as easily reduce our use of fuel by conserving directly by another
25% in which case we would be pretty close to energy independent.

Turning it into ethanol is a money-losing and energy-wasting proposition. And the money issue is critical. The US does not have the money to do that kind of thing any more.

Gee, should I believe you or real scientists who are experts in renewable fuels?

RMG, hey aren't you the oil troll who pushes wind powered trains(hehe)?
Okay, I asked you before not to play jokes on us poor TODers.

Gee, should I believe you or real scientists who are experts in renewable fuels?

You will, just like almost everyone else, believe the scientists that tell you what you wish to hear. There are scientists on both sides of the issue. Some have a vested interest in only one side of the story, like those employed by the National Renewable Energy Laboratory. However I would put more confidence on what the scientists who have no vested interest in renewable energy and only wish to report the truth, like those employed by some university. David Pimentel comes to mind.

Ron P.

What you're describing isn't science, it's advocacy.

You also don't have much use for the USGS or EIA or the IEA either.

You sound exactly like those idiots who believe climate scientists are in it for the money.

There isn't enough 'science' in the known universe to give you confidence in something you don't already believe.
Of course this is not atypical american behavior.

Pimental is a bug scientist who has been out to kill off ethanol for 30 years has producing one debunked paper (with his equally delusional collaborator Patzek) after another.

"You are entitled to your own opinion, but you are not entitled to your own facts."

Majorian, you clearly don't have a clue as to what you are talking about. I use EIA data in all my calculations. I put great store in what both the EIA and IEA say. I just think they are wrong in their future predictions.

No, what you are doing is science advocacy. It is the job of any agency, be it government or otherwise, to promote what they do. One would just expect the National Renewable Energy Laboratory to promote renewable energy. All universities however have a duty to promote only the truth. That should go without saying and I am shocked that you would think otherwise.

There isn't enough 'science' in the known universe to give you confidence in something you don't already believe.

There again, you haven't a clue as to what the hell you are talking about. I have turned on a dime because of science gave me further evidence. I could give you several examples. Also there are dozens of university scientists who say Ethanol is a scam!

And the word is getting out Yet More Outrages of the Corn Ethanol Scam .

The Ethanol Scam: It’s a “Can ‘O’ Corn!”

The Great Ethanol Scam

Not only is ethanol proving to be a dud as a fuel substitute but there is increasing evidence that it is destroying engines in large numbers.

Ron P.

Obviously you've never read the billion ton study which states 1.9 billion boe could be sustainably harvested as cellulosic ethanol (or you have and merely dismissed it in your omniscience.)

No, I dismissed it in my omniscience. I realize it would go a certain distance toward producing enough fuel to make a difference in the 7 billion barrels of oil the US consumes every year. However, do you have any idea how BIG these processes would be? They would basically be scooping up all the available cellulose in the US and feeding it into world-scale cellulosic ethanol plants. Somebody would have to pay to build these epic facilities, and I don't see anybody rushing forward to do that. In fact, I don't see anybody in the US rushing forward to do anything of a useful nature.

I am familiar with Canadian oil sands plants, which are very big, but these cellulosic ethanol plants would be much, much bigger.

RMG, hey aren't you the oil troll who pushes wind powered trains(hehe)?

Every so often, I happen to mention that when I was commuting to work in Calgary, where most of the Canadian oil companies are headquartered, on those days I didn't walk or bicycle I rode the wind powered electric trains. This made perfect sense because it freed up more oil that we could sell to you guys. I never, ever drove because that would have cut into oil sales and prevented me from achieving the comfortable retirement I now enjoy.

Now, the US could also build wind-powered electric train systems everywhere - it's much, much more practical than cellulosic ethanol - but I don't see any sign of that happening. In fact, I don't see much sign of anything happening. However, I do see the light at the end of the tunnel, and it's illuminating a large "DEAD END" sign in front of a brick wall.

How's cellulosic doing, anyway? Guy at Biofuels Digest says it's coming up short, at a pitiful .1 bg target, too. Perhaps the more you drink ethanol the better it looks.

Well, so far cellulosic ethanol is going nowhere. The EPA cut the cellulosic ethanol mandate for next year from 100 million gallons to 5 million gallons because basically there was no chance of it happening. Nobody has built a working commercial cellulosic ethanol plant yet.

Wow. That's just freakin' pathetic. And advanced biofuel can now mean cane sugar; my link also brought up the idea of importing sugar for other uses, such as detergent, which of course can just be the beginning. Expect this to take up the slack while Chu's various pies remain in the sky.

What's pathetic is the level of support for ANY semblence of a domestic US energy independence program.
By all means let's import all that Brazilian ethanol increasing the trade deficit, weakening the currency further. Meanwhile the freaking fossil operators are taking more and more gambles be it shale and coalbed methane gas polluting groundwater, mountain top coal extraction or an oil volcano in GOM.
All the oil/gas/coal addicts will laugh at Chu and those daffy scientists who are trying to produce new sources of clean energy.

But there are 3 commercial cellulosic ethanol plants under development.


All the oil/gas/coal addicts will laugh at Chu and those daffy scientists who are trying to produce new sources of clean energy.

That's what I'm afraid of. After the debacle, of course.

But there are 3 commercial cellulosic ethanol plants under development.

In 2013-2014. I wouldn't bet money on them, because I think there are a few problems yet unsolved that they are doing their best to ignore in their rush to get to market and make money.

However, since I did happen to get a degree in chemistry in my misspent youth, I would question why the government wants to convert cellulose to ethanol, rather than methanol (aka wood alcohol)? One would think that producing methanol would be much easier, and it would work as well as it does in racing cars.

It probably has something to do with the toxicity of methanol. It just doesn't seem environmentally friendly to put something in your gas tank that would make you blind if you drank it. But why would you drink it if it's automobile fuel?

It's all politics and has nothing to do with practicality or economics.

When I hear all the crap that people put out in favor of the ethanol subsidy I have a very hard time not rolling in the floor laughing , given that either they think the rest of us are so dumb as to swallow thier arguments, ot that they are perhaps dumb enough to believe thier own propaganda.

Federal law REQUIRES that ethanol be blended into gasoline.Period.The oil companies will buy the stuff at a price sufficient to bring it to market, and pass on the cost.Let the idiots who drive the most in the biggest cars and trucks pay thier own way at the pump;why should the rest of us be billed for the moonshine when a lot of us don't even drive?

The subsidy is no longer needed, as the market is absolutely gauranteed, so long as gasoline continues to be sold.

Cellulosic ethanol may work-someday.So may frogs evolve wings and fly rather than bump thier butts along on the ground.

It's not going to happen within any meaningful time frame for those of us with gray hair.

We will get many times more bang for the buck by spending our money on conservation and efficiency, or basic research,than we will ever get spending it of cellulosic ethanol.

And if the process of manufacturing the stuff is ever perfected to the point that the business can stand on it's own commercial feet, it will mean the end of whatever is left of the environment.

We can transition away from liquid fuels far more safely, and we can probably do so faster and cheaper as well.

It will be far more energy efficient to simply burn the biomass if it comes to that , and divert existing supplies of ng into gas to liquid refineries, or even do coal to liquid;at least these processes are actually known to work!

I do respect your views, but on the ability to genetically modify organisms to come up with one that will produce a better enzyme system, I put my stock with the enzymers. They are really good, and only recently they have been given this new economic incentive.

I would bet that they come up with something within the decade. Then, with infrastructure in place, availability of product should be near.

Robert Rapier has pretty harshly condemned cellulosic ethanol just on the basis of the difficulty in moving all of that cellulose from the fields to the factory. That seems to me to be one of the really big practical problems that gets ignored by all of the technolofy buffs. You sure aren't going to apply those enzymes in the field.

I like your sense of humor. That seems to be exactly what they are doing -- plants near the sources. Clearly, Mr. Rapier is not a spokesman for the industry, but the industry is finding its legs and private funding. I will stay with my bet.

In further checking, Mr. Rapier is a fan of cellulosic ethanol.

He stated that:

"However, readers should not mistake my position as hoping that they fail. To the contrary, I hope they succeed, because we are going to need a lot of successes."

Development is taking time. That is to be expected. Companies trying to get funding often overstate their cases -- sometimes they are lying and sometimes they just didn't take the time to think it through fully. And, sometimes it is harder to do than they first thought. That doesn't make them wrong or stupid.

Read RR a little more. He may 'Hope' it succeeds, but I'm pretty sure he doesn't expect it to.

I'm satisfied that we keep researching Fusion, but I don't lay any money on it's actual arrival. Some research ends up being useful when it discovers things we didn't even know we were looking for.

With regard to the current subject, the industry is in a phase of commercialization development on several alternatives while research is ongoing for others. That is a far cry from fusion, which will not undergo development any time soon.

Again, I foresee new discoveries -- some have been reported -- in the enzyme area, which will decrease the complexity and costs of the process. One company, Novozyme for example, has a number of patent applications published in just the past year. This, and stuff like it from universities, is real and fairly near-term.

I agree that moving all that mass to and from the farms to the cellulosic ethanol plants limits the size of the individual plants. However, the technology can be tailored for small scale increments, which has other benefits, such as a robust production in the event of any local disruption of supply or a military attack. The problem to me is the impact of removing the "waste" of a typical crop, which would otherwise be returned to the soil, where it would feed the soil organisms which make for healthy soils.

E. Swanson

This week's issue of The Economist has an article on the back page "Petrol Tax".

It shows the tax in dollars per gallon on gasoline for several countries in a bar graph, which are roughly:
$4.30 Turkey
$3.25 Germany
$3.10 Britain
$3.10 Finland
$3.00 France
$2.80 Italy
$2.75 Ireland
$2.60 Sweden
$2.10 Spain
$2.05 South Korea
$2.05 Japan
$1.95 Poland
$1.05 Australia
$0.80 Canada
$0.39 United States
-$0.35 Mexico (a subsidy)

So another option for making ethanol economically competitive and encouraging energy independence would be to raise the tax on gasoline by $0.55 to put it on par with the tax in the other geographically large OECD countries, Australia and Canada.

Sanity would suggest that we tax it at least as much as the average exporting country on the list.

The text along with the graph says that the gas tax in Norway is over $3.00 / gallon.

I think gasoline taxes in Canada average around CAD$0.32 per litre, which would work out to around USD$1.18 per US gallon.

And the new "Harmonized" sales taxes in Ontario and BC added a bit of a boost as of July 1. I think in Ontario it is supposed to have added 8 cents per litre, which would be an additional 30 US cents per US gallon. The implications are somewhat different in BC, but then there is the new BC "Carbon Tax" and the Vancouver "Transit Tax". All this would bump up the national average to considerably more than 80 cents per gallon, but I don't exactly how much, and governments are not being forthcoming with details since the HST was something of a concealed tax grab and the political heat is intense.

So, realistically, Canadian taxes are much higher than indicated, and the US is in a category of its own as regards gasoline taxes - in fact it is the only industrialized country where gasoline taxes are under $1/gallon.

"What the world needs now is coal, sweet coal"

These lines are written at the end of the article :-

"Coal and oil executives know the value of delay when it comes to unpalatable policies. Oil-sands plants are now being built while Ottawa dithers over climate policy; in emerging markets, coal-fired power stations sprout while the world debates an international treaty.

And the promise of bringing light to a poor student or power to a micro-business in a remote village is a powerful tool for prolonging debate and delaying punitive action."

In other words, a war is being fought using a delay strategy, while PR is being used to create new terms like "energy poverty" to cast fossil fuel industries in a better light. I wonder which spin-corporation is to thank for the new phrase.

I worked for two corporations where Sun Tzu's "Art of War" was required reading. Someone even created an executive version - "The Art of War for Executives" - available at Amazon - for people with limited time for data input. Or between martinis, while sitting in first class on an airplane.

How should Alaska bolster oil production?

Alaska Pipeline may shut down by 2014.

But the flow of oil through the 800-mile trans-Alaska pipeline is dropping. A senior ConocoPhillips executive who was in town recently warned a group of business leaders that pipeline throughput could drop to 500,000 barrels a day as soon as 2015. Major new oil discoveries would have to be made soon in order to bring new production through the line by then, he said.

But new discoveries are unlikely since little exploration is being done while the tax staredown continues, and Alyeska Pipeline Service Co., which operates the pipeline on behalf of the five oil companies who own it, has been saying that the throughput milestone may come as soon as 2014.

Now, oil flow is about 620,000 barrels a day and, while that's a far cry from the peak of nearly 2 million barrels a day 20 years ago, the state treasury has been saved by significantly higher oil prices.

Actually flow through the pipeline has averaged 599,000 barrels per day for 2010 and seems to be dropping. May 569,000 bp/d, June 528,000 bp/d and July 541,000 bp/d. If that trend continues the 500,000 barrel mark could be reached before 2014.

Ron P.

As I recalled, Matt Simmons mentioned that it needs a minimum flow volume per day to maintain operation. Does anyone know what this number is? What is the importance of minimum flow volume?

Unless major oil discoveries are made soon in Alaska, the Trans-Alaska Pipeline System could be at minimum operating level of 500,000 barrels per day in four years, a senior ConocoPhillips executive told a group of Alaska business leaders.


I am no expert on pipeline operations, and this is not clarified by the article, but I see two main problems: The pipeline is reaching the end of its useful life, at least the useful life for the type of oil tranported when Alaska was at its its peak - and - whether oil can be 'batched' that is held back in storage until it reaches its minimum transhipment rate of 500,000 barrels a day.

Does anyone have some ideas about these problems?

In the 1980s, at peak oil flows, a barrel of oil made the trip from Prudhoe Bay to Valdez in four days.

Now it takes 13 days.

The slower flow causes the temperature of the hot oil to cool faster. At some point, the oil temperature will dip below the freezing point of water along certain segments, unless Alyeska reheats the oil inside the pipe.

As it gets colder, ice and wax may coat the insides of the pipeline. The colder oil might also increase the risk of buried segments of the pipeline jacking up in the ground, company officials said. The problems have been building for decades and will only become more pressing as oil production declines further.

Without hot oil flowing at a minimum rate the pipeline gets "gummed up".

It seems to me that the loss of heat is directly related to flow rate -- and, of course, outside temperature. So, the cooling wouldn't be excessive all the time, and they could keep the flow rate up during cold periods by using plugs of suitable size of say ethylene glycol alone or in aqueous solution. Indeed, salt water may be useful. The plugs would flow in between plugs of crude. I have been told that various fuels are now piped in the plug arrangement. Another possibility would be to insert a small diameter pipe along the length of the line to fill up space and return liquid used in the plugs.

No data on this, but it seems feasible from an engineering standpoint. But, those guys are pretty smart, and they have probably thought of a number of work arounds. I doubt that it is the engineers casting doubt on the feasibility of a solution to the problem.

I think the main problem is in the wintertime when the heat in the oil is needed to keep the pipeline from becoming the world's largest chapstick. Batching isn't going to help this problem. If the flow rate drops below the minimum the oil congeals.

In reality, the Alaska North Slope oil discoveries, the biggest in North American history, are coming to the end of their productive life.

When they built they Trans-Alaska pipeline, the oil companies knew how long the oil production was likely to last, and they built the pipeline to last just about that long.

So, in reality, the ANS fields are near the end of their productive life, and the TAPline is near the end of its operational life. Sometime in the next few years, the oil production will drop below the level at which the pipeline is economic to operate, the oil fields will be shut down and abandoned, and the pipeline will be shut down and abandoned. All the equipment will be sold for scrap or abandoned in place, to rust into oblivion in quiet solitude.

All of this is inevitable given that there have been no significant new discoveries up there in recent decades, and this was planned for when the pipeline was originally built. Once it's done, it's gone, and it's a matter for the history books.

Are there no useful amounts of oil in the 1002 area of ANWR or in NPR-A that could be piped to the northern part of TAPS?

How long does Chevron and the USG have the rights to withhold info on the KIC-1 well findings?

Understand that the pipeline lifetime is a separate issue that would have to be addressed apart from having enough oil to meet MOL.

Now that the northern coast of Alaska is ice-free for several weeks during the summer, couldn't the oil be stored and shipped out by tanker?

After reviewing the responses above, it would seem in a few years or so that shipment by tanker - if possible -would be cheaper than keeping the pipeline functioning.

I'm not aware of any oil tanker facilities on the North Slope. Does anyone know, first of all, if facilities can be constructed, and if so, can they efficiently operate in an area subject to extremely cold winter weather?

Oil Transport from the Russian part of the Barents Region

In the year of 2002 the amounts of oil transportation along the Norwegian coastline from
the North-West of Russia increased considerably. It could be accounted for by the general
increase of oil production in Russia and by a growing influx of oil from the Eastern regions
to transshipping terminals in the White and Barents seas. The previous sea transit volume
forecasts made by the Norwegian Coast Guards in cooperation with the Russian state
institutions were based on the prospects of oil production and oil extraction infrastructure
development in the Russian part of the Barents Euro-Arctic Region1. That is why the
Norwegian authorities were surprised by the tremendous growth of oil transportation,
which exceeded the expected transportation flows and oil production volume estimates for
the Russian part of the Barents region.
In view of the existing growth figures in oil production and transportation infrastructure
development in 2010 the oil flow by sea can reach a yearly level of 150 million tons, of
which 80 millions will be transported by tankers of 250,000 tons deadweight and the rest is
to be carried by smaller tankers of 100,000 tons deadweight. We can expect 320 runs of
tankers of 250,000 tons deadweight year and 700 runs of 100,000 tons tankers to the west
and south. Accordingly there will be the same number of empty tanker return runs.
In the report one can find a short overview of the prospects in oil production and
transportation volumes from the Russian part of the Barents region including the oil
shipping from the White Sea oil loading terminals, where oil is delivered by railway and
via inland waterways from other Russian territories. The report also provides data of
transportation network potential and development plans of future transportation routes. The
special emphasis is given to the present situation. The risk analysis of this and similar
transportation volumes will be given in the report of the Norwegian Coastal Administration
/CNIIMF scheduled to be published in the fall of 2003.

This is from 2003 and may now be somewhat out of date. From other sources, it appears that there are a number of 75,000 ton icebreaking tankers in operation with more on the way.

10 million tons shipped from Varandey oil terminal

10 million tons of crude oil has been shipped through Lukoil’s ice resistant oil terminal Varandey in the eastern part of the Barents Sea since the start-up in 2008.

You can't operate tankers in the Arctic Ocean in the winter because the ocean freezes over. Tanker traffic would be limited to a few months in the summer.

It's not that it can't be done. I worked for a company that took two 100,000 bbl shipments per year out of a well in the Canadian Arctic Islands for a number of years. But for large-scale production, it's impractical.

And you have to deal with the probability that sooner or later you're going to have a major oil spill. It's not the safest place in the world to be shipping oil from.

It's not that it can't be done. I worked for a company that took two 100,000 bbl shipments per year out of a well in the Canadian Arctic Islands for a number of years. But for large-scale production, it's impractical.

Consider the difference in magnitude between his 200,000 barrels per year and the nearly 500,000 barrels per DAY we fear will be shutin by TAP closing. Its only about five hundred times larger!

A senior ConocoPhillips executive who was in town recently warned a group of business leaders that pipeline throughput could drop to 500,000 barrels a day as soon as 2015.

I did an Alaskan peak analysis in 2006 using the shock model.

This was straightforward to do because there are essentially two discovery stimulii, one for Cook Inlet and one for the North Slope. At the time someone had made an estimate for total URR, so I plugged that into the model with typical numbers for latencies. From the graph below I predicted about 175 million barrels per year coming out of the pipeline in year 2015, which is 480,000 barrels per day. Given enough constraints on the problem (no substantial new discoveries) and the amount of prior data available (we were already on the downslope), this value is pretty much substantiated.

So some flow rate triggers the decision to shut it down. It still seems a high enough flow to make it commercially viable. That is the only odd thing I see.

Or is it a threat to close so they can use the Arctic National Wildlife Refuge as a bargaining chip? In other words, open up drilling or we will close down the pipeline due to inadequate flow rates?

In the past I have been against oil exploration and production in ANWR.

However, in light of the current and projected future oil supply situation, and our (U.S.) progress to-date on alternative energy production and conservation/energy efficiency gains, perhaps it is time to open the 1002 area to closely regulated oil production.

After the economically recoverable oil resources are used up in Alaska, perhaps then we can use out last FF gasp up there to disassemble the TAPS and the other oil infrastructure and bring it back South to be recycled.



I would ask the same question about producing oil in the National Petroleum Reserve-Alaska (NPRA) and send that production through TAPS:


A different question: Do the fields up near Prudhoe Bay have significant gas content? If so, is it being pumped back into the reservoirs or flared off or both?

I have heard talk about a NG pipeline running down from NW Canada to southern Canada and the U.S...so apparently NW Canada has potential significant gas reserves?

It seems to me that we need these FFs to give ourselves more time to prepare for the future.

Such development would also deflate the continual political battle over this issue and help us eventually focus on planning for our post-easy-FF future.

I would offer the same rationale for off-shore deep-water oil production: Mandate improved and/or two improved BOPs and one, maybe two mandatory preemptive relief wells per well...let the experts figure out what makes sense...and produce the economically recoverable offshore oil and gas for the same reasons...buy us time, and take the 'held-back resources' issue off the political table for good.

I consider myself an environmentalist/green...but I am also a realist and pragmatist.

"It seems to me that we need these FFs to give ourselves more time to prepare for the future."

Sorry to be cynical, but what would indicate that we would use these FF's to prepare for the future ? We'd burn them, destroy ANWR and be no further along except to have fewer options left and more people.

Remind me again, how much recoverable oil is in ANWR? 6 months worth, 10 years down the road ?


I cannot remind you about the estimates of recoverable oil in ANWR and NPR-A, because I personally have no idea.

However, I do remember an article which said that the average estimate is on the order of 10B bbl in 1002. I have not seen any estimates for NPR-A.

We are going to have more people in the U.S. anyway, with or without ANWR and/or NRR-A oil development.

You may very well be correct that we would burn up the additional oil from ANWR and NPR-A and not use the 'bought time' to prepare for a future with significantly less FF.

Then again, we might get wise and use the time to prepare?

What if we did, what if we didn't, what if the World was made of pudding?

(Not my original line, google 'Story from North America' or 'Daddy kill the spider'...2 days ago my 18 y.o. daughter had the pleasure of capturing a NM tarantula which crawled up the wall next to her computer and depositing it in the arroyo across the street)

At the very least, producing these oil formations under close government regulation to minimize environmental damage would take the 'domestic oil trapped by the enviro-nazis' meme out of circulation, and this, combined with the inevitable decline in these newly exploited resources, may focus even the 'drill, baby, drill' crowd into seeing the finite nature of these resources and the need to plan and do something different.

Compromise is essential to a functional community.

However, I respect your right to have your 'line in the sand' (or snow, in this case?) position.

I have amended my previous similar views as a pragmatic part of the holistic way forward.

Peace be with you.

BTW, its called Arctic National Wildlife Refuge not that acronym that sounds like the name of a former Egyption ruler.


Thank you for the knowledge; I happened to be jiggy with that fact already (the full name of the area)...in the interest of lazy typist syndrome I didn't spell out the full name.

I did mention that according to the sources I read that the '1002 area' subset of ANWR is the specific area where some people think ~ 10B economically recoverable bbls exist underground.

I understand your sentiments. It certainly is my line-in-the-sand/snow position to say "no" to drilling in ANWR because as long as one keeps falling back, the pushers will just keep pushing.

We're going down. We won't wise up. I would rather feel like I said "no" to the madness somewhere, than try to compromise with people who know no compromise except to eat the hand that is offered, and then ask for the rest of the arm.

I am sympathetic to enviromental concerns of drilling in ANWR. I believe that ANWR can be developed in a responsible manner - and should be.

Maybe it could be, and it certainly SHOULD be, were it to happen, but as with 'Safe Abundant Nuclear Power'.. the behavior of these industries assures me that it WON'T be developed or handled with anything but a lot of bribery and sweeping things under rugs.

You may very well be correct that we would burn up the additional oil from ANWR and NPR-A and not use the 'bought time' to prepare for a future with significantly less FF.

If it comes in well past peak, and only eases the rate of supply decline, I suspect we would then be a lot smarter about how we use it. But, maybe I am assuming an unrealistic amount of rationality on the part of future humans and politics.

Do the fields up near Prudhoe Bay have significant gas content? If so, is it being pumped back into the reservoirs or flared off or both?

The ANS fields produce huge amounts of natural gas. In fact the largest gas plant in the US is the Central Gas Facility at Prudhoe Bay. It handles something like 8 billion cubic feet per day. However, all it does is reinject the natural gas back into the oil fields to improve oil recovery. The natural gas liquids get put into the oil pipeline for shipment south.

I have heard talk about a NG pipeline running down from NW Canada to southern Canada and the U.S...so apparently NW Canada has potential significant gas reserves?

Canada's Northwest Territories have huge gas reserves, and if a pipeline were built to carry Alaska gas south to the Lower 48 via the Mackenzie River, the natural gas companies would be more than happy to piggyback NWT natural gas on it. However, they can't afford to build a pipeline on their own.

A major problem with the Canadian option is that the State of Alaska would like to bring the gas down via Alaska rather than via the Northwest Territories, and is trying to block development of the Mackenzie Valley line in favor of a line following the Alaska Highway. Unfortunately the Alaska Highway route is considerably more expensive than the Mackenzie Valley route, and the Mackenzie Valley route is itself very, very expensive.

However, the biggest problem is the new production of non-conventional shale gas in the Lower 48. It is much cheaper than Alaska gas would be when brought down via either route, and that is probably the main thing preventing building of an Alaska gas pipeline.


Thank you for your insights...I always appreciate when someone posts facts/ground truth to TOD. Just as Mcain did downpost about Western water rights.

Knowledge is good.

Actually, I shouldn't say that the Canadian companies can't afford to build a stand-alone pipeline to take gas out of the Canadian Arctic. I wouldn't be surprised if the Mackenzie pipeline gets built before the Alaska one, given the political state of the US.

And even if the Alaska Highway route is chosen, Canadian producers can swing a lateral from the Mackenzie Delta down the Dempster Highway to connect with it.

But as I said originally, the big hangup is that shale gas is holding the price of gas below the level that would make any of the options economic.

It seems to me that we need these FFs to give ourselves more time to prepare for the future.

Your optimism is admirable. However, if our government is not prepared to take steps to discourage needless energy consumption (as it did during the WW2 rationing period) additional oil will merely enable the continuation of BAU, replete with urban hipsters racing to work in Dodge V-10 turbo-powered pickups (because there's no law against it) and other such foppery.


I concur with your concerns...see my response to EOS below...

In the past I have been against oil exploration and production in ANWR.

I've been on the other side* (unpopular in the liberal circles I usually belong in). But, I suspect the window of opportunity has closed, ANWR production would be too late to save the pipeline. Is this really correct, or would it be possible to close the line for a few years until the combined productive capabilities of Prudhoe plus new fields exceeds the MOL? Obviously it would require significant maintenence and rework of infrastructure, but I think this would be a lot better than starting from scratch.

* Of course I always proposed a compromise, the other side has to agree to an agressive conservation/renewables program, and significant ANWR royalties would be earmarked for conservation plus renewables. But ANWR being a litmus type issue, neither side wants to compromise.

I concur with the terms of your compromise; I am a little pessimistic that the drill-ti-all-now folks would accede to a meaningful, robust build-out of renewables plus an aggressive, meaningful conservation program.

Why accede to all that loss of liberty when one's stance/outlook is that there will always be those next big finds to continue BAU and let the good endless growth times roll??

EOS - I'm far from a pipeline expert but from the bits and pieces I've read it's more serious than MOL. The PL is not in very good shape. Even BP now appears to admit to not taking very good care of it. Also, I know little about the specifics of the potential up there but if there are meaningfull reserves that could add significantly to the flow rate it should take many, many years to reach that level. Not sure if my fading memory is right but I think it took 10+ years to ramp the initial rate to it's max. And that's if there is a comparable reservoir. Even if the reserves are there but in numerous small fields you probably just added an additional 10 years to development.

Why bother?
It will make the developers rich, but will be noise in the system for the rest of us.

Well,sorry to miss the ANWR party! Being Sunday and my day off, I've been outside and offline through most of this discussion. Hoping it's not too late to offer a few comments.


How long does Chevron and the USG have the rights to withhold info on the KIC-1 well findings?

The well was drilled on private native land (surface owned by Kaktovic Inuit Corporation, subsurface by Artic Slope Regional Corporation) by Chevron and BP. The USG (I assume you mean US Government?) does not have the data. Under Alaska law, the data can be held until there is a lease sale in the area. See
http://doa.alaska.gov/ogc/WhoWeAre/50th/aogcc50thBooklet.pdf (pages 44-49) for a discussion of this. Also note, that the KIC well is hardly unique in this respect. As of this writing there are 13 wells held under extended confidentiality. Note that at least 3 of them (Tiglukpuk, Killiq, and Cobblestone) are on native land in the Brooks Range foothills. However, since they are not associated with the famous (or infamous?) ANWR, nobody outside of N Slope exploration cicles has heard of them. Based on regional considerations, all of those 3 are probably in a purely gas prone area, if anything.


Remind me again, how much recoverable oil is in ANWR? 6 months worth, 10 years down the road ?

This is a bit of a red herring. The USGS mean estimate for the entire ANWR 1002 area is 10.36 billion barrels technically recoverable. http://pubs.usgs.gov/fs/fs-0028-01/fs-0028-01.htm
Prudhoe Bay, at discovery was etimated to have ~9.7 billion bbls. Therefore, by your logic, Prudhoe Bay, still the largest oilfield ever discovered in North American, also only represents about a six month supply. Note that Prudhoe Bay has been in production for over 30 years, and still represents the biggest slice of N Slope production. Total production to date has been ~ 12 billion, and most people think there is perhaps another billion which might be produced (depending on oil price, etc).

Note that there is a significant uncertainty in the USGS estimate. It could be bigger or smaller. If there is interest, I can discuss in a separate post.


A major problem with the Canadian option is that the State of Alaska would like to bring the gas down via Alaska rather than via the Northwest Territories, and is trying to block development of the Mackenzie Valley line in favor of a line following the Alaska Highway.....However, the biggest problem is the new production of non-conventional shale gas in the Lower 48. It is much cheaper than Alaska gas would be when brought down via either route, and that is probably the main thing preventing building of an Alaska gas pipeline.

Since Canada is a sovereign country, and Alaska is a only a state, it is hardly in our power to block the McKenzie pipeline, no matter how much we might want to. :<) However, you are correct, that at the moment the biggest issue stopping both gas pipeline proposals is long term gas price uncertainty due to shale gas and imported LNG.

Enemy of state:

...I suspect the window of opportunity has closed, ANWR production would be too late to save the pipeline. Is this really correct...?

Not necessarily. See my post down page. The 2015 end TAPS may be mostly a bargaining chip in the big oil co's never ending battle with the State of Alaska regarding taxes. As a point of interest, in the early 90's I can recall a VP of ARCO saying that without big new discoveries, TAPS would be done by about the year 2000 or so. Obviously we are well beyond that. I'm told there are some fixes to TAPS that could be made that would allow it to operate at lower levels of throughput, perhaps even below 300,000 bbl/day. These would be expensive to implement, but if there was expectation of new production from ANWR there might be incentive to do so.


...The PL is not in very good shape. Even BP now appears to admit to not taking very good care of it....

Not entirely true. There have been some issues with TAPS, more related to the pumpstations and control systems rather than the pipeline itself. It is aging infrastructure, to be sure, but with appropriate maintence and upgrades could be kept in operation for a long time to come. Point of information, the pipeline is owned and operated by Alyeska, a separate company. BP is only part owner, as are ConocoPhillips and Exxon. If there was real expectation of opening ANWR to exploration, I'm fairly sure the owners would keep the TAPS in operation until it was determined whether the USGS estimated reserves are really there.

Edit: Corrected name of ASRC


Thank you very much for your detailed and easy to understand answers.

I think it would be very informative if you would wish to write a keypost about the Alaskan oil and gas outlook sometime.

I know it isn't KSA-sized, and I know it will only lessen the downslope of oil availability, and I know that we may not be wise enough to use extra time to transition to other energy technologies and lower-energy lifestyles, but I think that most readers of TOD would be interested in having the complete facts, and even well-educated estimates, of what oil and gas resources are left to be produced in Alaska, the future of TAPS, other potential pipelines, the potential effect on Peak Oil, etc.

Is the NPR-A a complete unknown, or is there any public data on its potential resources?

What is the known estimates for the Arctic ocean oil and gas resources?

Does Alyeska have a contract clause with the United States Government (USG, common abbreviation within the government, sorry, I should have spelled that out)to dismantle TAPS and send it to the scrap yards and return the lands to something resembling their original landforms?

I think it would be very informative if you would wish to write a keypost about the Alaskan oil and gas outlook sometime.
.... I think that most readers of TOD would be interested in having the complete facts, and even well-educated estimates, of what oil and gas resources are left to be produced in Alaska, the future of TAPS, other potential pipelines, the potential effect on Peak Oil, etc.

Is the NPR-A a complete unknown, or is there any public data on its potential resources?

In total, that is a bit of a tall order! I will try to put something together on some of those topics, but it probably won't be tonight.

A couple of quick comments regarding NPRA, there has been a fair bit of exploration over the last few years. However, it seems to be winding down at the moment. My sense is, though I don't have access to any inside data, is that exploration for oil in NPRA has been somewhat disapointing. There is some reason to think that the area becomes more gas prone the further west one goes from Alpine Field. However, it should be noted that some of the most prospective area up around Teshekpuk Lake has not been available for exploration due to environmental considerations. BLM (the agency administering NPRA) is revising their whole plan for future NPRA lease sales. For the USGS's most recent NPRA estimate, go to:
For the USGS estimates of the central N Slope (mostly state lands) see: http://energy.usgs.gov/alaska/ak_cns.html


Once again, thank you for sharing your knowledge.

I certainly wasn't thinking of tonight for keyposts...you probably have a day job and many other things to do with your life time...I will keep an eye out as time goes by to see if you post more such enlightening material.

Your two links were useful; my quick spitball estimate is that if we add up the ANWR (1002) and NPR-A and the undiscovered North Slope technically recoverable oil, maybe we are looking at ~ 25B bbl?

The next question would be how much of that is currently and estimated in the future as being economically recoverable, and under what circumstances (many miles of pipelines feeding from 1002 and NPR-A and from southern areas of North Slope to TAPS; more drilling rigs, assuaging environmental concerns, cutting the mutually agreeable tax deals with the state of Alaska, etc.?

It seems that Alaska will remain an important part of the future U.S. energy picture....I imagine the deals can and will be cut and the resources produced and shipped at some point...the Alaska oil fund checks for the residents may continue for quite some time!

Since Canada is a sovereign country, and Alaska is a only a state, it is hardly in our power to block the McKenzie pipeline, no matter how much we might want to. :<)

I should have said that the State of Alaska would like to stop Alaska gas going down the Mackenzie Valley, and would much prefer it went across Alaska. As you said, Canada is a sovereign country and Alaska couldn't stop it from moving its own gas down the Mackenzie Valley.

The government of Canada wouldn't be particularly concerned if the Alaska Highway pipeline were chosen, because the Alaska gas still has to cross Canada to get to the Lower 48. The only difference is that the pipeline would cross the Yukon Territory and British Columbia rather than the Northwest Territories. The governments of the Northwest Territories and the Yukon, however, have their own opinions on the subject.

If the Alaska Highway route were chosen, Canadian gas could come down the Dempster Highway rather than the Mackenzie Valley, and connect with the Alaska pipeline in the Yukon. If the Mackenzie Valley route were chosen, the Alaska gas would probably run offshore from the Alaska North Slope to the Mackenzie Delta.

Regardless of which option is chosen, the pipeline route would go to Northern Alberta. As it happens, the southern portion of the pipeline has already been built, but to date it has only been carrying Canadian gas from Alberta and BC to US markets.

I should have said that the State of Alaska would like to stop Alaska gas going down the Mackenzie Valley, and would much prefer it went across Alaska....

I don't think there has been much consideration of Alaska gas going down the Mackenzie Valley in quite some time. The only way to do that would be to either take a pipeline overland across ANWR, or route it underwater off the N coast of ANWR. Overland across ANWR would no doubt cause a firestorm of opposition from those who are opposed to exploration in ANWR. Also, Alaska N Slope natives have generally been opposed to any offshore development, so there would no doubt be significant opposition from them for the underwater route. Years ago there was some discussion of the offshore route, but to my knowledge no one has seriously considered taking Alaska gas through the Mackenzie in a very long time.

Besides the route down the highway (built by either Transcanada Pipeline under Alaska's AGIA or the the Denali proposal by BP and COP), the only other route under serious consideration would be the so called "All Alaska" line. This would be a pipeline to Valdez and an LNG plant, then tankered to the US West coast. This has been pushed by some groups in Alaska, but the big companies have repeatedly said it doesn't pencil out economically.

Pipeline experts I have talked to indicated the cheapest option would be to run the pipeline straight across the ANWR to the Mackenzie Delta, and then down the Mackenzie Delta, and the second cheapest would be an offshore pipeline across the Beaufort Sea to the Mackenzie Delta.

The relatively mellow Mackenzie Valley would be a much cheaper route than trying to put a pipeline through the mountains of southern Alaska and the Yukon. That's where the biggest mountains in both the US and Canada are.

Either of the two proposals currently being considered would be much expensive than the Mackenzie Valley route - into the range of what it cost to send a man to the moon back in 1969 - and would allow the two countries to build one pipeline instead of two to bring their Arctic gas out. The Mackenzie Valley route might be only half the cost of sending a man to the moon.

An LNG plant at Valdez would be the most expensive alternative, because then they would have the expense of liquefying the gas and regassifying it at the far end in addition to the pipeline costs.

But, really, the decisions are all political in nature, and politics might determine that nothing ever gets built.

But, really, the decisions are all political in nature, and politics might determine that nothing ever gets built.

Absolutely. If (a big if) ANWR were ever opened to exploration, then I suppose it might also be more politcally feasible to route a gas pipeline across ANWR. Thinking now about lasst nights discussion, I recall that at one time Exxon was proposing a gas route across ANWR or N of ANWR. (Probably because they are the majority owner in Pt. Thomson and also have a position in the Mckenzie area.) The Alaska legislature also did push for a measure that would block construction from Prudhoe across state lands for a Mckenzie route. I'm not sure if it would even be legal for the state to do that, due to interstate commerce and all that. In any case, I haven't heard any discussion of that route here in Alaska in years.

Probably time to move to the new drumbeat thread?

From the same article:

ConocoPhillips executives also testified against ACES earlier this year, telling lawmakers that the unfavorable tax climate was one reason the company was not drilling a new exploratory well on the North Slope for the first time in 45 years. The company also pointed out that it was taking billions of dollars in investment just to keep production steady at a decline of 6 percent per year.

6% decline per year for a field seems to be in line with the IEA's 6.7% global average decline rate. It sure looks like Alaska has peaked.

As WHT noted above, the peak for total crude production from Alaska looks like it was in 1988, at 2.0 mbpd:


The 1988 to 2009 decline rate has been 5.4%/year. The volumetric decline in production from 1988 to 2009 was 1.37 mbd. It's interesting to compare this to the 1988 to 2009 increase in net exports from Canada--0.84 mbpd.

I would caution that part of the motivation for the ConocoPhillips exec's comments is to influence the oil tax debate here in Alaska. A bit of history (which inevitably includes a lot of politics):

After Frank Murkowski left the US Senate and became governor, he attemped to get a North Slope gas pipeline going. His proposed legislation was widely viewed as too much of a givaway to the oil industry. After Sarah Palin became governor, she pushed through "ACES" ("Alaska's Clear and Equitable Share") which raised state taxes as oil prices went up. Remember, this was when oil prices were extremely high. (The "Drill Baby Drill" Palin didn't emerge until she became a national candidate.)

In the industry, ACES is widely viewed as taking too much of the upside, especially for big, high risk exploration projects. ACES did however, create significant incentives for smaller companies. For a current view from one of our local economic pundits, see:

Regarding TAPs throughput, my understanding is that there is a lower technical limit of how much oil is required to operate the pipeline. I seem to recall hearing numbers in the 300,000 bbl/day range. Whether or not it would be economic to operate at that range is of course a different question. Also, my understanding is there are some technological changes to the pipeline which would help, but these would require significant cost to implement.

Bottom line is that yes, N Slope production is in serious decline, and yes TAPS throughput is a looming issue. On the other hand, I suspect that 2015 may be a worst case scenario, and an attempt to influence the debate on state taxes.

Is the low flow volume due to:
1. depletion of the fields, or
2. that the current price does not support more production and volume through the pipeline?

A little of both, but primarily #1. All the major fields on the N Slope are in decline. However, higher price might slow rate decline from existing fields. There is a lot of oil remaining in N Slope fields, but it is tough and expensive to get. Most people don't realize how many wells are drilled on the N Slope just to maintain production. For example, the big Kahuna is of course Prudhoe Bay. The really awesome world class rocks in the upper part of the reservoir are mostly depleted. The bulk of the remaing oil is in the lowermost part of the reservoir (a much more shalely and compartmentalized section). BP drills something on the order of 40-60 wells a year in Prudhoe. These are mostly short coil tubing sidetracks that produce for a couple of years, then rapidly decline. The other fields drill fewer, but still substantial numbers of wells. A better price might slow the decline, but certainly would not reverse it. A step change in drilling costs (such as coil tubing was when it started) would help too!

The low flow in the TAPline is caused by depletion of the oil fields. As westexas noted above, Alaska oil production peaked in 1988, and has been declining at 5.4% per year ever since. Higher prices might coax a little more oil out of the fields, but wouldn't increase flow rates much.

Higher prices might coax a little more oil out of the fields, but wouldn't increase flow rates much.

Agreed, not much. That's why I said "A little of both, but primarily #1. All the major fields on the N Slope are in decline. However, higher price might slow rate decline from existing fields....... A better price might slow the decline, but certainly would not reverse it. "

NO ONE that I know of is under any illusions that we will reverse the decline of existing N Slope fields.

Edit: quoted more of myself

This is from Friday but I didn't see it posted. From my understanding, there were 5 corporate credit unions that all credit unions had to be a member of. All five have now failed.

Regulators Step in to Aid Credit Unions

Nearly two years after Wall Street’s giants were rescued by the federal government, regulators on Friday took over three financial institutions that provide the underpinning for hundreds of the nation’s credit unions.
Last year, regulators closed two wholesale credit unions in Kansas and California and took control of their operations. Regulators will help repackage and sell off about $35 billion of troubled mortgage-related assets held by the five institutions.

From the article:

.....Of the 27 wholesale credit unions operating in the United States, five have been seized by regulators over the last 18 months.

It's only 5 out or 27, just another small problem for the invisible hand of free market capitalism to work out...

E. Swanson

The wholesale credit unions provide a variety of services for individual credit unions, such as processing checks and other payment transactions. Additionally, individual credit unions also park funds that their members have deposited by investing in paper issued by the wholesale credit unions who in turn invest those funds in larger chunks than could the individual credit unions. Unfortunately, many of the wholesale credit union investments were in commercial real estate mortgages, commercial asset backed loans, real estate development loans, etc., just as for the regional and smaller banks. These investments are in trouble, and so the assets of the individual credit unions are also at risk.

So 5 out of 27 means that a significant fraction of the whole credit union business is at risk.

See http://www.swcorp.org/pdf/valuecoopdiagram.pdf for a diagram of the industry structure.

Here is the article that I had miscomprehended. The five big ones have failed.

When credit unions fail

There are lots of great credit unions in America, all of which are owned by their members. And then there are the corporate credit unions, which are atrocious and expensive failures. Today, the final nail was placed in their coffin when the last three big corporates were officially taken over by the government.

If you will allow to generalize for a minute, basically the US government decided in the financial crisis of 2008 to directly assume the losses of not only failing large credit unions, but also most all failing banks, Fannie and Freddie, and some other similar entities. We see that 'policy' in effect here - even if Congress has not specifically approved the bailout funds to cover the losses from these various institutions.

It's not clear just how much will be lost, and how the losses will be paid off. Fannie Mae for example lost $90 billion, but since its debt is guaranteed by the US government, it can just issue more debt to deal with its problems, just like they will be doing for the credit union problems above.

By not recognizing the losses as an actual expense of goverment then, regulators do not have to ask Congress to pay for losses. In fact, it's not even clear what the amount of expected losses will be.

From above the article below has an interesting response from the Russian heading their agriculture.

'High grain prices may provoke world food crisis'

...the cost of a bushel of wheat in the United States has doubled as against the price of September last year, while in Europe the price has grown by 80%.

A number of experts have rushed to link growth in grain costs to Russia’s decision to impose a provisional ban on its own grain exports. The Chairman of the Russian Duma Agrarian Committee Valentin Denisov shrugs off the claims as rubbish, and says this, for his part.

The imposition of Russia’s embargo on grain exports, Valentin Denisov says, has been prompted by this country’s internal interests and the need to settle its home problems. This can in no way cause the world grain prices to grow. Nor does it mean that Russia will not return to the world grain market in the next few years. But at the moment Russia is not the strongest player on that market. However, the trends of agricultural development that have taken shape in recent years make competitors fear Russia.

"This can in no way cause the world grain prices to grow." Oh really?! I guess being in denial is politically convenient all over the world.

The greater point in this article though is the apparent food crisis we're headed for in the near future. If Mozambique is already having food riots, then that is a bad sign as the northern hemisphere moves towards winter.

Interesting pic of the change of water level in Lake Mead... Can it go empty?

August 2010

August 1985

The maximum capacity of Lake Mead is 28.5 million acre-feet (35 cubic kilometers) of water, with an acre-foot equaling the amount required to cover one acre to a depth of one foot. According to records from the U.S. Bureau of Reclamation, the lake held roughly 27.8 million acre-feet of water at its high point in 1941, and levels have fluctuated through drought in the 1950s and the filling of another upstream reservoir, Lake Powell, in the 1960s.

Lake levels rose steadily through the 1980s, reaching 24.8 million acre-feet in August 1985, when the bottom image was taken. But as of August 2010 (top image), Lake Mead held 10.35 million acre-feet, just 37 percent of the lake’s capacity.

Lake Mead reached its August 2010 low after decades of population growth in the American Southwest and 12 years of persistent drought. According to the U.S. National Park Service, the amount of water flowing out of and evaporating from Lake Mead has consistently exceeded the amount of incoming water in recent years .


You can track Lake Mead monthly depth here:

Lake Mead and the Upper Colorado River (Lake Powell and others) are managed under a cooperative compact. Due to the water level, 'drought' management rules are already in place. If Mead drops to 1075', additional water rationing rules go in effect. If it drops below 1050', Las Vegas loses one of its two water intakes. Las Vegas has a project on the books to bring down water from north Nevada, but I'm not sure of its current status.

I thought that Ls Vegas has a project in the works to drill a tunnel under Lake Mead to pump water to Sin City?

If so, 'Sucking it dry' is not a long-term answer.

Maybe if the SW is in for a hundreds-of-years extreme drought, the Lake Mead and Lake Powell dams will become superfluous (as will much of the SW's population) and the CO can revert to its natural state.

They have a serious proposal to drain the aquifer (s) that straddles the NV/UT line. It is opposed by nearly all (that be both of them) living in the area, but also by a number of governmental agencies in Utah. The thought is that removal of that water will turn a high plains prairie into a dust bowl that will drift east to the more densely populated Wasatch Front of Utah. We Utahns, have already sucked dry all the surface water in our stat, and the only thing keeping the meagre vegetation alive and preventing a dust-bowl from descending on Provo, is that ground water.

The minimum power pool for Hoover dam is also 1050', and losing the hydropower would cramp the style of Las Vegas just as much as losing half the water.

They seem to predict a 50% chance of falling below that level by 2017.

my - Do you have thenumbers for decreased input vs. increased consumtion? IOW. how much of the increasing deficet is due to inceased consumption? And I don't mean to sound snotty but how do they define "12 years of persistent drought" in a historicly arid region?

I believe most of the water comes from snowfall in the Rocky Mtns... So my guess is that snowfall has been low for some time? Not sure. I do think that they need to think about alternative forms of freshwater should this thing go to low.

I think those dams require a lot of upkeep. I would imagine they would fill in over time?

Powell is doomed--
Just a matter of time:

The reality is, they can't keep Powell and Mead full-- they get to chose which one, and it is always Mead.

Would you believe dust?


"April 17, 2010--Dust in snow causes early melting in region's high country (Colorado Springs Gazette)"

Dust from all those tractors, four wheelers, dirt bikes, bulldozers, and county roads. Sometimes it seems like everything we touch turns to crap.

Water is rationed/allocated via quotas set in water agreements. The latest manageent agreements were renegotiated in 2005. So, on the grand level, increasing consumer pressure doesn't change the outflow from Mead. The outflow is determined by decades old water allocation (and as the article points out, that allocation is based on historically high water flows) and more recent inter-state/usbr management plan.

Consumer demand does play a small role, since California (as the downriver state) benefits when upriver states don't use all their allocation. Such has been the situation between AZ and CA.

Interesting pic of the change of water level in Lake Mead... Can it go empty?

If everyone lives up to the terms of the revised Colorado River Compact, probably not. The basic math goes like this.

The assumed annual flow in the original Colorado River Compact was 15.0M acre-feet, allocated equally to the upper-basin and lower-basin states. However, the upper-basin states are required to deliver, in any ten-year period, at least 75M acre-feet, so in the case of long-term reduced flows, the lower-basin states have senior rights. This has not generally been a problem because the upper-basin states have historically underdrawn their allotment.

Under the revised Compact which the lower-basin states agreed to in 2007 (or had forced down their throats, depending on how you view the role of the federal Dept of the Interior), those states reduce their draw as the level in Lake Mead falls. If the lake level falls below the lowest value in the agreement, then the lower-basin states get only 7M acre-feet, the upper-basin states continue to deliver 7.5M, and while there's evaporative losses, the lake will see a net gain in water and the level will increase. Current estimates of the annual flow run from 13.2M to 14.3M acre-feet, so there's little question that an average of 7.5M will flow into the lake each year.

It is always amusing to see the problem blamed on population increases. In the lower basin states, 80% of the diversions are for agriculture; in the upper basin states, it's 90%. State water law is really complicated in the West; as a general rule, though, it's pretty safe to assume that the most senior water rights are held by those ag users. This makes it look like the urban areas are the problem when there's a reduction in allocation, because most of the reduction gets taken out of the urban areas' junior rights. In the simplest case, a 3% reduction in available water in the upper basin would show up as a 30% reduction for cities with junior rights and a 0% reduction for farmers with the most senior rights. Doesn't matter how "efficient" the cities might be or "inefficient" the farmer is; first in time, first in right.

In at least some states, water rights are held for a specific purpose. The most senior right-holder may have a right for agricultural use. The rights they hold for using the water for a different purpose -- oil shale, or selling it to a neighboring city -- would be very junior, since they've never used it for the new purpose before. Shell has been buying up water rights in NW Colorado for potential use in oil shale projects; they have to buy rights from many different people, from most senior to most junior, in order to get clear "title" to use the water for oil shale, a completely new purpose.

Like I said -- complicated.

The Colorado delivers enough sediment to Lake Powell to fill 1,400 ship cargo containers each day.

Not very complicated. A 10 year old can tell you the result.

The crazy thing about the CO River Compact and the entire situation is that Colorado and Utah allow millions of acre-feet of water to flow down to Powell and Mead to which they legally have rights. Essentially, these two states give water to the downstream users. There have been many rather wacky schemes to appropriate the water and ship it to the Denver area, but the economics and logistics of pumping huge volumes of water over 11,000 foot mountain passes have prevented any of these from becoming reality.

Currently, there are two large projects being proposed that will further reduce flows into Powell and Mead: a pipeline to move water to Denver from Flaming Gorge Reservoir on the Green River, and a nuclear power plant in Green River, Utah.

Stay tuned for water wars pitting Phoenix and Las Vegas against Denver and Salt Lake City, with the Feds as the referees and an unholy alliance of environmentalists and sportsmen booing from the stands. It is going to be interesting.

Good News from the Pacific Northwest

The first article today is about building a high-end live/work/play community in a dense urban environment. Taking a look at all the infrastructure that has already been built or is about to be built it seems the South Lake Union neighborhood may actually live up to some of the hype. I understand that this type of development cannot happen everywhere but at least Seattle city planners and area developers are making their long term investments in infrastructure that will still be viable when liquid fuels become more expensive. Businesses may come and go but infrastructure is very difficult to change.

Who's built what in South Lake Union

This big year caps a decade of change in South Lake Union. Research labs, condos and office towers have replaced warehouses, commercial laundries and auto dealerships. Still more projects are planned.

Our second article this morning is about the construction of Washington State's second passive house. The fact that this is in the news is what's important here along with the profiling of a young architectural firm The Artisans Group that is pushing sustainable design. As energy issues come more and more to the forefront I am optimistic that we do have options to reduce our consumption of fossil fuels for heating. (See the AP Paint roof white article for cooling. Secretary Chu's suggestion wasn't so flip after all.)

High-efficiency home under construction in Olympia

OLYMPIA — A home without a central heating system that's designed to reduce home heating costs by 75 percent or more is under construction here.

It's called a "passive house" — the first of its kind in the Olympia area and only the second in the state using an architectural design hatched in Germany 15 years ago.

Lastly, we have a crazy and brilliant ex Cal Tech professor who has salvaged cast-off equipment to set up a high end machining shop in a small, suburban town a half hour from Seattle. He seem's crazy but also shows some serious "can do" attitude. It will be interesting to see whether these genioussoftware guys can be as creative working with physical materials as they are with ideas and electrons.

Sunday Buzz: Microsoft researcher on the cutting edge with vintage machinery

Some people dream of getting an Academy Award or a big job at Microsoft.

Jim Kajiya already has both. His dream is different: a world-class machine shop where he can help reinvent American manufacturing.

I may not have high hopes for intelligent decision making at the national level. But I am continually impressed by what's going on at a more local level in different places around the world.

Best Hopes for creative solutions to complex problems.