Drumbeat: October 27, 2010

Cheap natgas threatens Nabors joint venture IPO

(Reuters) - Nabors Industries Ltd said on Wednesday a planned initial public offering of oil and gas joint venture NFR Energy was not feasible at current U.S. gas prices, which the CEO said were "horrible."

..."Maybe in our business you've got to be optimistic," said Isenberg, 80, who over the past three years took home a total of $147 million in salary and bonus. "But I'm not still personally buying any gas futures."

Tailings ponds duck death toll rises

Oilsands giant Syncrude said 350 birds have now died after landing on the Mildred Lake tailings pond Monday night, while Suncor said the grim tally on their ponds rose to 40 ducks.

On Tuesday, the Alberta government announced that about 250 ducks had to be euthanized after landing on tailings ponds in the Fort McMurray area belonging to Syncrude, Suncor and Shell.

Russia, Ukraine fail to agree new gas deal

KIEV (Reuters) - Russia and Ukraine were unable to agree a new gas supply deal sought by the cash-strapped Ukrainian government on Wednesday, leaving the threat of a new year gas war hanging in the air.

In January 2009, a pricing row between Moscow and Kiev resulted in a stoppage of Russian gas flows to Europe for about two weeks, tarnishing Russia's image as a reliable exporter and spurring a European quest for new suppliers.

Security zone placed around Deepwater Horizon site

NEW ORLEANS -- The federal government has set up a security zone around the wreckage site of the Deepwater Horizon drilling rig, which lies on the sea floor about 50 miles southeast of the Louisiana coast after it exploded and sank in April, leading to the massive BP oil spill in the Gulf of Mexico.

Global extinction crisis looms, new study says

A growing number of creatures could disappear from the earth, with one-fifth of all vertebrates and as many as a third of all sharks and rays now facing the threat of extinction, according to a new survey assessing nearly 26,000 species across the globe.

Steve Forbes: Energy Crisis Over!

Not because of some humongous breakthrough in alternative energies but because of new ways to access two sources widely used today: oil and natural gas. The recent news story about China's national oil company, Cnooc, purchasing a stake in Chesapeake Energy's Texas shale oil and gas fields and agreeing to pony up most of the capital to develop them underscores what an amazing transformation is taking place in the U.S.' energy picture.

The word "revolution" is overused, but it's truly appropriate when applied to these technological breakthroughs: hydraulic fracturing--a.k.a. fracking--and horizontal drilling. With fracking, drillers inject water, sand and chemicals deep underground to crack gas-bearing rocks. The technology, which has been around for a long time, has advanced dramatically. Literally trillions of dollars' worth of shale oil and gas can now be economically extracted.

More firms expected to follow Conoco in gas shut in

NEW YORK (Reuters) - ConocoPhillips shut in a small amount of its natural gas production in the third quarter, a move that could set the stage for other producers to curtail production as an oversupplied market depresses prices, an analyst said.

Conoco, the third-largest U.S. oil company, shut in about 180 million cubic feet of natural gas per day in North America, a minuscule amount of its total production.

Drowning in Crude

This week’s inventory report from the department of Energy showed a huge increase of 5.007 million barrels of crude oil versus expectations for a build of 1 million barrels. Gasoline inventories, on the other hand were down 4.387million barrels versus expectations for a build of 625 thousand barrels. Finally, distillate inventories were down 1.613 million barrels, which was slightly more than the forecast for a draw of 1.5 million barrels.

Gazprom Keeps Grip on Polish Pipeline

Poland and Russia appear to have phrased their new gas agreement in a way that will only formally observe European Union rules on third-party access to the pipeline. In reality, Russia’s Gazprom will keep nearly full control of the Yamal-Europe pipeline that supplies Poland and customers in Germany.

Russia, Ukraine initial oil transit treaty

KIEV (Itar-Tass) - Russia and Ukraine have initialled a treaty on oil transit through the Ukrainian territory, Russian Energy Minister Sergei Shmatko told reporters on Wednesday.

“Today the transit agreement was initialled,” he said adding that “the agreement sets the oil transit rules for the two countries.”

Impact Of Rising Shipping Costs Will Likely Reach Vending Supplies Soon

Sources inside and outside the industry are saying bulk vendors might do well to brace for higher prices of capsuled merchandise. Despite the inevitable suspicions of operators, who often accuse suppliers of seeking to boost their own bottom lines, what appears to be behind an anticipated price jump will mostly be related to costs associated with shipping.

Review of Ben Parfitt’s Fracture Lines (report)

A Canadian study of shale gas fracking and its impact on water quality was released earlier this month. Entitled Fracture Lines: Will Canada’s Water be Protected in the Rush to Develop Shale Gas?, the study was conducted by Ben Parfitt for the Program on Water Issues, Munk School of Global Affairs, University of Toronto. Parfitt’s analysis is thoroughly sourced, with his fifty-page text being supplemented by another eight pages of detailed endnotes.

Cressier refinery in Switzerland shut due shortage of French oil

Zug-based Petroplus has announced it is shutting down operations at the Cressier refinery indefinitely “due to the labor strike at the southern port in Fos Sur Mer, France, which is disrupting the supply of crude to the refinery. The restart of the refinery is dependent on the outcome of the strike.” The refinery, near Neuchatel, is one of the Switzerland’s two oil refineries.

Fuel price hike to boost refiners' bottom line

China raised gasoline prices by around 3 percent in order to reduce deficits at the nation's two major refineries amid increasing international crude oil prices.

Will there be enough energy to go around this winter?

After last year's big freeze, the National Grid has assured Brits there will be plenty of energy to keep them warm this winter.

Last winter was the coldest recorded in the UK for more than 30 years. The big freeze, as it has become known, caused millions of pounds of disruption to business, damage to the UKs roads, and, worryingly for homeowners, the prospect of energy shortages.

The Ecology of Consumption (excerpts)

Ironically, the new economic Malthusianism comes closer in some ways than demographic Malthusianism did to the intent of Thomas Robert Malthus in his classic Essay on Population. Malthus’s argument was principally a class one, designed to rationalize why the poor must remain poor, and why the class relations in nineteenth-century Britain should remain as they were. His greatest fear was that due to excessive population growth combined with egalitarian notions “the middle classes of society would . . . be blended with the poor.” Indeed, as Malthus acknowledged in An Essay on Population, “The principal argument of this Essay only goes to prove the necessity of a class of proprietors, and a class of labourers.” The workers and the poor through their excessive consumption, abetted by sheer numbers, would eat away the house and home (and the sumptuous dinner tables) of the middle and upper classes. He made it clear that the real issue was who was to be allowed to join the banquet at the top of society:

"Blood and oil" released in Iran

"Blood and Oil" a book by Michael Klare has been rendered into Persian by Vahid Mousavi and published by Saghi.

Son helps on home job -- by long distance

His clients in Brooklyn, N.Y. - mostly homeowners looking to add energy efficiency to drafty 19th century houses - know architect Ryan Enschede is passionate about cutting energy use. It's the way, he said, that people can best fight production of greenhouse gases associated with heating or cooling a house. He considers sustainable architecture the cornerstone of his business.

Military, gov't increase investment in algae fuels

SOUTH SAN FRANCISCO, Calif. (AP) — The forest green algae bubbling in a stainless steel fermenting tank in a suburban warehouse may look like primordial pond scum, but it is a promising new source of domestically produced fuels being tested on the nation's jets and warships.

All that hype won't sell electric cars

NEW YORK (CNNMoney.com) -- If you thought electric cars were about to take over the world's highways, a new report by auto analysts at J.D. Power Associates says, "Not so fast."

By 2020, the vast majority of new cars sold around the world will run on gasoline, not electricity, according to the report "Drive Green 2020: More Hope Than Reality." In ten years, just 7.3% of passenger vehicles sold globally will be hybrids or plug-in cars of some kind, the study predicts.

Hazard of lithium batteries on planes sparks debate

WASHINGTON — Safety advocates have warned for more than a decade that someday an air shipment of lithium batteries like those used in cameras, cell phones and countless other products would catch fire, causing a plane to crash and people to die.

That day may have arrived last month.

Innovations to boost airborne energy have wind at their back

Kites and blimps may be the next big thing in wind energy and may even power your home one day – and we’re not talking decades from now. Think years.

Why? The higher you go up, the stronger and the steadier the wind and the more energy you can grab. Scientists say that a wind turbine high in the sky could generate 20 times more energy than a traditional model standing 200 feet off the ground.

Chris Martenson: Mike Shedlock on the Economy, Deflation and Where to Invest This Year

I am a firm believer in peak oil. I don't know how anyone can deny it.

Given peak oil, and given the demand from China for oil and other commodities, the world is on a crash course of demand that cannot be filled.

China is growing at 8-10% a year (assuming you believe the stats). Can China keep growing at that rate forever? For even 10 more years? What about India? Brazil?

Either we get some serious energy breakthroughs, China slows, or the standard of living drops in the US, UK, and Europe. Well China does not want to slow, and the US and Europe are fighting hard to maintain a standard of living that is not sustainable.

Historically these situations end up with war. That is an observation, not a prediction.

Oil Snaps Three-Day Rally on Crude Stockpiles, Dollar Strength

Oil declined for the first time in four days in New York on signs that U.S. crude supplies are rising and as the dollar strengthened, curbing investor demand for commodities.

Futures dropped as much as 1.2 percent before an Energy Department report today that may show crude inventories increased by 1 million barrels last week, according to a Bloomberg News survey of analysts. The American Petroleum Institute said yesterday stockpiles surged 6.4 million barrels, the most since March. The dollar climbed against all except one of its 16 most-traded peers.

Jeff Rubin: Tightening oil markets will bring speculators back

With oil prices now already above $80 per barrel and likely to hit triple-digit levels within months, you can expect to hear a lot more about the role of speculators in the marketplace. It’s always easier to find a convenient whipping boy than to recognize that depletion and the prospect of ever more costly fuel in the future are the real problems.

Petrobras Finds `Large Accumulations' of Oil in Sergipe-Alagoas Basin

Petroleo Brasileiro SA, Brazil’s state-controlled oil company, said it found “large accumulations” of oil in a well named Barra in the Sergipe- Alagoas Basin.

Karachaganak team hit with $1.2bn tax

Kazakhstan has prepared new tax claims worth a total of $1.2 billion against ENI and BG Group's Karachaganak gas project, according to reports.

Audit Chamber warns Exxon Neftegas over Sakhalin-1 spending

The Russian government may replace Exxon Mobil as operator of Sakhalin-1 oil and gas project for raising its spending to $95.3 billion from $42.8 billion for the period until 2055, Audit Chamber auditor Mikhail Beskhmelnitsyn said on Tuesday.

Sakhalin-1 'may see change of guard'

The ExxonMobil-led Sakhalin-1 development could see a change of operator, an official from Russia's budget watchdog claimed.

"Today, their (foreigners') place may be taken up by Russian companies," Interfax quoted Audit Chamber representative Mikhail Beskhmelnitsyn saying after he was asked if he would rule out the possibility of dismissing ExxonMobil as the project operator.

No plans to change Sakhalin-1 operator-Russia oilm

(Reuters) - Russia has no immediate plans to change the operator of the Sakhalin-1 oil and gas project off the Pacific coast, currently led by U.S. major ExxonMobil, Energy Minister Sergei Shmatko said on Wednesday.

Kiev: Russian-Ukrainian gas contract no longer legal

As Ukrainian Prime Minister Nikolai Azarov announced at a cabinet meeting today, the 10-year natural gas supplies contract between Naftogaz of Ukraine and Gazprom dating back to January 2009 does not comply with Ukrainian legislation. According to the PM, Ukraine will voice its position on the matter during today's meeting of the intergovernmental committee on economic cooperation with Russia.

"We are going to let our Russian colleagues know that the existing agreement cannot satisfy us," Azarov stated. "The market conditions have changed, and the price calculation formula, therefore, requires changing," he added.

Russia's TNK-BP to explore shale gas in Ukraine

(Reuters) - BP's Russian joint venture, TNK-BP, is expected to sign a memorandum on shale gas exploration in Ukraine, materials from the Russian government press service, seen by Reuters on Wednesday, showed.

China to Offer Shale-Gas Blocks to PetroChina, Sinopec, Cnooc in Auction

China will offer shale-gas blocks to the nation’s biggest energy companies as the world’s largest polluter aims to increase the use of cleaner-burning fuels to help reduce carbon dioxide emissions.

Shale gas's fractured hope

Poland and Russia are negotiating the extension of a gas supply deal that could secure Russia's supply of gas to Poland until 2037. Polish Treasury Minister Aleksander Grad said recently that the deal should include flexible long-term conditions, in light of a liquid natural gas pipeline in development and large-scale domestic shale gas deposits.

Alaska's untapped oil reserves estimate lowered by about 90 percent

(CNN) -- The U.S. Geological Survey says a revised estimate for the amount of conventional, undiscovered oil in the National Petroleum Reserve in Alaska is a fraction of a previous estimate.

The group estimates about 896 million barrels of such oil are in the reserve, about 90 percent less than a 2002 estimate of 10.6 billion barrels.

Nigerian crude exports up in December - sources

LONDON (Reuters) - Nigeria will export more crude oil in December, pushing its sales well over 2.1 million barrels per day (bpd) and far above its OPEC output target as its onshore oilfields recover from years of political violence.

Nigerian crude exports will rise to an average of around 2.15 million bpd in December, up from about 2.10 million bpd in November, trade sources said on Wednesday, citing provisional loading allocations.

French Power Workers to Resume Strike; Prices Jump on Expected Output Cut

French power-plant workers are set to go on strike this evening in protest against planned pension reforms, cutting output at all types of plants, a representative for the CGT union said.

Conoco third-quarter profit up, output lower

(Reuters) - ConocoPhillips, the third-largest U.S. oil company, said on Wednesday that its quarterly profit more than doubled, as crude oil and natural gas prices rebounded from a year earlier.

PetroChina Profit Beats Estimates as Crude Prices, Output Rise

(Bloomberg) -- PetroChina Co., Asia’s biggest company by market value, posted a 13 percent gain in third- quarter profit, beating estimates, as the oil and gas producer increased output to benefit from higher crude prices.

Uganda plans its first oil refinery in 2-5 yrs

(Reuters) - Uganda has received interest from Asian and European firms for its first oil refinery, to be built in public-private partnership in two-to-five years, the African nation's minister of state for energy said on Wednesday.

Iran resumes Turkey exports

Iran resumed gas exports to Turkey today after a 10-day halt due to repairs being carried out on export infrastructure.

Gridlock on Chinese Highways Sends Coal to Four-Month High

China is driving up world coal prices as clogged roads and railways from Beijing to Tibet restrict deliveries in the world’s fastest-growing major economy while the country tries to build stockpiles ahead of winter.

Pirates abandon hijacked ship off Tanzania's coast after crew locks itself in safe room

NAIROBI, Kenya - The European Union Naval Force says that pirates have abandoned a French-flagged ship they had attacked.

The EU Naval Force said Wednesday that the pirates couldn't get control of the Maido because the crew had locked itself in a safe room. The attack took place Tuesday about 100 miles (160 kilometres) east of Tanzania.

E.ON to Take $3.6 Billion Charge After Acquisitions as Power Demand Slides

E.ON AG, the German utility that bought French, Spanish and Italian power plants in 2008, said it took a 2.6 billion-euro ($3.6 billion) charge to reflect lower asset values as electricity demand trails expectations.

Back-to-Back Drives in the Chevrolet Volt and Nissan Leaf

The Nissan Leaf and Chevrolet Volt take different approaches to environmentally friendly motoring, and they look about as dissimilar as Laurel and Hardy. But how do they compare on the road? While Nissan and Chevrolet have recently allowed some journalists to drive their vehicles at separate events, I had the opportunity last week for a rare back-to-back turn at the wheel.

WTW: the watchword for fleets of the future

The future looks bleak for the humble motor car.

With an estimated three-quarters of a billion cars on the planet, that might sound like a strange thing to say. But take a look around and you begin to see the problems facing the automotive industry.

Masdar: ‘No silver bullet’ for problems facing cleantech city

Masdar City was meant to be the world’s first carbon neutral city. Based in Abu Dhabi, its creators envisioned a glittering city in the desert, entirely self-powered, and after the initial building stage, having no net effect on the world’s carbon emissions.

But the plans have taken a major knock in the last 18 months. Lending for real estate dried up in the wake of the Dubai financial crisis, companies proved reluctant to move in to the new commercial space and the developers quickly realised their initial plans for the energy mix were too ambitious.

President Obama and business: What went wrong

Nothing has been "nationalized." Unions have been kicked to the curb on the Employee Free Choice Act. Google's $60 billion tax loophole and all the others -- still in place. The health-care reform, heavily modeled on that of Massachusetts Gov. Mitt Romney's work, is a big boost to insurers. The sweetheart deal in Medicare Part D for big pharma remains untouched. Much of the stim was taken up by tax cuts. George W. Bush at least talked about peak oil; not Mr. Obama.

Aerotropolis doomed by changing world economy

The problem, however, is the unjustified assumption underlying their enthusiasm that all else in the world will remain equal. The energy crisis is the reason it won’t.

Every aspect of life in modern, industrialized civilization is backed by cheap oil, which is now known to be depleting globally. As the reserves of cheap oil decline, we’re turning increasingly to unconventional oil, which is expensive because it is hard to discover, extract and process. Tight supplies and shortages will boost the price sky high.

Electromagnetic pulse impact far and wide

The sky erupts. Cities darken, food spoils and homes fall silent. Civilization collapses.

End-of-the-world novel? A video game? Or could such a scenario loom in America's future?

There is talk of catastrophe ahead, depending on whom you believe, because of the threat of an electromagnetic pulse triggered by either a supersized solar storm or terrorist A-bomb, both capable of disabling the electric grid that powers modern life.

FedEx Inaugurates New Solar-Powered Hub at Cologne Bonn Airport

The hub in Cologne is one of the most modern FedEx hubs in the world. Its fully-automated sorting system can process up to 18,000 packages and documents per hour. The roof features the largest FedEx Express solar power installation worldwide and represents one of the largest rooftop solar installations in North Rhine-Westphalia, with an area of 16,000 square meters, producing about 800,000 kilowatt hours per year.

UK awards one of top world tidal power projects

(Reuters) - Britain has awarded one of the world's largest planned tidal power projects to a consortium of utility International Power, Morgan Stanley and tidal technology firm Atlantis Resources Corporation.

China Has 170 Gigawatt Wind Power Project Pipeline, Consultant MAKE Says

China has a total wind turbine project pipeline of more than 170 gigawatts in different stages of development, MAKE Consulting said in a report.

The Chinese market will grow by a compound annual growth rate of 17 percent between 2010 and 2015 and will account for some 38 percent of the global wind power market in five years, the Hoejbjerg, Denmark-based industry consultant said in a note on its website today.

Kimberly-Clark rolls out tube-free Scott toilet paper

The 17 billion toilet paper tubes produced annually in the USA account for 160 million pounds of trash, according to Kimberly-Clark estimates, and could stretch more than a million miles placed end-to-end. That's from here to the moon and back — twice. Most consumers toss, rather than recycle, used tubes, says Doug Daniels, brand manager at Kimberly-Clark. "We found a way to bring innovation to a category as mature as bath tissue," he says.

China Hydropower Dams in Mekong River Give Shocks to 60 Million

The Mekong and its tributaries provide food, water and transportation to about 60 million people in Cambodia, Laos, Thailand and Vietnam. Their livelihood is now threatened as their governments turn to hydroelectric dams along the river to generate power and create revenue.

China, hungry for electricity to fuel its breakneck growth, has already built four hydropower dams on the Mekong, completing the first one in 1993 without consulting its downstream neighbors.

...“What the Chinese are doing shows a selfish lack of concern for the serious damage their dams will ultimately do to the downstream countries,” Osborne says.

Japan to give 2 billion dollars to grease wheels at stalled biodiversity summit

Japan will provide 2 billion U.S. dollars over three years to assist developing nations tackle issues of biodiversity erosion, Prime Minister Naoto Kan announced to delegates from more than 190 countries Wednesday at a UN biodiversity summit.

LNG boom will double WA emissions: Greens

The Australian Greens want all new liquefied natural gas (LNG) plants forced to sequester their greenhouse gas, claiming coal and gas projects proposed for Western Australia alone could almost double the state's annual emissions.

Greens senator Scott Ludlam on Wednesday released his calculations of the emissions from new LNG plants and coal power stations proposed for his home state to 2016, as well as two big emitting iron ore projects.

Japan 'won't abandon' Kyoto climate treaty

Koreans are working very hard to sell our cell phones and cars and so on and we try to make the money. But we have to spend more than US$140 billion per year to buy energy. And 97 per cent of our energy comes from abroad, including your country. And our fossil fuel dependency is more than 80 per cent. So that's the Korean situation and how to overcome this, that's our immediate concern and our agenda.

Global warming issue may determine key races in Virginia

GOP congressional candidates have questioned proposals to curb climate change. Polls suggest several House races may turn on whether the incumbent voted for the 'cap and trade' bill in 2009.

Educators take aim at climate change

As a group that is traditionally politically conservative and somewhat suspicious of big government, hunters and anglers in the United States seem an unusual choice for conveying a message about the need for climate-change regulation. And yet it was precisely this group that the US National Wildlife Federation (NWF) began courting — with considerable success — in its drive for national climate legislation in 2007.

Arctic shipping will hasten ice melt, study says

Global shipping firms are not only taking advantage of melting ice in the Arctic Ocean — they're actually helping to drive the meltdown that continues to unlock sea routes across the top of the world.

And as a rapidly warming Arctic encourages more ship traffic through Canada's Northwest Passage and along other polar routes, the sooty emissions from passing freighters will significantly accelerate climate change in the region, according to a new Canadian-American study that, for the first time, predicts the potential impact of engine exhaust particles on the Arctic environment.

Link up top: Alaska's untapped oil reserves estimate lowered by about 90 percent

The group estimates about 896 million barrels of such oil are in the reserve, about 90 percent less than a 2002 estimate of 10.6 billion barrels.

This is the biggest news to come out of the US oil patch in decades. This is real “reserve shrinkage”. They drilled and found it was mostly gas, not oil. But even the gas was much less than they originally thought, 8 trillion cubic feet less, 61 trillion cubic feet rather than 69 trillion cubic feet.

This is only the National Petroleum Reserve, not ANWR. But since there is hardly any oil left in the reserve, there will be a new push to open ANWR in order to keep the pipeline running.

A great map of the National Petroleum Reserve can be found here: Update on National Petroleum Reserve in Alaska (6-13-02)

As stated, this article is from 2002. However there are some great graphs on this page showing how much oil they expected in the National Petroleum Reserve back then. They thought there was 6.673 billion barrels in the NPR and 5.724 billion barrels in ANWR in 2002.

The new assessment estimates that there is between 5.9 and 13.2 billion barrels of undiscovered, technically recoverable oil within NPRA. It suggests that the majority of these petroleum plays will be in the northern section and in moderate sized accumulations. "Over a range of market prices between $22 and $30 per barrel, between 1.3 and 5.6 billion barrles of oil are estimated to be economically recoverable, on the basis of the mean estimate of technically recoverable oil volumes."

As you can see the higher estimate quoted above is because of the higher price of oil. They figured, I suppose, that $80 a barrel oil would increase the recoverable reserves to 10.6 billion barrels.

Ron P.

Imagine if the news was the other direction: "Alaska proven to contain 10 times previous estimates of recoverable oil". People would argue that this PROVES peak oil concepts "wrong". Drill, baby drill.

But, the news is: Alaska only has 10% of what we thought was there. We forgot to carry the 2 or something. 90% of those reserves, gone, poof. The reactions is pretty ho-hum it seems.

I believe some claimed Peak Oil was Hockum due to the increased reserves in Alaska.

Now the trick is to find those claims and ask the people making the claim if, with the data change, their position is still true.

Are the estimates for ANWR any better than those for the National Petroleum Reserve? Should we be expecting a 90% downgrade in the ANWR reserves one of these days too, or has it actually been drilled enough to say with a reasonable degree of certainty what is there?

There has been no drilling in ANWR but seismic data has been collected. There was drilling just off shore of ANWR but none in recent years. The wells drilled just outside ANWR is depicted on a JPG on this page:
Arctic National Wildlife Refuge, 1002 Area, Petroleum Assessment, 1998, Including Economic Analysis<.a>

And a more detailed report from the USGS, still dating from 1998, can be found here:

Arctic National Wildlife Refuge, 1002 Area, Petroleum Assessment, 1998, Including Economic Analysis

Remember these are the same folks who overestimated reserves in the National Petroleum Reserve by 90 percent. It appears that the USGS has been extremely optimistic with their reserve guesses. I expect that there is much less oil in ANWR than their original estimate.

Ron P.

I agree.
This is very big blow to USGS credibility (and to the Alaska economy--no more checks coming).

Total NPR oil plus gas boe reserve estimate is down 50% to 11 Gboe.
The entire Alaska Arctic undiscovered resource was estimated at 73 Gboe in 2008.

This could be the death of socialism in Alaska.

One ANWR exploratory well was drilled in 1987, the KIC: ANWR Oil and Gas Issues. Exxon cut a deal with First Nations peoples. It's a "tight hole," meaning info is classified; draw your own conclusions. I'm sure Lindsay Williams would tell you it's nigh unto bursting with Texas T.

As I mentioned in my Drumbeat post yesterday (http://www.theoildrum.com/node/7073/735916) many industry observers felt that the 2002 estimate was too high. More than anything, the downgrading of the NPRA estimate points out the difficulty of making this kind of prediction ahead of the drill bit. Geology is always complex, and the N Slope (because of it's tectonic history) is somewhat more complex than most areas. Even a modest amount of new drilling can change an estimate dramatically. Regarding the ANWR vs NPRA estimates, there was actually more data available for NPRA than there is for ANWR. Therefore I would expect even more uncertainty for ANWR. Note that "uncertainty" can work both ways.

It is worth looking at methodology used in these reports. See the pdf of Chapter AO "Assessment Overview" of the complete The Oil and Gas Resource Potential of the Arctic National Wildlife Refuge 1002 Area. The bottom line, in my opinion, is that these reports are at best an educated guess of what could be there. We don't know until we drill what is actually there.

I agree with Alaska geo.

Understanding uncertainty is critical in this arena, and yet it is still done incredibly badly even in most oil companies let alone the usgs. I'm not talking about finessing the decimal points, I'm talking about a basic recognition of how wide the uncertainty ranges really are on the key parameters. Anchor bias is very common. I've seen many cases where field evaluations carried out by different teams result in p90 to p10 ranges for a field resource that don't even overlap. 

Even for a properly appraised discovery covered by 3D seismic, the p90 to p10 range for UR is typically +/- 30 to 50% of the mid case, or more.

For a reasonable sized find with a single crestal discovery well, the range can be wider still. 

For an undrilled prospect mapped on 3d in a mature basin, many of the points on the distribution will be failure cases due  often (for example) to perceived risks in trap configuration, and without well control volumetric ranges for success case outcomes are very wide.

For a host of hastily mapped leads on 2d or poor 3d seismic in an immature or undrilled province where uncertainties in source rock and reservoir presence, timing, migration and access to charge, trap and seal effectiveness all add to the mix, the ranges are truly colossal. 

Proper consideration also has to be paid to dependencies; ranges in portfolio analyses such as these are often narrowed unrealistically due to the assumption of too much independence between the leads (low cases tend to cancel with high cases so that there are many more ways of reaching a mid range number).

The report linked by al-geo on the alaskan arctic is a classic example. The tech. rec. resource range quoted in 1998 was p95 = 4.3Bstb, mean = 7.7 Bstb, p5 = 11.8 Bstb. This range is LUDICROUSLY narrow, as evidenced by the fact that the new mean is less than a quarter of the old p95. The report is in other words not worth the paper it is printed on. 

We just finished a multi well campaign in a moderately frontier area which has resulted in a current mid case resource base which is less than a fifth of the pre-drill estimate on which the block bid was made. Such is life in the oil industry. 

This why the analysis of Dispersive Discovery works so well. It uses this uncertainty to advantage and you get a very good picture of global depletion.

I'm thinking that "we really have only 10% of that" applied to the stated figures on Global Reserves would yield a number lots closer to the actual truth of it...

Well I really don't think they are overestimated by that much. But I do think most OPEC reserves are overestimated by approximately the same amount Kuwait's reserves were overestimated before their recent upgrade. Their proven reserves are overestimated by about 75 to 80 percent and their proven plus possible reserves were overestimated by about 50 percent as reported here:

Oil Reserves Accounting: The Case Of Kuwait (From Petroleum Intelligence Weekly)

They recently upgraded their reserves by 24 percent and that makes their reserve claims even more ridiculous.

As for non-OPEC reserves I really don't have a clue. But if we must rely on the USGS's estimates then I would say they are overestimated as well, but not quite to the extent of OPEC reserves.

Ron P.

It is a great story to illustrate how out of touch the media is- this morning on the news i thought they were discussing a big new discovery, but no, it is a downward revision. They might as well have just yawned and said, "in our next story a 12 year old girl gives birth to an 8 year old boy!"

re: Alaska's untapped oil reserves estimate lowered by about 90 percent

This is what I expected based on my experience. I worked for a company that spent billions drilling the Canadian side of the Arctic during the 70's and 80's, and we found the same thing. Decent amounts of gas but not nearly as much oil as you would expect based on results in other oil-producing areas.

It was a learning experience and cost a lot of people people their jobs as well as their retirement savings, plus adding a lot of money to the average Canadian tax bill (the Canadian government subsidized our efforts to the tune of $1.25 in tax breaks for each $1.00 we spent).

I always had a gut feeling that the US side of the Arctic would be similar, and this latest announcement confirms it. The Russian side of the Arctic looks similar. I strongly suspect that other Arctic exploration programs will have the same results: Fairly large amounts of gas but not much oil.


Do you have any ideas as to why that might be? (lots of gas, not so much oil)

sg - I'll jump in for RMG since he hasn't been able to answer yet. The nature of the original organic material and the specific thermal history of an area has the biggest influence with regards to hydrocabon generation. Secondary, the timing of the trapping features is also important. Sometimes if the traps aren't in place the oil/NG will leak all the way to the surface. Far from my experiences so I have to leave the answer in such generalities.

How consistent are the time spans that oil/gas can remain confined by geological traps? I could imagine that the propensity to escape upwards might differ between the liquid and gas phases. Assuming semipermeable caps, I would think the gas would be lost quicker. What is your experience?

@ EOS,

I'm sure that ROCKMAN will post a reply soon, but here's my two cents' worth for your question. An earlier comment today by Alaska_geo was "Geology is always complex, and the N Slope (because of it's tectonic history) is somewhat more complex than most areas. Even a modest amount of new drilling can change an estimate dramatically." The "geology is complex" is a key part of that comment, and your question about traps is directly about geology. I'll let someone else address your question about whether gas is lost faster than oil, but I'll speak to your assumption about semipermeable caps.

The best caps/seals are much tighter than semipermeable. Many of the great reservoirs in the Middle East are capped by thick beds of anhydrite (CaSO4), an evaporite mineral that behaves somewhat plasticly at depth, and which is an almost ideal cap or seal because fractures are closed up by the ductile behavior of the rock, unlike many shales for example, which deform more brittlely and thus fractures, even though very small, can provide conduits for hydrocarbons to escape upward over time.

OK, so what does that mean about time spans that traps can be effective at holding hydrocarbons?

In the best of circumstances, here's a potential scenario in which the trap could exist and be stable for maybe 300 million years or more:

The trap would form, hydrocarbons would be generated in strata below the elevation of the trap and then over time would migrate upward and/or laterally into the trap.

A ductile seal like anhydrite would serve as the cap (which BTW serves two purposes; to keep the hydrocarbons from migrating to the surface, AND to keep microbes and surface fluids from migrating downward and munching on the hydrocarbons and consuming them before Homo sapiens can extract them and consume them ourselves).

There would be no further tectonic activity in the region for hundreds of millions of years (not unreasonable for vast areas of the continents today), and the hydrocarbons would then just reside at depth in the trap, out of reach of hydrocarbon eating microbes, and unable to migrate upwards through the nearly impervious seal. That's the ideal. Other TODers like ROCKMAN will no doubt have additional thoughts on such a scenario.

A less than ideal situation would involve some combination of the factors that I excluded. Maybe it's a very shallow reservoir. That might be OK, but chances are that the viscosity will increase over time as the volatiles diffuse upward, and that's how the tar sands of Alberta and the Orinoco formed. Or there's a leaky seal, which is very common, and even though the rate of upward migration is VERY slow, there is still upward migration nonetheless, so the hydrocarbons might slowly leak away over maybe 80-100 million years, more or less. Or tectonic activity increases, and structural deformation of the region results in fracturing, and then folding and faulting of the strata, which can lead to more rapid loss of hydrocarbons, or can turn petroleum into gas if the temperatures start to creep up in the reservoir.

Geologic situations that are less ideal than this are far too common to cover in a couple of sentences, but it's safe to say that far more sedimentary basins of the world fall into the "what might've been" or the "shoulda, woulda, coulda" in terms of hydrocarbon systems than the few that have produced hydrocarbons over the past 150 years or so. Many areas are studied at length by us geotypes, and maybe everything looks good, but when the actual drilling begins, and actual rock samples are brought back to the surface in the drill stem as core, maybe we discover that, yep, it sure looked promising but we missed a fracture zone because seismic isn't able to resolve the fractures, or something like that.

I'll stop there, as I've got an 8 am meeting to attend.

EOS - Petro and others have offered some good detailed answers so I'll just toss out a general impression. Folks I know who study basin wide hydrocarbon generation tend to feel that the vast majority of oil/NG every generated did not find its way to the trap but eventually leaked to the surface. As pointed out not only do you need to have the trap formed by migration time it has to be maintained onCe the oil/NG has been trapped. Our folks with Rocky Mountai experince could no doubt go on for hours about "breached" anticline structures in their part of the world that leaked many billions of bbls of oil when the traps were unplifted and eroded. Likewise Gulf Coast folks can talk about oil reservoirs that were burined so deep in S. La. that the oil was cracked to NG as a result of the high temperatures. .

As to whether oil or NG is trapped easier its a rather complex issue. It has much to do with the pressures and rock integrity. The hydrocarbon density has some impact but other variables, such as the height of the hrydrocarbon column, have more control.

Tectonic activity in the past has fractured most of the reservoirs, allowing the contents to escape. In addition, the temperature in most of the remaining oil formations has gone too high in the past, resulting in most of the oil being converted to natural gas by thermal cracking.

It's quite different from the Gulf of Mexico, where there hasn't been as much tectonic activity, in addition to which the GOM has been unusually cold, allowing oil to survive at much greater depths than you would normally expect.

The Arctic is a rather large place. I would be careful about using information from a small subset to make sweeping generalizations about the entire area.

The Russian side of the Arctic looks similar.

What aspects of the Russian side look similar to you? Could you be more specific?

The Arctic Ocean area as a whole is too old and has experienced too much tectonic activity in the past. The geology is very complex and the formations have been buried too deep and are too leaky to have retained any significant mount of oil.

You have to put this in context, though. In the Canadian sector we and our competitors probably found 2 billion barrels of oil. Given the high costs in the Arctic, that's not enough oil to justify putting in the facilities to produce it. In order for a field to be economic, it has to be absolutely huge to pay for the development costs and the cost of a pipeline out. Prudhoe Bay is absolutely huge, but it appears to be anomalous, and if there was another like it, it likely would have been found by now.

All the likely prospects in the Canadian sector of the Arctic Ocean have been drilled. Companies ran out of prospects before they ran out of money. The Russian sector probably has most of the remaining good prospects, but the Russian sector is well known to be highly gas prone. The American sector isn't that big, and I don't know any reason to expect it to be any different than the Canadian or Russian sectors.


Not trying to pick a fight here, but I think you are grossly over generalizing things, and making some very sketchy assumptions based on limited data.

"I always had a gut feeling that the US side of the Arctic would be similar, and this latest announcement confirms it. The Russian side of the Arctic looks similar. I strongly suspect that other Arctic exploration programs will have the same results..."

I'm glad your gut is so foolproof, but you might want to look at the basic geography of the Arctic before assuming that anything in Alaska or Canada necessarily tells you much about what may or may not be over on the Russian side. That is equivelent to using geologic data from the Canadian Sable Island play to draw conclusions about the North Sea. A bit of a stretch, in other words. It doesn't "confirm" anything.

The Canadian Arctic shares some similarities with the the Alaska side, but there are some big differences as well. The currently most popular theory of the evolution of Arctic Alaska is that it was attached to the Canadian Arctic, but then rifted away and rotated to the west in the Jurassic/early Cretaceous. This is sometimes refered to as the "windshield wiper" theory. And even that theory is not entirely accepted. Some people want to do a double rifting event rotating in two directions (the "saloon door" theory). The evolution of the rest of Arctic Ocean, including the Russian side, is even less well understood. Partly this is because even the basic bathymetry of the Arctic has not, unitl recently, been well mapped. There are a number of competing theories, mostly involving some combination of rifting and strike slip movement, to explain the Russian side, and how it connects to the Chukchi Sea.

This is just a very brief synopsis of the basic tectonic story. The source rock, reservoir, and migration history is also complex. There is currently a lot of active research going on on these topics, so stay tuned. But the bottom line is that it is very presumptuous to assume that the presence of gas in NPRA says anything at all about oil or gas on the Russian side, no matter what your gut says. It just isn't that simple of a story.

"The Arctic Ocean area as a whole is too old and has experienced too much tectonic activity in the past...."

As I noted above, the "Canada Basin" (the Arctic Ocean between Canada and Alaska) is Jurassic in age. This is very roughly about the same age as the Louann Salt in the Gulf of Mexico. Not "too old" in other words.

"All the likely prospects in the Canadian sector of the Arctic Ocean have been drilled. Companies ran out of prospects before they ran out of money.",

As you are no doubt aware, there is currently an active exploration program going on in the Canadian Beaufort. See Imperial-Exxon, BP form JV for Canadian Beaufort exploration . Apparently these guys don't think they have run out of prospects. Note that "EL 449 was acquired two years ago by BP for a startling work commitment of C$1.18 billion, while EL 446 was secured by Imperial and ExxonMobil a year earlier for a pledge of C$585 million." Apparently they think there is enough potential to invest some serious money.

Please note that I am NOT suggesting this means the Arctic will solve PO, and let us continue BAU. However, it does mean that it is seriously wrong to assume that downgrading NPRA means Jack S**t about what may or may not be found on the Russian side of the Arctic Ocean.

If you want to get further into any of the geology of the Arctic Ocean, I can supply you with some references for further study.

I realize I'm overgeneralizing, because I don't really know much about the American sector of the Arctic. My main disagreement is with the USGS whose reserve estimates seem to be based on hallucinations. Well, I think it's more likely politics, but the net effect is the same.

My disagreement with the USGS is rather basic. I know that the Canadian and Russian sectors (which is most of the Arctic) are gas-prone and deficient in oil. Why would they expect the rest of the Arctic to be any different? For some reason they seem to expect to stumble over another Prudhoe Bay oil field in every region that hasn't been drilled yet, and I don't think that's realistic. More likely, the areas that have not been drilled will resemble the regions that have been drilled, which is to say they will be gas prone and oil deficient.

Other than that I think the methodologies the USGS uses are just plain weird, and produce results that are much too optimistic. The reduction of the NPRA reserves by 90% when they actually explore it is one of the results of this skewing of their estimates toward the high end of what is possible. There is no real reason to expect to find another Prudhoe Bay in Alaska. If there was one, it would already have been found.

But the bottom line is that it is very presumptuous to assume that the presence of gas in NPRA says anything at all about oil or gas on the Russian side

You have to understand that I am not doing that. I am reasoning from what has been found in the Russian sector and extrapolating to what will be found in the American sector. We Canadians do talk to the Russians from time to time, although our memory is often hazy because vodka may be involved. Suffice it to say that there is lots of gas in the Russian sector, although it is difficult to get it to market. However, there is less oil than they would like to see, and getting it to market is something of a challenge, too. The obvious market is China, but the Russians and Chinese don't get along very well.

As you are no doubt aware, there is currently an active exploration program going on in the Canadian Beaufort. See Imperial-Exxon, BP form JV for Canadian Beaufort exploration . Apparently these guys don't think they have run out of prospects.

Well, Exxon and BP have run out of other prospects, so it no doubt looks attractive. Imperial is probably along for the ride because it is a subsidiary of Exxon and has the people in place to make it all happen.

They almost certainly will find gas, and there's a possibility of hitting a nice big oil find in the billion barrel range (companies already have found a billion barrels in the area). But I think there's essentially zero chance of finding 10 billion barrels, the size of Prudhoe Bay.

The economics are attractive. It's close to the Arctic Ocean port of Tuktoyaktuk and equipment can be moved there via the Dempster Hiqhway or barged down the MacKenzie River. If they build the MacKenzie gas pipeline they can move the gas to market. If they get a big oil find, they can barge the oil up the Mackenzie to Norman Wells (the river is 4 miles wide there), where Imperial has an old oil field (discovered in 1920, 300 million bbl recoverable, 75 million bbl remaining), and put it in the existing oil pipeline south to Alberta.

So, it would be easier than trying to find enough oil to keep the Trans-Alaska Pipeline open. There are advantages to working in the Canadian sector. But there are no Prudhoe Bays there because we would have found them already.

If you want to get further into any of the geology of the Arctic Ocean, I can supply you with some references for further study.

I wouldn't mind seeing them.


I realize I'm overgeneralizing....

That was the point of my response. In my opinion, there is way too much overgeneralization on TOD. These are complex issues, and overgeneralization from the PO side is just as bad as overslimplification by the BAU crowd. I wasn't trying to pick a fight with you.

My main disagreement is with the USGS whose reserve estimates seem to be based on hallucinations. Well, I think it's more likely politics, but the net effect is the same........Other than that I think the methodologies the USGS uses are just plain weird, and produce results that are much too optimistic.

At no point did I defend the USGS, other than to say that these kind of estimates are at best a guess. I also pointed out that many industry geos thought the USGS was over optimistic when their estimate first came out. My own veiw is that in using their "play" method they tend to greatly overstate the number of leads that could be traps. They need to greatly increase the risk factor on all their parameters. I think part of the problem is that they are not, for the most part, people who have actually drilled exploration wells for a living. Several of the USGS guys are friends of mine, they are good geologists but tend to be academics. Most explorationists have been burned enough times that it tends to make one appreciate the downside risks much more.

So, it would be easier than trying to find enough oil to keep the Trans-Alaska Pipeline open.

Any big oil discoveries in the Canadian Beaufort will take decades to develop. My own view is that we need to stretch out Alaskan production as long as possible. Let's make the fat tail as fat as possible to buy time for a transition to whatever follows PO. Obviously, since I work in Alaska, I also have a personal vested interest in this.

Does barging oil up the MacKenzie scale up enough to handle big volumes? I honestly don't know. As a personal note, during WW2 my father worked on the ALCAN Hwy project. He actually helped build the CANOL road that used to go towards Norman Wells. One of my big regrets is that I didn't pay more attention to the stories he told me about those days.

But there are no Prudhoe Bays there because we would have found them already.

I wouldn't make that assumption. From what little I've seen about it the Imperial-Exxon-BP guys are going a lot further offshore, into much deeper water than the last round of Canadian Beaufor exploration. We won't know what they find until they drill it.

When I get a chance I'll try to put together a list of some references. It might be awhile, as "To Do" list keeps getting bigger.


The USGS seems to be chronically overoptimistic. I realize that they are working with inadequate data, but even then a good guess should be low as often as it is high. If that is true, the errors will average out and the result should be in the right ballpark. Since all their estimates are too high, the sum of all their estimates is too high as well. Unfortunately, major government decisions are made on the basis of their estimates.

As you noted, part of the reason is that they are working for the government. If you work for a company and are always too optimistic, you will probably get fired eventually for losing too much money. In government there are few consequences for being wrong and you get to continue on making bad estimates until you retire and collect your government pension.

Any big oil discoveries in the Canadian Beaufort will take decades to develop. My own view is that we need to stretch out Alaskan production as long as possible. Let's make the fat tail as fat as possible to buy time for a transition to whatever follows PO. Obviously, since I work in Alaska, I also have a personal vested interest in this.

It's true that anything found in the Canadian Beaufort will take time to develop, but in the meantime the oil sands will continue to ramp up production. That's the transition for Canada. For Alaska and the rest of the US it's not as good. I'm retired so I'm putting my money on oil sands (and uranium and bus companies) because I don't want the exposure of frontier exploration.

Does barging oil up the MacKenzie scale up enough to handle big volumes?

If they had big volumes they would only barge it until they could put in a pipeline from Tuktoyaktuk to Norman Wells, from where the existing pipeline runs south. It would scale rather well because most of the infrastructure is already in place.

As a personal note, during WW2 my father worked on the ALCAN Hwy project. He actually helped build the CANOL road that used to go towards Norman Wells.

The CANOL project is rather interesting. It was and still is one of the biggest projects ever constructed in Northern Canada. It was started because the US was losing WWII after its fleet was sunk at Pearl Harbor and there was a real chance of the Japanese taking Alaska. The US needed a source of fuel for Alaska, and the Alaska Highway project, and the Japanese were torpedoing oil tankers. Imperial oil already had a big oil field at Norman Wells, Northwest Territories, so the US government built a pipeline from there to Whitehorse, Yukon and build an oil refinery there. It was insanely expensive because there was absolutely nothing but trees, water, and frozen ground between Normal Wells and Whitehorse. They had to build not only the pipeline but hundreds of miles of roads, telephone lines, and 10 aircraft landing strips.

The project was completed in 1944 and abandoned a year later because the war was over. Two years later, Imperial oil found the first really big oil field in Canada near Edmonton, so it bought the oil refinery from the US government for scrap value and moved it to Edmonton, marking the start of Edmonton as a major oil refining center. Most of the other equipment is still there, scattered along the old pipeline route.

The CANOL project is rather interesting. It was and still is one of the biggest projects ever constructed in Northern Canada. .....It was insanely expensive because there was absolutely nothing but trees, water, and frozen ground between Normal Wells and Whitehorse. They had to build not only the pipeline but hundreds of miles of roads, telephone lines, and 10 aircraft landing strips.

Beside the Army Engineers, they hired a big crew of civilians, like my dad. Mostly big strong farm boys from N. Dakota, Minnesota, & Wisconsin, who were willing to work outside in the cold. He started as a laborer, and ended up as a chainman on a survey crew for a telephone line along the CANOL route. It must have been an incredible experience. I remember some of his stories, but like most kids I was way too busy to pay attention to anything my dad said. Too late now, his personal stories are gone forever.

I strongly suspect that other Arctic exploration programs will have the same results: Fairly large amounts of gas but not much oil.

I was thinking the same thing earlier today after reading that article, and wondering if the Arctic region would all end up with lots of NG, but not much oil. If that is how the Arctic plays out I'm greatly relieved, because that is one of the last vestiges of reasonably undisturbed wildlife areas in the world. Oil may break down in the Gulf, but it won't very easily in frigid waters and it will get stuck under the ice.

Here's the big question though: Will it be worth drilling for NG in the Artic? Along with shale plays is that another indication that a great deal more transport will use NG to replace ever more expensive oil?

Prudhoe Bay had lots of oil.

Right, in 1985 Prudhoe Bay produced 1,825,000 barrels per day. For the first eight months of 2010 Prudhoe Bay produced 595,000 barrels per day. Obviously Prudhoe Bay is in steep decline. If the rest of the world had declined, and was still declining like Prudhoe Bay the world would be having a $hit fit.

So what's your point Consumer?

Ron P.

According to the Alaska Dept of Revenue, in August 2010, Prudhoe Bay produced 252,529 b/day and the "North Slope" produced 540,948 b/day. The rest of the North Slope production came from:

- contemporary and nearby Kuparuk, which started production in late 1981, peaked in 1992 at 322,000 b/day and is now 133,527 b/day.

- Alpine, first production 2000, was 89,810 b/day in September 2010. The balance was about 65,000 b/day from a variety of newer oil fields.


HOWEVER, the Dept of Revenue lumps Prudhoe Bay, Midnight Sun, Aurora, Polaris, Borealis and Orion together into one reporting unit. These satellite fields went into production

# Midnight Sun - production start date: 1998 - 5,500 b/day (all for August 2006)
# Aurora - production start date: 2000 - 9,000 b/day
# Orion - production start date: 2002 - 11,000 b/day
# Polaris - production start date: 1999 - 4,000 b/day
# Borealis - production start date: 2001 - 19,000 b/day


Also from the above BP Prudhoe Bay Fact Sheet - the field’s maximum rate was reached in 1979 at 1.5 million barrels per day. This rate was maintained until early 1989, and is
currently declining by 10% per year.

That is 48,500 b/day production from relatively young fields above Prudhoe Bay in 2006. SWAG, Prudhoe Bay per se is 205,000 to 210,000 b/day of the reported 252,529 b/day.

It appears that Prudhoe Bay, per se, is at 14% of peak production.


So what's your point Consumer?

His point was that the snap prediction that the whole arctic region would have little oil is not supported. That IMO is not the same thing as saying "we are saved" so lets go have a BAU forever party.


But the point remains Consumer, that you were dead wrong, Prudhoe does not have plenty of oil. As Alan pointed out above most of the oil from the Alaskan Arctic Regionn, what there is left of it, comes from satellite fields, not from Prudhoe Bay itself. Prudhoe Bay is damn near dry and the rest of the Arctic region is declining fast, very fast. Exactly where is that "plenty of oil located'?

Again, what's your point?

Ron P.

People were saying that drilling holes in the Arctic yielded much gas and not much oil, so they were extrapolating to say that areas in which holes hadn't been drilled in the Arctic would also yield much gas and not much oil. I provided a counter-example of a place in the Arctic in which drilling holes yielded a lot of oil. I said that Prudhoe HAD a lot of oil, not that it HAS a lot of oil.

Prudhoe Bay is damn near dry ....

Ahem...let's not over state this, shall we? Yes, Prudhoe is in steep decline. However, it is in decline from a very high place. Exact estimates vary somewhat, but most estimates for remaining economically recoverable oil in Prudhoe cluster around One Billion barrels, plus or minus. That is for Prudhoe itself, not counting Kuparuk, Alpine, or other satellite fields. I don't know about where you are from, but in my part of the oil patch, a billion barrels is hardly "damn near dry" . That billion bbls will not be easy or cheap to produce, but in the current price range of $70 to $80 oil, Prudhoe is still quite profitable. It will be producing significant (although declining) volumes for a good many years yet.

Northern Ghawar is dam near dry !

Compared to what it was, and compared to our dependency on it.

SWAG (since Aramco ain't talking) - 900,000 b/day from southern Ghawar (will last 50+ years at that rate) and 2.5 million b/day from the heavily exploited northern 2/3rds.


There are in fact huge amounts of natural gas in the Arctic, but the real problem is the cost of building pipelines to get it to market. A pipeline to bring gas from Alaska to the Lower 48 states would cost on the order of $25 billion. The growth in shale gas production in the Lower 48 states has pretty much wrecked the economics of such a pipeline. There's lots of much cheaper gas much closer to market.

An American Citizen’s Guide to an Oil-Free Economy

Chapter 1: Electrified and Improved Railroads

by Alan Drake

is up on the Energy Bulletin now (as well as ASPO-USA)

Slightly expanded (Bart asked for a list of next chapters)


Best Hopes for the Power of Good Ideas,


Alan, you wrote at the end of the foreword:

"In Aesop’s fable, the Ant worked to prepare for the coming winter while the Grasshopper lived for the day, consuming as much as he could and leaving the future to take care of itself. The grasshopper would react and “do something” when cold weather and food shortages were a reality, but not before. The USA of today is much like the Grasshopper"

But I see no mention of food production in your chapter heads. Is this because you are assuming that tackling transportation issues, and other chemicals, make that unnecessary?



But I see no mention of food production in your chapter heads.

Transporting food "and essential materials" are mentioned several times as strategic goals.

Actually growing food (other than indirectly by transporting essential materials) is beyond the scope of the paper.

In my mind, there will always be a need for long distance movement of food (preferably sustainably). Repeated crop failures (nature + Climate Change) will deplete local resources and it will be famine or importing food.


SHANGHAI/HANGZHOU, Oct. 26 (Xinhua) -- High-speed trains began traveling between the eastern Chinese cities of Shanghai and Hangzhou Tuesday morning, the latest milestone in China's effort to build the world's fastest rail network.

Two bullet trains equipped with China's CRH380A system simultaneously took off at 9:00 a.m. Tuesday from Shanghai's Hongqiao Station and from Hangzhou Station.

Trains on the line will travel at an average speed of 350 kilometers per hour, shortening the trip between to 45 minutes from 78 minutes.

After 20 months of construction, the 202-km high-speed railway linking Shanghai, China's economic hub, and Hangzhou, capital of east China's Zhejiang Province, extends the nation's in-service high-speed rail network to 7,431 kilometers.

Earlier last month, the Shanghai-Hangzhou high-speed line stunned the world when in a trial run, a train hit a speed of 416.6 kilometers per hour, a world train speed record.


I see the Amtrak come through my town sometimes.

I don't understand why there's so much oposition to building high-speed rail in North America. In my opinion, it would be money much better spent than bailling out home owners, auto manufacturers, or banks.

They'd rather spend the money on defense building F-22 Raptors (187) that will never see battle and cost $65 billion or the F-35 which the US wants 2,443 aircraft at a cost of $323 billion... We could probably cover the whole US with high speed track at the cost of just those 2 programs and put the masses to work.

The opposition to high speed rail is due to past errors in cost control (and the same could be said for the military spending which is not a reason for comparing it to high speed rail). The military has different goals and objectives and the two cost items are best considered separately. The only real link is how big we want the federal debt to be.

I do not begrudge the military a few weapons systems, they do need to be restrained to the real world, which is to say that their priorities need to be changed, but I believe that this is already realized. (How many raptors are they buying? Is this the same as what they asked for?)

As far as rail, be it high speed or otherwise, we do need it and we need to electrify freight rail as well; something about electrical energy being around longer when oil becomes scarce. The problem I see with all light rail systems is one of right of way. Existing freight right of way can be used, but freight transport needs to remain viable as well. The railways were not designed to handle both. I also do not see the need to drive rail speeds beyond a reasonable travel time. Rail passengers can enjoy many luxuries on the trip that should make the trip time not so big a deal. Trains do not really need to compete with air travel because we will see air travel become increasingly expensive as liquid fuels become a problem. I am all for the electric train system – start soon and be steady.

Whatever you spend money on develops a constituency. TBTB don't want constituencies developing for social programs -- much better to spend money on sheer waste, so it's all profit and no responsibility. The military programs are spread out so that many localities have a stake in continuing them. But no social movements are supported with such spending.

I've never been convinced that high speed rail (faster than 120mph) is a good investment. Consider the embodied energy in the system, versus the likely traffic that uses it. Then, what is the operational energy cost. Rail, dome to western luxury standards just doesn't cary very many passengers per ton of train. If we packed rail cars with people like they do in India, then the passenger-miles per BTU can be really high. But, stuff like sleeper, and dining cars preclude high passenger density, and the way drag scales with speed, means high speed rail won't be very energy efficient (even if it doesn't need liquid fuels).

A key is to use the right technologies for the right jobs. We need rail to displace overthe road freight transport. And we need an expansion of electrified routes. Perhaps commuter rail makes sense. But, that would be because it sacrifices rider comfort for density. Unless/until we are willing to do that for longdistance passenger train, its just not a good use of resources.

Since highspeed rail has different track requirements, (grade, turns,etc.) it requires all new infrastucture. Another layer of complexity? Useful as a replacement for air in regional travel, it will still take days instead of hours to go coast to coast.

It occurs to me that someday I may feel lucky to hop a ride in an old boxcar to visit family, one state over.

It seems that people also forget that the energy of high speed rail increases as the square of the speed, and the costs would appear to increase exponentially.

So we then have a fast, but very expensive system, for who? If it must recover its cost through fares (like airlines do) it will be so expensive very few can use it. If it is subsidised, it will be less expensive, but those who can;t afford it or have no need to travel, are subsidising those who do use it.

Is people's time really that valuable to be worth $23bn for a LA to SF fast train? If we assume that in the future we won't have the oil for air travel, then we should also get used to travelling less, and slower. How many thousands of miles of medium seed rail can be done for $23bn?

What is really needed for intercity travel (<400 miles) is a medium speed (100mph) train that runs frequently and efficiently - it will be much more affordable. If you are on business, the train is your office, and you ar more productive than on plane or car. if you are travelling for leisure, is your time that important? if you are going much further than 400 miles, the plane will start to look a better option.

There is a reason we don;t all drive Ferraris - they are very expensive. High speed rail is train version of a Ferrari, except that the government is buying it - that still does not make it a good investment.

If it must recover its cost through fares (like airlines do)

Many airline costs, like the terminal and its land, are bore by the locals, not the airlines.

Not always - all airports charge landing fees to the airlines. Some airports have low fees to attract floights and others (London Heathrow, New York JFK, etc) can charge high fees, becaue they are preferred, or (Toronto Pearson) only destinations.

Of course, airports still get their own breaks - often exempt from property taxes, etc, the land gifted and so on, but not always the case, and many airport expansions need to then buy the neighboring land that now has much higher value because of the airport.

In the US, the cost of building airports is largely born by the federal government. If not for government support, air travel would never have gotten off the ground.

Arlo Guthrie/City Of New Orleans/Boston Pops


We need rail to displace overthe road freight transport. And we need an expansion of electrified routes. Perhaps commuter rail makes sense. But, that would be because it sacrifices rider comfort for density. Unless/until we are willing to do that for longdistance passenger train, its just not a good use of resources.

While displacing over the road fright transport is a good thing, commuter rail is what makes the most sense of all.

LA has multiple six lane (each way) freeways all over the place, and they are all packed. There are really only two highways (I-5 and 99) to SF, which are a total of eight lanes. Yes, a better train service (passenger and freight) between the cities will remove a good portion of that traffic, but it is a drop in the bucket compared to the vehicle miles each day in LA and the Bay area.

Commuter rail, done properly, will get more passengers per $/mile/train and take more cars off the road, save more people more time each day, improve city air, reduce traffic accidents, improve neighbourhoods through TOD etc etc - and save much more oil!

Inter city rail is great, and I am a supporter of such, but efficient transport between inefficient cities is not solving the problem.

But we have some really nice McMansions.

West Texas-

They have those too:

Image and video hosting by TinyPic

Lovely development. Energy efficiency is obvious, as the houses are 2 story and there are solar thermal collectors on top of many of the roofs. There are no swimming pools in view (yet). They do use more land than necessary, but, that's what you get with money. Must be some of those US educated technology types...

E. Swanson

No sidewalks and fences right up to the curb line, while the provision of striping in the street sends a message that "this street is for cars." Not very walk friendly.

Chinese development seems to be very schizophrenic: massive investment in HSR and subways, but also freeways and sprawled subdivisions.

I don't see how they could have looked at American cities with their clogged freeways and said "we want that!" So much for Ancient Chinese Wisdom I guess.

Chinese development seems to be very schizophrenic

Seems to be, but not is. How do you get a developing country with a population 4 times that of the U.S. on the move ?
With building out everything that there is to find.

So what does China do with all its freeways and cars when they are no longer viable? Rail is a much more intelligent and affordable solution compared to freeways, so your argument does not fly.

Rail is a much more intelligent and affordable solution compared to freeways, so your argument does not fly.

My comment was about people's choice how to move, not about the best solution. Now imagine the amount of people in China buying their first car. Holland has a population of 16 million, a lot of trains but also a lot of traffic jams. Rail doesn't prevent people from buying cars, people do what they like, intelligent or not. Should because of PO 10% of the cardrivers in Holland decide to take the train then the amount of trains has to be doubled or the people would be packed in the trains like in India or Japan.

My first thought when I looked at that was: How do they get anywhere without a car?!

No cars, no gardens, no bikes, no people. Does anyone even live there?

Probably not simkin - just a propoganda shot extolling the wonders of communistic capitalism (or capitalistic communism)...

The actual people probably live in the slums on the other side of town.

Fits right in with those gigantic ghost malls that are bigger than any other in the world yet have about 10% occupancy.

I spotted one car parked in a driveway to the left of the center of the photo. Since the yards of two of the houses on the right are not landscaped, I think this is a photo of a new housing development.

Those wierd curbs cast a very long shadow...

Regarding the building of the railway, it seems almost incredible to me that they can build that entire link in under two years. We need some of that "can-do" here.

One group sees it as a way to remove them from their cars. Not that such a message will be said.

Another sees it as 'I have my car - I don't want to see my tax money spent on this' - aka a government boondoggle.

A 3rd has documents like Agenda 21 and claim its part of that plan.

A smaller 4th see it as an attempt to de-populate the rural areas and move everyone into the cities.

Each make noise - and what you hear is that noise.

bailling out home owners, auto manufacturers, or banks.

Bailing out homeowners? Not a chance. What makes you think one dime's been spent for the HOMEOWNERS?

As it is, the homeowners will get it in the shorts when the IRS removes the deductibility of interest paid on the home loan.

Where I'm from the environmentalists - a large voting block - opposes all rail projects because they fear it will encourage 'growth'. We've got a perfect railroad corridor alongside a crowded freeway, and really no hope for a train.

Just where is that ?

Portland Oregon is fairly "green" and very pro-rail.

Likewise Vancouver BC.


It's the Hwy 101 corridor from Sonoma County (Santa Rosa, Petaluma) thru Marin, then crossing the GG Bridge into San Francisco. There's a Ferry terminal right along the old tracks, along the way to SF, in Larkspur.

Perhaps Aangel or Hightrekker or other folks could further illuminate?

Marin is 'sort of green'. Folks want their mansions and their open space. And they don't want other folks moving in.

What part of Sonoma County do you live in?

from: http://www.sonomamarintrain.org/

The Sonoma-Marin Area Rail Transit District – SMART – will build a 70-mile passenger railroad and parallel bicycle-pedestrian path along the publicly owned Northwestern Pacific Railroad right of way through the two counties. The rail line runs from Cloverdale, at the north end of Sonoma County, to Larkspur, where the Golden Gate Ferry connects Marin County with San Francisco. Along the way SMART will have stations at the major population and job centers of the North Bay: San Rafael, Novato, Petaluma, Cotati, Rohnert Park, Santa Rosa, Windsor and Healdsburg.

The SMART train and pathway project will provide the backbone of a transportation system that ties existing transit systems such as buses and ferries along with future options such as shuttles and trollies into a seamless network that creates true transportation options for North Bay residents. Without that backbone, a congested Highway 101 will remain the only viable alternative for north-south travel in the two counties.

The SMART project is estimated to cost about $590 million, the bulk of which will come from Measure Q, a one-quarter percent sales tax increase approved by 69.6 percent of Marin and Sonoma voters in the Nov. 4, 2008, election.

edit: spelling

I was posting about SMART in the October 25 Drumbeat: http://www.theoildrum.com/node/7070#comment-736304
but have reproduced it here.

The SMART train, as they propose to do it, is a Cadillac solution when a base model Chevy will do the job.

They want 80mph trains, which means substantial upgrades to the line, replacement of sections of 70lb rail with 113, straightening some curves, etc - hundreds of millions. But the line can take freight traffic today, and with modest upgrading could take 50 or 60mph passenger trains.

The average distance between stations for all but the less travelled northern section is only 4.3 miles, and many of those sections have speed restrictions to 45mph or even less, so the trains will spend very little time at 80mph.

They are proposing to build fancy train stations, for a two car train that will carry only a few more people than an articulated bus.

The operations plan for Smart can be found here;

Some highlights;
Expected daily traffic - 5000 passengers
Staff - 107+contractors
Annual operating cost $18m
Daily train operating hours 37.5
Hourly operating cost per train = $1930(!)
Operating cost per passenger = $14
Travel time from Cloverdale (northern end) to Larkspur (south end, 70 miles) 1 hr 30min, 4 trains each way each day
Travel time from Santa Rosa to Larkspur (40 miles) 55min, trains 1/2 hr intervals at peak, up to 3hrs apart during the day.

I don't know what the fares will be I'll bet they are less than $14, so this will not even cover its operating cost, much less recover any capital, or pay for future train replacement, etc.

The longest track section, at the northern end of the line, that will only have 4 trains/day, is 17 miles. The rest is 53 miles, average 4,3 miles between the 12 stations, and many of these sections have speed limits imposed by the track conditions, that can;t be changed.
The most frequent service, from Santa Rosa to Larkspur, (40 miles, 58 minutes). Upping the speed from 60 to 80mph has saved, at best, five minutes (if all 40 miles were at 80mph the saving would be ten minutes), but at huge capital cost. The northern section, only traveled four times day, also only saves five minutes, at best.

If they applied some value engineering here (what is the most effective use of the limited capital $) they could have a slightly slower train running today (instead of projected date of 2014) , at a price people could afford, without needing massive subsidy from everyone else in the two counties (they levied a sales tax increase to raise the capital budget).

i would gladly take an extra five minutes of travel time for that.

The proponents of this project think they are doing a great service to those who cannot afford to drive, but in reality, they are not. By making the project so expensive, they have not only divided the community, but most of the capital money will leave the two counties and not come back. And for those who ride the train, the fares will be such that they are not saving money - they *may* save some time, but what is the value of five minutes?

A pragmatic approach will result in more of these projects being done - this Cadillac approach results in less.

I would not begrudge track upgrades. 70# rail sounds pre-1890. My guess is very old bolted track with rotten ties and degraded ballast. For safety, economy of operations and for a smooth, quiet ride, track upgrades are required (welded rail cuts wheel maintenance and fuel cost). Done right, very little work on them for a half a century to a century. Straightened curves last forever.

On the new Greenbush line outside Boston, electrification would have saved 15% on schedule time with faster acceleration/deceleration. 27.6 miles, 10 stations, 58 minutes end to end for Greenbush so SMART would benefit less from faster stop & go. Say 10% time savings.

Electrification would have cut hourly operating cost significantly (and maintenance staff), allowed more space/car for pax and less for engine and fuel. Quieter, smoother operation w/o smells. BUT people would have to look at wires. Cost about $2 million/mile to electrify single track (perhaps cut last stop out or make special arrangements for 4/day service)

SEPTA has large current contract to replace EMUs (operate in 1 to 8 car trains). SMART could have added on 18 EMUs for lower cost. These new EMUs will replace 43/44 year old EMUs. 100 mph top speed.

107 sounds over-staffed to me.


PS: There are no poor people in Marin County. Twenty years ago some rich widow left almost $1 billion for them and the executors could not find more than a handful.

Alan, It seems over staffed to me too. It seems the whole project is being overdone because the people in charge want a Euro style (and speed) system

It IS a pain that they have to use heavy railcars though. Still, for the northern section you could have single diesel railcar (not an 80mph one) that just goes back and forth between Cloverdale and S.R. While going to Larkspur is nice, for most people up there, S.R. is the common destination.

Agreed about poor people and Marin, they just can;t afford to live there. But they do live in Sonoma County. One of the things identified about hwy 101 is that there are more trips within the counties, than to SF, and lots of people living in Sonoma driving to jobs in Marin. These are ideal train commuters, and mostly would be going from S.R. south to Novato/San Rafael area. The train does not have to be 80mph to compete with hwy 101 in the mornings - even 30mph will be faster (and more pleasant)

As far as I can tell, electrification was never seriously considered in their planning - it could be done later, but then you have done your money on the DMU's, though they might have a use elsewhere.
I look at the situation and think a smaller, slower car for the Santa Rosa north section, and then the two car trains for S.R and south. S.R itself will be a destination for many of the passengers, but they seem to think it's all people going south.

And finally, once you have the trains, and all the trackwork done, I don;t see it as a big deal to run some more services during the day. Two 3hr gaps in the day makes it quite inconvenient for casual day trippers. There are lots of students and retirees in the area who could make use of that - but they can always change the schedules once up and running.

Anyway, I hope they get a train service going there, but I think they are building a first class train for an economy passenger market.

I lived in Portland for a couple years (too far from the ocean), and I was able to walk out the door with my stuff and end up surfing in Chile a day later. A train (The MAX) stopped a couple blocks from home, took me to the nicest airport I've seen in the states (PDX), and from there I was off. No cars, no cabs, no traffic...

The no growth mantra can be part of the Agenda 21 POV.

I'm still waiting for anyone even to propose high-speed rail outside of California. What's proposed in my neck of the woods is a crock - 79mph, substantially slower than the best (circa 110mph) 1930s technology. And with the Federal Railroad Administration firmly planting its cement overshoes in the 1920s, demanding massive, heavy, clunky passenger trains built like tanks, I have no expectation for this to improve anytime soon. Nothing is as leaden and immovable as corrupt, parasitical, obstructionist Federal bureaucracy.

Another obstacle also seems unlikely to go away anytime soon. After you've waited a couple of hours for the next train, endured the train crawling at no more than 79mph and often a lot slower, waited out a random "freight delay" or three, and gotten off again, then what, pray tell? It's not as though most US cities have frequent reliable transit to whisk one from home to the train station, or from the other train station to the final destination. (As I've said before, we can't even teach bus drivers to tell time.) Nor is as though, say, the last bus of the day will still be there when the train arrives late (the one and only time bus drivers can tell is "quittin' time", almost to the millisecond, almost no matter how bad the traffic.) To pay two astronomical cab fares plus the train fare, you might as well drive - and you'll get there in a bit more than an hour instead of it taking a major portion of the day.

Oh, I know, oil depletion and concrete SUVs. But one can expect the cab fares to track the cost of driving, since cabs are, well, guess what, cars. Transit-bus fares - if there's anyplace where buses actually show up - may track too, since they usually run on diesel. Even the train fare may track if there's any fungibility between oil and electricity at the margin, or as regulators keep pushing the cost of producing electricity skyward. One may also expect fares to rise as revenue-strapped governments become less able to cover most of your fare out of someone else's pocket, the way they do now. When all is said and done, the sole "gain" from the whole exercise may be free rides for whichever freight railroads happen to be given the gift of free renovations.

So we've got hopelessly corrupt and inept government at all levels, with obstructionist regulators mired in the distant past and Congresscritters mired in God knows what. We've got mewling-kitten politicians who surrender instantly and meekly to every passing obstreperous no-account NIMBY nebbich who makes the slightest noise. How does anything new, like actual high speed rail as opposed to a pure sham, get built under such utterly unpromising conditions?

I'm not sure but I think it has to do with keeping the have nots seperated from the haves. The fear I hear most often is that it will spread inner city crime out into the exurbs. I think that people in the far flung burbs like being isolated from the city as much as possible ... at least for now.

Yes, exactly. All the other whining is just that, whining.

keeping the have nots seperated from the haves. ...
being isolated from the city as much as possible ... at least for now.

But, what were seeing is with all the foreclosures, that the have a littles are moving into suburbia. If they had good transport, the housing could price in enough of a premium to keep the riff-raff out. But human understanding, and the way things actually work are often on different pages.

Indeed. A lot of the people I work with live 20-30+ miles out. It's their illusion not mine. They'd like to believe that "those people" don't even have the option to visit "their area" let alone move in. Of course things rarely work out the way we imagine.

From the photograph, that high speed rail is powered by electricity! No loud diesel locomotive rumble to awaken the neighborhood at night. Sleep tight, America, you are losing the techno battle...

E. Swanson

Amtrak stops a 79 MPH train three days a week in Cincinnati - at 3am. If the republican wins the gubernatorial election here next week, he has promised to kill the project to connect Cleveland and Cincy by 79 MPH rail.

On a business trip to Shanghai earlier this year I rode the Maglev train demonstration line. I caught it at lunch hour when the top speed is limited (300km/h) but even then it runs the 35km from the airport to the business district in under 8 minutes.

Its a great ride but the train was nearly empty. There was originally plans to expand service to the other airport and suburbs but the locals told me that got canceled over objections of area residents who feared their property values would decline.

So it seems NIMBYism is the enemy of progress the world over... not just in the US...

You're not down in the Portland area are you? (I think you said you're in Mid-Maine..)

Well, today, the downeaster is laying track through town.. I'm glad I don't commute these days, but I'm MORE glad that others who do will have a better option soon. The Downeaster to Boston has been a big hit, and stretching it farther up the coast will do a lot to add value and resilience to the connected communitites.

City officials said Tuesday that they expect significant delays as a train makes its way slowly through the city, unloading rails for the extension of Amtrak's Downeaster service from Portland to Brunswick.

Workers will unload 6,700-pound rails along the tracks, which will require the closure of about a dozen rail crossings of city streets for about 30 minutes each as the train passes. The crossings include heavily traveled streets such as Forest Avenue.


For what it's worth, Amtrak ridership is up; setting new records.

More people took an Amtrak train in the last year than ever before, bringing in record ticket sales for the national rail service.

And in the Northwest:

SEATTLE -- A heads-up for holiday travelers: Thanksgiving is still a month away, but train tickets are already selling out.

Trips to Seattle and Portland are selling out quickly. The Washington State Department of Transportation, who partners with Amtrak, advises people to book tickets early.

Ridership has risen 13% compared to last year at this time, setting a new record. Several factors contribute to the increase: Amtrak's new second train between Eugene, Ore., and Vancouver, B.C., the economy, gas prices and people traveling closer to home for vacations.

In 2010, Washington state received $590 million in federal money for high-speed rail. WSDOT says that money will help meet the growing demand to ride the train.

And the no. 1 reason for Amtrak increase in ridership: The homeland security body cavity search.

Yes, that's a big reason. You don't have to undress to board the train. You can plug in your laptop and work.

And also...for many destinations, it doesn't take longer than flying. Airlines have cancelled so many flights that getting from one small city to another often involves long layovers, even overnight campouts at the airport. Might as well take the train.

And the view from a train can be much more interesting and enjoyable,,, for those that still look out of windows. (One might even see some cute babies ;-)

.....although I fear that security will become more of an issue as trains become 'popular' in the US again.

"And the view from a train can be much more interesting and enjoyable..."

I wonder how long it will be before some genius forces everyone to roll down the shade as happens on a lot of airplane flights, and it's no longer permissible to see that view...

Always a little ray of sunshine when contemplating Rail Travel and it's nightmarish hazards, eh?

Seeing as Pass trains have a century's lead over Airliners, and they don't travel above the clouds.. I suspect that much of this concern has already been established in Pass Rail operating culture..

High speed rail in China, but not in the US? China is a country on the move, making all the right moves from investing in renewables, high speed rail, to securing long term oil and gas contracts. They plan big projects and follow through.

All this while the US infrastructure degrades beyond its useful life, unfettered suburban sprawl, huge deficits adding to huge debt and only fighting between parties that cancel out any kind of possible positive direction on any front.

As china rises, the US is falling, and at some point they will fly past us like we're standing still, but we won't be standing still because we'll be going backwards.

Sure, I know peak oil will get us all, but in the interim its pretty hard to watch our country turned into apparently an incompent mess, while what was once lowly china with its hundreds of millions of peasants, travels on high speed rail!


That is the way i see it. We are getting left in the dust. Our chance is past us. Get ready to walk or bike. People are going to go nuts when fuel prices skyrocket or worse yet the shortages become more common. The government will try hiding it at first, but that can only last so long. Electrified rail could have at least given people the ability to move vast distances at speeds much higher then vehicles, although still slower then flying (most of the time). At the end of the day i'd be satisfied with a vast Amtrak network moving around at 80mph.

And maybe I'd be satisfied with that too, or not, I haven't decided yet, but I wish they'd quit hyping it as "high speed rail" when it's antique technology from many decades ago.

moving around at 80mph.

Moving at that rate for 24hours a day, versus 10-12 in an automobile -and being exhausted as well, is a huge step up, even if the nameplate speed is about the same.

Even at the first glimpse it is obvious that a lot of that article about the chinese high speed train is wrong. This might not change the world but definitely tells a lot about journalism:

One can easily calculate that travelling 202 km with 350 km/h average speed does not take 45 minutes. Fact is that 350 km/h is the standard travelling speed of the train.

The world train speed record is still held by the French TGV with 574.8 km/h (http://www.youtube.com/watch?v=8skXT5NQzCg). That is far more than the 416.6 km/h mentionned in that article.

You are correct jorn, articles about Chinese HSR projects have tended to have some exaggerations and technical inaccuracies,but then don't articles by most media?

350 km/h is really the top speed of the train, so the average will of course be less. Based on a quick calculation, the 45-minute journey time will only be achieved by non-stop trains, with an average speed of 269 km/h, doable with a 350 top speed and no stops. Trains making some or all of the intermediate stops will be slower obviously. This has been the typical pattern for the new Chinese HSR lines, often with only 2 non-stop trips per day (and these setting a "record" for commercial service), while most of the trains operate on some kind of stopping pattern.

The 416.6 km/h record is a record for an unmodified, commercial service trainset. The French record (574.8) was made with a specially modified set.

Hello everyone, I know this is a bit off topic and the post is long, but I thought I’d share. This is particularly interesting for anyone living in the Oporto region in Portugal. There’s a gardening/composting center called Horta da Formiga which offers a couple of classes related to gardening, composting and food preparation such as: small scale composting, composting teacher certification, cheese and preserve making, mushroom growing, fruit tree pruning etc. They are pretty cheap (composting classes are free and the others are around 20€ - 30€) and generally take place on the weekend to allow people who work Monday to Friday the chance to attend.

I’d like to add that they have an interesting program called “Horta a Porta” crudely translated to “Vegetable Garden at your Door”. Basically, this program, in partnership with local government (city hall etc.), helps people who are unemployed, have financial difficulties or earn less than a certain monthly wage, learn to grow some of their own food. I’m not sure about the details and restrictions, but those who register for the program are freely leant a 25m2 plot of land, a small storage shed and given free organic gardening training. All produce is consumed by the participant.

Personally I’m looking into the program and the composting, mushroom growing, cheese/preserve making and fruit tree growing classes.

Also, while I’m at it…I’ve been trying to find places to learn blacksmithing but have been unable to find classes/training in my area (Santa Maria da Feira, Portugal). I find it’s been pretty hard to find active blacksmiths. I have been looking for these classes using the tradition word for a blacksmith, “Ferreiro”, and it has not been easy. However, I recently noticed that there are professions/ classes in something called “Serralharia Artistica”, which is slightly easier to find (though not much, the closest training center to me is an hour’s drive) which deals with forged metal, usually for artistic purposes, such as sculpture, hand rails and gates. But, according to the national skills and qualifications catalogue it also deals with tool making, especially for agricultural purposes. So for anyone in the northern part of Portugal that is looking for the same thing as me might want to try looking for “Serralharia Artistica” instead of “Ferreiro”. In the district of Aveiro, the Center for Employment and Professional Training of Viseu, offers this class.

Here in the US, the Society For Creative Anachronism sometimes offers blacksmithing classes.

There used to be a really interesting web site (that has unfortunately gone dark) by a SCA blacksmith. He originally tried using wood/charcoal, but found it took a ridiculous amount of wood to make a sword. I forget exactly how much - several acres, it might have been. (I guess that's why steel was for the wealthy only.) He "cheated" by using coal.

try anvilfire.com, it has a lot of blacksmith related stuff.

I'd suggest starting with a book such as The Art of Blacksmithing by Alex W. Bealer. This way you will have a knowledge of basic terms and techniques. It is extremely detailed. In the US, this book can often be found at discounted prices.

There are also books such as Farm Blacksmithing by J.M. Drew and Forging by John Jernberg that are readily available in the US. Don't know about Portugal.

I have these books and can vouch that they are worth it.


PS How about You Tube for videos on blacksmithing?

There are blacksmiths in Colonial Williamsburg.

Was there a couple of weeks back. Basically a living museum of pre-Revolution America. And the old trades are really being practiced.... almost full-time in some cases, complete with apprentices.

Their shoemaker (and some of the others) are avid economic historians.

Those coastal towns were thoroughly exposed to the global economy even back then. Shoemakers in the New World had difficulties competing with imported shoes even in the 1700s. And they were cheap for many folks. Research on discarded shoes preserved in wells shows they were often not repaired. Just chucked when they began to wear out. Sometimes 3 or more pairs per year.

After taking your measurements, the turnaround time for tailored suits and dresses from England was only 9 weeks.

Paranoia ran high and England was often accused of trying to keep the colonies down via cheap exports to the Americans but is was just plain old economics as labor was expensive in America.

Some things don't change much.

Sturbridge Village in Sturbridge, MA is a similar "living history museum" kind of a place, with all the old colonial skills and crafts being practiced. I used to love going there as a kid.

We had something similar in eastern Ontario, Upper Canada Village. Attendance has fallen over the past couple of decades, so the provincial government hired the manager from 'Canada's Wonderland' to turn it around. Artisans and skill trades were the first to be hit. Now we have a festival of lights (ca. 1860?) in the village at Christmas, and a Medieval Faire in the summer.

I've got a few friends who Blacksmith, and I know they hold events -"hammer ins" - all over the country.

Here are some links:

General news and info site:

Local crew:
(I love their motto: "1st rule: Do not set self on fire")

You for all your suggestions I will check them out. I'll also add this book to the list which seems to be highly rated on Amazon: The Backyard Blacksmith

Global cotton industry criticizes India over export restrictions

India has imposed a restriction on cotton exports to facilitate better domestic supply in the wake of spiraling prices. However, the prices increased with firm pace following the reports of weak output in US. Global textile groups are blaming rise in international cotton prices by nearly 100 per cent (from 62 cent per lb to $1.20 per lb).

It is learnt that the U.S. mills are worried about running out of cotton because India's actions have constricted the worldwide supply and have caused panic buying in the former country.

Since cotton is a substitute for plastics in the ubiquitous use of bags and containers, I have pondered the price would be indicative of peak oil. However, maybe the current run-up is due to weather. The article below has nothing to do with either of those thoughts but is interesting nonetheless. Uzbek is the #2 or #3 exporter of cotton depending on the size of Australia's crop.

For Exploited Uzbek Farmers, High Cotton Prices Only Enrich Overlords

The Uzbek government justifies conscripted labor by calling cotton a strategic commodity.

In fact, cotton brings in about 60 percent of Uzbekistan's hard-currency export earnings. But authorities who run the exploitative system have failed to reinvest profits for infrastructure needed to sustain the cotton sector in the future.

Soviet-era irrigation systems have crumbled to the extent that more than half of the water Uzbekistan drains from the Aral Sea for irrigation leeches into the earth before it reaches the cotton fields. Meanwhile, the Aral Sea is down to 15 percent of its original size -- one of the world's worst man-made environmental disasters -- and agricultural land is being poisoned by salt in the water.

Of course, I wasn't really focused on cotton per se, but rather on the tendency of countries to satisfy domestic demand, before a commodity is exported. Note the recent restrictions on wheat exports from Russia and the Ukraine.

Consider a hypothetical rewrite of the cotton article:

Global oil industry criticizes Russia over export restrictions

Russia and other oil exporters have imposed restrictions on oil exports to facilitate better domestic supply in the wake of spiraling prices. However, the prices increased with firm pace following the reports of weak output in US. Global refiners are blaming rise in international oil prices by nearly 100 per cent (from $100 per barrel to $200 per barrel).

It is learnt that the U.S. refineries are worried about running out of crude oil because Russia's actions have constricted the worldwide supply and have caused panic buying in the former country.

So I guess "we eat all we can, and sell the rest" applies to more than just Blue Bell Ice Cream?

It would be interesting to plot the "Rock's" Blue Bell consumption against production.

Since cotton is a substitute for plastics ... the price would be indicative of peak oil.

I'm guessing not really as the material cost would be swamped in energy and other costs. Cotton gets the energy bump and has its own oil inputs in the form of the nasty pesticides to keep the 'weevil at bay.

A couple of years ago jute bags were in shortage threatening the cocoa supply from Africa after China started making customers pay for plastic bags. The price of jute, like it's cousin cotton, is mainly controlled by supply and demand. Sure, inputs to grow increase with oil prices but I don't think that will be the main driver. A more blatant example is corn, prices are rising because of constrained supply and increased demand from ethanol not because ng prices are high.

The Economist (with a hat tip to the Globe & Mail)
Engine trouble: A rise in the cost of extracting energy will hit productivity

...the surge in the crude price to $147 a barrel in July 2008 undoubtedly played its part in exacerbating the recent recession, acting as a tax on Western consumers at a time when confidence was already low. That rise in energy prices was driven by demand, however. A surge propelled by the costs of extraction would be a negative productivity shock for the global economy.

thanks for the column. in a lot of ways, it's a total: "ummmm. yeah-uh." but i think it's encouraging to find this concept published in a clear way in a mainstream, hard-nosed publication.

would be interested to hear button's expectations regarding downstream effects of such a shock. of course, lots of experimental energy tech would look a lot more attractive, and actually, obama's battery push comes to mind. then again, bernanke's qe starts sounding more scary. i'd tend to think we'd want to have saved up for this eventuality as opposed to blowing our wad trying to nurture the status quo.

anyone else have thoughts about the fed's upcoming 'easing'?

RE: FedEx solar array

Impressive, but doesn't a FedEx sorting facility operate primarily at night? I guess they can sell the energy.

According to the article, the array will produce "about 800,000 kilowatt hours per year". Sounds great! But let's put that into perspective.

Searching for specs on the Nissan Leaf battery pack we find an enthusiastic article that gives this number as 24 kWh. For range numbers we go to the Nissan page which has: "EPA LA4 test cycle: 100 miles".

Putting it all to gether we get:

800,000 kWh/year * year/365 days = 2,191 kWh/day

2,191 kHw/day * 1 Nissan Leaf battery pack charge / 24 kWh = 91.3 charges/day

91.3 charges * 100 miles / charge = 9,130 miles/day.

So, the entire FedEx 16,000 square meter array at the Cologne-Bonn airport would allow them to drive 91 Nissan Leafs full of packages for 100 miles each.

I'm sure that wouldn't handle their total capacity but it is promising. Converting fleets over to compressed natural gas or electric vehicles will allow certain components of our modern society to continue to function even in the face of liquid fuels shortages.

Now might be a good time to encourage your local authorities to invest in a few electric vehicles and solar arrays for emergency personnel just in case.

Best Hopes for a smooth transition to a solar powered future.


about 800,000 kilowatt hours per year

Thats about 200 times what my panels produce. So, maybe it covers the electrical needs of the facility. Obviously it isn't meant to address the much greater energy needs of the fleet.
So its similar to say 100-200 homes getting panels (mine is on the small side).

The hub in Cologne is one of the most modern FedEx hubs in the world. Its fully-automated sorting system can process up to 18,000 packages and documents per hour. The roof features the largest FedEx Express solar power installation worldwide and represents one of the largest rooftop solar installations in North Rhine-Westphalia, with an area of 16,000 square meters, producing about 800,000 kilowatt hours per year.

Any guesses as to why this facility was built in Cologne, and not in Phoenix, where there is more sun and FedEx also has a hub? No. I really don't want anyone to actually answer that...

Also it might be worth while noting that this solar installation is one of the largest installations in the region, so that means there are others that are larger and thousands that are smaller. I guess those dumb Germans are still wasting their time trying to build out solar not knowing that it doesn't really help all that much.

Here's a picture I took in the entrance lobby to the Karlsruhe Media center and Art museum on a recent trip to Germany. Notice those little blue rectangular things up there on the glass roof, any guess as to what they might be? Hint they don't use any fossil fuel to produce electricity. While they are pretty to look at they aren't part of the art exhibit either!


Summary of Weekly Petroleum Data for the Week Ending October 22, 2010

U.S. crude oil refinery inputs averaged 14.1 million barrels per day during the week ending October 22, 171 thousand barrels per day above the previous week’s average. Refineries operated at 83.7 percent of their operable capacity last week. Gasoline production increased last week, averaging 9.2 million barrels per day. Distillate fuel production increased last week, averaging 4.4 million barrels per day.

U.S. crude oil imports averaged 9.5 million barrels per day last week, up by 863 thousand barrels per day from the previous week. Over the last four weeks, crude oil imports have averaged 8.8 million barrels per day, 76 thousand barrels per day below the same fourweek period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 1.0 million barrels per day. Distillate fuel imports averaged 190 thousand barrels per day last week.

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 5.0 million barrels from the previous week. At 366.2 million barrels, U.S. crude oil inventories are above the upper limit of the average range for this time of year. Total motor gasoline inventories decreased by 4.4 million barrels last week and are above the upper limit of the average range. Both finished gasoline inventories and blending components inventories decreased last week. Distillate fuel inventories decreased by 1.6 million barrels and are above the upper boundary of the average range for this time of year. Propane/propylene inventories increased by 0.7 million barrels last week and are near the lower limit of the average range. Total commercial petroleum inventories increased by 0.6 million barrels last week.

The article up top says we are Drowning in Crude, which of course implies there is a surplus of oil.

Granted there is almost 30 million barrels more oil around this year than a year ago, a whole 1 and one half day more of extra US supplies! Wow. This may be related to the fact that oil previously stored offshore has now come ashore. It does not represent an increase in world oil output. But you may still call it drowning, or maybe we’re just slightly better off. But we don’t put oil in our vehicle tanks - we put gasoline and diesel. And less and less oil is being refined lately to keep up with vehicle demand.

It’s not completely clear why the oil is ‘piling up’ mostly along the Gulf Coast and lower Midwest (such as in Cushing, Oklahoma). This may be related to a mismatch in quality, such as too much tar sands oil, or refinery problems in the upper Midwest caused by previous pipeline problems.

But no - there is no crisis on the horizon just yet. Still I tend to agree with Rubin (up top) - the price of crude is still on its way higher, and it doesn’t particularly matter that oil demand in the US has suffered a minor relapse lately (although this week oil demand picked up significantly from the last few).

While ‘speculation’ is usually blamed for pushing prices higher (but never lower, speculators are thought to be too dumb to ever be able to bet on falling prices :) ), ‘speculation’ is also associated closely with monetary and economic trends that give prices an extra push up.

Don’t be surprised to see ‘speculators’ return quite soon when the Federal Reserve pumps up the supply of dollars.

But no - there is no crisis on the horizon just yet.

So you've changed your mind?

Didn't you predict a couple of months ago that November would be when supply shortages became evident?

Yup. I remember him saying down to around $70. I actually bought his forecast and sold oil stock. cost me $6000 so far plus dividends. HOHO

Gotta laugh at forecasts.

These are the good old days

I've been predicting higher prices, but said last summer it could possibly drop to $70 temporarily, but I wasn't really expecting that. Maybe you are thinking of memmel, who actually did predict that a month or so back, and it did drop a little after that from where it was. If anything, prices of oil and oil stocks are not as high as I expected by now, especially stocks - probably the after-effect of the GOM spill.

I did say some thing along the line that by November we could be getting squeezed. Oil imports into the US were higher than I expected - basically because offshore oil store in tankers was dumped in the US, while I expected it to be distributed more around the world.

But while I am not exactly correct on the timing, keep in mind that imports into the US are generally falling and oil use is generally increasing, and that situation can not continue that way for very long (or other words, in six months we will be looking at low inventories or a renewed recession).

Electromagnetic pulse impact far and wide

In trying to find out the effect of EMP on a propane tank (because as soon as there is a nuke going POP I'm getting the 100 lbs tank) I came across this:

Nuclear EMP is actually an electromagnetic multi-pulse. The EMP is usually described in terms of 3 components. The E1 pulse is a very fast pulse that generates very high voltages. E1 is the component that destroys computers and communications equipment and is too fast for ordinary lightning protectors. The E2 component of the pulse is the easiest to protect against, and has similarities in strength and timing to the electrical pulses produced by lightning. The E3 component of the pulse is a very slow pulse, lasting tens to hundreds of seconds, that is caused by the nuclear detonation heaving the Earth's magnetic field out of the way, followed by the restoration of the magnetic field to its natural place. The E3 component has similarities to a geomagnetic storm caused by a very severe solar flare.

Solar Flare? Hmmm...

A solar storm of the size of the 1859 event, or even a smaller geomagnetic storm that occurred on May 14-15 in 1921, could simultaneously knock out the power grids of the United States, Canada, northern Europe and Australia, with recovery times of 4 to 10 years (since the solar storm would burn up large transformers worldwide, for which very few spares exist.)

I didn't know Russia had an experience like Hawaii

The test was generally known only as Test 184 (although some Soviet documents refer to it as K-3). It knocked out a major 1000-kilometer (600-mile) underground power line running from Astana (then called Aqmola), the capital city of Kazakhstan, to the city of Almaty. Several fires were reported. In the city of Karagandy, the EMP started a fire in the city's electrical power plant, which was connected to the long underground power line.

And this:

Imagine what the world would look like if a solar CME hits one side of the planet and leaves the other intact.
(If the US of A was on the non-hit side the TVs would be filled with people claiming this shows the nation was favored by God. Might be worth not having a TV to be spared such blather)

There was a news item on the danger posed by solar flares recently on Channel 4 news here in the UK


If humanity must have some form of doom - the upside to a solar flare version of doom - no one's to blame.
(ok, ok. Scott the Weatherman would blame the alien spaceships round the Sun.)

The downside - its still doom.

And geo-politically - One side of the earth would be down, the other up. And I can't see how THAT will end well for the down side.

In trying to find out the effect of EMP on a propane tank?

A comprehensive place to start would be Report of the Commission to Assess the Threat to the United States from Electromagnetic Pulse

Something to consider. This Commission (EMP Commission) was initially established by the U.S. House Armed Services Committee under the National Defense Authorization Act of 2001. Sponsored by Rep. Roscoe Bartlett (R-MD), the EMP Commission served as a cornerstone of right-wing advocacy on national defense policy.

Some consider the report alarmist: e.g. Advocates seeking to spread alarm about the purported threat of EMP attacks, which would involve the detonation of nuclear weapons in the upper atmosphere to generate a pulse that would knock out electronics-based infrastructure, have repeatedly used the findings of this commission to advocate increased funding for costly weapons programs such as missile defense and push alarmist notions that “rogue states” like Iran and North Korea pose an existential threat to the United States.

NERC has also looked into the issue.

A solar storm would have a much larger 'footprint' than a nuclear EMP (i.e. larger the half the globe)

A solar storm would have a much larger 'footprint' than a nuclear EMP (i.e. larger the half the globe)

The whole planet on fire with electrical infrastructure destroyed? Woot. Sign us all up then. *shudder*

I've not seen reporting on how useless PV panels would be after an EMP - anyone have a link?

Newt Gingrich Sounds Alarum on EMP

A forum discussion here:

I've had several nearby lightning strikes. One direct strike took out an old Trace controller. I've installed quite a few lightning arresters in my system. No damage since then. I also built a 20'x40' metal building about 100' up the hill from the arrays which may offer some protection as a sink (giant lightning rod). Not sure if this applies to EMPs but I suspect that if you had some warning you could disconnect components from the system. The PVs themselves may be OK if they were disconnected from the rest of the system.

The PVs themselves may be OK if they were disconnected from the rest of the system.

I think in order to have a big enough EMF (Electromotive force =voltage) you need a conductive loop that covers a big surface area. It is the change in magnetic flux through the loop that generates the voltage. Flus is just the amount of magnetic field normal to a surface, multiplied by the surface area. So if you are disconneted from the grid you should be OK. It is the voltages that can build on long distance transmission lines that are the real issue. I think the real problem is that the induced voltage is low frequency, so even though its voltage is much lower than the AC voltage on the line, it can induce a large DC bias current on the line. If you can saturate the magnetic cores of a transformer (they can only take so much flux), then you can get a lot of current in it, and it can overheat and catch fire......

So, I think if you have a grid connected system, and your power company is smart enough to shut down the grid you would be fine. If not, my WAG would be that your inverter might get fried, but your panels should be OK.

Here, Eric;
This one is fun, if not specifically answering your question.


A good bit of discussion on various preventatives, incl. a bunch on Faraday cages.. but since you were so quick to snark on PV, (and Semiconductors would be quite vulnerable, if not 'caged'..) then I'll drop in this tidbit, for balance.

A major area of concern when it comes to EMP is nuclear reactors located in the US. Unfortunately, a little-known Federal dictum prohibits the NRC from requiring power plants to withstand the effects of a nuclear war. This means that, in the event of a nuclear war, many nuclear reactors' control systems might will be damaged by an EMP surge. In such a case, the core-cooling controls might become inoperable and a core melt down and breaching of the containment vessel by radioactive materials into the surrounding area might well result. (If you were needing a reason not to live down wind from a nuclear reactor, this is it.)

..There was no link or hard reference to the mentioned 'dictum', however..

so quick to snark on PV,

I'm not a snark'n - I'm wondering as I have panels and would like to know if they are expect to make it/not make it.

Electric induction into metal has been studied extensively, for example, planes can be struck by lightning and continue to fly. (They can also be knocked out of the sky – lightning is not a straightforward event, nor is EMP.) But I would suggest that lightning is a rather more likely scenario because the concept of an airborne EMP event would likely signal that all kinds of H___ are breaking loose and your propane tank would probably survive better than every piece of electrical machinery you have.

The idea to defend against electromagnetism is to have your tank well grounded and the metal sufficiently thick to carry any induced electric charge. Propane tanks are usually a metal with a low conductivity so the induced electric current will be small and since propane tanks have to hold high pressure, the metal will be thick. For lightning, you can place a grounded conductor that protects the tank like a lightning rod protects a building. All it needs to be is grounded, high conductivity, and higher than the tank. It helps if it has a sharp point to concentrate an electric field. Read up about lightning and if really worried about EMP, plan to design a conductive and grounded cage around the tank, or use a double walled tank. The EMP would do most of its damage to the outer layer of the grounded system and the interior should be OK. This same concept works for electronics, but usually only the military use it since it ups the cost of everything.

CMEs are basically proton streams and so they disperse extremely rapidly. We have solar proton events such as the 1989 event that knocked out the Quebec power grid where the CME was aimed in our direction at the right time. The Sun does not emit much in terms of gamma rays and x rays get absorbed above 80 km.

Something really nasty and unusual would have to happen in the Sun to produce a CME that would do severe damage to the Earth. We do not live near a blue giant and there are no supernova candidates in our galactic neighbourhood, so we don't have to worry about being fried by protons or gamma rays.

Imagine what the world would look like if a solar CME hits one side of the planet and leaves the other intact.

I don't think geomagnetic storms are restricted to the sunny side of the planet. I could easily imagine say the northern (magnetic) hemisphere getting hit worse than the southern -or vise-versa. I think the real distinction will be between those regions that prepare -by shutting down the power grid before it hits, and those that try to muddle through (shutting down the grid isn't cheap, and more likely than not the warning system will produce some false positives).

Wow. Now Bill Gross is telling the world The Emperor is naked.

Bill Gross Calls Fed "Most Brazen" Of All Ponzi Schemes, Says 30 Year Bond Market Is Ending, Compares US Economy To Black Hole

We are, as even some Fed Governors now publically admit, in a “liquidity trap,” where interest rates or trillions in QEII asset purchases may not stimulate borrowing or lending because consumer demand is just not there. Escaping from a liquidity trap may be impossible, much like light trapped in a black hole.

...One and one-half trillion in checks were written in 2009, and trillions more lie ahead. The Fed, in effect, is telling the markets not to worry about our fiscal deficits, it will be the buyer of first and perhaps last resort. There is no need – as with Charles Ponzi – to find an increasing amount of future gullibles, they will just write the check themselves.

I ask you: Has there ever been a Ponzi scheme so brazen? There has not.

Well there goes his guest spot on CNBC...

As someone from Pimp-co doesn't he have an obligation to be one of the head cheerleaders ?

Maybe they'll move him on out to make room for Stoneleigh - a true expert regarding the "liquidity trap"...

I still think that constrained oil supplies are acting as an accelerant, pushing us faster along the path toward the ultimate end game, like an aerial tanker dropping napalm on a forest fire.

Actually, I haven't noticed seeing Bill Gross on CNBC in a while, mostly El Erian. But Not To Worry. I'm positive Steve Forbes will be all over the place now that he has declared, "The Energy Crisis Is Over!"

Too bad CNBC's best show, "Worldwide Exchange" is buried in the programming between 4:00am and 6:00am. Surprisingly often, they have analysts on who actually have a clue. Inevitably they are Brits, Europeans or Australians.

You know, as time goes by more and more I feel like the leading indicator of collapse and true doom is the ever crazier proclamations by idiots like Steve Forbes about how this crisis or that intractable problem is all of a sudden "solved"

As someone posted yesterday anything anecdotal or based on that "gut feeling" or "sixth sense" or "intuition" one has about the state of this planet is yelled down in a louder and louder fashion by this steady merry go round of so called business experts - who oh by the way have gotten us into one mess after another after another (yet now feel somehow qualified to comment on fields far outside of their scope knowledge - exhibit A is Steve Forbes who probably doesn't know 1/2 as much geology as an 8th grade earth science student).

I've decided to go all in on the contrarian indicators - the more I hear these clowns reassuring that this or that problem (each of which we've seen coming down the track for decades now but do nothing about) has been solved or some miraculous breakthrough has been made in the realm of iphones or ipads or financial instruments or whatever - well, I'll take that as a signal that we've taken another step that much closer to the brink... and since the rate of the proclamations have increased then I'm assured that we'll not just step off that cliff but instead we'll hit the edge with a nice head of steam...

I'll take that as a signal that we've taken another step that much closer to the brink...

I call it the "Generally assume the opposite rule," (borrowed from a passage in "Atlas Shrugged"). One can generally assume, regarding energy and the economy, that the truth tends to be the opposite of what a public official is saying.

You did a neat job there of flipping the target over to "public official" from "business leader", where it was originally, and where IMHO it belongs.

Or a possible compromise of "Both" Business Leaders and Public Officials.

It seems to me, as with the Labor v. Mgmt debates of the last century, that with all this surplus power that has been granted for us to find and use, that the abuse of power is an inevitable result.

Is it possible to exert some control over the powerful by having enough power of our own that we don't NEED theirs nearly as much?

(TRADING PLACES, Eddie Murphy saying, "I think the way to really get to a rich person is to make them poor!" - sloppy paraphrase..)

Two years ago or so, I came to the realization that in 1984 you could be a 30 year treasury that would still be yielding 14%. I then realized the bond yield was on a 25 year downslope and was yielding just North of 4%.

So I think what idiot is going to lend the US government money for 4% over 30 years when the debt is going to explode? I went short the long bond in a big way via ETF. I've been hammered. I view it as my retirement (20 year) investment.

Now the government is buying its own debt. Making a market against me by making money out of thin air to fund their obligations. In fact, I am convinced they will not tell anyone how much they are going to commit to treasury purchases because they wait for the auction and see how the "action" is. The auction is fixed or rigged.

I tell this story to illustrate the fact that rational analysis of an investment decision will get you nowhere today. Then people wonder why "rich people" and corporations are stockpiling cash.


You forgot the first rule of investing:

"The market can stay irrational longer than you can stay solvent."

Irrationality has little to do with blatant market fixing, I believe it is termed racketeering in some circles.


Interesting post.

I hope you see why people like myself are taking physical ownership of gold and silver.

Yes sir I do--Ninety Five percent of my net worth is oil working interest.

I keep seeing everybody say that the quantitative easing is an effort to prime the pump (economy), does anyone reckon it is the only way the government can be funded??

IE- They have no choice.


making money out of thin air

That's the way it has always been done, since the dawn of time.

What, you thought a finite pile of gold in Fort Knox made the fulfillment of exponentially expanding promises (re future "wealth" for all) more possible?

I'm going to repeat my request for some self-restraint when posting images. A lot can go wrong when "hot linking" images, which is why many blogs don't allow images in the comments. We do, because of our love of charts and graphs. But please don't abuse the privilege by posting "illustrative" images that don't add to people's understanding. If it's something everyone's familiar with, like a baby in a high chair or two people watching TV, don't post it. Here's why:

1) Bandwidth
Even if the image is small, it slows the page-loading. A new connection has to be opened up to the source of the image, meaning the page will load slower than if the image was stored here. The more different sites you link to with your hot-linking, the slower the page loads.

2) Theft
You're stealing bandwidth from the site you're hot-linking to. Some don't mind. Some do. Stealing their bandwidth may result in their site being taken offline until the end of the month, or their having to pay high charges for going over their bandwidth allotment. Some protect their images from hot-linking. Usually, you don't notice, because you're looking at the cached version on your hard drive. Other people don't see anything, or they see a "no hotlinking" image. This may be as innocuous as a banner ad for their web site, or it may scold (a sign saying "stop stealing, scuzzball"), or attempt to shock (a graphic porn image).

3) Copyright
Again, some don't mind their images being hot-linked to, but some do. Cartoons and other "art" type images are most likely to generate irate "takedown" notices.

4) Layout
Using "width=" and "align" tags doesn't work too well here. It may look fine to you, but to someone with different screen resolution, the image may overlap other posts, which is pretty annoying.

Given the risks, images should only be posted when they add materially to people's understanding. If someone posts a smiley once in awhile, I'm not going to have a cow, but if you're posting multiple posts every day with multiple hotlinked images that serve only to draw attention to your posts...stop.

It feels like I just had a visit to the woodshed :-(

Sorry, I didn't mean to make you feel bad. But I've talked to you about this before. I thought explaining it more would help.

I get the impression that you're kind of new to this. Probably because you've tried to hot-link images hosted at Tripod.com, and they are notorious for blocking hot-linking. They've been doing it since eBay started.

Perhaps I should have e-mailed you privately instead, but I thought it was a good opportunity to explain the issue to everyone, not just you.

No. Actually it was a very helpful explanation.

I didn't realize I was sucking bandwidth out of the source site.

I'll try a different approach from now on.

Example: [i Mg+]

[i]= image
[+]= extra info

Let's recall however that Gross, El-Erian, and PIMCO were highly visible in Q4 of 2008 and Q1 of 2009, and were adamant that the Government "was obligated to put its balance sheet into play" in order to mitigate debt deflation. Trillions of dollars later, and after handsome profits made by front-running government purchases of assets, now Bill Gross stands and points his finger? Perhaps Gross, despite his public image as a macro savant, shared some of the common delusions about the length and breadth of the depression. In other words, perhaps he thought at the outset of the crisis that it was indeed solvable, and that a growth path could be rejoined after a big, double shot of fiscal stim from congress and some QE from the FED.If that's the case, then Gross' stance now could be seen more as part of his own education process. To wit: he no longer believes there's a reflationary solution.


Luxury buying on rise, as jobless not spending

Consumers are buying more luxury items but spending remains tight for everyday essentials such as food and dental care, a USA TODAY analysis finds, suggesting a growing divide between haves and have-nots.

Consumer spending is on track to increase for the first time since 2007. Sales of Winnebagos have doubled. But sales of everyday essentials are still down.

I wonder how many of these Winnebagos/RV's are peoples plan B for when the house finally gets foreclosed on.

I gave up my house at the beginning of the year. I just got a tax notice from the county last week. Seems the bank still hasn't taken ownership. I still get notices from them wanting me to catch up and continue paying. I'm beginning to wonder if they don't have any legal documents that prove they own it.

An RV is my plan B.

Not knowing your situation, I think you had better read the fine print in your mortgage. I'm not an expert on property law, but here is what I've heard described on the 'net. In some states, if you have a first mortgage that you took when you bought the house, you might be able to walk away and let the bank have the property with no further responsibility for the debt. However, if, at some later time, you re-financed the loan, the new mortgage may not allow you to simply "give the house back to the bank". Even if the bank were to sell the property after a foreclosure, you might still be required to pay any difference between the remaining principle on the mortgage and the selling price...

E. Swanson

Actually it was thanks to something I read on TOD that made me look very carefully into this. I did do it the correct way and have since talked to my lawyers to make sure the county and bank have no recourse against me.

Brazilian giant pushes to Gulf's deep waters

Petrobras earlier this month moved a giant oil-extracting vessel into place at its Cascade and Chinook fields and is doing final hook-up and testing of equipment, company officials said. First production is scheduled to begin by year-end.
The Petrobras project is also notable because it is among the first to go forward in an emerging area of the Gulf, known as the Lower Tertiary trend, which is thought to hold vast untapped oil reserves.

And it is the first in the Gulf to use a tanker-like ship rather than a fixed platform to pump oil and natural gas from wells in 8,000 feet of water and thousands more feet below the seafloor.
But Petrobras, with its Cascade and Chinook project, has exported a ship technology commonly used in Brazil, which the company says reduces costs of developing deep-water fields, allows for greater flexibility in project design and offers more safeguards for protecting offshore facilities in bad weather.

It's called a Floating Production, Storage and Offloading vessel, or FPSO.

In the case of Cascade and Chinook, the massive vessel has the capacity to produce 80,000 barrels of oil per day, a mark company officials have said they hope to hit within two years.

Jeff Rubin: Tightening oil markets will bring speculators back

With oil prices now already above $80 per barrel and likely to hit triple-digit levels within months, you can expect to hear a lot more about the role of speculators in the marketplace. It’s always easier to find a convenient whipping boy than to recognize that depletion and the prospect of ever more costly fuel in the future are the real problems.

I think he is jumping the gun on oil prices going up. The economy remains too weak. And even China can't grow like it used to since its big export markets have a reduced appetite for Chinese good. Perhaps if China grows its internal markets.

Steve Forbes: Energy Crisis Over!

Steve Forbes remains the clueless trust-fund baby he's always been. Yes, natural gas markets have change significantly. But oil? He doesn't even support that claim in his article other than mentioning horizontal drilling which isn't exactly new. What a clown.

Steve Forbes: Energy Crisis Over!

Now I can rest easy. The World will be saved by the words of an idiot.

Steve Forbes for President.

Let's not have that re-run, please. ;)

This "breakthrough" for oil is Horizontal Drilling. Something brand new, or so Steve Forbes seems to think:

Horizontal drilling is another impressive breakthrough that allows us to get to oil and gas that was previously unattainable.

As near as I can tell this article was published in 1998

Horizontal Wells Now Common 51 Drilled in 1987 - 4,000 in 1997

Saudi Arabia has been drilling horizontal wells for over 15 years and horizontal MRC wells for almost 10. Fracking is not new either. There are no new breakthroughs here. Where does Steve Forbes get this stuff?

Ron P.

I sometimes wonder if the Steve Forbes' of the world want to try to politicize peak oil in the same lines that climate change has been politicized.

Both Jeff Rubin and Steve Forbes are dead wrong.

Supply collapses, but demand collapses right along with it as prices go up. But then prices go down. Amazing how that works! A high oil price is massively deflationary and contains the seed of its own destruction.

There is no doubt that there is an upper limit on the price of oil, at any given time, and at all times. It's just that we don't know what that limit is, so it's best not to make too many predictions.

You are correct that a high oil price is deflationary--but only if other things stay the same. Generally speaking, what the history of oil price increases shows is that when the price of oil goes up we do tend to go into a recession--but then the Fed eases monetary policy and the federal government cuts taxes or increases spending to combat the recession. In the long run, much of the increase in the Consumer Price Index has been due to increasing oil prices. Why?

Politics. Political forces tend toward inflation (bigger federal government deficits, easier money and credit from the Fed), and over time these political forces have-at least up to now--been able to overcome the deflationary impact of high oil prices.

We may well have a deflationary depression in years to come, and again you are right: If we do have a deflationary depression, along with the rest of the world, the demand for oil will go down and oil prices will go down too. The government response to deflationary depression will very likely be much bigger deficits than we have ever seen combined with quantitative easing 3, 4, and 5 by the Federal Reserve System.

Thus we may indeed get deflation from higher oil prices in the near future, but over a period of several years or more the likely effect of declining oil production and higher oil prices is to substantially increase the rate of inflation as the federal government and the Fed respond to a stagnant or declining real Gross Domestic Product with macrostimulus.

Not surprising to see Steve Forbes maintaining his Chief Numbskull status in the Energy Bonanza Twits Hall of Fame. He has to be on something the guy is freaking goofy creepy crawly wierd.


It might have something to do with his need to sell advertising. But in any case, his underlying premise is interesting, to-wit, that by increasing our rate of consumption of a finite fossil fuel resource base, he proclaims the crisis over. But to be fair, his point is that technological advances have moved some hydrocarbons from the resource category to the proved reserve category, but the question is to what extent this is an incremental increase in reserves versus a material increase. Art Berman has persuasively argued, IMO, that it is more the former than the latter.

My point has been that just because oil companies can make money in post-peak regions, consumers should not assume that they can make a material difference in the global supply situation.

However, any way you look at it Forbes' central point is that we have "solved" our problem by increasing our rate of increase of consumption of hydrocarbon molecules in the earth's crust.

My “Iron Triangle” thesis:

In regard to discussions of Peak Oil and Peak Exports, I have described what I call the “Iron Triangle,” which consists of: (1) Some major oil companies, some major oil exporters and some energy analysts; (2) The auto, housing and finance group and (3) The media group. . . . The prevailing message from some major oil companies, some major oil exporters and some energy analysts can be roughly summarized as follows “Party On Dude!”

Meanwhile, over on the other two legs of the Iron Triangle, the auto, housing and finance group is focused on selling and financing the next auto and house, and the media group just wants to sell advertising to the auto, housing and finance group. The media group is only too happy to pass on the “Party On Dude” message to consumers.

Once we all buy another car ... then the Party can start!

This is so easy. Problem solved.

Let me shake my Hang-Ten hand in the air and yell "Party On Dude!"

Art Berman did provide a great presentation cautioning about the future of natural gas.

But for right now, no one can doubt that the natural gas situation has significantly changed. Just one look at the natural gas prices tells the story. At least for the near future. It remains to be seen how things develop.

But I was completely dumbfounded by Steve Forbes mentioning oil. Well, no, I wasn't dumbfounded since I expect him to say stupid things. Perhaps saddened is the better word.

There have been several articles claiming that the techniques used in the shale gas boom can be used for oil, too. I have no idea how legit those claims are.

The shale gas thing is one reason I wonder if the plateau will go on a lot longer than expected. (Of course natural gas isn't oil, but it can replace oil in many uses.) No one saw that coming. Now there are other countries saying they have shale gas, too. Do they really? Some say no, but they said North America didn't, either.

But the shale gas situation isn't even a slam dunk despite the hype - look at that Rigzone editorial posted yesterday where it's debatable as to just how the production in these wells declines. If the decline curves follow a hyperbolic function then they might be in good shape (assuming NG prices come back to make the whole thing viable) but if the decline follows more of a purely exponential decline then the picture may not be so rosey. It may turn out that it's more of a blend of the two (a "an each well is unique" type scenario) but my guess is that any additional data won't be the type that will really advance the cause of shale gas - I'd suspect that the really favorable data was used up in gaining the overall interest of (and raising capital for) the industry in the first place.

Leanan - As I mentioned in another post one the first big horizontal plays (in the late 80’s) was oil in the Austin Chalk formation along the Texas coast. Thousands of such wells were drilled. The AC is a shale more or less but made of carbonate mud instead of silica mud. The oil production is from fractures in the AC. The horizontal drilling greatly benefited the play. The fractures are fairly vertical so hitting one with a vertical well bore was always risky. But drilling horizontally several thousand feet greatly improve the odds of hitting the fractures. As others have note horizontally drilling fractured reservoirs, for either oil or NG, is a decades old story.

WT I hope its the Iron Triangle in practice but you may be giving him to much cred. I think the guy is missing a few brain cells. I have watched him enough with that goofy howdy doodie (like too much doobie) look. I'm probably being way to mean to the stoners. Its a vacuous look that makes me wonder if there is anything behind the curtain... will the light ever go on! The poster child for cognitive dissonance Steve Forbes, to think he fancied himself President.

Forbes's call to increase exports of NG come at a time when drillers are shutting-in fields due to unprofitable pricing. So, I must agree with westexas--Forbes needs to sell advertising.

"The Earth is awash in energy." --Forbes

Did he have any laundry detergent ads in his mag?

Well, being as most all Economies are based on "party on dude", they don't know what else to say; and the more accurate statement of "sooner or later, we're fraked, and probably sooner..." just doesn't seem to be PC on the MSM. I can't remember the word that Mr. & Mrs. Conehead used in a similar situation, but that works too!

In order to "Party On dude" dont we need more free credit -- like a Green-exp-sand policy or something.

Seems you need credit.

I guess the "smart folks" in the stainless steel room with no windows are trying to figure that one out. How to get money to consumers?

lol -- we are doomed

My usual EV take . . .

All that hype won't sell electric cars
No doubt that EVs will take a while to gain market share. However . . . they could surprise people. That article lists exceptions that swallow the rule of the article title.

Moving more drivers to battery-powered or hybrid cars would require one or more of the following to take place, J.D. Power's report says:
1)A big increase in global petroleum prices.
2)Major technological breakthroughs that would reduce the costs of hybrid and electric cars.
3)Government policies to encourage consumers to buy electric.

A big oil price spike will obviously make those EVs look very nice that is the one that I think could make EVs take off in the mainstream. But (2) & (3) combined could also have a big effect . . . there is a $7500 tax-credit right now and if EV manufacturing prices dropped quickly, (2)&(3) combined could make them much closer in price to gas cars.

Back-to-Back Drives in the Chevrolet Volt and Nissan Leaf
Nice intro article but not much meat. The tax-credit is a full $7500 for both cars, not just 'up to $7500'.

Hazard of lithium batteries on planes sparks debate
I'm not sure why you linked that article. That really concerns consumer electronics & airplane safety. If you posted it because of EVs, it really doesn't apply. Consumer electronics use high energy density batteries with relatively short lifetimes. With the notable exception of the Tesla Roadster (that was designed before better batteries were available), commercial EVs use different battery chemistries with lower energy-density and much longer cycle lifetimes. There certainly are still some risks with EV batteries . . . any time you jam a lot of energy in a small space you are creating a danger. But the newer automotive Li-Ion batteries are much much safer. You can short-circuit LiFePO4s without disastrous consequences.

Here's some new battery technology that may be worth watching.

DBM Energy's electric Audi A2 completes record setting 372 mile drive on a single charge

Little Lekker Mobil, a four-seat Audi A2 refitted with an experimental electric powerplant as part of a government sponsored project with Germany's lekker Energie and DBM Energy, just completed a 372-mile (600-km) stretch of road between Munich and Berlin on a single charge, a journey that lasted around seven hours. Even with the heater running, the modified A2 with fully usable trunk arrived with spare electricity in the "tank." The battery uses DBM Energy's KOLIBRI AlphaPolymer Technology said to be 97 percent efficient and chargeable from virtually any socket -- plug it into a high voltage DC source and it can be fully charged in just six minutes according to the car's driver and battery inventor, Mirko Hannemann.

It is nice to see some Germans getting on the EV bandwagon. They've been dragging their feet for a while. I suspect that is because their reputation has also been for expensive high-power gas cars (Mercedes, BMWs, Porsche, Audi, etc.). On the low end, VW jumped into diesel with both feet.

But it seems kinda crazy for the Germans not to get into EVs considering their love of renewable electricity. Those EV batteries are a great place to suck up extra power if the wind is really blowing or the sun is really shining.

SFGate has a bit more meatier story on the JD Power report: Hybrid, Electric Car Demand May Be Overhyped, J.D. Power Says

Using current consumer preferences as a guide to what is going to be happening 10 years from now is a fundamentally stupid methodology.

Consumers have the ability to walk into a showroom and pick any vehicle they want at any time they want. (Assuming they have the money.) So they can be fickle . . . they have zero commitment until they put down the money. They don't have to think ahead . . . they can think just for the moment. And even when they make a stupid decision, they can resell the car and buy something else.

However, the car manufacturers have to make decisions *years* ahead of time. They have to figure out what cars they will make and then design them, get factories up, source parts, assemble the cars, and ship the cars. So they spend a lot of time trying to figure out what cars people will want. And although they do make mistakes (such as preferring to make cars that are profitable instead of the ones people actually want), they basically do a decent job of it.

The car makers are not creating all these electric cars because they've suddenly all become tree-huggers. They spend a lot of time & money trying to figure out where the market is going. And their extensive research says that the market is going to go electric in the future and that is why they are making the cars. Toyota's official position is that peak oil will hit by 2020. The average car buyer doesn't even know what the phrase 'peak oil' means.

Now the rate of EV adoption is unknown and heavily dependent on gas prices. If gas prices don't go up, this report will be correct . . . but only by chance. If gas prices shoot up, consumer preference can change instantly making this report look really stupid.

So this is a really silly report. But they gave themselves an 'out'. They said "consumer migration to alternative powertrain technologies will most likely require either one of the following scenarios, or some combination of these scenarios:
* A significant increase in the global price of petroleum-based fuels by 2020
* A substantial breakthrough in green technologies that would reduce costs and improve consumer confidence
* A coordinated government policy to encourage consumers to purchase these vehicles."

This hype does not pass the smell test. Certainly a battery like he described would have a place at the table, but the efficiency and recharge rate are fishy. Usually something too good to be true ends up not being so good when all the information is available.

Skepticism is HIGHLY recommend for anyone looking to the EV & battery space. The sector is notorious for dreamers and hucksters that don't deliver. Some people want to believe so bad that they get ripped off. But despite the many problems, I'm cautiously optimistic about EVs. If you avoid the dreamers/hucksters and admit the real downsides (range, up-front cost, etc.), the technology is still quite promising.

Not sure exactly what record you are referring to here - they only got just over half the world record for a single charge drive of 623 miles;


BBC News just now has something on the reusable rig and the new contracts the government is offering for oil and gas in the North Sea. A second renaissance? Hmm.

For all: For those who didn’t catch the absurdity (IMHO)of the Forbes’ comment above: “The word "revolution" is overused, but it's truly appropriate when applied to these technological breakthroughs: hydraulic fracturing”. Some clarifications: this revolution isn’t new. It started over 20 years ago. Frac’ing horizontal wells isn’t new. What changed around 2006 or so was the application of this long ago PROVEN technology to various shale gas plays. And the technique worked…but wasn’t very profitable once NG fell below $6/mcf.

And with re: the Eagleford Shale play. First, it isn’t a shale gas play per se. Production from “shale gas” reservoirs is unique in that the production is coming from the matrix of the rock. Very unique given the very low permeability of shale. The ES is a fractured shale reservoir. The production is coming only from the oil/NG in the fractures. Second, the ES is a hot play because of the oil yield and not the NG for the most part. NG production potential of the ES has been known for many decades. The formation runs from the Mexican border all the way into La. But in S Texas they discovered an area that had this high oil yield. Many ES wells produce oil worth 5 to 7 times the value of the associated NG. The ES play is very similar to the Austin Chalk play (over 20 years old) that was very heavily drill horizontally and frac’d (using the same technology we use today). The ES lies only several hundred feet in depth from the AC. The AC was a shale made from carbonate material as opposed to the silica based mud of the ES formation.

There are still sweet spots in some of the SG plays but they are few and not all that sweet. But no one needs take my word for it. McClendon, CEO of Chesapeake, was the national cheerleader of the SG plays. Two weeks ago he stated in no uncertain terms that the SG play in the US was dead. Not only would CHK not be chasing SG anymore, they wouldn't be pursuing any NG plays in the US. They were now strictly in oil plays. And then he announced the sale of a portion of his company’s 600,000 acreas in the ES play in S Texas to the Chinese. The Chinese did not commit over $2 billion to this part of the EF for the NG. It’s an oil play…period. Just another point highlighting how misleading the Forbes’ statement is IMHO.


I am strictly a conventional player and was wondering if the presence of oil or gas in those shales (Eagleford specifically) shares a direct relationship with the fluid content in the conventional reservoirs it sourced spatially? Gas reservoirs above the gas bearing shale, Oil reservoirs above the oil bearing shale.




It is Cretaceous in age resting between the Buda Lime and the Austin Chalk. It is the source rock for the Chalk and the giant East Texas Field.

rockman sees no condensate, hears no condensate and speaks no condensate.

FF -- I'm sure the Cretaceous players figured out those relationships sometime ago. Unfortunately I ain't a Cretaceous player. But Elwood appears to know a bit.

But no one needs take my word for it. McClendon, CEO of Chesapeake, was the national cheerleader of the SG plays. Two weeks ago he stated in no uncertain terms that the SG play in the US was dead. Not only would CHK not be chasing SG anymore, they wouldn't be pursuing any NG plays in the US. They were now strictly in oil plays.

McClendon is wrong. Or, more precisely, what he said which everyone is misinterpreting is that the US has such a large glut of gas and will for the foreseeable future, and prices are so likely to be depressed for the foreseeable future, that no one is going to bother seeking out new plays. This says nothing about whether potential new plays exist or not. They do - I can think of at least a couple off the top of my head which almost certainly have large amounts of gas and which could be commercially viable if the price was right, but which almost certainly aren't going to be pursued anytime in the near future because we have a glut of the stuff. And there are almost certainly more. If McClendon was truly concerned that we were out of new SG plays, his company would not be promoting the export of LNG.

Yeah, perhaps there is a perspective issue here. From a driller/producer, shale gas is a mess because the NG prices are so it just isn't worth doing. But from the consumer perspective, this is a great blessing.

But in oil, the situation is reversed. There is good money to be made from $80+/gallon oil by drillers/producers. However, the consumers are not so happy with $3+/gallon gasoline which may be heading higher.

abundance - I suppose it depends on how one looks at "potential". There is a potential to produce millions of ounce of gold from sea water if the price of gold is high enough. I prefer the term commercially viable. At current prices most of the SG reserves are not viable just as recovering gold from sea water isn't today. But there will be a day sometime in the future when NG prices rise to a level to spur increased drilling in the SG plays. And when that day arrives there will be an increase in SG reserves. But that's not today nor is it a year or two from now IMHO. So as I define potential: it's at a minimum value today.

As far as misinterpretaing what he said I don't think so. Unless it was was incorrectly. He specifically said CHK would not be drilling for NG...SG or conventional. There wasn't much to interpret in his words.

What is happening with the Oilwatch Monthly posted by Rembrandt? I have not seen an issue since August 2010.


Well, Monday Matt said he was closing the forum and would have more on Tuesday; it's now Wednesday and nothing. Weird.

However, the point I want to make is how quickly something can change. Here was a reasonably stable situation and, suddenly, it's gone. There is a guy several of us (locally) know who we respect. He has traveled in the upper reaches of government, has been financially successful and walks the doomer walk.

His latest statement is: 1) That he believes, there are a number of Executive Orders waiting to be signed but won't be signed until after the election because they are so "hot." 2) You better have 6 months of food stored by the end of the year or you'll be in a world of hurt.

He may be nuts but we have no reason to doubt him. If he is right, his forecast of change is rapid. I believe it is a mistake to assume that there will be ample time to adapt even if his forecast proves wrong. There are a lot of other potential "tipping points" around and they are heating up.


He's not the only one making claims about stuff changing post election in the US of A.

http://www.halfpasthuman.com/ doesn't paint a pretty picture either.

Color me mildly paranoid, but it's also curious that Professor Goose has elected to disappear, with his name being removed from the Wikipedia entry on The Oil Drum, but what do I care, the Rangers are in the World Series*.

*Which may in fact be a sign that the End of the World is at hand. Oh well.

Sounds ominous. There was a back-up board, but it is now dead too (and had a craptacular layout anyway).

What could possibly be on the cards post-election to be a game changer? I don't doubt QE2 will be a big thing, even if expected. It is, however, the unknown unknowns that I'm more concerned about right now.

PG removed his own name from Wikipedia. He's the only one on staff who spends significant time at Wikipedia.

The reason he withdrew from TOD has nothing to do with fear of sudden doom. His real life got busy. Surely you noticed that he wasn't around much, even before he officially withdrew?

Well, Matt has the Wednesday breaking news up and the archives - this is about 3 1/2 hours after I posted above.

Its also possible he was finding keeping a forum a big old plastic hassle.

Did he explain why he was closing it?

Editor's Note: Future of the Forum

The LATOC Forum is now archived in read only mode: Archived LATOC Forum.

I'll keep it archived there indefinitely unless somebody is willing to take it off my hands. If you're interested .......... http://www.lifeaftertheoilcrash.net/breakingnews.html

[emphasis added]

Dude's bailing.

I think he was having a lot of technical problems. And I seem to remember something recently about him being fed up with it, saying that too many people were using it for ... ummm ... let's call it unproductive intellectual self-stimulation, and they were unwelcome and ought to go away, but that rant seems to have disappeared to the great bit bucket in the sky.

Edit - plus Ghung's quote of course, but there had been more.


Can't say I blame him. I don't think people realize how much work it is to run a forum.

I'm glad he's at least leaving the archive up.

We don't, but we do appreciate your efforts.

I can think of a dozen reasons to discontinue the forum. If he truly believes his message, at some point he likely feels personal pressure to prepare. A full time job, as I can atest to.

The staff at TOD can surely relate to the burdens of managing an open forum. I can sense it here. All good things must end.

Why is Matt silent on the issue of closing his forum? Law suit, perhaps? Threats? Just plain f'ing tired? Realization that his hard work may be for naught? Peak oil has gone main stream, yet little has changed.

As I've stated before, in a few hundred years, someone doing their postgrad work on the "Great Decline" may find a bonanza of insight in his archives, and TOD's as well. Too bad all of the links will be lost .........."like tears in the rain".

Well done, Matt!

Too bad all of the links will be lost .........."like tears in the rain".

"Roy had all the same questions we all have. Who am I? Where am I going? And how long do I have?"

let us revisit all this talk 31 January 2011.

'No one says we are falling off a cliff tomorrow.'

1. there are a number of Executive Orders waiting to be signed but won't be signed until after the election because they are so "hot."

2) You better have 6 months of food stored by the end of the year or you'll be in a world of hurt.

Extraordinary claims, with definitive time predictions: 'After the election' and 'by the end of the year'.

31 January gives ample buffer to see if these predictions came true or not.

I imagine Mr. Beck appreciates the business for the 25-year stable packaged foods he hocks...in addition to the gold he and most every other radio talker pushes.

That 95 billion barrels of arctic oil is hard to find:

Arctic Oil: Even at $100M a Pop and Nothing to Show, Cairn Energy Will Be Back

Cairn Energy’s high profile Arctic drilling program offshore Greenland has produced nothing except a $185 million writedown in costs after the UK company abandoned two wells and suspended another one this year. But Cairn said this week it will be back next summer, if its gets the OK from the Greenland government, despite its failure this year and the $100 million per hole price tag.