Libya, oil production, OPEC responses, Saudi Arabian capabilities and the SPR

The impacts of the disruptions in the Middle East are now starting to become evident as supplies no longer flow into the delivery pipelines that carry fuel from countries such as Libya to their European customers. It is now considered likely that the 1.6 mbd that Libya delivers to the world market will not be available for some time. Ireland, for example, which has had other problems with the banks in the recent past, is now faced with the loss of perhaps 23% of its fuel supply, which while only 14 kbd is, for that country, likely to be very significant. For while the Libyan shortage at present may be just due to Gadhafi ordering the ports closed, if he is also ordering the destruction of facilities, as is rumored, then the consequences may be more long term. ENI has reported that the Libyan shortfall is currently 1.2 mbd.

It is in this context that the world turns to OPEC, which has stated that it has enough oil in reserve to stabilize deliveries, and looks to see a compensating production increase from those nations with that potential. And here is the rub, for some OPEC countries are themselves in a little political difficulty which might negatively impact their own production, while those that can, in the short term, increase flow volumes to match the shortfall are likely all called Saudi Arabia.

So the next questions become – first can Saudi Aramco now bring that oil to market, and then second, will they? It is actually not that simple because the oil that will be marketed is likely to be the heavier crudes that Saudi has more difficulty in selling in normal times – since the higher quality Arabian Light has an established market. As I mentioned in a post earlier all oils are not created equal, and not all refineries are set up to easily switch from light to heavy. KSA has said that they can immediately increase the output from Khurais from 1 mbd to 1.4 mbd but that, in itself, will not be enough. Bear in mind that the oil has to be not only produced, but also shipped, and so there will be an additional delay as tankers are chartered and a new delivery line is established. It might also be remembered that there is often confusion about which volumes that KSA are talking about when they mention increasing flow. If we assume total liquids, then KSA has been producing at around 10.2 mbd. They have stated that they can produce up to 12 mbd, if they are still counting oranges – this gives a cushion of around 1.8 mbd (and if some of that is really counting Manifa it is not really there). We will have to see what they have in mind.

This is the time of year when demand is normally low, as heating needs become less critical, yet it is too early for the summer driving increase. But that fall has not been as evident this year. OPEC produced at a two-year high of 29.85 mbd in January. Because of the increase in demand from China and India overall demand has been increasing, and prior to the current situation, had been anticipated to rise an additional 1.5 mbd this year.

Which brings up another concern, since much of the current debate seems to assume that the current events will have a transitory impact, but I cannot see the justification for that assumption. Were the countries involved in the position where there was a clear opposition with a history of government, then a transition might have limited impact. The problem is that in most of the countries that are now in turmoil the outgoing administrations in general were able to keep power for the decades that they did by ensuring that there was no effective opposition, or alternate ruler that could replace whoever the “Leader” was. The example of places such as Iraq shows the difficulty in establishing a functional new government and getting oil and natural gas supplies flowing at historic levels (they are almost but not yet there).

Changes in philosophy, and the need to switch to providing more to the general populace is likely to reduce funds available for continued development of oil and natural gas. This will affect much more than just the immediate oil flow from Libya. OPEC themselves currently purport not to see a problem since, by their numbers, there is more supply available (by about 700 kbd) than demand. However as the Libyan change has shown, supply to greater levels than this can go off-line relatively quickly, and probably take a lot longer to get back into production after the turmoil is over. Which is a finite period in its own right.

For the very short term the governments of Europe have pointed to their stored volumes to explain why they don’t need to worry, and certainly the US has the ability to release some of the Strategic Petroleum Reserve which is currently as full as it has ever been. At what point that might become an issue is yet too early to tell, but with a growing concern that ever rising oil prices might drive the world back into a similar recession to that which followed the last visit to $147 a barrel oil, that option is likely to be increasingly considered.

Just curious: Does anyone see any posibility of this political mess interracting with any other fiscal mess(es) and making this global situation worse? (I just worry about sneaky/stealthy "Black Swans").

Rogers says Saudis can’t rise to the occasion.

Agricultural prices still depressed. Repeat of 1970’s lies ahead.

Smart stock brokers will be driving tractors for smart farmers according to Rogers:

The Saudi King’s $36 billion “stimulus” might increase domestic demand for oil sapping exports with increases in domestic consumption.

And it may not be enough to calm turbulent political seas around Saudi Arabia threatening to sink the regime.

Last Friday’s analysis of the situation from IPT’s Market to Market here:

Therefore, while KSA is not rioting. They are taking bbls off the market indirectly by boosting their domestic consumption with increased local stimulus. LOL.

It is all the same differential calculus and all results drain the global export tanks.

Climate change is then a positive feedback loop to remove farmland from producing to non-producing, making food worse, leading to more riots.

Well the long term picture seems to say "We are doomed." in the near term to have less oil. In the long term to have a serious food crunch, since almost no one is saying that we have too many people.

I don't know about fiscal interactions but keep in mind that the rebellions in the Mid East region were sparked by spiraling food prices; which themselves are the result of extensive crop damage throughout the world; which in turn is the result of mass flooding, intense rains, and drought.

Within the past year and in current progress:

1. Russia & Ukraine, wheat exporters: Severe drought, 40% wheat crop loss.

2. Pakistan: Severe flooding. Need to import.

3. Australia, wheat exporter: Severe flooding covering the size of Texas. Wheat crop loss and remaining crop degraded to animal feed status.

4. Canada, wheat exporter: Crop damage due to intense rains.

5. Argentina: Soybean and corn crop loss due to drought.

6. China, self sufficient in wheat: Near total loss of winter wheat crop predicted, requiring importation. Due to their huge population, and being a top world consumer of wheat, food prices are shortly going to be further effected in the near future.

7. Mexico: Corn crop loss due to drought. Mexico's importing of corn from the US has increased 50% over previous figures.

While Libya itself may not have serious food issues, there was the inevitable effect of 'inspiration' by watching other dictators challenged.

This is all due to Global Warming and the situation is predicted to get progressively worse during this decade and beyond.

The repercussions of continued and worsening crop damage --> increased food prices will hit the impoverished populations first, even India is starting to have food protests. It will afterwards effect the richer nations directly.

However, such disruptions will also impact the whole world economy, so we won't have to wait for more than a few years to see a critical effect.

Recomended website to keep appraised on the Global Warming/crop yield issue, as well as other related issues is,

great point, thanks for being abreast of the food factor in this equation.


Thanks for the website.

Unfortunately, we - as a species - have caused much grief to our fellow resident species of this planet... now our actions have targeted our own survival.

Not good.

According to a bit of arithmetic I did recently, the world's food system may be using up to 25% of our oil. Not just direct and indirect agriculture that consumes maybe 2% of the world's primary energy, but the broader food system that consumes up to 15% of it. If two thirds of that energy is oil, and that 10% comes from the 38% or so of the world's net energy that's supplied by oil, then 10/38 or about a quarter of the world's oil goes to the food system.

As net oil exports continue their slide and prices rise, this will have a very direct impact on the cost of food. Add in harvest reductions due to CO2-driven climate instability, and we're staring at a limit to the global human food supply, right around now (OK, probably within the next decade or so).

I don't foresee mass global famines, though. The size and elasticity of the food system will forestall that. In fact, food production will behave much like the oil supply. Its growth will stagger to a halt, but there won't be a sudden overall drop in output. Essentially our food supply will be capped.

The probable results of a capped food supply can be inferred from biological experiments on laboratory colonies of mice whose food supply has been limited. If the limited food is enough to feed a specific number of adult mice, the observed results have not included a die-off of the adults. Instead, there is a reduction in the fertility of females (fewer live births) as well as an increase in early infant mortality.

Over time the adult population continues along quite normally, with replacement mice entering the population only as the food supply allows. In other words, the number of newborns reaching maturity balances the number of deaths in the adult population resulting in a stable population. It makes sense to me that if the overall food supply were to decline slowly, the same mechanisms would continue to play out - only with fewer newborns reaching maturity.

There is no reason I can see that this dynamic should not apply equally to homo sapiens as to mus musculus. We are both species that remain subject to the laws of Mother Nature and ecology.

One other response to consider when it comes to limiting population growth is the role of family planning - deliberate fertility control. As local situations become more difficult, and especially if people see little hope for improvement in the short or medium term, more women will begin to think of controlling their fertility.

Such decisions were behind the drastic plunge in birth rates we saw as the former USSR fragmented. Their birth rate fell by almost one half in the six years from 1987 to 1993. In fact the case of Russia is instructive, because the eventual rise in the death rate came a full five years after the birth rate began to plummet. This time difference implies that that Soviet and Russian women made deliberate choices not to have children, beginning when the situation got bad. It also implies that unlike the voluntary drop in birth rates, the rise in death rates was due to involuntary factors - primarily declining health due to longer term malnutrition, lack of health care and alcoholism.

So as in the laboratory mouse colonies, we may see a situation in which limited world food supplies do not lead to massive deaths due to global famine, but rather to a sharp drop in birth rates across all nations. However, because of human nature things are unlikely to remain as peaceful in our civilization as they do in a mouse colony. Social unrest (to use a mild term) will lead to spreading deterioration in nations' health care and sanitation systems, which will eventually lead to a rise in the world death rate.

I don't think we will have to worry about growing overpopulation. I'd be willing to bet money that the world's population will peak between 7.5 and 8 billion some time around 2025, then begin to decline.

In much of the world your kids are your social security system. Until this changes I don't think there will be major declines in the number of kids people have in those countries.

I am in the US at age 52 and I believe my only support in old age will be from my kids. I do not believe social security will deliver.

I think the main point is that we, like all animals, require food. We don't reproduce when the food supply is not adequate. Whether children are a part of long-term retirement planning or not doesn't change or preempt the fundamental relation between food and reproduction.

Exactly so. Those who see children as a sort of walking 401(k) are thinking like economists, not ecologists.

Excellent points. Not hard to see that even at an energy site everyone knows we don't actually eat the oil.

Good time as any to repeat my epiphany. I live interior Alaska. Getting on toward a decade ago, just before Christmas a huge cyclonic system of big low pressures snowed shut every road to our little hub city for one day to three days depending on direction. I just happened to have to drive SE to collect my daughter who had ill advisedly ventured into the 90mph blowing snow during a two hundred mile trek home for the holidays. She was fortunate--pipeline maintenance vehicles rescued her and all the other motorists stranded in the same low mountain pass and put them up in a mothballed TAPS pump station for the night. Phones worked for a few hours.

Anyway as I slowly drove out of town Christmas Eve morning there was no inbound traffic for near an hour. Then for the near the next hour only one type of rig was moving in the inbound direction. Took me for or five trucks to notice but--every one was an inbound empty oil tanker headed to the region's sole refinery. Some places that direction had been socked in a couple days earlier these were the first rigs to get through. People with empty oil tanks were about to face a deep high pressure system with temps racing past forty below.

It took but a moment for me to transfer our little snow storm caused couple day truck bottleneck to a worldwide trans ocean oil delivery system shutdown. The next image that sticks in my mind was all the empty supermarkets I imagined. I didn't want to take it any further--I had lots of empty miles to drive to a get to a road I hoped the guys would get open.

My story ends happily--after one aborted trip south toward the pump station I tried again as dark was coming on. Just as I got to the ten foot and higher drifts across the highway a plow and loader broke through--daughter and I made it home for Christmas eve. Not the kind ending I'd expect if stuff really hits the fan.

No question, life still has risks. It's good to keep a sharp eye out for risks, and prepare for them both individually and as a society. TOD is good for that.

OTOH...Alaska is tougher to live in than most places; things are less risky than they used to be; and they're likely to continue to improve, albeit not at all smoothly or without pain.

We gotta keep a balanced perspective.

What might not have been obvious about my little story:

1. This was a bit over six years ago--at the time I barely thought about oil at all.

2.The thought about the potential of globally disrupted oil supplies just jumped into my head seconds after I realized all I was seeing coming my way on that lonely road were empty oil tankers.

3.In retrospect the setting was a bit surreal
a. I was essentially driving alongside a million barrel a day oil flow (though it was miles off at that point).
b. I was headed to a pump station that was closed because pipeline flow was about half its peak level.
c. Enroute I planned to stop at an operational pump station to see if they were in contact with the closed one further south.
d. That operational pump station is now within shouting distance of the Missile Defense Command, which was beginning to be built at the time.

True just a bunch of odd circumstances pieced together in retrospect--but not the first odd lonely road coincidence for me. I heard news of the Camp David Accords being signed on the only radio station I could pick up as I drove a very lonely east/west mid Montana highway--a road that is flanked by our offensive ballistic missile silos.

Oddly, the president who engineered the signing was under great pressure a few years later to nuke Tehran. Saint Helens blew about that time--I caught his ashen face on the local news as he exited the plane after overflying the eruption sight--I always figured seeing the result of that perfectly placed ten megaton charge at a time when people around him were really pushing him to press the button might have had something to do with the deathlike pallor on his face as he walked down the steps from the small plane.

We gotta keep a balanced perspective.

no doubt--but sometimes being back a bit from the center of the picture gives you that perspective...if you happen to be paying attention.

And by the way in the big picture the guys who calculate that sort of thing say things are actually somewhat more risky than they were a few decades back--blow up wise that is. A nuclear exchange is now rated as slightly more probable than it was a couple decades ago. Fortunately the think tank guys still figure it to be a very unlikely event. Its hardly my big worry or what I work my life around--but the thought has been background radiation in minds of many my age who grew up under what was then a huge looming shadow. We'd be remiss to dismiss that thought (and similar ones) from our minds. We are the trigger locks.

We'd be remiss to dismiss that thought (and similar ones) from our minds. We are the trigger locks.

I agree completely. That's why I have a hard time getting enthusiastic about nuclear power. Some people casually dismiss the risks of nuclear proliferation....I don't understand that.

Can't casually dismiss the risks, just try and figure the trade offs--not an easy task. If it were to come down to just between more coal and more nuke I'd have to go with the later these days. Of course its not that simple but its all part of the complex equation. We've entered the Brave New World though it isn't quite as Huxley envisioned.

If it were to come down to just between more coal and more nuke I'd have to go with the later these days.

I agree. Fortunately, I don't think that's the choice - in fact, windpower can be ramped up much more quickly than nuclear, which is the other reason I prefer it.

We still have baseload issues once wind penetration reaches some yet to be reached point. On our small and currently thinly intertied grid the powers that be are hesitant about signing contracts that would bring wind up to 16% of our generation capacity. If we manage to finally push our hydro project through a whole lot of wind could be added. Only the 600MW low Watana (still about 700 ft. tall) is now being considered.

I'm not a fan of big dams but this looks to be project worth doing. Hydrology is my big concern--glacial melt that is not being replenished supplies about 13% of the projects water--I haven't heard just how many years that will be happening or how much generation remains once glacial melt becomes insignificant. The dams big savings don't happen until its second fifty years of operation.

I like hydro. Nuclear's link to weapons..I don't like. If weapons proliferation could be prevented by swearing off nuclear power, I'd do it in a NY minute.

I'm not optimistic that weapons proliferation could be prevented, but I'm very curious about thorium as an alternative which might reduce proliferation.

What % of Alaska's kWhs presently come from nuclear;hydro;NG; coal and wind?

Is the local utility or ISO allowed to curtail wind inputs to the grid?

Well its different up here

Alaska has over 200 remote, stand-alone electrical grids serving villages as well as larger transmission grids in Southeast Alaska and “the Railbelt”. The Railbelt electrical grid follows the Alaska Railroad from Fairbanks through Anchorage to the Kenai Peninsula and provides electrical energy to approximately 500,000 people. from here

No nuke right now, small nuke has been and is being considered for certain apps. Almost all the village grids are diesel.

I'm having a heck of time finding simple statewide break downs but the state does have 423 MW of installed hydro mostly on the medium small grids in southeast Alaska and on Kodiak Island, but 126 MW of that is connected to the state's largest grid, the above described Railbelt.

That 126 MW is near 10% of the Railbelt' capacity. The Railbelt gets about 70% of its power from natural gas, and most of that from the Cook Inlet fields which are in steep decline. About 160 MW of the Railbelt is fueled by oil--we in the interior get to use that spendy stuff. Another 60 MW is naptha also in the interior. There is an old 25 MW coal plant operating next to the mothballed 50 MW debacle I refered to at the end of Robert's key post. Another handfull of 20-25 MW interior region coal plants with district heat scattered about (three military bases, the university and the old downtown plant) round the coal up.

Very little wind on line right now but the wheels are turning.There is some geo thermal under intense scrutiny but nothing of substance currently on line. And then we in the interior have BESS for backup. Fifteen minutes of 27 MW or 40 MW for less time. Not cheap, not generation but we bought it and it does help.

I like hydro power--I just am not a big fan of what the dams do to wild rivers. The Susitna project is far enough up stream to be beyond virtually all salmon migration, thus far study indicates it will not have a major negative impact the spawning and frye cycles.

Sounds like wind would work really well: both diesel and natural gas can balance really easily with it, and wind's gotta be cheaper than diesel.

Kind've like Guantanamo, which uses wind for 1/3 of it's power, and diesel for 2/3. Works really well.

They are a few turbines near Kotzebue and I believe Kodiak has some now too. A few have popped up on the grid--the larger projects in the works are mentioned in my reply to Len. More small systems are in the works as well, there is some state money for renewable power.

One problem is that once you get away from the mountains into the interior there is almost no wind. Soft snow can lay on my birch trees for weeks on end. Unfortunately, at that time of the year, there is near zero solar as well.

My wife's village was an early adopter of wind 35 years ago--that was unfortunate. The European system was supposed to feather out and lock down during high winds--fairly common in southwestern Alaska--it didn't. Lucky no one was killed as a little 90 knot breeze took the windturbine out to sea. That didn't make anyone too enthusiastic about windmills in that neck of the tudra for quite a while.

Tech is improved and villages where it blows are moving toward windpower, but their economies are tenuous at best--transport is very expensive in and out (almost exclusively air except for a couple seasonal sea or river barges--which of course carry diesel fuel). Food is high, heating is high (no trees), income is low (fishing has not been good). We will see what happens. But late 'oilized' off grid rural Alaska could well be a peak oil canary in the coal mine.

Areas that can't develop wind, solar or nuclear will be in trouble.

Northern areas will have trouble with solar (unless it gets a lot cheaper).

Poor rural Northern areas without good windpower and a supporting grid (or the money to develop them) will be in the worst predicament.

I wonder how much of Alaska's population fits that description?

Probably around 10%. Some rural areas with a solid resource industry, like all such, will be fine while the resources last, whereas some of the midsized southeast towns are in decline now as timber and fishing have faltered.

Fairly detailed 2004 Alaska numbers here. Funny at first, I couldn't find my little area which is part of greater Fairbanks. Ends up I live in the Yukon-Tanana Uplands while Fairbanks is in the Tanana-Kuskokwim Lowlands<?- )

One needs to be very realistic about wind power. Clear-eyed evaluation of facts is critical.

From month to month, wind output (the amount of energy actually produced compared to the amount the turbines are capable of producing given perfect conditions) can vary. In April 2009, the average wind output was 41 per cent of capacity, while in June it was 14 per cent, reflecting the fact that the summer months aren’t as windy.

Ontario Canada IESO (Independent Electricity System Operator) makes this statement on the cover page of their website about the 1080 MW of fairly well-distributed wind generation down-wind of the great lakes, reportedly some of the best wind resources in N America. Looking at the details of Ontario wind generation it is clear that most wind electricity is generated in the middle of the night in the middle of winter, when all it accomplishes (in Ontario) is intermittently shutting down some baseload nuclear generation in favour of a mix of some wind and a lot of coal or gas from controllable-output plants, an outcome which has very likely a net negative effect on CO2 emissions.

Advocates of N. Gas generation to supplement wind generation also need to look beyond the simple chemical formula for combustion of methane --> Co2 emissions, into the amount of CO2 which is commonly co-produced with N. Gas in the field and immediately separated and usually released, often up to 50% or more of the total volume of gas which comes up. Also, pipeline transmission of N Gas is not CO2-free.

ISEO used to make available on that website a spreadsheet of historical wind generation by hour for the past several years, but I can no longer find it. It's records for the years I looked at were extremely depressing for advocates of renewable energy who know anything about grids. I personally unconditionally favour re-directing wind energy investment into CSP solar with thermal storage and HVDC transmission. That technology is already well proven, has a lot of space remaining for development, and according to Sargent and Lundy engineering of Chicago and NREL, could compete unsubisidized with coal and nuclear after the construction of only 2.8 to 8.2 GW, easily do-able.

Assessment of Parabolic Trough and Power Tower Solar Technology - Cost and Performance Forecasts - Sargent & Lundy LLC Engineering Group Chicago, Illinois

For the more technically aggressive low-cost case, S&L found the National Laboratories’ “SunLab” methodology and analysis to be credible. The projections by SunLab, developed in conjunction with industry, are considered by S&L to represent a “best-case analysis” in which the technology is optimized and a high deployment rate is achieved. The two sets of estimates, by SunLab and S&L, provide a band within which the costs can be expected to fall. The figure and table below highlight these results, with initial electricity costs in the range of 10 to 12.6 ¢/kWh and eventually achieving costs in the range of 3.5 to 6.2 ¢/kWh. The specific values will depend on total capacity of various technologies deployed and the extent of R&D program success. In the technically aggressive cases for troughs / towers, the S&L analysis found that cost reductions were due to volume production (26%/28%), plant scale-up (20%/48%), and technological advance (54%/24%).

Given Sargent & Lundy Engineering's worst case scenario provides peak time solar electricity at $0.062/kwh by only building 2.8 GW and doing a few minor and definitely achievable R&D improvements, plus transmission, and a clear path is provided to offering 83% capacity factor using cheap sand and gravel tanks for thermal storage with 3x collector area and no additional central plant, which should make the installation no more expensive PER KWH if only the industry can get to 2.8 GW installed, I don't see what we are waiting for.

It also appears to me that the more agressive forecasts of NREL / SunLab of $0.035 / kwh if we can get to 8.2 GW insalled quite quickly is entirely within reach.

I found the hourly IESO records I referred to above. Note, entries are DATE dd-Mon-yr, HOUR, MW with nominal 100% output being 1080 (Mwhr per hour). Interesting recent entries include e.g. quickly selected hot summer day when the grid is maxing out from air conditioning, wind running well below 10% nameplate and low-efficiency simple-cycle gas peakers maxing out.


Ontario Independent Electricity System Operator - IESO - (Select Hourly Wind Generator Output)

Len forgot that I did an analysis of the Ontario data:

It is in the book The Oil ConunDrum and I gave him some credit for giving me the data reference. There is a section devoted to the problem.

Web: Thank you for the gracious (though unnecessary) credit. As you know, it was nothing, really :) I'm trying to download the pdf's linked at your site now, to do my best to make some attempt to catch on to a little of the results of your superb facility with the maths. Kudos.


The S&L study is from 2003. It seems to project that we should be at $.04 - $.06 by now. Does that make sense?

I've looked at the Ontario data. One problem was that I couldn't find a timeline of when wind capacity was added, so that it's very difficult to identify the % of nameplate production. Have you seen that info?

Hi Nick. The statements in the S&L study are that costs COULD be down to $0.04 to $0.06 by 2010 IF 2.8 to 8.2 GW of solar thermal were installed by that time. A great part of the projected cost reductions come from volume manufacturing and from anticipated incremental technical improvements which would come with experience. Since almost none has actually been built, the costs are still up at the high numbers. It's the old catch 22, cost doesn't drop to where investors will jump in until a lot of investors have already jumped in, which is obviously not going to happen until costs drop.... Add in the resistance from incumbent fossil generation and outfits like Arch Coal and Pickens Gas (from above, the greatest beneficiaries of wind generation are Natural Gas suppliers, no wonder the Pickens plan promotes wind generation), plus an economic bump, plus a lot of incited resistance to doing anything with taxpayer funds, and its not likely to happen.

I've pretty much given up on N. America and am in process of developing a business plan for Egypt and Libya to send power to Italy and Germany.

Agreed on timeline of capy additions. Last time I looked, I think in mid 2009, installed capy was about 875 MW, now its 1080 MW. All I can suggest is interpolation for rough numbers, or contacting the IESO offices for the data if precision is critical. I also note from an article I wrote for EnergyPulse - IMEUC - Independent Market for Every Utility Customer: Alternative Market Operation that on May 8, 2008 "The 472 MW connected wind ranged from providing 174 MW at midnight to 19 MW on peak."

Have you seen recent figures for NA CSP costs?

re: Ontario:

Canada is a funny place: it's provinces are enormous, but it's population is small, and concentrated in the south. In this case, the wind farms are concentrated around Windsor and Toronto in a relatively much smaller area. 1.08GW wind (nameplate) really isn't much.

So, this is an interesting start, but hardly enough to make generalizations.

Actually a good portion of the wind generation is on the height-of-land ridge to the east of Lake Huron, about 100 miles northwest of Toronto. Some is along Lake Erie, about 150 miles southwest, and the balance is at the east end of Lake Ontario, about 180 miles east of Toronto. That seems like an excellent dispersion IMHO, certainly as good as you are ever going to get for 1080 MW. Do you propose that Denmark has a better dispersion? Can you point out comparably useful data for Texas, Alberta, Denmark or other? If the Ontario installations are really an "insufficient test" then we're doomed to testing (and arguing angel counts dancing on pinheads) until we have no money left for investment. I'd note that any wider dispersion, say north of Lake Superior, makes transmission costs prohibitive regardless of population distribution given that the whole concept of dispersion is that large blocks of power can be transmitted from areas of oversupply to areas of undersupply. Wind patterns are much larger than economical transmission can compensate for.

Face it, wind is "practically" of very little use given present customer usage patterns. Those patterns might be able to change to efficiently accomodate more wind if a market system such as my IMEUC proposal referenced above were implemented, but that has about zero odds.

That seems like an excellent dispersion IMHO, certainly as good as you are ever going to get for 1080 MW.

I agree. I didn't phrase that properly, I suppose, as that kind of variance is what I would expect from that small amount of generation in a small area: the relative variance would decline quickly with greater size.

Wind patterns are much larger than economical transmission can compensate for.

That doesn't make sense to me. HVDC is not that expensive, and we'd be dealing with balancing amounts, not 100% of load: no grid would ever be 100% wind. I don't think anyone envisions a grid with more than 60% wind.

wind is "practically" of very little use given present customer usage patterns.

I really don't see our current methods of managing supply and demand as unchangeable. I agree it's not easy - that's why nuclear is favored - it fits nicely into traditional methods of managing supply and demand.

So...maybe we'll move to a grid that's dominated by nuclear. OTOH, I see no reason for us to agree that's the best solution.

That seems like an excellent dispersion IMHO, certainly as good as you are ever going to get for 1080 MW.

Actually to me it looks as a single fairly compact low pressure system would actually power all those locations often enough, though some could be on it's backside and some on it front--but still dispersed pretty well for the neighborhood.

However on our little grid we have a whooping 75 MW wind going in. 50 of that is on Fire Island in the Cook Inlet off Anchorage and 25 is near Healy by the notch the Nenana River makes through the north slope of the Alaska Range as it slopes away from Mt. McKinley. Those sites are 200 air miles apart with what some would consider a fair sized land form in between (unlike what could be said about the glacier dozed the lay of the land around the pretty little loop made by the three great lakes around Toronto). Another 25-50 MW of wind is a bit more tentative, its only 100 air miles from the Healy site and on the same side of the mountains, guess it wasn't far enough away for our untility to contract with it just yet <?- )

you wouldn't happen to be male. Ever been married?

Read this again please:

In fact the case of Russia is instructive, because the eventual rise in the death rate came a full five years after the birth rate began to plummet. This time difference implies that that Soviet and Russian women made deliberate choices not to have children, beginning when the situation got bad.

Hardly new human behavior by the way, just a nicely documented recent tidbit.

Mice don't have advanced health care available to them. I fear what will eventually happen is those countries with medical assistance available will show an increase over the cap you mention, while the countries that don't won't. The result will be more and more food is consumed by the developed nation, while the undeveloped ones begin to starve. Will the "first world" nations close their doors to the tidal wave of immigrants desperate for food and assistance?

nor do mice have a system where the top mice divert 10 mice worth of food(grain) into producing cheese for the elite. Organisms will compete for food, but our economic system is unique. It will be interesting to see how long the "plenty of food, it's the distribution that is a problem" mantra is used to justify biofuels, the western diet, etc.,

Technically it don't last any longer. We use more food than we grow. Global food stocks have declined rougly 10 of the last 12 years. There is not enogh food even today. Add 85 million mouths this year...

In your country and mine, 98% of us need to be fed from 'stocks'. Additionally in my country, UK, unlike in the USA, we actually need to import something like 60% calories, let alone nice things such as 'up-market' a-seasonal fruit & veg. Regions like MENA e.g. Egypt, KSA, are also increasingly very large net importers of primary food materials. All modern urban populations, especially us importers, depend on 'stocks' and their affordability.
A bit more more complicated though in the world at large, where about 50% of people depend to a greater or lesser extent on food that they can grow themselves with family labor. Of course, if whole areas get hit by successive bad weather then these otherwise fairly self-sufficient people must import 'stocks' or starve. We have not seen such old-fashioned famines for a while except in special circumstances (Mao's forced industrialization, latterly N Korea, and a few others). However, the fewer international stocks there are available means the the shoe will pinch very hard for the poor in some areas, especially the urban poor. Bear in mind though that globally, including China, the pretty dramatic 'trend' of recent years has been for resources to be devoted increasingly to 'upmarket' meat and horticultural products (and biofuels), and not to the provision of basic staple food grains that keep down the price of calories & protein (bread and rice & beans) in the poor urban areas of the world.

No doubt we could get a positive food balance and start building the inventories again, if we ate less meat and stoped turning human-food into car-food. But will we? I am sceptical to that.

And even if we did, population still grow, climate change moves on, and the petroleum export decline may start to accelerate any year now. De-population is in the cards. The choise is between the volonterly or forced (by nature) kind. When? Idon't know, but guess in 20 years.

To what degree I wonder will rising food prices in the west cause people to eat less? At present most of us eat far more than we need, with concomitant health repercussions. Eating less might in fact be better for our economies. However, the civil unrest in north Africa and the middle east is in large part caused by economic distress, and by this I mean food costs for the marginally employed, as well as unemployment per se. People have been grumbling for a few years now about the increasing cost of staples, and the problems of feeding a family. I heard of complaints about the price of a sack of rice in supposedly oil rich Oman three years ago. Bizarrely, along with the stresses on the diets of the poor, the importation of western luxury foods and sweets, plus a car bound lifesyle, has led to a serious increase in obesity in countries where it previously never existed, and diabetes is now a very serious problem in all the Gulf countries.

With dependency on the traditional suppliers for wheat and rice being compromised by exceptional weather events it will likely be food, and not fuel, that will be the catalyst for serious world economic damage in the short term. Most of these countries have very good health care systems too, so the previous natural toll on populations is now compromised, as it is in the west.

The countries with good health care already have declining birth rates. Good medical care doesn't prevent birth rates from falling, it just keeps death rates from rising by maintaining adult life expectancy.

Yes, the first world will slam the doors on food refugees. In a New York minute.

I agree to much of what you say. But countries such as Haiti and Nigeria shows how poor nations can make women have MORE children. I'd guess it is about education to a large degree.

No population can grow beyond its food supply, in aggregate. Haiti and Nigeria are candidates for frank and severe food shortages, and no population survives outright food shortages intact. I'm just saying that there are ways in which a long-term food cap could present a different outcome than the die-off some of us worry about.

Poverty and hunger are not necessarily synonymous, as Haiti for instance was more or less self sufficient in many food products until its markets were "opened" during the Clinton years. At which point the counter-point is demonstrated: the country was flooded by sufficient cheap and free food to practically end local small farming. Cheap food, high birthrate, and poverty. In Mexico NAFTA had a similar effect in many markets - the flood of cheap imported food driving many local producers out of business (poverty), while also making food cheaper and increasing the birthrate.

So in many cases poverty leads to a glut of food and food aid, and a corresponding increase in population. We associate poverty with hunger (and in some cases that is the case) but the global response to poverty is to send food, which tends to increase both poverty and population.

Hopfenberg has a superficially unkind but entirely realistic case for the cause and effects of our policies:

If two thirds of that energy is oil

Why are we assuming that? I suspect that oil is a lower % of food energy requirements than average: stationary refrigeration is the single biggest energy input, at least in the US.

It's notoriously hard to get a fix on how much actual oil is used in agriculture. Using the numbers I could find through Google, the actual proportion of oil is probably more like a third of the total energy used: half of the 20% of primary energy used in direct and indirect agriculture, 100% of the 15% used in in transportation of food and 15% or so of the remaining 65% used for other operations. It's equally hard to get a handle on the amount of energy used by the world food system but the consensus seems to be that it uses around 20% of global primary energy. If the same ratio applies of oil being one-third of all energy used, then the world is using about 20% of its oil for food. Perhaps not a quarter, but you can see it from there.

It's essential when considering our dependence on oil, to distinguish between various time frames.

In the short term, agriculture is very dependent on oil for farm equipment and transportation, and natural gas for fertilizer and chemicals.

In the short term personal transportation will take the brunt of consumption reductions, sparing ag fuel supplies. In the medium term, farmers can grow their own fuel.

In the long-term, it's pretty easy to electrify farm equipment and transportation (including electric rail), and substitute low-fertilizer crops (e.g., soybeans for corn) and produce ammonia fertilizer via electrolysis.

This is a pretty good overview, especially with regard to food:

"Let's begin with two very helpful UN Food and Agriculture Organization reports: World agriculture: towards 2015/2030, and the sequel World Agriculture: Towards 2030/2050. What these reports do is basically look at projections for population and economic growth and then estimate how much food people would want in the future, and what quantity of agricultural commodities would be required to fulfill that demand. The first report focuses a lot more on the supply-side factors of how this could be done, while the second report extends the analysis out further in time but confines itself much more to demand side considerations.

...As you can see, the history is that most regions of the world have been getting more and more food. The exceptions are some of the formerly communist countries which suffered a partial collapse of their societies as they attempted to transition to a different economic system. The FAO projects that as the developing countries continues to grow faster than the developed world, they will be able to afford more food, and thus they will continue to approach, but not completely achieve, developed world levels of (over)feeding."

Regarding Fossil Fuels, from the same article:

"In Powering Civilization to 2050 I argued it was potentially feasible to transition to power civilization with a mix of solar, wind, and nuclear energy, with the transition well on the way to completion by 2050. (Luis de Sousa made a broadly similar argument in Olduvai Revisited 2008). This would require a period of belt tightening and conservation in the next couple of decades, but once the transition had overcome the critical threshold (as solar energy in particular became cheap), I suggested energy in general would get cheap again. I adopted the UN medium population projection which has population at about 9 billion by 2050, with growth slowing sharply. "

Most farms in developed countries ae already electrified to the extent practical using current day technology; the only large scale fixed location use of diesel on most places is for driving irrigation pumps, etc, located well away from the house and farm buildings, where the utility delivers the juice.

Electrifying field equipment is going to prove to be a tremendous challenge-one that imo won't be met.I think it will always be cheaper to run heavy tractors, combines, trucks and other such machinery on some sort of synthetic fuel-probably a combination of biodiesel and ethanol , once oil becomes too expensive. Natural gas works pretty good on tractors and farm trucks and will be used extensively for a long time-farmers may be able to produce their own methane cheaper than biodiesel in some cases.

The problem with electrifying farm equipment is that it never cruises like a car does, once up to speed;the need for horsepower is heavy and continious-nobody has ever built a battery , to my knowledge, that could deliver a hundred horsepowere equivalent for four hours and still be small enough and light enough to mount on a tractor-and if such a battery takes four hours to charge, you would need at least three of them per tractor during the busy season, when the tractor is hot seated-a tractor often gets fuel and grease and a rested operator every eight ot ten hours and runs eighteen to twenty four hours for days on end.

Then it often sits in the equipment shed for days or weeks on end, and may not be used at all for a month or more.This situation does not lend itself well to the cost effective use of very high priced batteries-if they are ever built at all.

Biodiesel and ethanol will almost certainly fuel our farms once oil and natural gas reach a high enough price, and for a long time afterward, if not for the duration of industrial farming.I just can't see batteries ever getting cheap enough to compete.

Animal power might make a comeback if it becomes impossible to manufacture new machinery using coal and nukes or maybe wind power . But so long as we have machinery, it seems altogether likely we can grow crops for fuel on less land, cheaper, than we can grow feed for draft animals-which have to be fed EVERY day, not just on days there is plowing, harvesting, hauling, etc, to be done.

Never the less, it there is a major fuel supply disruption, anybody who owns a horse or mule will be able to sell it for an ungodly price;even a worthless saddle horse might pull in a few thousand bucks in a panic.

I agree with most things you say, but have two opinions to it.

First, EROI of bio-liquids are horrible compared to petro-liquids. If EROI is below or near 1, the only thing you do is to convert one barrel of petro to one barrel of bio. Such a system is still as dependant on petro-fuels as ever, it only has a "green" label to it.

Secondly: Should we turn to litteral horse powers, those horses will need food. EROI won't be a problem, we just grow the stuff and feed it to the horses right as it is. Horses have their own internal fuel refinery system. Problem is just, those fuels need to be grown somewhere. And I know a species of naked two legged primates who want to eat to.

I agree-biofuels are a very poor bargain compared to petroleum.But this does not mean we can't produce enough to run our farms, at a net gain- ethanol and biodiesel produced and consumed in farm country, in farm equipment, will be very expensive, but doable.

There are some considerable savings to be realized by cutting out a bunch of middlemen and doing things on a small scale-for instance who ever runs a small scale distillery in a given nieghborhood will be able to buy locally, sell locally, and use the byproduct livestockfeeds either on his own farm or sell them to a local farmer.It might be possible to fuel a distillery with home grown crop residues whereas shipping such low value fuel to a power plant would cost too much.

But there is no doubt wholesale food prices would rise considerably;I'm simply of the opinion they would rise a lot more if we try to go back to farming with draft animals or with electrically powered machinery.But we could grow enough that nobody would starve, by dropping down the food chain a ways and cutting out most of the meat in our diets.

As a matter of fact, it is not even POSSIBLE for us to return to farming with animal power in the short to medium term-the animals don't exist in large numbers, hardly anybody knows how to properly work and care for the few we have these days, and the acres of land per man that can be farmed is only a small fraction of that which can be farmed with ice powered machinery.

Putting enough people out in the fields, on any sort of short to medium time frame, would be impossible in a developed country; only a few gungho youngsters are interested, the work is VERY hard, the pay is miserable, and surplus housing and amenites are scarce or nonexistent in farm country.

I doubt if you could get the average citizen, male or female, into a little tin trailer and out in a field in the hot sun with a hoe using anything less than a whip, a cattle prod, and a squad of soldiers coming along behind shooting anyone who makes a break back towards town.

In short, we are in deep doo doo and have to make the best of a few bad options-biofuels will never allow us to continue bau, but they can keep us from starving in the medium term, in America and other places with enough good farmland.

As for returning to horses, you are correct in that it will take (and did take) a great deal of production simply to sustain the horses themselves.
But we must also consider the skills and infrastructure which used to exist regarding horses, but which is now almost entirely gone. Thanks to the Amish & Mennonites, much of that information has been kept alive.

Though it is hard to contemplate actually going back to horses (I can't think of a more appropriate use for fossil fuels than in primary food production), it is reassuring to know that there are still a few individuals who have kept alive the centuries of horse wisdom.

Is anyone out there a fan of George Ewart Evans, who worked so hard to keep that wisdom alive?

"Agriculture requires 1.4 million tons oil equivalent for motive power. Around 500,000 hectares are currently devoted to growing rape as an agricultural product and around 1,500,000 additional hectares would be required for rape and beet cultivation for the processing of sufficient bio-diesel to make agriculture self-sufficient in motive power. This represents around 8.5% of the agricultural land in current use. This needs to be balanced against other demands on the same land, but some of the set-aside could be re-employed."

The above is for England.
the quote is from section 5.

I sorted out the math for the US some time ago and also got less than 10% of the agricultural land would be able to support the fuel needed for the farms to keep working. From what I've been able to find, horses required more of the farm to feed them than the tractor would. Probably this is because the horse always eats, and the tractor can be parked and use nothing when it's not needed.

Yes, the studies I have seen indicate that it would take about 10% of the land to grow enough vegetable oil to run the farm equipment (you can modify a diesel tractor to run on straight vegetable oil rather than biodiesel if you want.)

Using horses used to require about 25% of the land just to feed the horses.

All true, and good points, for the short term. In the long term of course you have to consider the scale of oil-dependent infrastructure necessary to build and maintain tractors. Fuel to run them isn't the only issue.

Thanks to PVguy upthread for the info on oilseed diesel for tractors in England and the link to John Busby.
A lot of good points have been made here during this TOD discussion. I agree with OFM about the very hard work involved in earlier farm work. Personally, it does not seem that long ago when I sweated on farms and on construction sites! Further back historically in mid 19thC, horses enabled about 22% of the population of England to feed the growing urban majority when England was about 18M. Later of course we had to buy in the majority of our food from abroad (>70% of food as calories by 1939). England is now well over 50M within a UK total population of 60M and we almost certainly do not have the option for food self-sufficiency, even with modern inputs and/or a drastic change in diet of the kind already outlined by OFM as part of this discussion.
Just a thought: where crop rotation needs a 'grass' break from arable farming, and especially in wetter areas like west of UK where oats could be the most viable cereal crop, it might be advantageous to use horses for some of the work, including hauling and forestry work?

So you say if weset aside 10% of farmland for fuel production, we could keep our farms running. Now, given that 2% of the workforce (or less) works in farming, this gives a picture of how little chance there is to feed everybodys fuel need by converting food into fuel. Bio-liquids will not keep our cars rolling.

If EROI is below or near 1, the only thing you do is to convert one barrel of petro to one barrel of bio. Such a system is still as dependant on petro-fuels as ever, it only has a "green" label to it.

The important thing is liquid fuel return on liquid fuel invested: diesel is only about 20% of the energy input. 60% of the energy input is process heat, which can come from much cheaper sources: in the short run natural gas and coal; in the long-run from cattle-lot methane, ag waste, solar, wind, etc.

Diesel is only about 20% of the energy inputs to ethanol - most of ethanol's energy inputs have prices that are decoupled from the price of oil: nat gas and coal. Right now BTUs from nat gas are roughly 40% as expensive as oil BTUs, and coal BTUs are even cheaper, perhaps 20% (of course, everyone would prefer nat gas to coal to minimize CO2, but it seems likely to be used to some degree). Even if nat gas and coal prices were to double along with oil (unlikely, given the supplies of both), there would be a wide margin to make ethanol more than competitive.

Nick, Sorry but the argument was about EROEI not energy return on $ invested.

Fast forward to a time when fossil fuels are not available for process heat. You then have to run your process on biomass produced fuels, wind, solar etc. How are you going to justify making ethanol to burn in an ICE.

Think further on when coking coal will not be available. What will the world do for steel production from iron ore reduction. Sure we could recycle all the steel but then we would need and electric arc furnace powered by what- windmills.

Without subsidies biofuels are simply not competitive, and I doubt if they ever will be. All the processing steps produce entropy, that consumes energy, and that limits the EROEI.

The old adage applies. Let nature do as much of the work as possible. That is the only route to high EROEI - sadly.

the argument was about EROEI not energy return on $ invested.

Yes, Energy ROI was what I was talking about.

Fast forward to a time when fossil fuels are not available for process heat.

That's quite a ways in the future. We'll have natural gas for at least 30 years.

You then have to run your process on biomass produced fuels, wind, solar etc.

Sure. Process heat from stover, bagasse etc works pretty well. That's what they do in Brazil. Concentrated solar heat would work nicely as well.

Finally, of course, in 30 years we could be using electric tractors.

then we would need and electric arc furnace powered by what- windmills.

And the problem is??


Have you ever thought about scale. Wind, solar , and biomass are not going to be able to provide for 7 billion people and growing ever.

Might I suggest that you read up on Groos Primary Productivity and Net Primary Productivity for a start.

Try here

Then look at the efficency of photosynthesis on C3 and C4 plants. Corn stover and bagasse is not going to heat the world.

TOD has discussed soil several times. There is the book from David Montgomery called Dirt: The erosion of civilisations. Buy a copy and read it. Then look at this paper on peak soil here.

You might also read a copy of Energy Plants and Man by David Alan Walker.

When you have read this and assimilated it I hope that you will see our predicamant. We are too late. We niether have the time, the resources or the political will to avoid a population callpse. GG is correct.

There might be 30 years of gas. Then what. Believing that scinetists will dream up something - Cold Fusion - is pure fantasy.

Look at cellulosic ethanol. where is it? You cannot mandate biofuels.

As for windmills and solar. Sure, but we cannot store electricity and how are we going to build and maintain this infrastructure.

EROEI is what rules, $ are secondary. Ignore it at our peril - and we do.

Have you ever thought about scale. Wind, solar , and biomass are not going to be able to provide for 7 billion people and growing ever.

Sure they are. Wind and solar can provide far more power than we'd ever need. Don't forget nuclear.

Most of the information you provide documents that plants can't provide enough energy to replace fossil fuels. I'm not suggesting they would.

we cannot store electricity

Sure we can. Batteries work well enough, and are getting better.

How are we going to build and maintain this infrastructure.

The same way we do now.

I agree with Old Farmer... electrification of farm work will certainly be a tremendous challenge.
As most of us know, we are lucky to keep our cell-phones and cameras charged & ready to work.

Pulling a 6-furrow plow through heavy clay, or combining for hours on end, is on an entirely different scale, as is the torque from the PTO which drives our various implements.
It is this aspect which should really have us worried... there really is nothing comparable to the amount of work that farmers can get out of a $70 tankful of diesel.
Nuclear, solar, windmills and geothermal will not be of significant help to the farmer out in the field...

Unless StrandedWind and his solid-state ammonia synthesis comes to be. Ammonia as a farm fuel makes good sense, as does CNG.

Torque isn''t the problem: electric motors provide much, much better torque than diesel, especially at low speeds.

A $70 tank of diesel is about 20 gallons, at today's prices, and roughly equals a 200kWh battery. See my comment above to OFM about a 300kWh battery.

If there is to be an electric tractor I wonder if it would be an electric traction engine. Easier to carry large batteries or for a cable hook up. If farms are to get smaller then the field sizes may be more suited to this approach. A traction engine traditionally moved from farm to farm which would spread cost and utilise batteries better. They also were used to power many other applications such as forestry, threshing and bailing, fairs etc which would again spread their use during the seasons and reduce 'shed time'.


Could you expand on that? I'm not sure what you mean.

This gives you an overview

They acted as portable mechanical power sources and would go from farm to farm when work was required. for ploughing one would sit at one end of the field and a pully or another engine would be at the other. The plough would be pulled back and forth between them eliminating the need to have a machine small enough to cross the field. For an electric traction engine the capacity to carry batteries would be greatly increased as you no longer need the small light machine to ride on the field and more weight might even be beneficial in providing a solid anchor. If HT electrical poles ran across fields it would be a lot easier to provide a portable hook up to a transformer on a stationary engine rather than one trogging across the fields Also, as there would no longer be a need for small wheels to go between rows there would not be a restriction on the size of wheels to spread the weight, it would be easy to provide moveable steel tracks (scavenged old automobiles?) or split logs for extra support. A heavy engine and big wheels (steel) would also be ideal for repairing and leveling gravel roads.

If the scale of agriculture reduces and electricity becomes the more available moving force then this may be a better solution than trying to duplicate todays infernal combustion powered machines. You could also just use a traditional design and wood fire it.


If HT electrical poles ran across fields

That sounds a lot like putting up caternary wiring. Wouldn't it be simpler to run electric tractors powered by overhead wiring?

No caternary needed. The traction engines would not be running all over the field, just a track up between the fields. One pole every one or two fields with a hook up point on the insulators. Long hot stick to lift your connecting wires. Work the two or four fields, move to the next pole. Probably better ways of doing it but I'm trying to get past the point that the tractor HAS to carry a lot of batteries to work the fields and run all over them. You see plenty of HT poles around so why not use that to distribute out to fixed points that the engine can work out from over a restricted run.


Interesting. So, don't bulk up on batteries - instead, wire the farm.

Have you seen recent examples?

nobody has ever built a battery , to my knowledge, that could deliver a hundred horsepowere equivalent for four hours and still be small enough and light enough to mount on a tractor

100 HP equals 75kW. 75kW for 4 hours equals 300kWh. The Tesla battery provides 54 kWh, and weighs about 900 lbs. So, 300kWh would weigh about 2.5 tons.

So, 2.5 tons. Here's an old Ford tractor that required about 1.25 tons of ballast:

"The operating weight of this tractor was 7,130 lbs., and the ballasted weight was 9,585 lbs. The ballasted weight included additional weight to improve the overall performance of the tractor, including acting as a counterweight for heavy loads."

What is the ballast requirement for a modern tractor?


Cost is another question: Tesla battery pack uses cheap, off the shelf batteries which cost about $350 per kWh right now (which is much lower than Tesla's price for wealthy early adopters), and can be expected to fall to $200 in the next 15 years. So, that's $60,000 per pack. Of course, each time you use the pack you'd save about 30 gallons of diesel. If diesel prices rise to $6, you save 150 bucks per use (figuring in the cost of electricity), and you need to use it 400 times to pay for it. If you use it once per day and charge overnight, then you need to use it 400 days.

How many days could you use it per season?

Just a few quibbles with your analysis. First, if your figure of $350 per KWHr is the unit cost of storage capacity per cell, that certainly won’t be anywhere near the price of an integrated storage system consisting of many cells. There is considerable expense involved in building big storage packs that contain multiple (thousands of) cells – packaging, integrated charging safety electronics, cooling, switching circuitry for dead cells - all of it is complex and costly. I know from personal experience that the cost of the rest of the system can be as much or more than the individual cells themselves. In the case of Tesla, they price their 54KWHr storage unit at $35K if memory serves correct, which would equate to $194K if you extrapolated up to 300KWHr. Sometimes the “overhead” cost of the rest of the system goes up more than linearly as the overall storage unit gets bigger.

Even if you factor in the early adopter premium, my hunch is that a more reasonable estimate will be somewhere in between your $60K estimate and the $194K that Tesla would charge. And don’t forget you might need two or three of them to run the tractor continuously as OFM described. So maybe you’re looking at a $120K storage system times two or three. Also, the fuel expense of an ICE tractor is distributed over time, whereas the cost of a quarter million dollars worth of batteries is an upfront expense, so NPV will come into play as well. If electric tractors were a slam dunk, people would be plowing fields with them today. They may get there one day if/when battery technology improves significantly, but we’re not there yet.

There are serious flaws in all the talk of batteries for tractors. firstly when it is time to plant crops and harvest them, it is the time to do it throughout the whole district. Tractors are often running 16-20 hours plus at those times, and on most farms in the district that plant the same crops.

No farmer is going to be able to do the work when it needs to be done by using the tractor for 4 hours a day. There would need to be a swap over battery system at the very minimum, and farmers would need at least 3-4 battery banks, or maybe only 2 if there was fast charging.

This leads to another problem, the current electrical infrastructure of the area. If you have many farms trying to draw 1000 kwh a day to recharge batteries, plus the contractors doing likewise, what sort of new investment in lines, substations, generating capacity would be needed?? Of course this would be in addition to current uses of electricity.

No farmer is going to be able to do the work when it needs to be done by using the tractor for 4 hours a day. There would need to be a swap over battery system at the very minimum, and farmers would need at least 3-4 battery banks, or maybe only 2 if there was fast charging.

I agree. Each battery pack will have the same business case I described above. Don't forget, tractors like this use a lot of diesel fuel.

There's a lot of uncertainty.

Will we stick with cylindrical cells, with poor heat rejection? Will we stick with small consumer-sizes? Will we need pre-heating for a summer ag application? Probably not.

Will successive generations of li-ion chemistry reduce waste heat? Will power electronics and sensors fall in price? Probably.

you might need two or three of them to run the tractor continuously as OFM described.

Definitely: you'd likely need 4 or 5 of them to run for 20 hours per day. Each one will have the same business case I described above. Don't forget, tractors like this use a lot of diesel fuel.

If electric tractors were a slam dunk, people would be plowing fields with them today.

Of course. The business case I described above assumed $6 diesel.

Sorry Nick, but I’ve been involved in the commercialization of large rechargeable battery systems like the one you are describing (bigger than Tesla), and it would take a lot more than $6/gal fuel to make a business case for tractors and heavy farm equipment, given the long periods of high duty cycle usage and very high power loads. Four of the battery packs you are describing would be approaching a half million dollars in upfront cost using today’s technology, and perhaps more. And I haven’t even mentioned the complexity of maintaining packs with literally thousands of individual cells and nanny electronics for each and every one of them. Even at $6/gal, I suspect there would be no business case to be made, except for very specialized niche areas, which is where I've had past involvement with these systems. How much fuel do you believe a tractor will use over the 5-6 year lifespan of such a battery pack – even at $6/gal? And what is the NPV of that distributed cost compared to a half million dollar upfront cost for batteries?

Long before this technology becomes viable for tractors, I think it’ll become viable for automobiles, which have the luxury of being parked for most of the day (so only needing one battery pack and having lots of opportunity for low-rate recharging), and have much lower power demands once up to cruising speed. And IMO, the economics aren’t even there for automotive applications yet, except for a few niche applications at the edge of the market. Now if you are making the argument that one day in the future, when fossil fuel is dramatically more expensive than now, and automotive developments have driven down the cost and improved the reliability of big battery systems by an order of magnitude, then I can believe it might make sense for big industrial farm equipment applications. But IMO that day is quite a ways off and we are nowhere close to it right now.

I’ve been involved in the commercialization of large rechargeable battery systems like the one you are describing (bigger than Tesla)

Could you tell us more? What were the costs? What were the other relevant specs, like cycle life, chemistry, etc?

Four of the battery packs you are describing would be approaching a half million dollars in upfront cost using today’s technology

Yes, that's consistent with what I said: current cell costs of $350/kWh x 300 kWh x 4 packs = $420,000.

And I haven’t even mentioned the complexity of maintaining packs with literally thousands of individual cells and nanny electronics for each and every one of them.

You're not really responding to my last comment.

How much fuel do you believe a tractor will use over the 5-6 year lifespan of such a battery pack – even at $6/gal?

Tesla says they expect 500 charge-discharge cycles. Each cycle replaces 100HP for four hours, which would require about 30 gallons of fuel. 30 gallons x 500 cycles = 15,000 gallons. At $6/gallon, that's $90,000. That supports a cost of $90k/300kWh = $300 per kWh.

Yes, NPV matters. OTOH, there will be a residual value of the battery packs at the end of the 500 cycles: they'll still have roughly 80% of their capacity. The two roughly balance out.

Long before this technology becomes viable for tractors, I think it’ll become viable for automobiles

I agree. This argument is a bit theoretical.

Unfortunately, there are details about the application and end user I can’t discuss, but I can give you some general observations that IMO make this technology less rosy than it looks with back-of-the-envelope type calculations. The chemistry was Li-ion based, with a stated life of 400 cycles. What we found over time was that the capacity, rate of loss of capacity, and cycle life were all less than stated, because of real-world effects that almost always deliver less than theoretical results. In some cases, the deviation from stated spec could be significant. We found that cells aged not only as a function of # of charge/discharge cycles, but also as a function of time, charge rate, temperature and a host of other factors. The cost per KWHr was considerably more than your stated figure of $350/KWHr, but it was a few years ago, so maybe that’s the number now. But as I stated in my earlier post, there are other costs beyond the cost of the cells themselves, and those costs were considerable.

The other costs in building a big storage pack consists of things like the following: cell balancing electronics to avoid catastrophic failures during charging (the cells all age differently, lose capacity differently, and that can lead to problems during charging), switching electronics to switch out dead cells (the cells die off at different rates), vent systems to allow toxic gases to be discharged safely to atmosphere when cells fail, containment packaging to prevent catastrophic failures in one cell from propagating to adjacent cells and causing massive runaway, cooling systems, crush protection, and diagnostic circuitry so you can periodically plug in a laptop and monitor the thousands of cells and plethora of electronics that make up the pack. All electronic systems must be designed to fail safely, yet not allow cell failures during subsequent charging. All of this other stuff was more expensive than the cells themselves, and had to be maintained by competent technicians and engineers.

I threw out a price of $120K for a 300KWHr pack, but in all honestly I don’t consider the extrapolated Tesla price of $194K for a 300KWHr battery to be unreasonable, given just what goes into the pack itself. And beyond the pack itself, there is a lot of corporate overhead and discipline that must be exercised when building these complex systems to be turned over to customers, and that represents an expense that also has to be covered in the pricing of the pack. QC by the cell supplier must be fanatical. Don’t know if it’s still true, but back a few years ago cells had to sit on the shelf for some number of weeks after manufacture to check for leak down. Delivery could not be rushed no matter what the commercial opportunity. The Japanese had the best QC and most honest performance specs, but their cost per KWHr was considerably higher than competitors from other countries. Like many things, you get what you pay for. The battery pack manufacturer must have his own disciplined internal QC to double check the cells and oversee manufacturing. Cells beyond a certain size are illegal to put on an airplane, so shipping times could be prohibitive during emergencies. Disposal of dead cells had to follow strict guidelines, etc.

A tractor that gets used heavily during planting season, spends time sitting parked in a barn and used more sparsely for a while, and then gets used heavily again during harvesting some months later may not ever achieve the quoted # of cycles. In a way, that aspect of the tractor application is perhaps what makes it least desirable for using batteries – you need multiple packs for heavy continuous use during some brief period of time, so there is huge upfront cost, but then there are long periods when that capital is sitting there tied up in an expensive asset that isn’t generating a return. I guess that’s just another expression of the impact of NPV. With a conventional tractor, you buy the fuel right before you need it and you use it right away.

And my experience with “residual value” was not so positive. There may be 80% of capacity left in some of the individual cells, but the capacity of the overall pack could be much less than that because of the series-parallel nature of the way these packs are built up. One dead cell in a given cluster may cause you to switch out that whole cluster. You can try to salvage some value by disassembling the whole mess and measuring each of the 10 or 15 thousand cells individually and saving the kinda-good ones, but there wasn’t much of a market for weak second-hand cells back then, and there would have been considerable cost in getting to that point. We ending up paying licensed contractors to properly discharge and dispose of the old cells, so the residual value was less than zero. Maybe there is a better re-use supply chain in place now.

So at the end of the day, I would still expect that the upfront cost of a sufficiently large set of 3 or 4 mega-packs to be much more than the sum of the diesel fuel costs at $6/gal over the actual lifespan that I think people are really going to get out of these things – probably by a wide margin. And when you factor in the siginficant impact of NPV over a 5 or 6 year timeframe, and you consider the other operational, safety and supply chain constraints of mega-batteries, the picture is even less rosy for electrified tractors. Diesel tractors work pretty well, and I still believe it will take much higher fuel prices (higher than $6/gal) and much better battery technology and supply chains before mega-batteries would make sense for farm tractors.

Thanks for the detail.

Well, I think you're talking about 1st generation cobalt-based li-ion. That is indeed the chemistry that Tesla is using - Tesla used it because they needed the very highest energy density. And, I used Tesla as an example because theirs is the largest automotive battery pack in use in a commercial vehicle at the moment, but it isn't really the future of automotive batteries.

2nd generation li-ion like those used by the Volt and Leaf uses much larger flat cells, with much greater thermal (both in terms of thermal runaway and in terms of reduced lifetime due to battery temperature), chronological and cyclical stability.

These improvements greatly reduce the amount of babysitting required - the Leaf doesn't even use liquid cooling.

3rd generation li-ion is likely to improve life and stability further, while greatly increasing energy density. All of these things, combined with large volume production, will greatly reduce the cost of both cells and battery packs.

I have no doubt this technology will continue to move forward. What I've read about the Leaf is encouraging, but reading between the lines of their public press releases some of the same issues are there, although reduced in severity. Hopefully gradual electrification of the automotive fleet will push the technology foward enough, so that one day in the future it can serve more than the narrow niche that it does today.

Yes. I think EREVs like the Volt and PHEVs like the plug-in Prius will be a much larger part of the market for quite some time.

I think it will always be cheaper to run heavy tractors, combines, trucks and other such machinery on some sort of synthetic fuel-probably a combination of biodiesel and ethanol

always projects quite the time frame ?- ) Out past 'stardate whatever'

Not to be too flippant though. Heavy mobile equipment like tractors, dozers, bucket loaders, heavy dumptrucks, remote large generators and the like will get to use diesel for a very long time (assuming we more or less hold thing together).

Big ships are another tough switch out, currently, unless you figure in less than popular nuke steam.

What do we produce now, about 76,000,000 forty-two gallon barrels of crude a day. A quarter that production would be plenty to power those toughest to change out ICE uses many decades out--plenty of time for unthought of tech to come to the fore...if we hold it together.

Regarding time frames:

In the short term, there will be some price-motivated reduction in discretionary personal transportation. However, I can easily see the demand for personal travel North America being less elastic than the demand for agricultural fuel in South Asia (for example). As a result I expect there to be a huge growth in energy subsidies to agriculture, starting in the developing world, to mitigate some of the impact of rich nations outbidding the poor and possibly causing the collapse of agriculture in developing countries.

In the medium term, if farmers decide to grow fuel, that will come at the expense of the food supply – as it already has in the USA. Biofuel is not an answer in an environment where both fuel and food are constrained.

In the long term, I expect that long-distance transport will be electrified, and I also expect some electrification of agricultural machinery in developed nations. I don’t hold out much hope for the large-scale electrification of tractors in Belarus, Kazakhstan, China, India, Pakistan, Thailand or most of South America. I certainly don’t expect it over the next 10 to 15 years when this program will need to be underway if we are to avoid the breaking wave of the net oil export crisis.

Regarding the FAO:

The FAO doesn’t have the first clue about Peak Oil, let alone the net export crisis or the intersection of that crisis with CO2-driven climate destabilization during a succession of deepening global recessions. Their analysis of the food situation out to 2030 or 2050 is pure BAU with a side order of Tinker Bell, smothered in a tasty sauce of ignorance and denial (IMHO).

Regarding Stuart Staniford's well-meaning article:

With all due respect to Stuart, I think he’s trying to engineer a way forward out of the box using the lessons of the past, and I don’t think current events are going to permit that. We are now at the inflection point of three global systems at the same time. The trajectories of oil, climate and economics are all changing direction right now. We might be able to project our way past one inflection point based on our past history. Three at once is quite another matter, and requires us to step back and re-evaluate our premises in toto.

Increases in crop yields are pretty closely tied to the increased use of fossil fuels - for fertilizer, pesticides and machinery. According to the datasets at, the correlation of both average yield and total grain production to world fertilizer use is over 0.96, while the correlation to cultivated grainland is only 0.42. That says to me that fertilizer is a key input.

Then we need to factor in the continental and global distribution networks. If the ability of those networks to bring food to market is compromised, it has exactly the same end result as a reduction in primary agricultural output: eaters don't get food. The net export crisis is guaranteed to compromise those networks in many nations.

As others have said, industrial agriculture is a mechanism for turning fossil fuel into food. We are about to get an object lesson in Liebig's Law of the Minimum, with the scarce ingredient being oil. At the same time, our ability to cope with that new reality is being increasingly hampered by climatic and economic instability.

There will be a lot of variation in how different countries respond to the coming changes. Some responses may bear some resemblance to your and Stuart’s hopeful projections. It’s a lead-pipe cinch, though, that the response in Pakistan or Argentina will look nothing at all like the response of the USA.

It’s seductively easy to take an engineer’s view of the future when living in a country like the USA. Most of the world doesn’t live there, though, and I don’t expect even the near future of the world as a whole to look anything like Stuart's (or even Lester Brown’s) gentle bromides.

The future is here now, and I don't think it looks like the past with windmills.

I think the overall thrust of your argument regarding the impact of oil depletion on agriculture is incorrect. I'm going to throw some figures out that I might recall imprecisely, but they should be in the ballpark. Regarding fertilizer: I believe that about 1% of US total energy consumption goes to make it, and ~3-7% of US natural gas is used to do so. We can substitute coal for natural gas, and we have a very large bituminous resource in the Midwestern US that we're basically not touching at the moment because of EPA rules regarding SO2 emissions. We might have troubles brewing with phosphorous, but for the most part we don't have a problem with fertilizer production because of oil depletion.

To add to what others have said in comments above, most fuel can be made on the farm. Keep in mind that there was a mechanical revolution in agriculture in the 19th century that preceded the introduction of internal combustion engines. And, as you've pointed out, most of the increases in production have not been due to mechanization, per se, but rather occurred in the mid to late 20th century because of increased fertilizer use coupled with crop hybridization. Mechanization just frees people up to do other things. Again, we have enough coal to keep making the equipment. The key thing, however, is the fertilizer, and aside from phosporous, we face no difficulties. Therefore, it is wrong to state that we have a problem because of oil depletion in food production -- this is wildly overstated. As I'll describe next, we may have radical problems in food distribution (which is mostly due to a people distribution problem), but in farming itself, the problems are mostly logistic, and they can be handled without too much trouble.

So where are the optional areas of energy use? I can think of a few: moving the food to people is one. Moving people between work and home is another, especially in the form of the suburban/superblock + concentrated business-industrial spatial arrangement that prevails in the US. The US will have much further to go than most regions in the world in this regard to adapt to oil depletion. Next up, I would nominate heating and cooling requirements for buildings. Taken together, these changes represent rather serious challenges for how most US urban industrial settings are currently arranged, and it's here that we'll see the biggest changes. North America is very energy inefficient in this domain, and this is due to the intersection of industrialization, oil, the internal combustion engine, and urbanization. The result has been a tremendously productively efficient, but extremely energy inefficient infrastructure. That can be changed, but it's going to take 50 to 100 years. We'll basically have to rebuild all of our factories and cities.

Remember that I'm taking a globalized view of the issue. How would your approach translate to Morocco, Thailand and Peru?

My point is precisely that we (either the USA or the rest of the world) don't have 50 or 100 years. We have 10.

Regarding your comment about how little energy agriculture takes, do you understand the implication of Liebig's Law of the Minimum as it would be applied to an oil-constrained food system?

However, I can easily see the demand for personal travel North America being less elastic than the demand for agricultural fuel in South Asia (for example).

Why wouldn't farmers just raise their prices? If fuel is 20% of a farmer's cost, and fuel doubles in price, the farmer raises prices by 20%.

In the medium term, if farmers decide to grow fuel, that will come at the expense of the food supply – as it already has in the USA.

The analysis above seems to suggest that about 10% of farm acreage would be needed for growing ethanol/biodiesel. That's not that much.

Increases in crop yields are pretty closely tied to the increased use of fossil fuels - for fertilizer, pesticides and machinery.

Fossil Fuel isn't the same as oil. We're dealing with PO, but not peak NG.

I agree that poorer countries will be affected in different ways. On the other hand, again, why can't farmers there just raise prices? Higher food prices might even be good for them - very low food prices were very bad for 3rd world farmers in the recent past.

Aleklett projects an 11% decline in all liquids over the next 20 years: that means 89% is still there. I think ag use of oil will out-bid other uses quite easily.

One of the issues in developing nations is that the eaters who have to buy the food typically work in fields other than agriculture, and can't increase their wages at the same rate that farmers can raise their prices. So when an American farmer raises his prices to cover increased costs, a certain percentage of the world market is pushed away from the table. This is why I foresee a major rise in direct consumer subsidies for food and energy. Of course if a country can't afford a subsidy program there is an increased risk of "social unrest", aka food riots and revolutions.

If the world's food supply is constrained (as I believe is about to be demonstrated), then the 10% of acreage devoted to feeding tractors and combines instead of people could be very significant. If all farmers did that, it would eliminate food for 10% of the world population. If only half did it, it would eliminate the food of only 350 million people. Not a bad tradeoff I guess, and certainly not dangerous for an American farmer...

I also don't think we're dealing with Peak NG yet, but that's why I emphasize the food system as a whole rather than simply direct agriculture. If an eater is in Bolivia but their food is in Idaho and the transportation link has broken down due to oil problems (or oil-induced economic problems), it has the same effect on the eater as if the food hadn't been grown in the first place. Liebig's Law of the Minimum applies here. A chain is only as strong as its weakest link, and the global food system strikes me as a very complex chain with a lot of potential weak links.

That's why I'm less than sanguine about that 89% of the oil remaining (and I'd remind you about the Net Oil Export Problem as it applies to food exporting nations that import their oil). I think the complex global network of transportation and trade is very brittle, and I worry that a break in one link could cascade and cause a failure avalanche. This PDF paper has a formal treatment of the idea.

We probably won't have to wait too long to find out which of us is right.

Yes, rising food prices hurt the poorest among us.

If the world's food supply is constrained

Well, I don't see much evidence for it yet. Food prices and supply, like all commodities, have always seen boom and bust cycles in the short term. That doesn't tell us much about long-term prices and supply. For one datapoint, see

If an eater is in Bolivia but their food is in Idaho and the transportation link has broken down due to oil problems

I don't see much evidence for that. 1st, shipping Like farmers) will outbid other uses, and 2nd, shipping is pretty efficient and can be made far more efficient, both in the short term and longterm. see

But, let's start with the basics: how many gallons of diesel fuel are required to farm an acre of corn; how many bushels of corn does an average acre produce; how much gross revenue does that bring in; and what's the ratio of diesel fuel cost to gross revenue??

1st, shipping Like farmers) will outbid other uses

and what will that do for the price of food, would the Bolivian still be able to afford it?


what will that do for the price of food

It will raise it slightly. Other factors are more important to price variation, like increased demand for animal feed, and short term crop failures.

would the Bolivian still be able to afford it?

It would be interesting to look at Bolivia's balance of trade, especially in commodities (lithium, natural gas, etc). They may do quite well.

It would confirm what I suspected : that the future is not "madmax" or "waterworld", it's more "Children of Men".

It would confirm what I suspected : that the future is not "madmax" or "waterworld", it's more "Children of Men".

Naw, more like "The Road".

Comparing man to mice is rather optimisitc. Maybe homo sapien is not the best example to use as homo philoprogenitus appears to be on the ascendancy, which is natural if you think about it for 10 seconds.

Look at the event of the past 3 decades and we can all remember the has been Irish musician who very publically demanded that we give him our ****ing money to solve the starvation problems in Africa. A noble cause indeed but what is the result.

Well, two decades on it did not solve the problems of starving peoples in Africa, indeed there are now more absolute starving people than 2 decades ago and the situation will only get worse.

Fast forward to Afghanistan, Pakistan, Nigeria, Bangladesh, Gaza. Populations out of control and no matter how much effort is put into these countries unless the population growth is stabilised then collapse is all but guaranteed.

Witness the mass migrations of the past decade as migrants from the developing world charge to the developed nations legally or not. Look at the rate of population growth of these minorities in their adopted country and do the maths. Soon they will be the majority and destruction of the developed nations will follow, making them ungovernable and unviable. Have a look at the lectures of Al Bartlett or the books of Jared Diamond. Then convince me that man can be compared with mice. Not if man is homo philoprogenitus, which appears to be the case.

It is the 4 horsemen I am afraid.

In the original blogpost I excerpted my comment from I also say:

So as in the laboratory mouse colonies, we may see a situation in which limited world food supplies do not lead to massive deaths due to global famine, but rather to a sharp drop in birth rates across all nations. However...

Because of human nature things are unlikely to remain as peaceful in our civilization as they do in a mouse colony. There will be an enormous upsurge in global unrest as more poor countries find themselves threatened by food and energy shortages. Unreasoning hatreds will flare, predatory trade practices will grow, foreign aid will dry up and regional wars will become more common and more vicious. Poverty will spread due to successive global recessions of deepening severity. The life support systems of medical care and sanitation will eventually begin to disintegrate starting in the poorest nations (as they already have), and life expectancies will probably shrink as diseases increasingly penetrate the adult populations.

The Horsemen will get here, they always do.

My experience with starving mouse colonies is different. I kept 10-15 adult field mice in a ten gallon aquarium for a short while. I fed them crackers and gave them ample water. Everything seemed pretty peaceful until food demand temporarily outstripped supply. Vicious fighting and cannibalism ensued and I believe only one or two individuals survived. Undoubtedly there was also a density effect.

The domesticated humans of Western culture have been taught to sacrifice their reproduction in exchange for the affordability of greater comfort and pleasure and to conform with the herd propaganda that “just two” is good for societal stability. But if you look closely, why would you trust an organization that has a lifespan measured in decades or centuries, that is dependent upon non-renewable resources, populated by the delusional, commandeered by the most corrupt and self-serving, and deeply into overshoot?

As austerity begins to bite, it is likely that our owners want assurances that they will not find themselves inside that aquarium but rather find a revolving door into the gilded world of Wall St. and corporate America, comfortably removed from the chaos that erupts in places like Egypt and Libya. Everyone is now scrambling to get out of the aquarium and most won't be successful.

I kept 10-15 adult field mice in a ten gallon aquarium for a short while.

Terrarium. Aquarium is when there is water.

I would expect a different response to the "long slow squeeze" of an encroaching limit than to a sudden food shortfall. On the other hand, the complexity of the world and the perversity of human reactions ensure that there will be regions that have just about any conceivable response. The main point I’m trying to make is that we shouldn't expect a sudden die-off coupled with a rapid decline in the global population.

What I expect we’ll see initially when we look at the globally aggregated population numbers is a gradual but increasingly steep drop in crude birth rates coupled with a gradual rise in infant mortality. I expect this to start in about 5 years, followed about 5 years later by a sharper rise in the crude death rate as adult mortality increases.

At ground level the view will be different in every country (and quite violent in many). Our human penchant to ignore the big picture in favour of a relentlessly personal viewpoint will probably keep most people from realizing what’s actually happening.

Hi, Glider
I don't agree there should be a parallel with mice, and that we should see a decline in human births prior to food supply problems. I accept that fertility drops in the malnourished, and if your interpretation of the drop in Russian/Soviet birth-rates is correct, then hats off to all those women who were able to either fend off their men or consistently use birth control.
But I fear that desperate times are highly correlated with the low availability (and general unaffordability) of essential things: food, shelter, personal safety... and birth control products.

But I have even more difficulty with your point about the supposed elasticity of our food supply chain and the unlikelihood of a drop in production.
The Great Depression should warn us of what can happen when financial markets send the larger economy into a tail-spin.
There was very high unemployment, though there was much work that needed doing.
During the 1930s (which was nearly a century ago... much has changed, obviously) we had a society which was much less urban, virtually nothing which was suburban, and most people kept a pantry and did their own preserving.
We now have a population which is overwhelmingly urban & suburban, with only 2% farming and feeding the other 98%, with their own market under siege from foreign imports, and most citizens have no idea how to garden or preserve, and no pantry.

More importantly, the 2% which does farm is utterly dependent on affordable fossil fuel, which is a function of two elements: the cost of that fuel and the ability of farmers to pay for it.
Given that net farm income for many family farmers is at Depression levels (especially in the hog & beef sectors), we could easily have a scenario where farmers obviously want to get on the land, and that 98% desperately needing them to, but we could have a fraction of the primary food production activity required, all because there was no mechanism to ensure that farmers have access to affordable fuel.

I think we have much to beware of regarding future food supply, and that's not even throwing in the climatic variables, which Villa summarized quite effectively, nor other aspects like loss of foodland, water supply, etc.
We may not be able to do anything about climate, and little about water & foodland, but we could ensure fuel to farmers (though I concede that it would not be easy).

You may very well be right if you're speaking just about the USA. I'm not sure how well your comments would apply to Burma, Armenia, Angola or Paraguay though.

I tend to take an (overly?) aggregated view of the world situation, with the understanding that the social and physical environments in each country will pose their own challenges but that a global picture will emerge if we step back far enough and squint just so. In looking for the broad sweep of events I may lose the flavour of the regional differences, but I feel that concentrating too closely on local minutiae obscures the message of what's actually happening to our species and the planet. If we miss that, we run the risk of being fooled by the details into making unwise, incorrect and possibly injurious choices.

Most of the posters here tend to have strong engineering or science backgrounds, and as a result are terminally fascinated with the details. Although I've worked in an engineering field for years, at heart I'm much more of a philosopher than an engineer. Perhaps that's why the mouse analogy makes complete intuitive sense to me, and not to you. I see us as essentially similar to mice in that we are both social animal species that operate within very similar sets of ecological rules. You may see the differences that spring from us being humans and them being, well, mice. That's fine with me - the world needs both perspectives, along with countless others.

If you haven't read Jared Diamond, "Guns Germs and Steel" also "Collapse", you should, I think they would completely change your assumptions.

Of course I've read Diamond.

Actually, I think Diamond's work supports my thesis in many ways. For instance, in GG&S he points to agriculture as the motive force for the development of civilization. It's precisely this foundation-stone (or more correctly the broader supporting structure of the modern food supply system) that is now under threat from climate change and oil depletion. I don't think a devolution or simplification of the global food system will result in a collapse of the human species or anything so dire, but I do think it will trigger a complete reconfiguration of what we think of as modern civilization, with a corresponding reduction in both our activity level and our numbers. This is not altogether a bad thing, IMO.

I'm frankly nonplussed that you think "Collapse" would change my assumptions. It's one of the original building blocks of my viewpoint! For example, in it Diamond lays out 12 factors that have threatened past civilizations and/or threaten our current one:

  • Deforestation and habitat destruction
  • Soil problems (erosion, salinization, and soil fertility losses)
  • Water management problems
  • Overhunting
  • Overfishing
  • Effects of introduced species on native species
  • Overpopulation
  • Increased per-capita impact of people
  • Anthropogenic climate change
  • Buildup of toxins in the environment
  • Energy shortages
  • Full human utilization of the Earth’s photosynthetic capacity

I see precisely the same issues, but believe that energy shortages (specifically oil) and climate change will be the proximate causes of a decline in the global food system. That decline will in turn impact our ability to maintain a cohesive global civilization, or in many cases cohesive nations. Of course many of the the other factors that Diamond lists will come into play at the same time, specifically soil and water problems and the enormous human requirement for photosynthetic capacity due to our sheer numbers.

In addition I think Diamond missed the risks of social complexity that were so admirably laid out by Tainter. The complexity of our current civilization is what will make it it impossible for many nations to "solve" the problem we face, as attempts to do so will have a negative marginal return (i.e. will create more problems than they solve). Some countries may succeed in dealing with the problem within their own borders, but this is not, in the end, a national problem - it's a global one. Our drive towards efficiency and globalization has ensured that, and IMO forms the walls of the box we find ourselves in.


Overall fertility is already falling, I just think that a limit on the global food supply will accelerate it. Also, there is no birth control in mouse colonies. What they saw instead was fewer births due to malnourishment, plus an upsurge in infant mortality due to both starvation and infanticide. We'll probably see much the same scenario unfold, though our ability to use birth control in some places should reduce the level of infant mortality from all causes as we can better match the births to the available resources.

I have different opinion and that's all it is....................
There is absolutely no way in the wide world that we'll behave like laboratory mice.
Just Google world famines and see how we die like flies when we don't have enough food.

Like Easter Island we have no idea we are in overshoot. (I guess you read Overshoot as well).
We are past the point where we can stabilize. The collapse will come and it will be exacerbated by positive feedbacks.

We think we can engineer our way out of it and our stone heads are wind mills, tar sands and deep water drilling.

Maybe better to study St Matthew Island deer instead of mice.
Globalism has assisted to such an extent to feed the world, that even small breakdowns can be disastrous. We will find that out soon enough I guess.

I don't disagree with key ideas of your argument. I just wanted to add to your comment with regard to Australia.

Australia experiences long and extreme cycles of weather. With regard to your statement; "all due to GW", my understanding (and I am not authoritative in this field) is that there is argument (supported by the SOI) that the while strength of the la nina event is at record levels, it is still within the range of what has been experienced in the past.

This article was not what I was looking for to support my statement - but I only have a 5 min break and so will have to do:
(Note the year 1917 is comparable to 2010)

Please don't take my comment as a 'climate change denier'. I most certainly am not. Just trying to keep an open mind to the data available.

I made the same point about the Australian floods a week or so ago when an attempt to associate them with GW was made by a TOD poster (rather less politely unfortunately, it got up my nose a bit at the time).

Like you I'm not a 'global change denier', but I see real political danger in linking what is a natural event - the flooding of a flood plain that happens to have houses built on it - to GW. Actually, I've noticed on the whole that the politicians and GW advocates have steered well clear of such linkage with recent weather events in Australia, I'm sure to avoid the risk of loss of credibility.

Just Australia, OK. But Australia, Pakistan, Canada, China, Thailand, Russia, the Amazon drought, even "Snowmageddon" and the cold in Britain? It doesn't all look like ENSO to me. I may be drawing a slightly premature conclusion, but my usual mantra for these things has something to do with things that walk like a duck and quack like one too. I'm not a climate scientist with my grant-money Lamborghini on the line, so I get to draw my own conclusions.

For the Russian/Pakistani heat-flood (they were two sides of the same event, occuring at the same time) the case is quite clear: with pre-industrial CO2 levels that weather phenomena would have been very unlikely. Not all cases are so clear.

I'm not looking to tie particular events to AGW. That's a mugs game that the deniers would love us to play. This is a pattern/trend game, and to me this looks enough like the pattern we've been told by the scientists to look for as a signature of AGW that I'm willing to call it.

I agree with that and am very caresfull with linking events with trends myself. Unlike Al Gore, I do not claim the Katrina event to be CC induced, for example.

However the Russistani flood-drought has a likelyhood of below 0,000001% in a pre-industrial atmosphere but here it happened still. Even if we make it a divine command to never link individual events to the trend, this is a trend maker as strong as it gets.

on that note

The NSIDC monthly summary is out.

as to snowmaggedon

but that is only the sixth highest snow extent for the month since 1966

That first graph is a big worry. My next blog post (in swedish) will be about that. There are several issues with it. First you notice there are many segements where this years ice-cycle (I count ice-cycles between september minimums) is showing a record low ice extent for that date. (Early November, mid December through January, and this last week.) Also holding the "silver" possition every other dates.

Secondly, it apears spring ice maximum is already passed, in late february. Should somecold siberian wind blow in and cover a couple of thousand square kms, it will just be a shallow layer that will melt quicly.

Bottom line is; with this first half of the ice-cycle it apears September ice minimum have a chance to be the lowest ever.

If you look at the exponential explosion of the human population curve from 1000AD to the present and consider the area under the curve to represent total person/years and assume that each person/year in the past represents a minimum amount of food required for survival. Then a back of the envelope calculation indicates that we will have to produce as much food in the next 50 years as we have in the last 1000 years. With water supplies going down, soil going off on the wind and down the rivers, salt levels rising on irrigated land, it ain't gonna happen folks. Global famine is just around the corner.

Nail on the head. I could not agree more

“By 2030 we are going to need 50% more food, 40% more available fresh water, and something on the order of 50% more low-carbon energy,” Sir John Beddington, the chief science adviser to the U.K. government, told a symposium 20 February at the AAAS Annual Meeting. “We need a radical redesign of global food systems.”

"To feed all those mouths, we will need to produce as much food in the next 40 years as we have in the last 8,000," said Jason Clay of the World Wildlife Fund at the annual meeting of the American Association for the Advancement of Science (AAAS)

Hmmm... either estimate is impossible. Yes, we've made amazing gains in crop yields but we won't keep making them at needed rates.

Wall street will just say that we need to eat food more efficiently. So we all need to learn to live on 1000 cal a day.

Actually the sad thing is that Wall Street people think that we can just make more commodities to fix our shortages.

I really think they all know what is happening but they are trying to extend and pretend that the oil/industrial complex is still working perfectly well.

For any doubling the next doubling is equal to all the previous, e.g. if we have 128 today then
previously we had 64, so 128 + 64 = 192
previously we had 32, so 192 + 32 = 224
previously we had 16, so 224 + 16 = 240
previously we had 8, so 240 + 8 = 248
+4 +2 +1 = 255
but after the next doubling we will have 128 x 2 = 256

Another way to visualise this is a pond where the weed doubles every 5 minutes such that at midnight the pond will be completely covered. At 11:55 "only" half the pond is covered, so still plenty of time left to do something about those pesky weeds!!!

Interstingly, Australias agricultural production has not suffered on a cash basis with feed grade wheat (which there is plenty of) getting the same price that milling grade wheat made last year.

With the high Australian dollar thanks to the mining boom, Aussie farmers aren't feeling the cost of rising inputs that much (yet).

I think most of the political instability<>finance interactions are well within the realm of the canny. The one potential black swan (although not now it's discussed here) is the potential for countries to engineer financial troubles for a particular country; ignite latent political instability; then invade under the pretext of 'peace keeping' (outside UN remit) and get their hands on the oil supply.

Take the example of Libya. Would anyone ask too many questions if a country decided to take it upon themselves to intervene? It's a great pretext for implementing the military option without drawing censure, and by the time people realise you've usurped the supply of oil for your ends - it's a fait accompli.

While false flag type military operations are well known, I don't think most in the west have really considered the financial market as an offensive weapon that could be used to detonate latent internal action at a time of your choosing and for your own purposes.

Mind, what are sanctions really for?

"It's a great pretext for implementing the military option without drawing censure" The Arab League are meeting in Cairo today to vote on a resolution to reject foreign military intervention in Libya. So I think there would be plenty of censure.

I'm convinced the US government will go bankrupt, but not tomorrow. Before they go bankrupt, they'll print money, and then you'll get very high inflation rates. Then you get a depression with high inflation. Then eventually they'll go to war.- Dr. Marc Faber

It is interesting to me that anyone would describe such large events as only transitory in impact. After all, Libya is only one several countries experiencing a complete shift in power. As many have pointed out in response to this article, impacts are widespread, reaching such realms as food availability. I think it’s important at moments like these to acknowledge how interconnected countries have become through reliance on one another. When one link in this chain becomes weaker, it can lead to vulnerability elsewhere. BBC News wrote today about the oil terminal in Brega being a point of conflict.
This just seems to show how natural resources can be vital points of conflict This is dangerous for other links in that chain because many rely on. So it seems to me, effects are already being seen beyond the borders of conflict, because natural resources are not limited to only the ownership we place on them. So, say Libya’s reserves must be made up for by OPEC, how long can this last before other countries’ supplies are threatened? Does anyone know exactly how long, and at what sacrifices, OPEC would be able to contain the impacts of these conflicts? Because it only seems a matter of time before events domino, and economic stresses from events in the Middle East affect other countries and other realms. I agree with the author, and anyone calling these events as having only a transitory impact seems to be severely downplaying the potential for things to fall apart.

Has anyone combed the The Oil and Gas Journal's list of refineries in Europe to see what the capabilities are? Will they be able to meet the demand of finished products if they can only work with heavier stuff? It will be interesting to see if in the future the refining process could represent just as great a bottleneck as production..

Typically European and Asian oil refiners have little ability to
process heavy crude but why would they make the investment.
Most heavy crude, less than API 22 deg is in the Western hemisphere.

The logical step would be to process heavy crude into syncrude near the source like the US where heavy oil processing is standard and ship that to Europe.

Europeans need to get off oil even more than guzzling Yanks.

Arab Heavy isn't that heavy it seems, 28 degrees API & over 2.5% sulfur... I believe Europe might look to increase finished products imports, if they cannot utilize the new Saudi production

I think this "mismatch" of crude-harvest to refinery-capacity will be a factor in an upward spiral of oil futures contracts. So my perspective suggests that actual harvest/refining capacity doesn't matter. But the idea that we are nearing ever larger mismatches in crude-type to needed type does.

Since you seem to have specific knowledge of various crude types, what or when will these differentials show up as increased pricing disparities between say, heating oils or gasoline?

Or will buyers hedge all the oil futures equally?

Don't be fooled by API gravity. It is the yield distribution that counts. Check the assay link and you will see that the pitch on the Arab Heavy is 1.5x Arab light and 2.3x Brent. The sulphur is 2.8% in THE CRUDE. That concentrates in the residue and needs some heavy desulphurisation, especially difficult as the cuts get heavier.

Why dont KSA and other producers refine their products before shipping? Surely this would be to their advantage.


The Saudis had plans to build 3 new refineries - SATORP Jubail, RTIP east coast, and SA Conoco Yanbu. All were about 400 kbd and only one is going ahead. Another refinery is planned for Jizan which will be about 4000 kbd. This latter refinery is on a fast track.

Saudi refining capacity is being slowly expanded and it is reasonable to expect some further expansions in the next few years. They have to provide jobs for what is beciooming a restless population.

In 2009, last figures available from Aramco, they refined about 2.25 million b/d on 8 refineries, which for a country of 25 million is quite high. Refined product demand was about 1.37 million tonnes about 20 barrels per capita year with the remainder being exported. About 1 million b/d is not reported as refined or exported, and was probably burned for power and water production due to tight gas supplies.

G - Sometime back in the early 90's the KSA was making some serious noise about ramping up refining and export more product than oil. No idea how far they moved in that direction but I don't think very far. I suspect that they saw a growing need to spend more capex on the drilling/production side which might have played a part in their decisions. I can only offer some wild speculationas to why. But, in general, refinery profitability tends to be lower than all the other portions of the system. This is especially true during high oil price periods. Remember refineries don't sell motor fuel to the public. They sell wholesale to the fuel marketing companies. Refiners don't make any money at the well head...the producers do. So when oil prices boom the refiners pay more at the same time there's pressure on fuel marketers to keep prices as low as possible so not to lose market share. So the refiners get caught between the two ends.

Refineries are expensive to build and run. I think the KSA would typically make more profit by selling oil instead of product when you factor in refinery capex.

You are 100% right up to a point. But SA has a population in overdrive with a lot of young people all wanting to be the CEO of Aramco. A few weeks back I was in Dubai at a conference and most of the young Saudi's were goofing off rather than listen to the presentations. Too much like hard work.

A feeling of entitlement pervades and like it or not Aramco will have to build more refining cpacity to provide jobs. It may not make economic sense but politically it is what they will have to do.

The Jizan refinery is a sop to the region which abutts a restless Yemen.

It may not make economic sense

Might it make economic sense, if they have heavy oil and the only way to uilize/export it is to build special refineries for it? Otherwise their heavy oil is a stranded asset.

EOS - That's certainly a possibility. It might be even more critical for internal consumption than export. But as carnot seems to point out the Saudi residents might not care for such a career...or any career. I've seen stories indicating that much of the grunt work in the KSA was done by imported workers. Seems as though some serious choices might be forced upon the KSA population sooner than later.


I spent 3 years in SA many years ago. Getting the Saudis to work was a challenge to say the least. A lot of the grunt work was done by foreign nationals, especially Indians. Contruction was done by the Koreans at the time - an alternative to the army.

I have met many Saudis but my overall feeling is that the younger ones feel that they are owed - big time. A job as a process plant operator would e frowned upon. Grubbing about outside at 50 deg C would also be shunned. Finally there is Inshallah. If Allah wills it, and that is not very often.

Actually Arab Heavy is not as unpopular as you think. The new Satorp refinery will process Arab Heavy and the RIL refinery complex in India can process it as well. The Chinese are building up heavy oil refining capacity and the net effect is that the spread between light and heavy has actually narrowed. Saudi Heavy oil production is also limited. It comes mainly from Safaniya and from the newly refurbished Manifa. I do not think it will be a problem to place this oil - maybe not in Europe but definately elsewhere.

All that is required is the correct hardware.

So thats why the pump-chains also own their own refineries. Thanks for the heds up. I've been wondering about that.

Europeans need to get off oil even more than guzzling Yanks.

Technically correct. Since Tanks uses petro-fuels much more wastefull than Joropians, they have a much bigger cutting space. They lose a million barrels of oil a day? No problem,just by more efficient cars. Or comute. In Europe we already do all that, so we will have the figure out what to stop doing.

I leave the discussion of how to rebuild the US to meet those changes aside.

Squarewave an intersting point and actually one I can answer. I analyse refineries as part of my job and have made a model.

In general the European refinery landscape is hopelessly equipped for heavy crude processing and only limited quantities can be co-processed usually with other lighter crudes.

Upgrading is a major issue with heavay crudes as the residue production is significant. European refineries are heavily biased by FCC units as opposed to hydrocracking by a 2:1 ratio. Crude like Arab Heavy contains a lot of coke precursors which makes both FCC and Hydrocracking a challenge. For FCC upgrading the metals Ni and V are also a problem and feed pretreatment is best. Hydrocracking involves heavy hydrogen consumption. The Vacuum Residue is also an issue as it is loaded in metals, sulphur and coke precursors. A deasphlter process helps but there are few of these plants anywhere.
Coking is the best option for the Vacuum Residue production but out of the 70 odd "large" refineries in Europe there are only a handful of cokers. FCC's are normally used for gasoline and hydrocrackers for middle distillates. Diesel (LCO) from FCC's is very poor quality.

I counted 10 coking units in Europe on my data base - 9 delayed cokers and 1 flexicoker. There are 54 FCC's (2.25 million b/d) and 31 Hydrocrackers (1.15 million b/d). Several refineries are due to close. Conoco Wilhemshaven, Petroplus Reichstett, Shell Hamburg, Tamoil Tremona and I would not rule out a few others. Many are up for sale or have been sold.

Italy has a severe overcapacity problem with a demand of 1.3 million b/d and refining cpacity of 2.3 million b/d, but closing any refinery in Italy will be a challenge. Germany is close to balance and there are small excess capacities in France and the UK.

All European refineries are operating in maximum middle distillate load for jet and diesel production. Gasoline remains a headache and ethanol direct blening only makes this problem worse. Something like 25% of the refinery outputs is gasoline related. Much of the light naphtha is used for olefines production.

One of the main problems with running a heavy crude in the refinery starts in the crude unit. Residue rundown is a limiting factor if the refinery has been designed around light crude, irrespective of the upgrading issues.

So, in short, a switch to heavy crude is not really an option. Only limited quantities of such crude could be processed by blending in with lighter crude. That also poses a problem as the lighter crudes can precipitate asphaltenes, if they are paraffinic. The worst crude I ever came across was Souedie from Syria. Truly dreadful stuff.

You can obtain some basic crude oil assays from here

I hope this helps.

This is great info. Seems that there would be a market to build a high-eff new small plant to handle heavy sour, and then close a couple existing partially-used refineries?

I assume the gas trans-ships to the US and we send some diesel back?

Too simplistic to think that small is more efficient. Scale really matters. Depending on your point of view one of the most efficient refining complexes in the world is reckoned to be the Reliance operation in Gujarat India. This is a mega scale operation that consists of two refineries with a combined crude capacity of nearly 1.2 million barrels/d.

It is connected to a petchem operation with many streams going back and forth. This has/is being replicated elsewhere but not on such a scale; this complex can handle heavy sour crude.

The real trend is integrating refineries and petchems to optimise margins which are scarce when making fuels. Your are correct - mogas is exported to the US but it is becoming more and more difficult. If it works diesel flows back but much European jet and diesel imports come from Russia and the ME.

I think I understand you at least as far as Europe being screwed goes.
It makes sense that the percentage of heavy crude will increase as we scrape the bottom of the oil drum. It also makes sense that the heavier the oil the more contaminiants like sulfur and vanadium will have to be removed by expensive refinery operations.

But the idea that you can't make gasoline from heavy crude is wrong, in the US 70% of the crude is heavy and they make all the gasoline they can sell. Most of the old light crude units were closed about 15 years ago.

The issue comes down to economics.

The heavy crude is mainly in the western hemisphere and so is the bulk of heavy crude refining.

The idea of Europe building heavy crude facilities for oil that needs to be shipped in is silly. Can they afford the additional natural gas required for upgrading? It's a little late to diversify their crude sourcing as most of the remaing oil is in MENA or unconventional in Canada or Venezuela. That leaves West Africa and Brazil as possible new sources.

The Chinese are building heavy crude refineries to use cheaper Arab Heavy and Venezuelan heavy. OTOH, the Venezuelan heavy is being refined in the Virgin Islands.

Careful, I never said that cannot make gasoline from Heavy Crude. It is just a lot more difficult and generally the yield is poorer. Europe did not invest in coking facilities because it chose not to. The product demand mix is different to the US where gasoline is the main product ~40%. In Europe it is the other way around. We actively go for middle distillates and that make refining a little more challenging. Much of the cracking technology is centred on carbon rejection such as FCC and coking. This produces gasoline components in the main and carbo is rejected as coke. Hydrocracking will generally be optimised in Europe for middle distillate products although with increasing severity and hydrogen consumption they can produce gasoline. This method is known as hydrogen addition.

The real problem is with the polyaromatics and asphaltenes in the feed. Asphaltenes are coke precursors and also lock up metals and sulphur making removal difficult. Coke made from asphlatenic crude will be of poor quality and is really only useful as fuel. Coke made from sweet crude is good enough for metallurgical applications.
Hydrocrackers and FCC's generally do not work well on polyaromatics as they are poor at opening the rings.

Refining is all about balancing the product mix. Get it wrong and you loose money. Making excessive fuel oil is a sure way to go bust.

Try this link for some info on delayed coking

and this one which is quite good

One point to remeber that FCC and coking will produce olefines that are unstable. FCC gasoline will be about 30% olefines and these form gums which age with time making the fuel go yellow.

So for a non-technical audience, how well will Europe handle a supply shortage of light sweet crude?

I understand you think Majorian's comments of Europe being 'screwed' as too simplistic and sweeping but how well could Europe upgrade it's refineries to handle heavy crude, and what are the alternatives?

Without massive investment with great difficulty. But I would caution that the world is not going to switch to heavy crude overnight. Most European refiners can handle small quantities of heavy crude but scale up would need some major revisions starting at the crude distillation which will need to be upsized in the residue area to handle the increased product flows. The overheads and side draws may be oversized.

Handling the an increased flow of atmospheric residue would mean an upsize to the vacuum unit, or for a cheapen option the CDU could be restricted to the residue run down rate. ie. a 100 kbd might become a 70 kbd CDU, with some adjustments to the top of the column.

The next problem would be upgrading the atmospheric residue. Ask 10 refiners and you would get 10 different answers. But most likley it would be down to using what is already in place. In any case everything would be a comprimise.

For a refinery with an FCC (carbon rejection) is could be revamped to handle worse vacuum gas oil. Adding a hydrotreater ahead of the FCC would improive the crackability. Normally a mild hydrocracking step is employed and often this is domne by the conversion of an existing hydrotreater. This step was recently done in Trinidad.

For a refinery with a hydrocracker there are a number of options but the vacuum gas oil could probably be processed without too much difficulty. For instance a once through unit might be updraded to a single stage recycle. This process would produce the best product mix for Europe. Metals in the VGO would pose the greatest challenge.

The real issue is the vaccuum residue and how it could be minimised.
There are a number of steps with coking being the obvious choice but coke quality could be an issue with heavy sour and metal crudes.

Another route might be to use a de-asphatling step which would remove the paraffinic and naphthenic oils from the residue leaving behind a heavy oil rich in polyaromatics and asphlatenes. The extract oil could be cracked in an FCC or a hydrocracker.

Although there are processes for residue hydrotreatment and hydrocracking I think the cost in terms of hydrogen would be excessive if applied to the residue, and the deasphalting step would be almost mandatory for hydrocracking.

Producing the hydrogen would need some major investment. It would be possible to apply a gasification step with a shift conversion of the CO to produce more hydrogen, rather than use natural gas. It really comes down to cost and the supply of feedstocks.

The sting in the tail for Europe is carbon emissions and refineries are under the cosh, with emissions being capped. Thus shifting to heavy oil would necessitate a large increase in energy consumption and carbon emissions which will incur costs.

Two years ago Conoco had plans to upgrade the Wilhemshaven refinery in Germany which involved a hydrocracker and coker. The project cost ran into in excess of €1 billion and was cancelled. The refinery was shut.

My own opinion is that investments to handle heavy oil in Europe will be limited. The margins on refining just do ont justify the investment-, particularly as margins have slipped back to $2-5 per barrel. The perverse nature of biofuels only makes matters worse as ethanol displaces components from the gasoline pool. Biodiesel is not much better as it causes huge handling problems with contamination of jet fuel and has very poor stability. The consumer in Europe is paying for this folly in terms of the additional handling costs and the surplus of gasoline components that have to be exported.

As the new emission limits for cars take effect then the situation for European refiners will only get worse, making investment decisions even more difficult.The fleet average target for CO2 emissions in Europe for new cars will be 95 gms/ km by 2020. Few cars can meet this. The new Nissan Leaf electric car has CO2 emissions calculated at 68 gms/km, based on the electricty production mix in the UK, a lot of which is from natural gas. Now tell me electric cars are green and zero emissions.

Most likely Europe will see its refining base shrink and will increasingly import middle distillates, but for how long will they be available.

Bit of a follow up. It took me a while to find what I was looking for. Here is an excellent article on Hydrocracking from the Encyclopedia of Hydrocarons. The whole book can be downloaded in pdf format for FREE. Highly recommended.

See p274 Stangeland Diagram.

For the whole book go here

click on leggi tutto for the download menu.

Would you be interested in contributing a post on this? It would be most welcomed. Contact me through my profile.

Nice article--you pretty well covered all the bases--I think that 2010 in a way became the final year of the energy game as we have experienced so far in our lives--2011 is the beginning of a whole new ballgame whose nine innings will be the nine years left till 2020. By then there will be no more games.

The Khurais field increase to 1.4 mb likely includes natural gas liquids, as the Saudi's have never claimed that it had anything greater than the 1.2 mb of capacity that it was designed for.

More (although vintage) info here:

[Edit] Or perhaps it can:

In the largest single-phase oil expansion project in the oil industry's history, the 30-year sustainable output capacity from Khurais and its satellites was quadrupled to 1.2 million bpd in June 2009, from three years earlier. Output could be pushed to 1.4 million bpd or even 1.5 million bpd, Mr Furaidan said.

The project pumped 1.2 million bpd on its first day of operation, proving the stated capacity for Khurais was accurate. Since then, output has fluctuated according to market demand. On Monday, Khurais pumped about 960,000 bpd, up from about 700,000 the previous day.


Thanks. Always Kurious about Khurais. ;)

'What we produce on a daily basis is different from one day to another because we are responding to the demand and responding to inventory in the downstream but today we are producing about 1 million (bpd), 1.050, yesterday we were producing 700,000 so it depends,' he said.

'We produced 1.2 mln bpd from the first day then we responded to demand might be reduced by 300,000-400,000 (bpd) depending on the demand,' he added.

Wow, those are some agile pumps. Dude, your production's been pretty much flat for three years, are you trying to make us believe you're shuffling levels around in these supergiant fields just for the exercise?

Mr Furaidan believes Aramco is setting an example of research-based clarity that other oil producers ought to emulate.

Current Saudi oil production and the kingdom's previous agility in responding to fluctuations in global oil demand reflect the reliability of the reported figures, he argued.

Ha ha Ha ha Ha ha Ha ha. I notice that according to BP refining cap worldwide is up to 90 mb/d so they shouldn't have trouble selling that heavy oil now. And it would probably be a good time to tamp down the price, what with it being a catalyst for another recession - don't want that now, do we?

There is talk in Washington to release oil from the Strategic Petroleum Reserves. That is strange since the tanks in Cushing will soon overflow. That shows once more how idiotic the Cushing site is. Pipelines go in but none goes out. Even some of the Golf oil has to be delivered to Cushing.

It might be that the government does this on purpose to suppress the WTI index artificially so that it is demonstrated that the public get the cheapest oil in the Western world. And true this is. In Europe the price of gasoline nears 8$/g and the living standard is as good or better than that of the USA.

Nice article. I am curious why Italy is not hit harder than Ireland. This is the last thing the Irish economy needs. It was interesting that the TV reported
more than 100,000 people leaving Libya. I had no idea of this number mostly
related to energy in the country.

There are reports that Gazprom has been able to increase supplies to Italy to help out.

Given that the pipelines and storage complex are private, why would the gov't even be significantly involved?

Since much of the gas spread is collected as taxes and spent on the same people, the net impact is perhaps less than the price would warrant. In the end, it steers behavior but not net expenditures -- flow of money is really just what gets imported versus exported in the balance of trade.

The benefit that the EU enjoys is likely more efficient use of the imported energy, and much greater density to transportation is less of an issue to begin with.

Historically success goes to those who leverage resources effectively. In the US, quantity has had a quality all its own. Efficiency is a neglected quality that will factor more significantly in the future.

There's also an issue with one of the SPR domes in Louisiana that will cause them to sell some oil in the short term, so if there ever was a good time to sell some, do it now.

Invest in heartburn medicine. There are going to be some risky guesses being made. If we merely have a supply disruption, maybe it would be a good time to draw down the SPR. If we are in decline....who knows? How do you pay it back? What is the SPR really for? (What department of government? )

The SPR can be replenished by selling the oil at high price during the rising edge of an oil price shock and then buying it at low price during the falling edge. Demand will be reduced on the falling edge like in 2008. No tax payer money is needed.

Except to pay back all the debt we apparently have to incur during the downturns. What if you disburse into the shock, flatten it a bit, use up the reserve, and then the shock continues? Now you have no strategic reserve AND high prices, and the US would be at strategic risk. When full, it is a deterrent. When empty, it is an incentive

Why not have a finished-good supply to use to smooth short-term disruptions? Then you'd have protection from refinery outages as well. I assume private stores would be applied exactly as you've stated -- the more deftly you play the ripples, the more money there is to be made.

Blue - If I understand correctly how SPR withdrawals work the oil isn't sold. It's given to the refiners who are then obligated to replace it on some predetermined schedule. Technically speaking it's free oil to the refiners...essentially amounts to a loan they have to repay in bbls. OTOH they are under no legal obligation to sell the products at a discount. They still set their prices at whatever the market bears at the time. The effect of an SPR drawdown (except during a supply shortage as during a hurricane) may be as much psychological as practical. Maybe even more so these days.

There are reference to selling oil from the SPR through out CRS Issue Brief for Congress: Strategic Petroleum Reserve, Robert Bamberger, May 31, 2005 (PDF warning). Referring to the draw down in 1991 in response to the first Gulf War on page CRS-10:

Nonetheless, more than 30 million barrels of SPR oil was put out to bid, and 17.3 million barrels were sold and delivered in early 1991.

Referring to former President Clinton's draw down circa 1996 on page CRS-11:

There were three sales of SPR oil during FY1996. The first was to pay for the decommissioning of the Weeks Island site. The second was for the purpose of reducing the federal budget deficit, and the third was to offset FY1997 appropriations. The total quantity of SPR sold was 28.1 million barrels, and the revenues raised were $544.7 million.

The revenue from selling oil from the SPR appears to be delivered to Congress, and legislation can specify how the funds will be spent.

Here is a description of a swap in September 2000 on page CRS-12:

On September 22, 2000, President Clinton announced a swap of 30 million barrels of oil from the SPR, and contracts were awarded on October 4. Interested parties bid to borrow quantities of not less than 1 million barrels. Contracts were awarded on the basis of how much oil bidders offered to return to the SPR between August 1 and November 30, 2001. In effect, bidders based their offers on their best models of what it would cost them to acquire replacement crude, weighed against the benefit to them of having additional supply at the beginning of the winter. Although there were reports that interest in the swap was thin, this proved not to be the case. DOE awarded 24 million barrels of sweet crude, and 6 million barrels of sour. Under the contracts accepted by DOE, a total of 31.5 million barrels were to be returned to the SPR in 2001.

The preponderant risk in the transaction was borne by the oil companies or refiners who placed bids. The volume a refiner promised to return, and the price at the time the refiner acquired the replacement crude, determined the refiner’s effective return on participating in the swap.

You might have been describing this swap or loan. It looks like a draw down is controlled by a finding of the President which allows the method to vary.

The DOE's SPR site shows the U.S. inventory as of November 30, 2010:
Sweet crude oil: 292.5 Mb
Sour crude oil: 434 Mb
total: 726.5 Mb

Blue - Great digging! I had never seen a report that the feds actually cashed out some of the SPR reserves. Scanning thru your link I did pick up an interesting tidbit: "No more than 30 million barrels may be sold over a maximum period of 60 days, and this limited authority may not be exercised at all if the level of the SPR is below 500 million barrels."

Thus it appears under the current rules the max delivery can't average more than 500,000 bopd. I can see how that could be of some help with local supply problems. But representing less than 1% of global production it difficult to imagine it's having much practical effect. Probably shake up the futures traders more than anything else. Not drawing down below 500 million may support the theory that the prime purpose of the SPR is fuel security for our military.

dr - Just MHO but I've always felt the primary purpose of the SPR was for the security of fuel for the military. Second, for events like hurricane disruptions, etc. Third, healthy psychology of the America public.

Agreed, in my even more humble opinion.

n - Something to remember about the lower cost of Cushing oil: that's not the effective price the public will see. That's what a crude buyer will pay. One big reason for the lower Cushing price is the cost of getting it to a refinery. The fact oil is being delivered to Cushing faster than it can moved out is another reason for greater completion amongst the oil owners. Depending on that factor the net cost to a refiner cold be as high as the Brent price in an extreme case. IOW a big part of the reason WTI Cushing is selling at a discount to Brent is that it will cost more to get it to the refineries.

It's also good to remember that the costs of gasoline isn't a 1:1 direct factor of oil price. Gasoline sells for what the local market will bear. If demand goes down the gas stations won't be able to charge more just because their refinery paid more for its oil. Likewise if the price of oil goes down but there's a surge in local demand and supplies can't keep up the price of gasoline will rise.

As far as the EU goes remember that as much of half of what they pay for fuel goes to the govt's in the form of taxes. And those taxes support much of the social programs that make the EU more livable. Our fuel taxes go to building more roads for the most part. that way we get to drive more and use even a great percentage of the world's oil.

Ngass -

Here in central Wales the diesel is now the £ /Imp Gl equiv of $8.82 /US gl, with petrol about 40c less.

This is about 8% higher than the peak in 2008, and it's begun to suppress road traffic noticeably.

We appear to have passed the peak of the so-called recovery from recession, in that the UK economy contracted 0.6% last quarter. Thus we are contracting again long before recovering the 2008 peak. A saw-tooth decline is evidently a possibility.

I've a question that I'm hoping you or some other bright spark can sort out. With the global economy in parlous condition, will a rising oil-price knock it flat again before reaching $147/bbl, or will speculators and govts be more cautious in their conduct and thus see the economy endure an oil price above $150/bbl ?

Among other events resting on that question is the possibility of a second term for the AWOL POTUS.



Heard today some news about protests rumors beginning in Oman, as most comment-ors here surely know is another somewhat significant oil exporter. It seems that there's probably going to be continued pressure on oil prices pretty steadily through to the noted-above summer seasonal uptick. Then you've got the annual hurricane factor (not to mention other potential ecological disruptions that have been occurring more rapidly), and things just don't look promising for developing any real lasting ceiling in oil prices.

For a long while I thought the global economy was going to continue to slog along through 2011 and wouldn't hit a wall until sometime in 2012, although now it seems like another wave of significant demand destruction is in the cards for 2011, unless we see a significant number of rabbits pulled out of hats. Oh, and I'm not British, I just really wanted to say "slog along."

It will be very interesting to see when world governments begin releasing oil from the reserves. That must be new political issue for countries to secretly fight over, a global game of chicken to see who decides to sell their stores first and who gets to cash in later when the price is higher. I propose a law that mandates that all money made by selling oil from the SPR to market goes directly to funding effective alternative energy R%D.

jon - See my post above. As I understand it unless the feds change the rules the SPR oil isn't sold so there's no monies to be directed anywhere. The SPR drawdown is loaned to the refiners who replace it, at their expense, at a later date.

I have a geology question about oil.

I thought oil came from ancient algae in lakes and coal came from ancient trees.
I heard it takes at least
50 million years to turn tree stumps into a bed of lignite.
How long does it take algae to turn into oil?

The earliest trees came after the Devonian period 380 Mya but algae has been around since 1200 Mya.

Shouldn't there be much more oil and degraded oil like bitumen than coal? What happen to the decayed algae in the open ocean, is it under tectonic plates or something? Is it locked in methane hydrates?

I'm just a guy with some geology interests, but the way I understand it is, oil forms under special conditions, coal under everyday conditions. So while coal have had less time to form, it does so much more efficiently. Tonnes/million years is higher forcoal than oil.

This is an amateur understanding of the issue so take it for what it is worth.

I thought oil came from ancient algae in lakes

Some of it did. However, most of it came from plankton in oceans. All algae are plankton, but not all plankton are algae.

How long does it take algae to turn into oil?

It depends. I've been told by geologists that some of the oil in the Gulf of Mexico is less than 1000 years old.

Shouldn't there be much more oil and degraded oil like bitumen than coal?

Yes, but oil is a liquid. It migrates to the surface and is destroyed by bacteria and oxygen. Only a small fraction (<1%) gets trapped in reservoirs on the way up. Coal doesn't migrate.

less than a 1000 yr old comment clarification please

it took a 1000 yrs to form or has just finally become oil in the last 1000 yrs after millions yrs of cooking?

I mean it went from dead plankton to crude oil in less than 1000 years.

You could probably do the same thing in the lab in less than a week. All it takes is pressure and heat. However, unlike what some people are claiming, I don't think it would scale up to a commercial operation at a reasonable price.

You can turn organic matter to hydro carbons in a matter of days. Just bury some organic matter shallowly in a swamp and return a few days later. You will see oil sheen on the surface. But that wont save us; it's a volume game.

maj - RMG covered it pretty well down below. I'm not sure if anyone has studied time factor directly. But oil has been discovered in very young sedimenrts in the GOM. Thus the implication is that this oil couldn't be older than the rocks the are found in. There is always the possibility of secondary migration with the iol formed much longer ago in a older rock and was transported to the younger rock. This process has been documneted but it's relatively rare.

Very difficult to estimate how much oil has ever been generated. As RMG says it been estimated that the vast majority eventually either leaks to the surface (lots of active oil seeps around the world today) or is buried deep enough that the temperature eventually destroys the oil.

I suppose the energy density of algae mixed with mud is so much lower than tree stumps. Shales are sedementary rocks which are about 50% carbon and 50% mud(clay-aluminum silicate).
Wood is less than 1% ash and coal is about 5-10% ash.

Still I find it surprising that the energy in oil and gas reserves together represent less than half then the energy in world coal reserves.

HO --

It was reported a few days ago that the Saudis had upped output 700,000 barrels-per-day, yet you have not mentioned it here.

See my Saturday Oil Report -- February 26, 2011

The Saudis have also claimed they can replace like for like, at least API wise. No doubt anything they produce will contain more sulfur.

-- Dave Cohen

How will the heaviness of the crude be monitored though? Seems like a new thing to track. I guess where the new supplies are shipped is an indicator (somewhat). I am presuming the heavier grades are not shipped to places that do not know how to handle them.

Thanks for the comment, but while I have heard that KSA is raising production to "around 9 mbd" which is what the Telegraph story is saying, they are being cagey about exactly how much. The problem is that if they were doing 8.6 in January then the gain has not been as much as reported. Some from Kurais, and some from Abqaiq.

I don't see how you can know that re: Khurais, Abqaiq.

best regards,

-- Dave

In your report you quote 2.5 mb/d and 3.5 mb/d as spare capacity. It would be closer to 1 - 1.5 mb/d

WikiLeaks cable from Riyadh implied Saudis could pump only 9.8 mb/d in 2011

Dont see how this is a problem for Ireland, We can just borrow more Euros from the ECB in emergency liquidity or better still just print Euro's ourselves and out bid the rest of Europe for the remaing supply.

The Joy's of a FIAT currency. It will take ECB months for them to figure it out. Then they will either have to throwus out for not playing the game or let us default.

I cannot see how the situation in Yemen could calm down.
A true revolution in Yemen would lead to a complete desorganization of the country, whose unity has always been questionable. That would put a huge pressure on Saudi Arabia which has more than 1,000 km of border in common with Yemen.

Yemen is a country I am always keeping a watchfull eye on. They are running out of oil AND water in an alarming speed. Water is estimated to be 90% gone by the end of this decade. They will be the first country to be completely dried out.

A possibility is that 90+% of the population migrates. In that case Yemen will seize to be a country and instead become just an area on the map. But to where will they migrate? This will be the problem of KSA. My guess is they will look to the Israeli example and simply wall/fence them in.

This ties in with Somalia on the other side of the gulf. They have the same kind of islam, and Somalia already have the same kind of gouvernment (anarchy) as Yemen is about to get. Will Yemen become the next Pirate-land? Then they will become everybodys problem. Something I suspect they will anyway.

And yes; they have an ongoing population explosion too.


Yemen could well be the tipping point. It is a case of damned if you do, damned if you don't. It really could be the trigger for mass migration and then what. If they go to SA there will be a problem and if they are bottled up thee will be another problem.

A total dog's breakfast. Better put a call into Geldof - he needs a career boost.

Its looking pretty much of a game changer for Libya and the rest of the world right now. It seems apparent to alot of people that America is so heavuily involved in all of this because it is a country so rich in oil, the media clearly labels the situation as such.

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