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Tech Talk - Governor Perry, API, and a Future Energy Plan
Posted by Heading Out on October 24, 2011 - 10:47am
Editorial Comment: I usually would not consider this a technical talk but rather more political, and I have just about finished reviewing the potential for growth of the reserves in North America. In that context, as I delved into Governor Perry's recently announced Energy Plan, I realized that it followed fairly closely the recommendations of the American Petroleum Institute and other Energy Alliances. That it might be therefore be considered the "best shot" of the oil and gas industry to predict how to increase oil and gas production in the United States, I will treat it as such a plan, and have removed my own comments on this post, though I may make some in a following post. I am also using his numbers rather than other values that might be available.
One of the relevant (to this site) facets of the current Republican debates at the start of this presidential race has been the Energy Plan that Governor Perry put forward the other day. Because it actually gets specific about where some of the projected 1.2 million jobs he anticipates adding to the American economy will come from, but given that detail has not got a lot of publicity, I plan to briefly review it here, together with some of the source documents that were used to generate it. Please note that this is not an endorsement, but rather an illustration of one of the suggested plans. Here is the summary illustration.
The entire plan is available, as a 40-page pdf, and in its shortest summary version was condensed into
My “Energizing American Jobs and Security” plan will commence or expand energy exploration from the Atlantic coast to the western seas off Alaska. We will end the bureaucratic foot-dragging that has reduced offshore drilling permits in the Gulf of Mexico by eighty percent. We will tap the full potential of the Marcellus Shale in Pennsylvania, Ohio and West Virginia. We will unleash exploration in our Western states, which have the potential to produce more energy than what we import from Saudi Arabia, Iraq, Kuwait, Venezuela, Columbia, Algeria, Nigeria and Russia combined.
The Governor puts current U.S. consumption at roughly 19 mbd with domestic supplies producing around 7.5 mbd. The nation runs on oil with transportation using 72% of the oil, and 96% of the country's transportation fuel needs are supplied by oil and gas.
The Governor inserts a quote from Governor Jindal of Louisiana that states:
According to a recent study by IHS CERA, in 2012 alone the Gulf of Mexico could create 230,000 jobs, increase revenues and royalty payments to state and federal treasuries by $12 billion, and contribute some 400,000 barrels per day of oil production towards US energy independence if the federal government accelerates the pace of permitting activity to a level that reflects the industry's capacity to invest.
This quote refers to the report “Gulf of Mexico - Restarting the Engine” by CERA which tabulates the difference achievable between a slow permitting environment, and an enhanced one over the next two years, and uses it (in more specific detail) to develop the summary table:
(It should be noted that roughly 94% of this in 2011, 97% in 2012 and all of the 2013 opportunities would be in the Deepwater offshore.)
In looking next at Alaska, the Governor sees the opportunity to develop the National Petroleum Reserve with its 896 million barrels of oil and 53 Tcf of natural gas, as well as the Alaskan Outer Continental Shelf (under the Chukchi and Beaufort Seas), which may contain as much as 10.2 billion barrels. The report by Northern Economics to Shell is quoted that anticipates some 55,000 jobs around the entire country coming from the development, with some 35,000 jobs being in Alaska. (Of this the breakdown would be 30,000 from the Beaufort UCS and 25,000 from the Chukchi Sea OCS.) It is anticipated that the increased production will fill the Alaskan pipeline again, with jobs being generated to make the connections. Which is why the 1.2 million job figure is only reached over time. Wood Mackenzie produced a report for API that is also used as a reference for the Governor, and it shows the job growth (broken down a little by source) as:
I am assuming that the increased production from Alaska would fit in the “Increased Access” category. And please note that the Wood Mac report carries out to 2030, while the Governor is only talking of the jobs through 2020 (which is the 1.2 million number).
And while the Governor is largely discussing this plan in terms of jobs, this is, after all, an energy site, and so I will also add the anticipated change in oil production that is foreseen from this change in the situation – again from Wood Mackenzie.
The jobs numbers were derived as a count of specific jobs generated in the industry, and then using a 2.5 multiplier to add their effect on the general economy. (This they consider to be conservative, given that it might be as high as 5 in some cases.) The overall addition of oil to the national reserve is considered to be roughly 60 billion barrels of oil, broken down as follows:
The Governor is a little more conservative about the oil that he anticipates coming from the Atlantic OCS, anticipating only some 3.2 billion barrels of oil and 28Tcf of natural gas, as well as the creation of some 10,000 new jobs. He references a report from the Consumer Energy Alliance as his source for some of this information. Note that in contrast to the Alliance, he only anticipates that drilling would occur offshore Virginia and the Carolinas.
Looking at increasing production of oil in the Western States, he cites the Blueprint for Western Energy Prosperity (site registration required) from the Western Energy Alliance. This projects that some 500,000 jobs could be created, along with the production of 1.3 mbd of oil and an additional 1 Tcf of natural gas from Western Resources.
The increase in oil production is anticipated to come from the Bakken fields (currently at 289 kbd and anticipated to increase to 650 kbd by 2020), and it also anticipates development of the Niobara formation in Colorado and Wyoming which, from sensibly zero, has recently started to be developed and is anticipated to produce some 286 kbd by 2020. However, the total gain in production from the two, over existing production in the West, is anticipated to be 529 kbd.
Natural gas transported through the Rockies Express and Ruby pipelines is expected to add 1 Tcf of production, which the Alliance shows divided between the Western States.
The Alliance makes the point, as does the Governor, that reaching these levels requires a reduction in legislation, and regulation, and improved access to federal lands.
Approval of the Keystone Pipeline (a topic of current debate) is expected to add 20,000 new jobs, which only leaves the allowance of increased development of the Marcellus and Eagle Ford shales (dependent on the allowed use of fracking the shale) to add respectively 250,000 jobs in the New York, Pennsylvania, Ohio region, and 68,000 jobs in Southwest Texas, and you have the Governors 1.2 million.
To achieve this the Governor proposes:
1. Immediately return to pre-Obama levels of permitting in the Gulf, followed by responsibly making more of the Gulf available for energy production.
2. Open the ANWR Coastal Plain (1002), National Petroleum Reserve Alaska (NPR-A), and the Alaskan OCS (Beaufort and Chukchi Seas) for development.
3. Open the Southern Atlantic OCS off-shore resources for development.
4. Immediately approve the Keystone XL Pipeline.
5. Expand on-shore oil and gas development in Utah, Colorado, North Dakota, Montana, New Mexico, and Wyoming, authorizing more development on federal lands.
6. Oppose federal restrictions on natural gas production, including hydraulic or nitrogen fracturing and horizontal drilling.
As I mentioned at the beginning, I will make some comments on this in light of my recent posts on North American Energy, in a later post.
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Drill Buddy Drill.
I'm sure Rockman will be happy with those 1 million extra jobs for drillers and exploration people. Nice boast to pay rates. Although quite what that would do for NOT having several more Deepwater Horizons is anyone's guess.
Honest, the only reason we don't have that luvly oil today is big bad government doesn't give us access. That Dubya was such a prissy fusspot when it came to oil regulation, and as for Mr Halliburton himself ...
And lest we or the public forget, the reason for extra regulation and increased permitting time is because of Deepwater Horizons which gushed oil in to the Gulf less than two years ago.
Like changing either of those to slow down the process down can actually contribute to lowering the odds of it ever happening again.
Sarcasm noted, but yes there is incontrovertible evidence that regulation does reduce the emission of pollutants (ie., Clean Water Act, Clean Air Act in the US, etc.).
So while regulation will not prevent all future oil spills, there is very good evidence that appropriate regulation will reduce future spills. From my years working in the corporate world, I could see the change in how hazardous chemicals were used, stored, and disposed of as the MSDS system was required. Requiring blow-out shut-off devices is a start, and requiring working blow-out shut-off devices is an obvious next step.
The converse question (ie., would removing all regulation make the oil production process safer and cleaner) pretty much answers itself for anyone willing to face reality.
You are referencing things involving actual new regulations. Not just a desire to slow down/gum up/stop a procedure that some bureaucrat wants to stop.
Lest we forget that it was the government that gave the permits to drill that deep in Gulf because, due to political reasons, they are not 'allowed' to drill closer to shore where the market would've have preferred to drill. I agree with Perry that we need to start using our own energy sources and it would be a great job booster. However, you can't have the type of growth we need in this country by just drilling. We need to throw out the current tax system and replace it with 15-0-0, instead of 9-9-9. That along with drilling would end the recession in a year.
Who wouldn't be, in an era of semi-stagflation and 9% unemployment? The oil and gas industry is one of the few pathways left open to working class Americans nowadays, and considering the value of their contribution to the overall condition of the world we live in, this is a good deal. Which would you rather have, a job driving a hot oil truck for near 6 figures, or a burger flipping job for minimum wage?
Bruce - So true. But I think this is where I confuse some folks. I'm all for "drill, baby, drill" as long as it's done responsibly. Good jobs, reduced trade imbalance, etc. But changing the PO path significantly? No way IMHO.
BTW - re: safer drilling in the Deep Water. For all practical purposes the "new" rules and regs will be no more effective than those inplace before Macondo unless they are monitored/enforced. Had the regs and proven industry standards been used it's very unlikely the BP well would have blown out. Going forward the oil patch, as a matter of self protection, will likely provide much safer ops than the feds ovesight ever will IMHO.
My experience in Colorado is that environmental protection as corporate self-protection is a failed strategy.
The thousands of abandoned mines around Colorado show that the most effective corporate strategy is extract the resource as fast as possible, pay lots of money to insiders, and then declare bankruptcy and walk away from the resulting toxic mess. Absent regulation, this is the path that the "economic self-maximizer" should follow, and plenty of people did and will follow this path if it makes them money.
The heavy metals leaching into drinking water for centuries to come is "someone else's problem".
Similarly, in the oil business, absent regulation the obvious strategy is to have a sacrificial company with limited assets that extracts oil, and just declares bankruptcy and walks away from the problem if one occurs (or asks for a government bailout, Tepco style).
which is why they now require a bond.
And this bond is always sufficient to cover the costs of environmental cleanup, of course. And if you believe that, I have some high-yield mortgage-backed CDSs I'd like to sell you.
Unfortunately, there is no way to extract oil or other ffs 'responsibly'--either it pollutes the immediate environment, or it goes through the system, is burned for its energy content, and then pollutes the global environment (or both). As horrific as major oil spills are, they are relatively local and usually relatively temporary tragedies.
Dumping the waste product of ff combustion (mostly CO2) into the atmosphere, on the other hand, especially at the rates that we are doing so, creates global harms that will stay around for centuries, at the least.
So, sorry to say, roc, and in spite of the bold title above the lead image, there are no 'good' jobs in this industry. It is not good to directly participate in and enable the destruction of the stability of the global climate system, with all the negative impacts that ensue.
Just to be clear, I am by no means letting those who do the actual burning of the ffs (all of us) off the hook. But we have to redefine 'good' and 'bad' jobs from purely monetary considerations to the consequences they have on the future viability of the planet. Insulating our housing and building stock, educating about ecological and energy issues, reconstructing our cities to be walking- biking- and mass transit-friendly... these are good jobs in a much deeper sense.
Bush rightly told us that we are addicted to oil. More pushers for our addiction are not what we need. More people UN-sequestering ever more carbon now safely stored deep underground are not what we need. "Good" is far from a fitting term for such activities and such jobs. (Again, sorry to break this news to roc and others actually involved in the industry.)
Why is this not shockingly obvious to everyone?
Do you, as a CO2 emitting biological machine contributing to this problem, honestly think you can cure your personal contribution to this problem any more than Rockman can? Or humans in general?
The CO2 we breath out is not part of the geological fossil carbon cycle. The carbon we breath out was instead taken out of the atmosphere by plants very recently, within the last year. Granted, producing and transporting that food, and clearing the original ecosystem, releases more CO2, but that is not the same CO2 that we exhale.
I can reduce my personal contribution to this in numerous ways -- firstly, I got rid of my Jeep many years ago and have gone carless ever since, openly vowing to Toyota that I will never buy another gasoline powered car again. Soon I hope to buy a Leaf and be part of the transition to a zero carbon economy. Once we can produce the solar panels needed to charge it, and the resources needed to build it, with largely renewable sources, we are there. But the first step of course is getting off ICE's, and the Leaf fills that role very well.
Another thing I try to do is buy local organic food and very little meat, and I hope to buy a little farm soon and produce a lot of my own food.
Quite true. We, as a species, have decided to not only increase our numbers to astronomical levels, thereby emitting CO2 which otherwise wouldn't even have been made, but we have found interesting other ways to do it as well. The Azolla event should certainly teach us to not discount the effects of the biologics. Be it them. Or us.
Good idea. Let's all just breath in more and stop breathing out altogether.
The standard response to that comment is always, "You first". :)
This is why I love reading TOD. I just learned what the Azolla event was!
have we really just replaced animals that used to live in this world.
I applaud your actions, but it's Chrysler that produces Jeep, and what have you got against Toyota? Toyota is the first manufacturer to mass produce hybrids (at least the ones for sale in the U.S.), and have just introduced a plug-in Prius.
Do not expect to be canonized for your sacrifice.
Is your Jeep unavailable for anyone to buy?
Unless your Leaf is wind or solar powered it still emits.
I don't know how many times I've commented on the fact that "cutting back" does not cut it when it comes to reducing emissions.
You are only making yourself feel good. For unless you can prevent Joe down the road from using that which you do not, then you are wasting your time. Every conservation measure must be accompanied by a concerted effort to fence off fossil fuels. We have to find a way to prevent them being burnt, we have to leave them in the ground NOT burn them more slowly.
Conservation measures as they now stand are simply an instrument or process to preserve BAU for as long as possible. And for BAU to continue so must the burn. If you don't believe it, why are we mining tar sands, deep-water drilling, arctic exploration and fracking everything we can get our hands on. As well as that Jevon's Paradox is there to bite us on the ass every time we find a more efficient burning method.
Now it means we must either sequester CO2 and/or make OFF LIMITS the equivalent or greater amount of FF that we would have burned otherwise. Pussyfooting around with windmills, electric trains and cars or solar panels without a direct action plan to reduce atmospheric CO2 is slow suicide. The time for conservation nonsense passed sixty years ago, before the last population doubling.
Lol.....you and I probably have the same number of friends left.
It does seem that those trying to drive a stake through the spectre of global warming are well aware that its all or none....pussyfooting around with carbon sequestration admits a looming problem. Denying climate change entirely is so much simpler. what were Gore's words? 'Acknowledging the problem creates a moral imperative to address it' or some such.
time for some Daily Show.
I didn't say it would. And I don't know that it matters anyway. You, and others in industry get decent paying jobs. GM, Nissan and soon Ford get to build solutions to the PO problem for the developed world, and demand from Chindia makes sure that both those things continue.
Rock,
Those good, responsible jobs you and Perry want to create do have consequences.
Let me start with a simple example that doesn't require belief in science or religion.
Two years ago a friend of mine sailed through the Northwest passage. He was not alone: they met 12 other private yachts on the way. A couple of months ago a sailor in a 27' plastic boat made the same passage. In two decades the Northwest Passage has gone from a voyage requiring steel icebreakers to an open water passage.
On land in the high Arctic the mean temperature has risen from 2 to 5 degrees centigrade, starting the feedback loop of melting permafrost and accelerating Co2 release. Ocean acidity has risen to the point where coral reefs will disappear worldwide with decades, but the wider significance of this fact is that it signals "Peak Absorption" , a decline in the ability of the oceans to absorb additional Co2.
If you live in Galveston you may have noticed that it has been two years since any significant rain has fallen. Perhaps a little hint of the future, but of little consequence to a faith-based theory of climate like that held by Governor Perry, the Texas Wildfire Denier.
There is a high probability that within two decades your oil patch will expand from the Gulf of Mexico to an Arctic ocean that is ice free for 6 months a year, and BP & others will be drilling there like there is no tomorrow. Lots of good responsible jobs to be had.
Once the North Polar sea becomes an open expanse of water, the Greenland ice cap cannot survive. Its melting will submerge Galveston, New Orleans, significant portions of Florida, to say nothing of entire countries around the world. The fresh water overflow may also have the effect of shutting off the Gulf Stream, radically changing the climate not just of Europe, but the entire world almost overnight. It is by no means certain that the feedback loops in a world with twice the atmospheric Co2 concentrations we have now produced will not drive it toward a state where it is no longer inhabitable by humans. And doubling of atmospheric Co2 is well within the capabilities of fossil-fuel-based industrial civilization.
Care to put a long term cost per job on those new jobs created by "drill baby drill"?
hz - You seem to miss the same fact that others have. While much of what you say is true there is another very true fact: the global economies will continue burning hydrocarbons including an increasing amount of coal. Doesn't matter whether you or I think it's a bad idea. IMHO nothing will stop this process.
So the question remains: do you want to export all those jobs to foreign countries? Do you want all the monies we spend on oil/NG to be sent to foreign countries? Do you want to give up the $trillions of revenue for domestic companies, salaries, taxes and royalties including $10 billion+ the feds receive each year? What social programs would you cut to make up for the govt's loss on income?
It's really very simple: do you want to keep some of our monies we spend on energy in the US economy or not? We're going to spend the same amount and contribute the same to AGW whether we produce oil/NG domesticly or not IMHO. So I ask you the same question I ask of others: what's the benefit to our country to give up on one of our few thriving industries?
Drill baby drill Rock. You got it! If the planet is going to burn, might as well be the US leading the charge, right?
And technically speaking, there is a solution to creating all this CO2 of course, but the people who discuss the interesting ways that might happen aren't going to be welcome here, because this is techno-land, not die off-land.
Rock,
Where is the benefit to the USA if the result is desertification of Texas, Iowa, and the breadbasket of the nation? How well will the Gulf Coast refineries function when they are under water? How much Canadian tar sands petroleum from the new pipeline will be refined in them?
I happen to agree with you that denial and greed will prevail, and therefore a national attitude of f***k the world, lets take all we can grab while we still have the military power to prevail is "logical" in the same sense that it is logical for a Goldman Sachs to gamble with leveraged derivatives bought with taxpayer money, as long as it generates yearly bonuses for the traders and officers. The end result of either policy will be the same: National collapse.
Even after a century of industrial agriculture mining our soil,clear cutting our forests, and pumping oil at the maximum short term rate our continent is still capable of supporting a large portion of our current population at a sustainable level of real wealth. The energy is there, in the form of solar, wind, tidal, hydro,and base load geothermal plus petroleum and algae based liquid fuels. Not the energy to sustain the suburban SUV infrastructure that we have foolishly built, but the energy needed to support a society that fulfills human needs for community and intellectual exploration. What is missing is the political/economic will to develop it. An alternative political/economic will stands zero chance of prevailing as long as people hold your idea of "responsible job creation" based upon continued exploitation of fossil fuel resources until the inevitable day of collapse arrives.
If the USA was the leader of the world instead of merely the current dominant imperial warlord we would act as a beacon rather than devolving into a senile power relying upon torture and terror delivered by remote control drones in a vain attempt to control the remaining supplies of cheap oil.
hz - Easy answer: $trillions of income that would otherwise go over seas. Again, maybe we view things very differently. Are you saying none of the bad things you offer will not happen if the domestic oil/NG ceases to function? If so you and I live in very different worlds. In my world the Chinese are building one new coal-fired power plant every three weeks. In my world the population continues to increase rapidly along with its absolute demand for more energy consumption. In your world apparently if the US stops developing oil/NG the rest of the world will praise us and stop their energy glutony. Yeah...right.
It is simply the prisoners dilemma. Texas may or may not become like the Sahara regardless of what the U.S. does. Why should the U.S. take the hit when everyone else isn't going to change their behavior either? By not burning the fossil fuels they leave themselves in a worse position to deal with climate change. The only thing which will stop the U.S. is scarcity not benevolence.
Rock,
In your world you will hold your foot steady on the gas pedal and drive the car over the cliff, secure in the knowledge that it (the US economy) is bigger than other cars on the road because we were able to buy or steal more resources to build bigger cars.
In my world I will try to slam on the brakes when I see the cliff ahead, only to be pushed over it by all the other cars driven by the world's me-first thinkers like you.
I think Rockman has described his world often enough for anyone who has read his posts to know that this isn't the truth. Being a geologist and working on an oil field does not make a man a he-devil. He produces a legal substance and unless people willingly decide to not consume the stuff his not producing it would do more harm than good.
S - "...does not make a man a he-devil." Thanks but I have a couple of ex-wives that might take issue with you. LOL.
LOL!
Anyway a better analogy is that you're the fuel pump. Your job is to keep the fuel pressure up, it doesn't matter one iota to you whether the throttle is wide open or idle positions (economy) and it doesn't matter to you where the driver is steering the car.
hz - I'm afraid you're under the impression that either one of us has control of that car (the US consumption of FF). There is absolutely nothing either of us can do to stop that car from plunging over that cliff.
But perhaps I'm missing something: exactly how will not producing FF domestically stop our citizens from importing more oil while sending those jobs and a huge chunk of our wealth to foreign countries? I do appreciate and share your concerns. But those concerns shouldn't blind you to the reality we face. Besides the jobs/monies we would be casting off its good to remember part of the current equation is swapping blood for oil. More domestic production unfortunately won't change that calculus IMHO. But at least I hope it slows the intake of shiny metal boxes through Dover.
Again, the choice seems simple: we produce what FF we can in a responsible manner and the country has a net gain. Don't and employment, tax revenue, personal income, etc. decrease. In either case we won't burn one less BTU. The car is heading for the cliff regardless. The question is how much additional suffering do you want your fellow citizens to bare before TSHTF big time? I've lived through tough unemployment periods and struggled to provide for my family. I don't use "suffering" lightly. I'm sure other parents out there who've experienced the same appreciate it isn't hyperbole.
Even if your statements on passage of the Northewest Passage were true, this does not prove anything. There were periods 6-8K bp in which the arctic was free of ice and sea level was a m or so higher. Consider that ice covered much of the Northern Hemisphere to a thickness of a mile. Two hundred years ago, it was so cold that many crops failed in North America. And the Medieval warm period lured the Vikings to settle Greenland only to drive them out some 300 years later.
Climate is always changing. The drought in Texas is no different than previous droughts experienced numerous times in the last 500 years, well before CO2 from fossil emissions. A particularly hard drought drove the Anasazi to practice canibalism, yet today that same land supports millions of people.
You do not understand pH and its effect on acidity. The average pH of oceans is somewhere around 8.1. It is speculated that it was around 8.2-8.3 about 300 years ago. In fact, no one could measure pH at that time. Also, pH can vary by 1 pH unit (an order of magnitude of hydrogen ion concentration)due to photosynthesis, rain, and other natural effects as well as geographically due to rivers, estuaries, etc. Around hydrothermal vents and natural liquid CO2 "springs" the pH really is acidic, but is rapidly titrated to alkaline conditions.
I also take it that you don't understand very basic chemistry. Carbon dioxide is CO2. O should be capitalized as it stands for the element oxygen. Capital C lowercase o (Co) which you wrote at least 4 times is the element cobalt.
I'd like to know more about pH and its effect on acidity.
pH is the measure of acidity or basicity. This page covers the basics pretty well.
Actually, it proves that the ice cover is changing.
It confounds me every time I see this argument. The first question I would ask is, How do you know the climate has changed before? Is it because the scientists who study that sort of thing have informed you of past climate changes? And you believed them? Well, why don't you believe them now? They are the same scientists, using the same science...
Hmm.
Texas climatologists have recently stated that the ongoing dry spell is the worst one-year drought since Texas rainfall data started being recorded in 1895. The majority of the state has earned the highest rating of “exceptional” drought and the remaining areas are not far behind with “extreme” or “severe” ratings by the U.S. Drought Monitor.
PEW Center on Global Climate Change
Best not get into that debate here though I will point out that records going back to 1895 neither support nor refute claims about Texas region droughts up to 500 years ago. Polyak's History of Sea Ice in the Arctic (1.8MB pdf) is the a tough but good read. Don't know if they got the sediment cores they were planning on drilling this last summer. It will take a lot more data-which may or may not be out there-to give us a complete picture, but every addition helps.[duplicate lines edited out]
From and interview with Polyak:
"The paleo data we have so far is very scant, so we can’t know for sure when the Arctic was ice free in the summer last time. To be conservative, the closest candidate is the early Holocene (roughly ~10 kyr ago), when the insolation in the Arctic was high due to the beneficial orbital configuration; however, the more data I see, the stronger is my impression that there was not that little ice at that time. The next best (actually, better) candidate is the Last Interglacial, about 125kyr ago, again due to orbitally-driven high insolation: the ice was likely very low, but we can’t say whether it was completely ice free in summer or not. There are also a few other major interglacials, which may have had a similar picture, in particular Marine Isotopic Stage 11, about 450 kyr ago. In any case we are talking about very rare events controlled by a forcing very different from today. If none of those intervals was really ice free, then a million year assessment would be correct."
Has anyone here read the entire "A 10,000-Year Record of Arctic Ocean Sea-Ice Variability—View from the Beach" published in Science? Just one more temptation for me to actually subsribe ?- )
At least one answer, is me, my friends and family, and most people I know would not be happy with increased oil drilling and resulting employment in the US. If we employ people to suck up the last remnants of US oil as fast as possible, the obvious result is that climate change and other pollution from oil burning is accelerated too. And of course faster drilling also ensures that the US will have no significant oil left when global shortages really start to bite.
Of course, increasing supply serves to reduce oil prices incrementally, which results in additional delay in implementing energy efficiency and renewables. So "drill,baby,drill" just delays the inevitable transition, and does massive environmental harm while we delay "doing the right thing". Should we be happy if the US keeps driving gas-guzzling SUVs for a few more years???(not me).
Trading our children's future tomorrow for a fast buck today is the American way, but not everybody is, or should be, happy about it.
Or in the shortest, rudest, summary of current reality-
Phook the grandkids,
Drill, baby, drill.
Phook their grandkids,
Chop that mountaintop.
I'm partial to that old perennial favorite of the Yuppie/ME generation:
"F*ck you, I got mine".
And...
"The one who dies with the most toys wins."
In many cases, the people who already live where the jobs are being created. SW Wyoming is an excellent example of the type of problems that are created: paved roads ground to gravel by traffic they were never designed to carry, overloaded water and sewer systems, big upticks in drugs, prostitution, and related violent crime. North Dakota is beginning to suffer the same problems; multiple counties have banned establishment of any more of the "man camps" that have been typical of the boom.
At least in the West, there's a lot of experience with the flip side of such job booms as well -- a small change in international prices, or national policy, and the jobs evaporate as quickly as they came.
Good point--another reason why these are not 'good' jobs.
Good jobs last more than through the next boom/bust cycle.
The entire point of peak oil is that there will be no more bust cycles. Supply cannot meet demand, price reflects this fact, and Rock will retire from a profession which will reward him for his effort.
Wyoming has no income tax and the schools are well funded.
Yes, and like most states that have no income tax, Wyoming has the ability to indirectly tax the income of people in other states. Wyoming derives on the order of half of their state and local revenues from severance and ad-valorem taxes on produced coal/oil/gas; the companies that pay those taxes add them onto the prices they charge, and most of the product is purchased (and the taxes paid), ultimately, by people in other states. Texas taxes oil/gas, most of which is sold to out-of-state concerns; Nevada taxes its casinos, most of whose customers are from out-of-state; Florida taxes its tourists, most of whom are from out-of-state.
This is not a criticism of Wyoming, simply an observation. Other states with political leanings similar to Wyoming's, but without the ability to tax out-of-staters reliably and to the same degree, have state personal income taxes.
One could say they only take their cut of the minerals before it leaves the state. The cost is not passed on to other states because the price is defined by the world market. if they did not tax the minerals the price would be the same only the company would pocket the difference.
Breakdown, state by state, of typical income sources ... they money always comes from somewhere ...
http://taxprof.typepad.com/taxprof_blog/2009/10/state-local.html
Wish it was higher resolution, but its readable.
Regards,
Cooter
Good chart to a point. If it shows the source of all state and local government revenue it looks like "licenses and other fees" is a huge catch all. Alaska gets the 70-80% of its unrestricted state revenue from oil royalties--the licenses category is the only one big enough to show that take--not exactly the title you expect to so see on royalties. That section is very large for Wyoming and North Dakota as well so that reinforces my suspicion of what it includes, but Deleware also has a very large contribution from 'licenses and other fees.' Deleware is not a resource state so what Deleware revenues are getting put into the catch all? That of course is assuming the chart is catching all the states' revenues.
What are the chances that Americans would be employed to do the work?
The first thing to happen would be a claim that no American would possibly want to do such arduous work, followed by a request for a couple of hundred thousand slots for immigrants.
Good point. Perhaps we should start quantifying American unemployment in a different way, expressed as those who WANT to work versus those who CLAIM they want to work but don't really mean it. For example, the crops going unpicked in Georgia because Americans don't want to replace the illegals who got booted, because, hey, it is WORK and all. These types of people really shouldn't count in the unemployment totals.
"These types of people really shouldn't count in the unemployment totals."
Why not, (since you used the "should"(n't) word)?
[Sorry, I always challenge folks who use shouldisms.]
If someone doesn't actually want to work, it doesn't seem fair to count them as unemployed. Using that criteria, we may actually have an unemployment rate of 1-2%? Less? People honestly who want to work, and aren't pulling the "gee I don't mean REALLY work" routine.
they do not to work for what the farmer wants or can pay them. If he paid them enough they would work. of course your hamburger would be 20.00
Good point.
The definition should say "People who want to work, PROVIDED they get fair compensation for their work".
It never seems to surprise that the world is full of exploiters who want the next guy to work for free while the exploiter takes the fruit of those labors without paying for the labor.
if you buy a computer did you exploit the labor of Bill gates who designed it or did you trade your labor for what you thought was a fair price?
We all sell our labor and our time according to our skills and opportunities.
Don't forget, we need to use another multiplier, the industry advocacy correction factor. This ranges from 0.1 (or 0.02 in egregious cases) up to as high as 0.5.
Wood Mackenzie are well known and respected, conservative O&G industry analysts. The correction factor could be at the upper end of the range ... but who knows?
On the other hand, we do have a pretty good idea of what will be lost with Perry's proposals.
Matt Yglesias has a good take on this. Basically, the natural resource extraction industries are one of the few sectors of the economy showing robust job growth:
Wait! Wait! Aren't the poor, underdeveloped countries supposed to provide the raw materials to the empire? What's wrong with this picture?
Yes, actually they are supposed to be providing *cheap* raw materials to the empire. Unfortunately, with ELM rearing its ugly head, they are simply not getting the job done! Lucky for us, there is a gross oversupply of humanity on the planet, which presents a perfect solution to our dilemma: oil from human biomass! Kills two birds with one stone: relieves overpopulation AND provides an indefinite supply of cheap biodiesel to perpetuate our happy motoring lifestyle. Win-win!
This would make sense in a stagflationary / hyperinflationary depression. "Currency Induced Cost Push Inflation" means commodities prices rise first, and wage rates rise last.
EROEI
A bit of a dirty word these days I know but....etc
M - Yep. But sorta "good news...bad news". I think most on TOD have caught on the inevitable feedback loops we can't escape. Higher energy prices = more energy employment = lower non-energy employment from the economic hit of higher energy prices. High gasoline prices = more incentive for alts = difficulty for the economy to pay the high price for alts given high energy costs. Lower energy prices = less incentive for alts. Essentially no state where everyone comes out ahead. Unfortunately given how much of our capital is exported to foreign oil producers it's not a zero sum game for the US economy: we come out short over all.
Well, there won't be 1 million extra jobs under this plan. Look at the assumptions: Perry assumes (wrongly) that Obama has instituted new (and unseen) regulations which stop nearly all work in all of the listed regions, and then he counts as "new" jobs the ones which actually exist now. And he tallies up the jobs stretching out to 2030, which gives our kindergartens time to train those new PE's. But there won't be 1 million jobs for drillers and exploration people; Perry says only 400,000 in oil and gas total, with the rest coming from a multiplier effect. And Perry thinks these jobs will occur, because oil prices will rise to $180/barrel, and NG jumps to $12.
As the economist said on the desert island, "Let's assume we have a can opener."
Want to really understand the foundations of the Perry energy plan? http://www.rollingstone.com/politics/news/rick-perry-the-best-little-who...
I'm convinced that no matter who is in the executive office and no matter who holds a majority in the congress, attempts to increase domestic oil and NG production will go whole hog.
What I'm concerned about is what next, who is working on it and are they properly funded?
I think the answers are: There's no consensus on what's next. The folks working on it are not primarily in the US (at least on the production end). And with few exceptions, they are not as well funded (in terms of direct and indirect subsidy) as the FF industry.
If that is the case, we're just delaying the mess and making the angle of decline sharper.
Or am I missing something?
Bit hazy is my concern. These additions to production include ongoing depletion or just new production?
Where will all the rigs come from? Why would we make ourselves more dependent on oil knowing that we have to transition to something else anyway? That's not how you break an addiction.
MrEnergyCzar
You'll enjoy HO's articles if you have a pro-Conservative viewpoint that discounts global warming as insignificant or even non-existent. The fact that he's even prepared to present this buffoon's plan here is an insult to thinking people.
As a man of moderate intelligence who does think from time to time I find no insult in having a presidential candidate's plan for energy posted on TOD..
so maybe coalescing all thinking people into an army of me on the internet is perhaps somewhat thoughtless
I think we should see any semi-serious plan. Since he copied from supposedly responsible expert sources (although you can't expect too much from an industry mouthpiece), this seems about as legit as we are likely to see from a candidate.
Of course, if you look at the proposed additions, most are embroiled in local/regional controversies. Full speed ahead in the Gulf, versus MacCondo stimulated spill angst. More drilling off the east coast -or California coast (not likely). Even a Republican gov, Jeb Bush torpedoed Bushes plan to allow drilling off Florida. There is a great deal of emotional opposition to most of these, that no matter who is president, they just won't happen.
"There is a great deal of emotional opposition to most of these,"
And there is a great deal of emotional opposition to wind turbines, solar power installations, and even solar collectors on your own roof in some places.
Society wants free energy from somewhere out of sight, with no effort, and no impact to any other location, including vacations they might want to take someday. It's not even close to a realistic attitude.
Mamba - So your position is that we would be better off not knowing the energy position of one potential future president of the USA. So essentially ignorance is power? So the best way to defeat a foe is to not understand where they are coming from. Interesting. I guess that means most of TOD aren't "thinkng people". Well, I have seen a few here that fall into that category. Even very recently, actually..
It would be possible to learn of Perry's energy position from numerous news sources. I'm more accustomed to reading critical analysis of such claims here on theoildrum, so I can understand the confusion about seeing something like this posted unadorned. But I think people should be patient and let the community here do their thing.
I always enjoy HO's articles as he is an energy realist. All Americans need to know the energy plans of those they elect, whatever their political persuasion. If this site attracts anything, it is thinking people from around the world. I look forward to HO's analysis.
By the way, Debbie, are you going to be at ASPO this year?
I suppose that by your standard, then, I have a pro-Conservative viewpoint: I think that we will eventually burn up all the coal and oil that we can reach. I don't think it's a good idea, I just think it's a more likely outcome than the alternatives. More likely than that alternate energy sources can replace coal/oil for the US as a whole. More likely than that 310M Americans will accept the changes in lifestyle that go with leaving the coal/oil in the ground. More likely than that the real economy will collapse before the coal/oil has been extracted.
"I think that we will eventually burn up all the coal and oil that we can reach."
I would characterize that viewpoint as realistic rather than conservative.
Well said. A viewpoint that would more accurately be described as "conservative" would be that this outcome is *sustainable* or *preferable* to powering down our lifestyle, population and consumption and migrating to renewable energy.
Thinking people will realize that it doesn't matter what people think. We are seeing The Emergence of Limits to Growth Scenario 2: The Pollution Crisis. Political sentiments follow the state of the world system, and if it wasn't Perry suggesting this, it would be another candidate. Ie.. if the incumbent was Republican, the Democrats would propose the same actions, maybe mentioning union jobs and taxes to support health care etc..
At this point the LTG authors and others who have run and experimented with the model seem to agree we are following scenario 2, with some of the family planning components of scenario 7 added. Eg.. China's one child policy has forestalled starvation, but its pursuit of industrial growth has led to cancer becoming the leading cause of death!
Remember, they only send out the clowns when they don't want you to notice them changing the set.
hf
To what extent is that the pursuit of industrial growth (in the usual Western foolishly-angst-ridden sense), and to what extent is it merely that despite their problems they now live well enough to die old of cancer instead of dying young of cholera, malaria, staph, malnutrition, etc.? IOW, does it really pass the "so what?" test?
The LTG books discuss this too. In the happiest ending scenario we all live full lives, dying of the usual old-age diseases (including cancer) after the usual life span. The population decline rate approximately mirrors the growth rate one lifespan earlier. A steeper decline happens when lifespans are decreasing due to breakdown of carrying capacity.
When i took a class on this book (in 1992) one of the assignments was to minimize total person-years of premature deaths, measured as integral of expected lifespan minus actual age at death. The most 'humane' action, by this measure, turned out to be guaranteeing that the least number of people consume the greatest share of finite resources, in the least efficient manner. That way the poorest people were unable to have as many children who would otherwise die prematurely. From that perspective, current policies actually make ethical sense.
Of course i don't agree with that perspective. It is possible to 're-wire' the system, introducing other negative feedbacks than the usual default ones included in the world model. These needn't be obviously growth-limiting policies. By 'monetizing' assets like forests, soil, fuel, and metals - allowing people to issue tradable receipts against them thereby turning them into money for as long as they are conserved, we could change the way wealth is measured.
slightly surprised by that. I thought low income=higher birth rate or is there a lower boundary to that[my] assumption?
the result of the children not making it to a child bearing age thus damping the effect of growth?
Thank you, HO, for posting this.
Without knowledge (including knowledge of Perry's current thinking on this issue), debate and advocacy are impossible, or worthless if attempted.
I too look forward to your (and others') analysis of his plan.
For those keeping score, Intrade has the top three most likely candidates to be nominated by the Republicans as:
Romney - 66.7%
Perry - 14.6%
Cain - 7.3%
http://www.intrade.com/v4/markets/?eventId=84328
Of course lots of things can and will happen before the nomination dust is settled.
Does candidate Romney have an energy (or energy and jobs) plan?
If so, based on his persistently high polling numbers from the race inception through now, it seems like a worthy idea to post his plan here as well for examination, analysis, and debate (if he has a plan).
Do any of these candidates have a plan or any ideas to modulate energy demand, or to developed alternative energy sources?
I'm gonna guess that Romney's plan is to see what will make Republican primary voters vote for him. After he is nominated he will switch to whatever plan will get people to vote for him in a general election.
God only knows what he might do if actually elected, probably prepare for the Republican primary in 2016.
RealClear Politics
compiles and averages available polls on the 2012 candidates: Cain 26.0%; Romney 25.5%; Perry 12.5%; Gingrich 9.2%; Paul 8.5%; Bachman 4.8%;Huntsman 2.0%; Santorum 1.6%.
Thank you for this link.
With InTrade, folks are wagering their money on their picks in the hopes of making a profit.
What I do not know is how long InTrade has been operating, and how accurate it has been...
Perry's plan: develop more natural gas in existing and new prospects like Alaska where the gas is stranded (no gas pipeline to the lower 48). Then develop more gas prospects in the Rockies West along with Marcellus and Eagle Ford shales to flood the market and depress the domestic price even more.
Development depends on price and putting more gas on market will only depress the price unless it is exported.
Perry, as far as natural gas is concerned, is essentially advocating exporting of US energy resources with this plan. Same goes for Keystone pipeline. And if more energy is exported, expect higher prices of nat gas and oil for domestic US energy users. That is the only way this plan will work.
If humans were more logical, then perhaps the U.S. would have an energy plan.
Perhaps we would consciously turn human nature on its head, and purposefully go after the hardest-to-get (Alaskan, etc) NG resources first, then the next easiest resources, then end up getting the 'shale gas' in Pennsylvania etc last.
A 'start hard, then work our way easier' strategy.
Such a plan would require government intervention in the markets, to subsidize the extraction of the most hard-to-get resources first...this would necessitate taxes and higher prices for the NG up-front, compared to what would be experienced with the 'extract the easiest resources first' paradigm.
The 'go after the hardest first' approach could maximize the total NG extracted, since the 'natural way' may likely strand NG in the expensive hard-to-reach places.
Oil and NG pipelines could be dismantled and shipped south as the perimeter/hard resources are used up.
Jobs would also be maximized over time, and the NG would be used for internal use, not export...again, given strong government control of the situation.
Such a plan would maximize our amount of time to figure out how we will live post-FFs, and would include robust research to that effect, perhaps by transferring some of the the obscene amount of money spent on the MIC to energy production/efficiency/conservation research in parallel with the 'extract the hardest FFs first and pay higher energy prices' approach.
But we do not live on the planet Vulcan, and we have to deal with the majority of folks who are short-term, non-systems thinkers and susceptible to the standard jingoism an sloganeering that is politics and business.
Any "logical", viable energy plan will necessarily further stress an already crashing economy. Any illogical, inviable energy plan will also necessarily further stress an already crashing economy; the consequences of extreme energy overshoot. Nowhere to go but down.
Best you figure out a way to lay back and enjoy, discover the upside of powerdown ;-)
Since this is necessarily both an energy and a politics post, I wonder how the GOM proposals are going to play in Florida, an important state for any candidate. I would think that a candidate promoting a strong green light on GOM development and reductions in all regulations would not sit well with much of the population and business interests there.
Of course, the Obama administration is not exactly banning drilling in the GOM either, so perhaps it's a wash, politically speaking?
Such proposals might not play out very well at all. Then again, those folks in Florida have luxuriated in having it both ways - lock up possibly significant resources as too "risky", but yet still bring in large numbers of oil-guzzling monied snowbirds and jet-set tourists to keep the economy humming along while somebody else takes on all the risk (and also pays extra taxes to supplement the risible tourist "industry" pay so the workers can live another day.) I suppose it's a nice sinecure until you run short of other people's money or resources.
OTOH if their haughty attitude about resources ever caught on more broadly, then I'd have to wonder what on earth they would do for a living amidst many fewer tourists, with many fewer bedsheets to change. Maybe they could grow and ship more oranges, but then I'd have to wonder whether they actually have enough arable land to make up the difference...
Well it seems that Perry is admitting to the reality of diminishing fossil fuel EROEI's, even if he doesn't realize it himself. If we had good sources of fossil fuels left then accessing that energy wouldn't require 1.2 million more "good jobs". I mean, that's the definition of a low EROEI isn't it? It requires more energy and effort (and therefore more jobs) to get usable energy out of the ground? If we had good sources of fossil fuels left then we'd have so much cheap energy available that we could easily fuel the economy to instead produce 1.2 million other higher level job opportunities doing things to genuinely better society, rather than getting 1.2 million desperate people to scrape around in the dirt for the last bits of ooze under the last corners of the continent. Seems Perry is confirming that we are indeed getting to the bottom of the barrel.
My opinion is that this oil will be developed regardless at some point. The dollar will crash soon and therefore the US will no longer be able to buy foreign oil. And since the US has done basically nothing to wean itself off its oil addiction, then when the dollar collapses I think the average person will be in such a position of strife that they will allow virtually anything to happen. The Koch brothers will become everyone's new best friends. What a sad state we will all be in then.
So we either go with this plan in 2012 under a moronic Republican regime or we go with it in 2 years time under an equally moronic Democratic regime dealing with the ramifications of a monetary collapse and 300 million desperate people. Of course the other alternative is to stop subsidizing the fossil fuel industry and instead put those 1.2 million people to work in jobs developing renwable energy systems so that we will actually have energy in the future, rather than seeing the fruits of those 1.2 million short term "good jobs" evaporate away forever in the last puffs of exhaust from America's fleet of Hummers.
But the problem with the renewable energy alternative is that it puts the power back into the hands of individual people, the middle class, and that's not what our political system is about -- it's actually about stealing wealth and power from the middle class, about creating a serfdom of peasants who are dependent on the central state for their needs. And that's why a switch to renewables isn't really going to happen in a big way until it's too late, IMO, because it's not in the best interests of anyone currently in positions of political or economic power for the average person to become energy independent. And the longer they can can keep the majority of people addicted to fossil fuels, the longer they can steal wealth from the middle class, and the greater the political leverage they'll have in justifying horrendous acts like this "good jobs" plan because they'll have 300 million serfs by the throat, all desperate for energy from their saviors the Koch brothers.
Seems we have learned nothing from all the previous failed ponzi schemes ever since the Dutch tulip craze. The majority of us are incapable of seeing beyond about 2 years into the future. I guess this time it will be different... Idiocracy here we come.
"....My opinion is that this oil will be developed regardless at some point. The dollar will crash soon and therefore the US will no longer be able to buy foreign oil."
You are of course correct here as the inability to repay debt of the US will cause a decline in the dollar, thus raising the price of imported oil and gas. As the cost of imports rises the International Oil Cos. will strive to produce more in the US since cost of production will be less compared to the oil price they get on international markets. This is no guarranty that the oil and gas produced in the US will be used here.
I foresee a gradual but dramatic reduction in oil use in the US due to economic decline that persists from now on. As a larger percentage of the population is classified as "poor" every year, the oil use per citizen will drop. But world demand for oil will continue to rise as the oil exporters and Chindia demand more oil and gas for their expanding economies.
You are of course correct here as the inability to repay debt of the US will cause a decline in the dollar, thus raising the price of imported oil and gas.
Not so fast here. The U.S. isn't maintaining 800 military bases in 150 countries and comprising 40% of the entire world's military spending no reason. On top of that, it's not like the Euro (facing possible collapse), the Yen (20-years of ZIRP and slow decline) or the Renminbi/Yuan (with its export-friendly dollar peg) about to replace the USD anytime soon. I'm not saying this is long-term sustainable, but this arrangement can certainly be propped up for a long time. As Keynes famously once said, "In the long run, we're all dead".
Having an Excel spreadsheet open I plugged Gov. Perry's quote [of Governor Jindal of Louisiana] in and something doesn't add up
OK. So 230,000 jobs at say $45,000/yr = $10,350,000,000/yr
plus $12,000,000,000/yr in revenues and royalty payments to state and federal
equals $22,350,000,000/yr for jobs and taxes. Lets call this Expenses.
Now 400,000 bbl/d x say $90/bbl x 365 days = $13,140,000,000/yr. Lets call this Revenue.
So Revenue - Expenses = $13,140,000,000 - $22,350,000,000 = - $(9,210,000,000)/yr --- Not such a good deal.
Either somebody is Lying - Big Time [I know their lips are moving] or I missed some obvious step. And I haven't even added the cost of producing those 400,000 bbl/d to the expense side of the formula.
Maybe he is planning a couple more Macondo spills. That could be a real job factory.
Let's see if we knock off 40% that would be salary BEFORE payroll tax, federal, state, local, medicare, medicaid of $27,000 per year. With a tax revenue of 7.2 billion.
gives 13,140M - 13,410M = -270M almost just lower the wages a little more.
Hmmm...back of the envelop, would this extra ~$9 billion of domestic oil extraction cost, if spread out among ~7 billion of bbls of oil used in the US each year, amount to a 'tax' of ~$1.29 per bbl of oil used?
I wonder what percentage of those jobs would be really low paying clean-up jobs after the inevitable spills from going all out with the protections taken off.
NAOM
230,000 jobs to give 400,000 bpd oil. (I'm assuming the jobs are the direct or indirect result of oil production activities.)
So, every job produces ~1.74 barrels of oil.
A quantum jump in productivity - backwards!!!
Or, every barrel generates 0.575 jobs.
That's magical oil, that there oil.
This productivity ratio is straight out of the DOD/Military Industrial Complex bureaucracy (actually it is a lot better than MIC 'productivity'...in the MIC most people read and create PowerPoint briefings and MS Word Reports, many of which seldom get read).
Our tax dollars hard at work!
We should pay all those PowerPoint Rangers (and another amount of people equal to them) half their current salaries to go out and do something useful for society such as insulate buildings, upgrade buildings' (including residential) HVAC plants, and install solar PV and wind turbines.
or build nuclear plants that generate cement that will absorb Co2 when they rehydrate in the roads they would be built with.
Seraph- thanks for doing the calculation. I read it but was too lazy to do the maths. Perhaps that is the problem. We are either too lazy or unable to do the maths which is why these folks can get away with crazy ideas.
I am intrigued to learn if there is a mistake in your calculation -
$45,000/year is too high. Most of these jobs are spin offs from greater economic activity and are low wage jobs. Put the figure at the minimum wage level because thats what most Perry created jobs get paid.
Some of those jobs are state employees being paid out of the taxes on the others.
Can $13billion oil revenue generate $12billion taxes? The oil companies have employees who pay tax on their income, tax on their spending, the people who they buy services and stuff off also pay taxes, so its not as impossible as it might seem. Maybe they are using peak Brent prices rather than WTI in their model so the oil revenue is rather higher.
I think it just needs some generous assumptions to get to this result. Oil is expensive. The spin off jobs are minimum wage. Tax is extracted at lots of places as the money goes round the economy.
Once you realise that he is assuming you pay top whack for your oil and get paid minimum wage, all those jobs and oil don't look quite so appealing.
Not necessarily. The economic impact of the oil business is greater than the value of the oil itself. That's the whole point of TOD. If oil were worth only its own cost, then the downside risk to the economy of losing every last barrel of oil would be would be order of $700 billion per annum, or about 5% of GDP. Not that big a deal, really. Instead, this site would have us believe that we can be hurt not only if the oil supply falls, but if it fails to grow! (Indeed, I have argued this many times myself.)
HO notes that one of the consultancies puts a multiplier of 2.5x on the oil business. This seems about right to me. In this framework 400 kbpd is worth about $30 billion per year in economic activity, which makes the numbers work, sort of.
I would note that the 400 kbpd number for 2012 looks over-stated to me. 2012 is too close to have that fast a response function in the Gulf. For 2014, maybe. A more reasonable progression might be: 2012: +150 kbpd; 2013: +250 kbpd; 2014, +370 kbpd (all cumulative numbers). So you might make an incremental 400 kbpd by 2014-2015.
Headcount looks high, too. ExxonMobil produces nearly 4 mbpd with 84,000 employees; Anadarko sees revenues of $14 bn with 4,400 employees. So the direct headcount to produce 400 kbpd would be on the order of 10,000, using the metrics here. Figure multiples of that for indirect benefit, say 5-6x. So you'd need maybe 50,000 people to produce 400 kbpd, all in, floor sweepers, shoe polishers and the rest. In my presentation to House E&P Subcommittee staffers in February, I estimated to economic impact of the loss of 600 kpbd of Gulf production in the 2011-2012 period at $30+ billion, $8 billion in various taxes, and 65,000 FTE-years (eg, about 40,000 jobs in 2012).
Now, you could have more "jobs" if you count people involved in the activity indirectly. For example, suppose a clerk at CVS sells a coke to a rig worker. Is that clerk "a job"? It's for this reason that I prefer FTE years (full time equivalent years). That's a more realistic assessment of economic impact, I think.
In any event, it's not hyperbole. It's just IHS CERA.
Steven - All just questimates but I tend to agree with your conclusions. But there's one big glaring assumption: before any well gets drilled some geologist/geophysicist has to generate the prospect. After that a landman needs to acquire the leases. And then an engineer has to design and drill the well. At the moment all these folks are fully occupied taking care of current business. It takes 6 years of college and another 4 or 5 years of on the job experience to become useful mammals. Beside that you need to convince a few tens of thousands high school graduates to major in these fields. BTW: the dropout rate typically exceeds 50% in these fields so be sure to recruit at least twice as many as we need.
On second thought you better double your recruitment: the oil patch is getting very gray. In the next 5+ years a great many of us are "going to the house"...for good.
You're right about prospects. It takes several years to cue projects in the Gulf--but there are nice prospects out there plus opportunities for existing field enhancements. Operators have noted both to us. So growth would tend to back-loaded offshore. That doesn't make it unimportant, nor are the jobs insignificant, but the issue has to be kept in perspective.
As for engineers. We just finished a forecast of the offshore and subsea engineering market. On paper, it would easily double in the next several years. Will we have the engineers to staff it? Good question, particularly noting the graying of the business. Engineering enrollments are up strongly, but clearly there's going to be a gap in the business for project specialists, project managers, and senior management. Chinese and Indian engineers are going to take much of the middle business. Visit any offshore engineering or construction company in Houston (eg, Technip), and you can see they are already very well represented.
So here's what I predict: there are going to be a bunch of senior engineers in Houston who are going to make way more in retirement as consultants than they ever did as employees. If you're thinking of retiring, well, forget about it.
"queue", not "cue"
Steve - True...we've got a little backlog of GOM prospects that won't get drilled for a 18 months or so. "If you're thinking of retiring, well, forget about it.": my 12 yo daughter has decided she wants to go to Texas A&M and become a horse vet. So unless I make the big score this time around no retirement. And even if I do I don't think I know how to do retirment anyway. But I'll work out of the house/on line for sure if I keep mt nose in it.
Rockman, I've been on a few deepwater rigs since the Horizon and they can hardly seem to get started without major BOP problems and other issues, because everyone is affraid to make a move. There's also several ultra deepwater rigs slated to come to the GOM this year and early next year, we don't have enough qualified workers and leaders, heck my company would panic if permits came out any faster than they are.
When baby boomers do eventually make the big crewchange by choice or even health reasons, I can only imagine how these already slow GOM operations are going to move forward.
It's going to be interesting.
Hey Rockman and Steve,
I am currently majoring in Petroleum Engineering at LSU. I am always thinking about if I join this industry am I helping mankind. My belief is that my generation will use the current technology to discover safer and more efficient ways to extract and use all energy forms. If everyone was to stop majoring in PE and jump onto the Environmental and Civil boat at once, there would be a huge gap in lifestyle for Americans. As you have stated before, are we willing to sacrifice what we have for a simpler lifestyle? I am, but other countries and men are not. It will be extracted by us or others at some point. The real truth is we all know fossil fuels will not last forever, mankind will have to change to survive. Hopefully through inspiration and innovation, which engineers should strive for, we can change our lifestyle's with more sustainable energy sources. Man will adapt to survive, and engineers and scientist should always strive for innovation to help man. This is how Einstein thought, and most of our other great inventors. They did not strive for money or job security, but to help men see truth. This is my goal in life. If I die and all I have to show for it is a huge retirement fund and personal security, what have I accomplished in this life? Not much, accept self survival.
My main point is that the Petroleum Industry should not be abandoned but inspired and innovated and eventually alternative energy sources will take over and our lifestyle will change for the better of our race. As Einstein said "Not everything that counts can be counted, and not everything that can be counted counts."
Since you are so heavily involved in this industry your wisdom should be acknowledged and used. So I ask, what are your thoughts on fossil fuels for the next fifty years and how can we help innovate the Petroleum Industry? These are the questions that should be asked.
PE - "what are your thoughts on fossil fuels for the next fifty year" That's an easy one: get a good paying job, get as much practical experience as fast as possible (IOW become a useful mammal as quickly as possible) and, most importantly, save every penny you can afford. You may retire from the oil patch at age 65 but the odds are against it IMHO. If you been paying attention to TOD you've seen discussions about the feed back loop: high enrgy prices = economic down turn = less energy consumption = lower energy prices. I won't try to guess to what magnitude this will playout during your career but it will likely be a very wild ride. Just my very WAG but in the next 20 to 30 years I expect at least half the domestic oil patch to disappear...for ever.
Rockman, had you been in PE's boots would you have considered mining engineering with an emphasis on coal or perhaps underrepresented nuclear engineering.
Being useful and living within ones means is top advice for anyone. Well ahead of find something you like..
robert - Couldn't do mining...can't handle tight places. LOL. Bad experience in a Mexican copper mine many decades ago. I think the problem with mining is just too few slots industrywide...just my WAG. I think a good flexible degree would be electrical engineering. But that's also one of the toughest but is useful in many different arenas.
Thanks for posting Perry's plan.
What's missing in the media coverage is what has happened since Obama has been elected:
US oil production... up strongly, despite the DW Horizon.
US nat gas.... up, near record level set nearly 40 years ago.
US wind and solar... up.
The media also misses the broader context. For example, here in the Rockies 30 million acres of federal land has *already* been leased for gas development and many many parcels still haven't seen a drill bit.
Three quarters of all the oil/gas wells in the world have been drilled in N. America. More than half the world's rigs are already at work in Canada and the U.S. 70 new wells will be completed today.
With gas under $4, many people in the natural gas industry, already struggling to make a buck, would welcome Perry's plan, as long as it doesn't actually get adopted.
The NPRA has been open for development for decades... You ain't gonna fill TAPS with oil from there.
Some years ago, I saw a perhaps relevant question on a delivery truck: "We shot all the buffalo,now what do we do?"
Perry has no credibility, he hands off to others who produce the crude (and the numbers).
The numbers come from CERA, and Dan Yergin. Enough said ...
The oil industry in GOM already has a lot of workers, adding 400k barrels per day production would not need another 230k workers. Maybe 2000 more workers. There aren't enough facilities to put 230k workers and give them useful jobs.
The challenge of 400k barrels per day is not the workers but finding the crude, then having an economy that can afford it.
If the government wants jobs, America needs at least a million new farmers. There is certainly a proven multiplier effect with farmers: their farm families, the new/revived farm communities and the crop-handling jobs. America could probably employ 5 million new farmers. It's a big country!
Farming would be 'lifetime and more' employment rather than the smash and grab resource stripping jobs.
Another employment opportunity would be watershed, cropland and forestry restoration. The need is bottomless in beetle-ravaged western forests and in waste-spaces created by ... the energy industry.
Perry never looks to the first and best energy employer: conservation. Conservation would hire twice as many as the oil/gas industry and these would also be permanent jobs. The largest issue with solar PV is the installation.
Perry is all hat and no cattle: a faux 'tough-gay' with a macho approach to destruction of the space platform so as to 'look good' during his 15 nano-seconds of fame. He's in the same camp as Sarah 'Turkey Killer' Palin.
It's worrying that Americans are even prepared to listen to one word from this microcephalic aspirant Preznit.
Just shows that all the denier dollars the Koch brothers have spent on fooling most of the people most of the time were well spent.
You don't have to fool most of the people most of the time.
Just 50.01% of the voting people
(-- or 5 Supreme Court justices, whichever is more convenient)
And just on election day
Let us be honest.
We are all like the Austrians in 1913 arguing about who our next Hapsburg ruler will be.
I'm partial to supporting Archduke Ferdinand
I think he has true conservative values.
The country can not support a million more farmers. unless you went back to horses and mules. We already grow more food then we can eat. We pay farmers not to grow wheat. Why would we need more farmers. The new farmland would come from dry parts of the country that do not have the water to farm at the present.
Energy prices also mean high food prices both to grow and to deliver the food to the cites.
And an item on the steady increase in the number of years that Yergin estimates it will take us to see a 20% increase in global productive "Capacity."
Daniel Yergin massively reduced his energy estimates
http://energybulletin.net/stories/2011-10-24/daniel-yergin-massively-red...
Is this real? Yergin on peak oil, 1979. He was less optimistic.
http://www.youtube.com/watch?v=ez9TRtXu8rQ
I think he was freaking out over the fact that we had hit domestic peak oil and became dependent on imports. But apparently his fear of imports subsided and he became comfortable with the fact that we are completely dependent on imported oil.
But it does make you wonder why he doesn't have any worries now? We can't start importing oil from Mars after global peak. Perhaps global peak oil is something that would terrify him so much that he has gone into denial over it. Thus, his denialist state of mind allows him to believe every possible reason not to worry about global peak oil: Technology will save us, tar sands, extra-heavy oil, coal-to-liquid, more deepwater oil, Enhanced Oil Recovery, Shale oil, etc.
Edit: Regarding Perry . . . I think it is moot. Perry's campaign collapsed like Ghadaffi's army. Perry is Texas Toast.
I suppose its rather trivial to say so here, but seeing as we have seen even the Saudis suggest some oil would be better left in the ground, is there some argument for hoarding? I guess Mr. Perry hasn't heard, we make fertilizer out of all that Ng.
Best Hopes for enough night soil,
Steve
"Saving" would be a better term than hoarding...
Still do these people understand that fossil fuels are capital not income? You don't "produce" it, you withdraw it. Mother nature did the hard work of actually producing the stuff. They seem to think the act of drilling magically causes it to appear, and as long as they keep drilling there will always be more.
The linked Wood Mackenzie/API forecast put Alaska production up to almost 2.5 mbopd by 2030.
WOW!!! of course this is based on stuff that is just a tad bit IFFY????
The chart from that report in the key post puts ANWR at 10.8 (resources added bnboe) which is of course a confusing way to term it, but that does fall in line with the USGS report which puts
The total quantity of technically recoverable oil within the entire assessment area is estimated to be between 5.7 and 16.0 billion barrels (95-percent and 5-percent probability range), with a mean value of 10.4 billion barrels.
But then this, the most recent assessment, was done 1998. Here is how the USGS said it was done:
The new assessment involved 3 years of study by 40 USGS scientists, who coordinated work with colleagues in other Federal agencies, Alaska State agencies, and several universities. New field studies were conducted, new well and sample data were analyzed, and new geophysical data were acquired. Perhaps most importantly, all 1,400 miles of seismic data that had been collected by a petroleum-industry consortium in 1984 and 1985 were reprocessed and reinterpreted. Collection of seismic data within ANWR requires an act of Congress, and these are the only seismic data ever collected within the 1002 area. All this information was integrated as basic input into the petroleum assessment
ROCKMAN you think we need more than reprocessed 1983-1984 & 1984-1985 seismic actually shot in ANWR and more than a single tight hole, the KIC well, actually drilled in ANWR before we can guess how many jobs and how much oil ANWR actually will produce? Well it's getting pretty loud in Arlington, best go watch the end of the game ?- )
Luke - We can make all those guesses right now with little chance of anyone making a strong case against us. That's the beauty of having an insignificant amount of data to make a valid assessment: you can't prove me wrong...na na de na na. LOL.
All seismic benefits from reprocessing every 5 or 6 years. Unfortunately that improvement tends to be rather small. A more important issue how the seismic was acquired. That technology has improved greatly since 1985. It's almost impossible to give a sense of the improvement but it's easy on the order of an old Commodore computer vs. a top of the line PC today. Current 3d seismic acquisition would leave no foot print and could be done very quickly.
As was once noted: it took 93 wells before the first major N. Sea field was discovered. And after more than 20 years and thousands of wells Norway just discovered a billion+ bbl oil field they had missed all those years.
And how much does one ANWR tell us?
The primary limiting factor in Alaska is the Trans Alaska Pipeline (TAPS). It has a capacity of around 2.1 mbpd. You could draw an additional amount from around the Aluetians (southern Alaska). So 2.5 mbpd is theoretically possible. Both the Beaufort and Chukchi (northern Alaska) have some nice resources. (Shell didn't pay $2.2 bn for leases on a whim!)
So, 2.5 mbpd seems somewhat high to me, but I would think around 2 mbpd is not out of the question, compared to about 600 kbpd today. It's a material resource. The increment from Alaska could represent as much as 10% of US consumption, about the same as the Gulf of Mexico.
So Alaska is a big deal.
So Alaska is a big deal but it is a different deal up here as well.
Today's decent NT Times article about a village on the Chukchi, Point Hope, gives a glimmer of that difference.
(note) Project Chariot, mentioned in the linked article, was merely a pilot project designed test the feasibility of using the big firecrackers to blast a sea level canal through the Isthmus of Panama.
I'd like to thank Heading Out for providing some really useful and accessible analysis into key policy areas in oil. His Alaska piece was terrific, and something I hadn't seen anywhere else. And his overview of the Perry oil program is also first rate, and very helpful for those who want some insight into political thinking about potential US oil policy and its impacts. Thanks!
How is it 'good' to pollute the environment. How much longer are we going to sh1t in our nest?
Just another George W. Same size almost same face.
This reminds me of the language of Newspeak as described by George Orwell:
"Slavery is Freedom"
More people working in the oil industry is an economic manifestation of higher EROEI. In other words, a necessary increase in the number of people who must sink into slave labour. And yet it is made to sound like a jobs bonanza. Perhaps people are simply incapable of anticipating how far wages will sink after so many jobs are created in the shale "production"(Newspeak: "Destruction is Production") industry.
Work makes us Free
Maybe folks will recognize the German better. Arbeit macht frei.
We hold those truths to be self evident.
shox - "Perhaps people are simply incapable of anticipating how far wages will sink after so many jobs are created in the shale "production". Just curious: are you aware that guys with nothing more than a high school diploma are making $90,000+ driving oil tank trucks? That a driller, again a hand that probably doesn't have more than a HS degree, is making over $200,000/yr. In the oil patch we have drilling hands on the rigs. One level below are roustabouts. They do thinks like sweep up, haul trash, refill water bottles, etc. Many don't have a high school degree. ..that's why they are working at the bottom. And they are making over $25,000/year. Many of these hands couldn't get a minimum wage job flipping burgers. It sounds harsh but I work with these "kids" and some are lucky to find their way back to the rig every day.
So you're vision has to be explained by a total lack of facts IMHO. BTW the oil patch has some quirks. When we slow up in a bust the salaries don't tend to drop much. What typically happens is everyone gets pushed down the pyramid. Drilling supervisors get demoted to drillers, drillers to derrick hands, derrick hands to floor hands, etc. Salaries don't drop much but your status does. This allows the oil patch to retain as much experience as possible during down times. The trick is to get one of those jobs that have become more scarce.
And the local that has three college degrees, has his 40 hour HAZWOPER training gets up at 4 AM, cleans up tarballs, and I know as much as any man on the site including the General Manager makes $12/hr. I asked where the company website was for posting better opportunities, I was told there are none. I am a sharecropper. I ask for only one favor from TOD on this issue. For the love of God if ANYONE knows where we can apply for Fukushima cleanup jobs let me know. This job may end soon and I have 5 older males at the worksite interested too. From what I understand, we are the ideal candidates. No more kids for us and older men. The radiation effects us less. You take 10% of my remaining life, what have you got? Not much.
THG,
BTW, what are your 3 degrees in?
International Master of Liberal Arts - History with a concentration on 19th and 20th century war history. A BA in Business Management. A BS in Computer Science engineering. I also have some 2 year degrees I do not count.
I would also add, based on my limited experience hanging out with those guys at the lower end of the payroll in LA and TX that many of them blow all thier money on consumer goods.
My ex bro-in-law would stop on his way back from the rig and buy a new $1500 shotgun or new "rims" for his truck before coming home to pony up cash for groceries. The company he worked for stared giving them their bonus in Wal-Mart cards in hopes (I think) the money would make it back to momma. :-)
I guess that's why these patch towns out in the hinterlands are still called boom towns.
serf - A very old joke about paying your coonass employees: pay every week and not every two weeks let alone monthly. Otherwise they'll be "weekend rich": spend all the money the first two days after getting their check and then scrape by till the next payday.
People enjoy high salaries UNDER PRESENT EROEI. The oil being drilled for presently has an EROEI of 20-30. If I have been reading all the articles on this site correctly, oil shale has an EROEI of about 3-5 in practice. You're a regular on this site, and an oilman, so you must know that with a return on investment of 30, with such a decent surplus of energy wealth, and hence material wealth, people in the oil industry can enjoy high salaries. But I wonder what the salaries would be when there is a massive reduction in net energy, and when the oil shale industry, with its paltry rate of return on investment, sucks in more and more of the workforce. I suspect people will be almost forced into the oil shale industry for lack of opportunity in other industries. It's all very simple: more energy means more economic freedom. Less energy means less economic freedom. I foresee a massive surplus of labour which will likely drive wages down and rob all people of what little economic freedom they have after net energy has substantially diminished.
I didn't read all of the above posts thoroughly, but Perry's employment numbers don't add up in the current country I live and work in. Let's assume the muliplier is correct, and that there are 500,000 - 1,000,000 direct energy sector jobs that will be created. Where will these people come from?
1. At the laboring end, farms in Alabama, Washington, etc., cannot find American citizens who will work work in fields for ONE DAY picking fruit and veggies. Do you really think that there are one million people willing, and able, to do the hard work to work rigs, lay pipe, weld, etc., in any weather, in eastern bupkis wyoming, etc ? Yes there are some who do - but- one million more??? Sure - cut unemployent benes,, etc., and maybe a few more people back east will move to ND, but one million?
2. Technical side - where are the engineers, geologists, and geophysicists going to come from to make this happen? In case Perry didn't notice, state budgets have cut college and university budgets - a lot., and no private sector donations cannot make up the diff, unless industry is willing to pony up billions, not a few millions to their favorite 6 schools. And the few private universities that still besmirch themselves with oil cannot possible make up the difference. Most universities produce damn few technical / math/engineering types anymore; there are damn few petroleum engineering departments, and there are huge swaths of the country that oil and gas cos. won't even bother recruiting at [see, for exa., Wash, Or, and CA]. The industry is filled with guys in their 50's and older, who are going to retire, consult part time, etc., and they are replaced by well meaning snot nosed youngsters starting at > $100 k/year who are going to have a steep learning curve. We produce thousand of bs degrees in business, etc., but damn few in phys. sciences and engineering.
"2. Technical side - where are the engineers, geologists, and geophysicists going to come from to make this happen? "
Fair point. I studied metallurgical engineering at the U of Idaho, intending a mining career. Then Clinton, Gore, and Babbitt arrived. They declared the West was to be for high-quality low-cost vacations for the urban elite. Added to the commodities bust at the same time, and there went that career.
Just after I changed careers to the edge of hi-tech just in time for that bubble to burst, the entire College of Mines at the U of I was dissolved due to low enrollment. Besides the extractive types and the mining engineers, that took out most of the geologists and geological engineers as well. The whole school is gone. Restarting it would be a huge task. You would have to coax in a new staff, redo a curriculum, and get funding to carry the program through the first years before you could get enough credibility to stand on your own. And attracting students to a new program with no industry connections is not easy either.
Whether prospective students today will turn up their noses and sneer at the idea of doing something as politically incorrect as mining is another open question. We are in a cultural situation where we want the goodies from mining and oil drilling and industry, but we don't want any of that nasty stuff done around us. So we have invented Advanced Economic Substitute and a Marketing Division skillful enough to convince other countries that we will repay them some future Tuesday for manufactured goods today. As long as they don't catch on we can have the goodies and let them wallow in the mess. The question seems to be how much longer the situation can last.
The Colorado School of Mines, South Dakota School of Mines, the New Mexico Institute of Mining and Technology, the University of Wyoming, and other schools still have mining curricula. Colorado School of Mines is widely regarded as one of the best engineering schools in the country, and from the people I know who went there or are still attending, is quite rigorous.