Drumbeat: December 31, 2012

The New Era of Oil Renaissance

We are going to have a Renaissance in this country, it just happened under everyone`s nose. The free market of high oil prices for the last 10 years made it happen all on its own without government subsidies, and part of the reason that things are going to get real tough for the alternative energy folks over the next 5 years as those government subsidies wind down. They will not make sense from an economic standpoint once oil prices come down considerably, and from a budgetary perspective we can no longer afford this propping up industries that cannot sustain themselves on their own merit in the free market. A 16 trillion dollar debt and climbing means the environmentalists will now be facing an uphill fight on Capitol Hill to have their cause funded by the American taxpayer.

Shale-Gas Revolution Spurs Wave of New U.S. Steel Plants

The U.S. shale-gas revolution, which has revitalized chemicals companies and prompted talk of domestic energy self-sufficiency, is attracting a wave of investment that may revive profits in the steel industry.

Austrian steelmaker Voestalpine AG said Dec. 19 it may construct a 500 million-euro ($661 million) factory in the U.S. to benefit from cheap gas. Nucor Corp., the most valuable U.S. steelmaker, plans to start up a $750 million Louisiana project in mid-2013. They’re among at least five U.S. plants under consideration or being built that would use gas instead of coal to purify iron ore, the main ingredient in steel.

The Pipe Runneth Over: Self reliant US may secure India's energy future

The implications of the world's largest energy consumer becoming self-reliant in gas and less dependent on oil imports are enormous - it is being bandied the biggest event in the global energy market after the oil shocks of the 1970s. Estimates made by the US Energy Information Administration (EIA) and BP (formerly British Petroleum) predict the US will be self-reliant in gas before 2020, and will import almost no crude oil from West Asia and other OPEC countries.

Crude Futures Set for Annual Drop in New York

Oil headed for its first annual decline since 2008 in New York as U.S. lawmakers sought an agreement on averting automatic tax increases and spending cuts that threaten the economy of the world’s largest crude consumer.

West Texas Intermediate futures fell as much as 0.5 percent, dropping for a third day. U.S. Senate Majority Leader Harry Reid said there are “still significant differences” between Democrats and Republicans with one day remaining to avoid the budget measures known as the fiscal cliff. The volume for WTI contracts was down 56 percent on the 100-day average.

Oil ends record year focused on US budget crisis

LONDON (Reuters) - Brent crude oil fell below $110 per barrel on Monday on worries U.S. lawmakers may not reach a last-minute deal to prevent a fiscal crisis, although remained on track to post a record annual average price.

Brent has averaged more than $111.65 this year, its fourth successive year of annual rises and above the previous record of $110.91 in 2011.

U.S. Gasoline Futures Drop as Stockpiles Rise More Than Forecast

Gasoline fell after a report that U.S. inventories of the fuel increased last week and amid concern lawmakers will fail to avert automatic tax increases and spending cuts scheduled to take effect tomorrow.

Futures declined for second day as the Energy Department reported that gasoline supplies rose 3.78 million barrels to 223.1 million, the highest level since March.

Why $100 Brent Will Not Last Through 2013

Back in September, with Brent crude oil prices sitting a little above $110, I predicted that Brent would drop to $100 or below by the end of November. While prices made an initial move in this direction, unrest in the Middle East and the weakening dollar (among other catalysts) have brought Brent crude back up to $110 at year-end. This demonstrates the danger of making short-range predictions based on long-term trends; other short-term factors can intercede and dictate the short-term price action.

The Six Most Overlooked Energy Stories of 2012

This past year, the story of energy in Canada was a story of Alberta oil -- who owns it, who wants it, and how we're going to get it to them. From Iqaluit, to Charlottetown, to Tofino, battles over bitumen, pipelines, and tankers bound for China dominated front pages, talk shows, and #cdnpoli.

But there was more going on out there. Here are a few stories that we argue matter just as much to our energy future, but that didn't necessarily trend on Twitter:

Iraq now OPEC's second largest oil producer

Iraq jumped two places to No. 2 in Opec's rankings this year, cementing its position among the world's leading oil producers. Neighbouring Iran dropped three spots to fifth as international sanctions took hold.

Yemen resumes oil flow after repairs — source

Sana’a: Yemen resumed pumping crude through its main oil export pipeline on Monday after repairs, a source at state-run Safer oil company said, following repeated bombings by armed men.

The Yemeni army launched an assault in the past few weeks using tanks and rockets on tribesmen blocking repairs to the Maarib oil pipeline, which was last blown up in November.

Why Chevron Is Going Lower In 2013

As you can see from the weekly chart above, after hitting the low $60s in the summer of 2010, Chevron shares enjoyed an almost uninterrupted rally to about $105 in early 2011. Since then, shares have consolidated and bounced between $85 and $117. Why did the rally stop?

To answer this, we need to understand what is driving Chevron's profits and, therefore, valuation. Chevron's main business revolves around discovering, drilling, refining, transporting and selling crude oil and its derivatives. In addition, like the other oil majors, it is a player in the natural gas space as well. However, Chevron's fortunes still rise and fall based primarily on one variable: the price of crude oil. In looking at the chart below, one can see that Chevron's valuation is almost entirely dependent upon the price of crude oil. This may seem like common sense but the magnitude with which crude oil prices affect Chevron's stock price is staggering. This chart compares Chevron's market capitalization with the spot price of WTI crude oil over the past 10 years.

BP-Led Caspian Gas Project to Cost Up to $30 Billion

The BP Plc-led Shah Deniz natural- gas development will cost as much as $30 billion, compared with a previous estimate of $25 billion, said Rovnaq Abdullayev, president of State Oil Co. of Azerbaijan, or Socar.

“In total, the second phase of Shah Deniz will cost $28 billion to $30 billion,” Abdullayev told reporters today in the Azeri capital of Baku.

BG Group gains $1.8bn loan for QCLNG

Britain’s BG Group has secured a $1.8 billion loan to underpin its ongoing development of the $20 billion Queensland Curtis liquefied natural gas (QCLNG) project off Australia.

The London-listed explorer said that the loan from the Export-Import Bank of the United States (US Ex-Im) would “support the export of US services and equipment” for the Australian LNG project.

Report: Iran test-fires missiles in naval drill near strategic Strait of Hormuz

TEHRAN, Iran — Iran’s navy said Monday it test-fired a range of weapons during ongoing maneuvers near the Strait of Hormuz, the passageway for one-fifth of the world’s oil supply.

IRNA quoted Adm. Amir Rastgari, spokesman for the exercise, as saying the Iranian-made air defense system Raad, or Thunder, was among the weapons tested, along with various torpedoes and underwater and surface-to-surface rockets as well as anti-ship missiles. The Islamic Republic said it also deployed domestically-made hovercraft during the operation.

Iran stage cyber warfare drills

Iranian forces have carried out what they called cyber warfare tactics for the first time as the Islamic republic’s naval units staged maneuvers in the key Strait of Hormuz, media reports said on Monday.

Al-Qaida carves out own country in Mali

MOPTI, Mali (AP) — Deep inside caves, in remote desert bases, in the escarpments and cliff faces of northern Mali, Islamic fighters are burrowing into the earth, erecting a formidable set of defenses to protect what has essentially become al-Qaida's new country.

They have used the bulldozers, earth movers and Caterpillar machines left behind by fleeing construction crews to dig what residents and local officials describe as an elaborate network of tunnels, trenches, shafts and ramparts. In just one case, inside a cave large enough to drive trucks into, they have stored up to 100 drums of gasoline, guaranteeing their fuel supply in the face of a foreign intervention, according to experts.

Northern Mali is now the biggest territory held by al-Qaida and its allies. And as the world hesitates, delaying a military intervention, the extremists who seized control of the area earlier this year are preparing for a war they boast will be worse than the decade-old struggle in Afghanistan.

Hugo Chavez reportedly suffers 'new complications'

CARACAS, Venezuela (AP) — Venezuelan President Hugo Chavez is confronting "new complications" due to a respiratory infection nearly three weeks after undergoing cancer surgery, his vice president said in Cuba as he visited the ailing leader for the first time since his operation.

Vice President Nicolas Maduro looked weary and spoke with a solemn expression in a televised address from Havana on Sunday. He described Chavez's condition as delicate.

Trains, Barges and Pipelines

It appears that besides the traditional methods of getting oil from the wells to the marketplace, one of the oldest forms of transportation is starting to make some headway. Railroads could play an important role for many years to come. Investors may want to pay attention.

EPA faces legal battles, might take easy confirmation road

WASHINGTON (Reuters) - Regardless of who takes the reins, the U.S. Environmental Protection Agency will likely face continued legal battles in President Barack Obama's second term as it tries to finalize pollution rules for power plants, analysts said.

Oil Giants Heading to Trial in Water Pollution Lawsuit

CONCORD, N.H. (AP) — Nearly a decade after it was first brought, a lawsuit accusing two oil giants of widespread groundwater contamination in New Hampshire is expected to present jurors with the most complex and time-consuming trial in the state’s history.

Japan’s New Leader Endorses Nuclear Plants

TOKYO — The newly elected prime minister of Japan, Shinzo Abe, said Sunday that he would seek to build nuclear reactors, reversing within a week in office a campaign pledge to move Japan away from nuclear power.

U.S. gets boost in nuclear power as reactor comes back online

Nuclear power production in the United States rose to its highest level in more than three months. Bloomberg reported that after the Tennessee Valley Authority reconnected a reactor at an Alabama plant, the U.S. reached 91,705 megawatts of nuclear power - the highest seen since September 14.

Vertical farms solve land problem (video)

With land prices at a premium in Singapore, vertical farms with rotating vertical racks present a sustainable solution while cutting down pollution.

To Save Wildlife, and Tourism, Kenyans Take Up Arms

It is essentially a militarized neighborhood watch, with loping, 6-foot-6 former herdsmen acting as the block captains, and the block being miles and miles of zebra-studded bush. These citizen-rangers are not doing this out of altruism or some undying love for pachyderms. They do it because in Kenya, perhaps more than just about anywhere else, wildlife means tourists, and tourists mean dollars — a lot of dollars.

It is not unusual here for a floppy-hatted visitor to drop $700 a night to sleep in a tent and absorb the sights, sounds and musky smells of wondrous game. Much of that money is contractually bound to go directly to impoverished local communities, which use it for everything from pumping water to college scholarships, giving them a clear financial stake in preserving wildlife. The safari business is a pillar of the Kenyan economy, generating more than a billion dollars a year and nearly 500,000 jobs: cooks, cleaners, bead-stringers, safari guides, bush pilots, even accountants to tally the proceeds.

Protest Tactics in a Warming World

For those trying to realize a sustainable future, there are two approaches: attack, reform, and otherwise engage the existing system to create structural changes, or build new systems from the ground up. The Do The Math tour falls into the first category. One of its central themes is a refutation of the idea that, because we all drive cars or heat our homes, we’re all equally responsible and that individuals just need to reduce their impact.

“Of course you should try to reduce your footprint,” says 350.org’s Kahn Russell, “but the way the math adds up is that we’re not all equally responsible. Our society is addicted to fossil fuels, and to fight that we need to go after the drug pushers. … It goes back to that Utah Phillips quote, ‘The Earth is not dying. It is being killed, and those who are killing it have names and addresses.’”

It’s getting warm in Antarctica, but mining still a pipe dream

Even if global warming and melting polar ice weren’t a concern, mining in the Southern pole is not an option.

First there is the Antarctic Treaty, signed by the 50 countries that operate bases there, protects the continent by forbidding its military use and the exploitation of its minerals or other resources.

And then there is the extreme weather. Unlike the warmer and much more accessible Arctic, drilling for coal or oil off the Antarctic coast doesn’t seem feasibly.

Kyoto climate change treaty sputters to a sorry end

The controversial and ineffective Kyoto Protocol's first stage comes to an end today, leaving the world with 58 per cent more greenhouse gases than in 1990, as opposed to the five per cent reduction its signatories sought.

From the beginning, the treaty that was adopted in 1997 in Kyoto, Japan, was problematic. Opponents denied the science of climate change and claimed the treaty was a socialist plot. Environmentalists decried the lack of ambition in Kyoto and warned of dire consequences for future generations.

But the goal of the treaty was simple.

Public's interest rules debate on shore

the bottom line has to be this: No public money should be spent until it furthers the public’s interest. As Collin O’Mara, Delaware’s secretary of the Department of Natural Resources and Environmental Control, has said, “There has to be a clear public benefit to justify the expenditure of public resources.”

That means no private subsidies, no special treatment of select individuals or favored communities.

Climate science makes an eleventh-hour comeback in 2012

Republican-affiliated climate researchers told InsideClimate News that attempts to educate their party leaders on the science were rebuffed. Meanwhile, many U.S. scientists fended off attacks of global warming skeptics, while Canadian scientists had to deal with budget cuts and muzzling by the government.

Amid the silence and skepticism, the Earth sent its own message.

Crude oil production from the Gulf of Mexico continues to decline. The peak was September of 2009 at 1,740,000 barrels per day and in September it was 1,139,000 bp/d, a drop of 600 thousand barrels per day.

Gulf of Mexico Production in kb/d. The last data point is September 2012.

GOM Production

Ron P.

Ron - Good to keep tract of one of the country's major oil plays. Some details on current activities: http://www.banner-tribune.com/view/full_story/20986032/article-Deepwater...

A month ago: "Deep water got nearly all the bids in the third federal oil and gas lease in the Gulf of Mexico since the BP oil spill. Of $133.8 million in winning bids, only $4.6 million was for areas less than a half-mile underwater." IOW 96% of the bids were for DW leases. The shallow water GOM is dead with regards to oil exploration and has been for a long time.

"That brings total lease sales in the Gulf to more than $2 billion over the last 12 months. Before that, lease sales were halted as the federal government scaled back production and imposed sweeping new safety measures and requirements following the Deepwater Horizon disaster in April 2010." So we now have additional lag time to the normal course of DW ops.

No one outside the companies currently evaluating the DW GOM can offer any idea about future potential and they ain't telling. But: "...the Bureau of Ocean Energy Management offered about 20 million acres in the western Gulf...and got bids for about 652,500 acres." IOW less than 4% of the area offered for lease had anyone offer a bid. BTW the DW oil play generally began in the eastern area of the GOM with the western tracts targetd for extention of the play...hopefully. And it would not have taken much of a bid to get any of those tracts. The largest single bid was $17.2 million which is very large compared to $100+ million bids offered for other tracts not that long ago. Consider that a single DW exploration well can cost over $100 million such lease bids represent only a small portion of the ultimate exposure.

Not a hard stat for sure but consider the implication of oil floating around $100/bbl (with 2012 having the highest average annual oil price ever recorded) and more than 96% of 20,000,000 DW acres not receiving a single bid. This doesn't mean the DW GOM potential is dead but might make one question some of the big increases some organizations have projected. Not unreasonable to expect some new DW discoveries of significant size. But it would take a couple of new Thunderhorses coming on line tomorrow to just offset the decline in the production trend you posted. And AFAIK there are no new fields coming on very soon. And what new fields do develop will have the high decline rate as your chart indicates. DW production has certainly helped us in the short run but it seems risky to expect it to be a long term game changer.

The shallow water GOM is dead with regards to oil exploration and has been for a long time.

That's probably quite true. I suspect there is a lot of deep gas under the Texas shelf, but at current prices for gas no one is going to spend money looking for it.

Ird - It would have to be pretty deep We've been popping the western GOM pretty hard for over 20 years to to depths of 15,000' or so. The big problrem with the fed lands off Texas is that there is very little oil production compared to off the coast of La. A lot of GOM NG has been developed because they found it while looking for oil.

And the shine on the ultra deep offshore plays like McMoRan's Davy Jones has dimmed a good bit. From


"The consortium has now spent more than a $1 billion just in pursuit of Davy’s treasures...In December last year, the hope was that Davy Jones would be on line and producing by the end of 2011. Now we are only days from this year end with the same hope that the well can be made to flow by December 31, 2012 so that reserves can be added to the MMR balance sheet. Odds are not good for a happy result before the year terminates."

The main problems is that they are operating at the extreme edge of our mechanical capabilities. Huge reserves for sure but they only count if you get them to the surface.

It would have to be pretty deep

The specific one I have in mind is at about 21,000 feet in 200 feet of water. That's about 8,000 feet below pressure, and just to make things worse there's a thick depleted sand about 3,000 feet above it. Should be a few Tcf in it, but as you say, "at the extreme edge of our mechanical capabilities". Not worth a second thought at today's gas prices, but if they go back up to $10-12 and stay up, someone will find the money.

I am not surprised that bids for DW leases are going slow. A lot of folks are having second thoughts because of those astronomical decline rates. Thunder Horse and other deep water plays were once expected to produce at high rates for 25 years. But not a chance because they are now declining at a rate in excess of 20 percent.

Combined production of Atlantis, Thunder Horse, Tahiti and Blind Faith in barrels per day. The last data point is September 2012.

Atlantis TH Tahiti BF

A side note: Atlantis, after being off line for four months earlier this year is now fully back on line. (As of about August 2nd.) Atlantis produced 62,753 barrels per day in September.

Ron P.

Ron, your graphs are one of the highlights of TOD. Please keep up the good work and have a great new year.


"Ron, your graphs are one of the highlights of TOD."

Hear, hear....

That's an incredibly steep decline rate for those wells. I don't think the people who write things like The New Era of Oil Renaissance realize what is going on outside those areas where production is rising.

This whole expansion in tight oil and tight gas is really driven by higher prices rather than new technology. Hydraulic fracturing of oil wells is over 50 years old, and horizontal drilling isn't much newer. What has changed is the price of oil which makes expensive techniques like those economically viable. Deepwater drilling is similarly expensive. The real problem with them is that the oil fields will not have the life that they used to since companies can't afford to operate them at low flow rates.

People who say, So how low can prices go? don't realize that low prices will put the producers into a money-losing situation, and they won't stay there for long - only until they go bankrupt. There is not a lot of potential for price reductions in the long term.

tight gas is really driven by higher prices rather than new technology. Hydraulic fracturing of oil wells is over 50 years old,

And I believe as part of the efforts of Dick Cheney the rules for hydrofracking were relaxed. Thus a paperwork burden was removed.

Eric – I can’t speak for the other states but as far as Texas and La. go in 37 years I’ve never had to get fed permission or follow any fed rules to drill or frac a well. And before the shale boom most of the wells frac’d over the last 40 years were in these two states.(I think). The only exception is getting Corps of Engineer permits to drill in wet lands. But even the regs there mostly dealt with surface operations and nothing down hole.

Some operators might prefer fed rules over the TRRC and the La. DNR. I have drilled in KY where the state gave all environmental oversight to the EPA. Besides being much less stringent there they didn’t even have anyone on the ground monitoring my activity. All I did was send paper work to Atlanta stating I was following the rules. As long as a local landowner didn’t catch me I could have dumped ever gallon of toxic chemical I had on the ground and the EPA wouldn’t be the wiser.

I do hear chatter about new fed rules perhaps for those states without viable regs. Just thought of another example: air quality control of production equipment. In neither Texas nor La. are there any fed regs I’m aware of but the states rules are fairly tight. In fact on my last La. well I had to follow even more strict standards then the state required. The parish regulations exceeded that of the state. From what I’ve seen from afar it seems NY is trying to develop good rules for frac’ng. And since both PA and NY passed laws making it illegal for local municipal treatment centers to take frac fluids (for a price) and dump them into the streams untreated it seems reports of surface contamination have dropped significantly.

37 years I’ve never had to get fed permission or follow any fed rules to drill or frac a well.

The unsourced claim I remember reading in last year was to the effect that rules about showing the effects were removed. Given I'd not seen this claim here on TOD its possible what I've read on the internet turned out to be untrue.

eric - "...rules about showing the effects were removed.” That might have been true for those states that were regulated by the EPA and not the state itself. But I’m not sure what “effects” might have been reported to the EPA. Maybe the production test info but that wouldn’t seem to be the issue. Maybe they mean pollution incidents. All operators are required by law, both state and fed, to report such accidents. Whether they do, even in Texas or La. is another matter.

The real value of the Texas/La. regs IMHO is more about the well/frac design than monitoring the effects. Both states have regs along those lines which are strictly enforced. And compliance is certified and monitored closely. Doesn’t eliminate the potential for accidents completely but much better than the bad old days decades ago.

If states want the toughest regs on the oil patch they shouldn’t look to the EPA IMHO. They should simply down load all the La. regs from the DNR website and make them the law of the land. As I said earlier my only experience with the EPA regulating the oil patch was in KY and that was a sick joke.

Damn socialist Texans!! No wonder they want to secede from the union. EPA is just too damn easy on the oil and gas drillers.

ts – Actually that’s closer to the truth then most would believe. LOL. Many assume the oil patch has the big stick in Texas and La. Not even close. For a few decades the land owners have had the stroke with the TRRC/DNR and the courts.

As far as violators and scam peddlers go from my personal experiences it’s often been oil patch hands that ratted them out. Sometimes in self-defense when an operator offsetting your wells does something wrong and you don’t want to get blamed; sometimes out of resentment when someone breaks the rules to save money when you paying the freight. And sometimes when it’s just the right thing to do. As you may remember my 12 yo daughter drinks well water every day. Lots of oil patch families also do so. If I caught someone dumping nasties on the ground in the area of her water well the Texas Rangers would be the lesser of their concerns. Twice I’ve helped bust illegal dumpers and one investor scam and it was very satisfying. Especially the con man that readily told me about his plot obviously thinking that since I was in the oil biz I wouldn’t have a problem. He was very wrong. BTW he wasn’t oil patch: a former used car salesman…I’m not kidding.

Yup. That's in part how Lyndon B Johnson got in. Told the young lasses in the hill country - Look at your Mother. If ya vote for me I'll get the rural electrification in so you can get them fancy labor saving machines like water pumps and washing machines.

It's like estimating the average height growth of an extended family by just focusing on the five year olds.

Ron... thanks for the chart. I know you get the data for the Gulf of Mexico oil production from the EIA... do you get Atlantis, Thunderhorse, Tahiti and Blind Faith from the EIA as well?


No, I get the data from BSEE, Bureau of Safety and Environmental Enforcement. They are a division of the Department of the Interior. They used to be called MMS, Minerals and Mines something. They became BSEE a short time after the Disaster in the Gulf.

Getting the GOM production is rather simple. Go here:
BSEE Production Information Then click on "Production by Planning Area with Daily Production Rates". Then type in the From and To dates and click "submit".

Getting the data for individual sites is a bit more difficult. First you have to get the lease numbers for the areas you wish to query. You get that here:
Deepwater Natural Gas and Oil Discoveries and Fields
Then you search for the individual lease numbers. Thunder Horse, for instance, has 2 leases and North Thunder Horse has 6 leases but only 5 of them are producing. Anyway after you get all the lease numbers you have to then bring up each one by one.

Okay now that you have the lease numbers you must go to the link I posted first:
BSEE Production Information Then you click on "Production Data". Then you check the first three boxes on the left, Lease Number, Production Month, and Production Year. (Be sure to check only those three boxes.) Then you must type in the lease number, from month to month and from year to year then hit "submit".

That is how you do it. Hope that helps.

Ron P.

Ron... thanks a million. Yes, the instructions worked out just fine indeed. Amazing how much production from Thunderhorse has declined in just a few years.

Thank God we don't have to rely on the GOM to make the U.S. oil independent when we have all that oil from the Bakken to come online in the next 5 years (sarcasm).

MMS: Minerals Management Service

They were the ones having sex and drugs with BP (that's British Petroleum):


According to reports by Interior’s inspector general, abuses at the agency went beyond undue influence: there was “a culture of substance abuse and promiscuity” — cocaine, sexual relationships with industry representatives, and more. Protecting the environment was presumably the last thing on these government employees’ minds.

MMS spawned under President Ronald Reagan.

MMS was rebranded as the BOEMRE which was then further respun as ONRR, BOEM and BSEE:


Along the same lines: Is the API just concerned with industry standards for product and pumps and such, or do they have even a wee tiny bit to do with influence?

K – “ MMS spawned under President Ronald Reagan.” Actually the agency began in 1953 as the OEMM…Office of Energy and Minerals Management. It was rebranded to MMS in 1982. I haven’t dealt with fed offshore leases lately but did a good bit during the 70’s and early 80’s. From a practical point of view nothing of significance changed with the new name. Similarly nothing much has changed with the recent rebranding from what I can tell. Nothing good or bad other than the staff knows they are being watched much closer I assume.

You may have won the internet! I don't find a reference back to the OEMM... I find references to the OEMM as a part of the MMS in documents from 2009-2011.

"The Mineral Management Service (MMS) manages offshore energy leases through their Office of Energy and Minerals Management."

MMS Office of Energy and Minerals Management Renewable Energy Program.
(PDF) http://www.nj.gov/dep/dsr/ocean-wind/vol1-chapter%207-8.pdf

In the last twenty years, MMS’s leasing, environmental, and regulatory budget decreased or remained static while deepwater oil production inthe Gulf of Mexico boomed. Note: OEMM (Office of Energy and Minerals Management) has responsibility for renewable energy, leasing andenvironmental, resource evaluation, regulatory, and information management programs. It does not include revenue management or general administration.

Rights and Riches: The Early Skirmishes over the Outer Continental Shelf
The foundations of federal regulation of offshore oil and gas development were laid in the
Outer Continental Shelf Lands Act of 1953.10 That initial legislation gave the Department
of the Interior diverse and potentially contradictory responsibilities for offshore mineral
development. ... In 1945, President Harry Truman had proclaimed federal authority
over the subsoil of the U.S. continental shelf. California, Texas, and Louisiana defied
this proclamation and continued to lease offshore land, prompting suits by the U.S.
Department of Justice. The Supreme Court ruled against California in 1947 and against
Louisiana and Texas in 1950, declaring that the federal government possessed “paramount
rights” that transcended the states’ rights of ownership.12 Offshore leasing and exploration
stalled for three years, as Congress and the 1952 presidential candidates postured around
proposals to return submerged coastal lands to the states.13 That conflict was largely
resolved in the Submerged Lands Act, passed in 1953, two months before the Outer
Continental Shelf Lands Act: states would control three nautical miles out from the
shoreline (9 nautical miles for Texas and western Florida due to historic claims).
(PDF) http://www.eoearth.org/files/152501_152600/152593/chap_3.pdf

The outer continental shelf boundaries were established in 1953:

Sec. 705. Outer Continental Shelf State Boundaries

Section 705 directs the Secretary to carry out the OCSLA
Section 4(a)(2)(A) mandate to determine the seaward boundaries
of the states to the outer margin of the OCS. The Committee
notes that the mandate was originally included in 1953, when
the OCSLA was first passed.

For offshore leases, companies submit written
sealed bids to the Minerals Management Service's Office of
Energy and Minerals Management (OEEM), and the OEEM compares
those bids to its own independent assessment of the value of
the potential oil and gas in each lease...

Perhaps the OEMM is vestigial from these days?



Prior to the creation of the MMS in 1982, the mapping of offshore oil and gas areas was the responsibility of the Bureau of Land Management (BLM). In 1954, BLM published the first leasing maps and issued the first leases off the shores of Texas and Louisiana. These first maps were based on the local state plane coordinate system (SPCS) for those states. Offshore leasing maps were also produced for Southern California using the local SPCS. BLM decided to switch to the universal transverse Mercator grid system in 1974 when using the SPCS for mapping the OCS proved problematic. It was also decided to continue using the North American Datum of 1927 for the Gulf of Mexico area.
MMS was renamed the Bureau of Ocean Energy Management, Regulation, and Enforcement in 2010 after the Deepwater Horizon oil spill in the Gulf of Mexico. The reorganization process will divide BOEMRE into two separate bureaus: the Bureau of Ocean Energy Management (BOEM) and the Bureau of Safety and Environmental Enforcement (BSEE). BOEM and BSEE will function separately beginning October 1, 2011. The OCS mapping responsibilities will remain with BOEM, which will continue to provide mapping support for BSEE.
Within BOEM, the Offshore Energy and Minerals Management (OEMM) offices contend with all aspects of offshore federal leasing and renewable energy projects. This includes the preparation and administration of all oil and gas lease sales in federal waters. The primary authority for OEMM comes from the OCS Lands Act (43 USC 1344) (1953). The OCS Lands Act directs the secretary of the interior to manage the OCS in a manner that considers economic, social, and environmental factors as well as the potential impact of oil and gas exploration on the marine, coastal, and human environments.

...so the BLM did what MMS did before MMS split into the BSEE and the BOEM... the BOEM containing the OEMM which is empowered by the 1953 OSCLA.


Some of the functions of the current BOEMRE and former MMS were previously under the USGS Conservation Division. I recall talking to a recruiter for the Conservation Division when I was in university.
Some history at

Until the Reagan Administration, oil, gas, and coal leasing permits were processed, and the industry’s performance overseen and regulated, by the US Geological Survey’s Conservation Division. It was the only part of USGS with a regulatory role, and many felt it didn’t belong there. But Congress had laid the responsibility on USGS because of its record of independence and scientific rectitude.

MMS was born (and the USGS Conservation Division eliminated) over one weekend in 1982. Not the usual, relatively slow, process for changing or reforming agency functions — with written proposals, Congressional hearings, counter-proposals, debates, compromises, etc. No — Reagan’s Secretary of Interior, James Watt, took Conservation Division out of USGS with no discussion and no warning to anyone in Congress or USGS.

Interesting read.

"One of our readers has gathered oral histories on oil production in a Louisiana Parish (County). In response to our “Foresight on Gulf Oil Disaster” post, he wrote: “my research turned up lots of people who discussed the corrupt practices in the oil fields (or at least shortcuts). Anyone who knows about how the drillers are pushed to complete wells before ensuring the safety features are working would not be surprised at the number of blowouts in the Gulf."

"...I vividly recall the creation of MMS. It was always a paper tiger and intended to be so. ... There was no doubt in most of Conservation Division, and perhaps in USGS generally, that MMS (often referred to as Mickey Mouse Service) was created to help industry function freely and not to regulate. The Reagan and both Bush Administrations were advocates of industry self-regulation, so MMS was not supposed to do much regulating."


So... prior to President Ronald Reagan's realignment of the government's interaction with the oil industry so that it was fully under his anti-environment, pro-corporate Secretary of the Interior James Watt, the BLM was responsible for the mapping and the USGS was responsible for the permitting, oversight, and regulation.


There are still a number of agencies involved. That's several different sets of custom monogrammed condoms and needles. I imagine the total expenditure for these could be even greater than the SEC's outlay for porn.




If snake oil could be refined into gasoline and diesel fuel, the nation would have no foreign oil dependency problem.

K - Very good. Everything in your post matches my experiences over the last 37 years. By coincidence just yesterday I explained to a neighbor that cutting comment made on the Macondo rig just before the blow out. Rebuked over his safety concerns that hand commented "Well, I guess that's why we have a BOP". That wasn't an off the cuff statement. It was premeditated and very focused. I heard it many times before and used it a time or two myself (for a while I was a well site pore pressure analyst in the DW GOM). And it's always done in front of witnesses. Besides strongly demonstrating your position it's also used as a basic cover your *ss move: thus if things go very wrong you can say "I told you so". And despite sounding a tad childish that's a powerful tool in the aftermath of death and destruction.

Often it's the office personnel who take a riskier position than the well site hands...for obvious reasons. And it's usually pressure from the office that pushes well site hands to make poor decisions. More than once I pointed out to some office commando who wanted to accept some risk that it wasn't there *ss on the drill floor if things go wrong. That comment is seldom appreciated. I'm VP Operations for my company and have final say on safety issues. Fortunately with my owner, who really likes making money, the safety of the hands and the environment is always the first priority. That lets me sleep a lot easier at night. A lot better than the few times I sat in my bunk at night on an offshore rig with my preserver close by while we pushed the risk envelope. But the pay was good. LOL.

Yes, management wants to take risks that will trace back to someone else. I designed an electrical fuse into a home appliance long ago and Management wished to save money by replacing it with a wire.

Was the OEMM independent or was it imbedded within the BIA, BLM, or the USGS after the 1953 OSCLA? I can't find a reference to it as a separate entity, or at all, before about 2004. The MMS was created in 1982 with the OEMM appearing within it much later.



One reason so few leases get bids in the central and western GOM lease sales is because the areas are quite picked over. After years and years of almost anuual lease sales going back to the early 80s, these blocks have been looked at by industry many, many times. A couple things can cause industry to have renewed interest in great swaths of acreage, including - 1. when a new trend is discovered, like the Wilcox trend or, 2. when new seismic causes industry to relook at leases that were previously thought to be nonprospective.
This is one reason the oil industry wants new areas to become available to leasing, like the eastern Gulf, offshore Atlantic, offshore California, etc.

Yeah, Western sale always smaller than central for geologic reasons. New seismic and the skipped 2010 sale led to a big western sale in 2011 With hardly any expiries to jazz the 2010 sale, the only big bids in 2012 western sale were on blocks with rejected bids in 2011. 2012 central sale was a big one.

Better way to track industry attitude might be # deep water rigs active. I believe we are at or above the pre-Macondo number. Billions still being spent, several new discoveries with a lot of appraisal and development wells.

Decline of deep mio production accelerated by Macondo hiatus, also slowing down other plays. There are several new lower tertiary fields undergoing development, but their success is still unknown. Fast declines in deep mio fields partly due to complex geology impacting per well eur, but likely to be offset by new (and expensive) development wells to produce large field ultimates.

Was the 2005 dip due to Katrina / Rita? 2008 Gustav?

Yes, all those deep dips are due to hurricanes'

Ron,considering your GOM graph and as per your posting that the Alaska pipeline flow was about 555000 bopd ,how much time before all the BS about ND and Bakken is negated ,considering the MOL for the Alaska pipeline is 350000 Bopd and the current decline rates at GOM as above .

"...considering the MOL for the Alaska pipeline is 350000 Bopd and the current decline rates at GOM as above ."

With modifications the Trans Alaska Pipeline can continue to operate well below 350,000 BPD. Internal studies by BP, revealed as part of a court case, indicate that with modifications TAPS can operate down to around 100,000 Bopd, and perhaps even lower. BP has been booking reserves with the SEC on that basis.

See my old post at

For more details see A TAPS bottom line

2012 average Alaska production, for the first 11 months, was 523,000 barrels per day. I don't expect the decline in Alaska or the GOM to offset the Bakken until the Bakken itself peaks, or is very near its peak. That will likely be around 2017 I would guess, give or take a year.

Ron P.

Not that there's anything wrong with debating MOL of the pipeline. But that difference in 350k and 100k bopd is less than 2% of US consumption

Link up top: Why $100 Brent Will Not Last Through 2013

The IEA is projecting world demand growth of 865,000 bpd in 2013, bringing world oil demand to 90.5 million bpd. However, production last month was already 91.6 million bpd, indicating that even with flat production next year, the market would be oversupplied.

I am making no prediction on the price of Brent in 2013 but this is faulty logic. Brent is a benchmark for crude oil, not NGLs. Most of the gains in production next year, if there are any, will be in NGLs, not crude.

That being said, there is a high probability that demand will fall in 2013, given the terrible state of many Western economies. And the US is about to go over the fiscal cliff which could depress demand even more. The price of oil is just as dependent on the state of the economy as it is supply. And the state of the world's economy is not good.

Ron P.

Bakken formation in North Dakota is likely to see some gains in overall production in 2013. Costs to drill and produce it are rising at 10 to 20% per year, now at $70 per barrel or above in my estimation. With railroads having "pricing power" the cost to transport the Bakken oil will only rise until Keystone XL pipeline is completed in three or four years. If Brent drops to $100 per barrel then Bakken oil gets about $75 per barrel just breaking even for 2013. If Brent stays above $110 then moves above $120 in 2014 then Bakken oil can stay nicely profitable and surge toward 1 million barrels per day in three years or less. Should Brent drop and stay at $100 or less, Bakken will not increase much in 2013 and likely decrease production in 2014. All my opinion based on TOD info and contacts in ND.

mb - "...the cost to transport the Bakken oil will only rise until Keystone XL pipeline is completed in three or four years." Maybe...maybe not. Once the Cushing bottleneck is fixed producers will have the option to ship more oil to a better priced market in the Gulf Coast. One Cushing/GC pipeline has already been reversed and moves 150,000 bopd. They project additional new Cushing/GC pipelines delivering 600,000 bopd in the next two years. OTOH if the other markets currently being served by rail bid up their price a lot of that oil may not make it to the GC. I would think it has to make the rolling stock investors a tad nervous.

Once the Cushing bottleneck is fixed, the bottleneck will move to the Canadian border and oil will back up in Canada. The Canadian export pipelines are already running at capacity, well ahead of forecasts, and considerably more production is coming on stream in the next few years. In the absence of new pipelines, rail is a viable option.

The rolling stock investors will probably do okay. They are only in it for a good time, not a long time, and they can measure their investment payback times in months rather than years. By the time the pipelines get past the environmental and governmental hurdles, they probably will have made much more money than they expected to and can then sell the tank cars for scrap once the pipelines get built.

Most Western Canadian oil refineries will probably make out like bandits too, buying oil at landlocked Western Canadian Select prices and competing with refineries in Canada and the US buying oil at Brent prices. There is only one refinery left on Canada's West Coast, and I think its days are strictly numbered. Chevron will probably turn it into a storage terminal rather than deal with the horrendous environmental issues of reclaiming an old oil refinery site.

The Eastern Canadian refineries which currently run imported oil will either switch to Western Canadian oil or go out of business. The cost differential is just getting too big.

Aren't refineries (that need to ship out their products) hobbled by the same transportation bottlenecks that plague the crude producers? Wouldn't there be a similar discount for landlocked gasoline as landlocked crude?

Not really. Refineries aren't dramatically increasing production. They have transportion set up for refinery capacity. They may marginally be able to increase production but they only have to get that extra gallon of production a few miles farther to the nearest buyer not all the way to the coast where the nearest "Brent supplied" refinery is.

I'm referring to the comment above:

"Most Western Canadian oil refineries will probably make out like bandits too, buying oil at landlocked Western Canadian Select prices and competing with refineries in Canada and the US buying oil at Brent prices."

- I still don't see how that can happen.

The Western Canadian refineries on Refinery Row near Edmonton are already supplying everything from Vancouver, BC to Thunder Bay, Ontario, at the head of the Great Lakes, so the competition they are meeting is selling at prices based on Brent prices. Canada is both an importer and exporter of oil, so the marginal barrel of oil is an imported barrel.

Consumers in Western Canada don't get much of a break on prices even though the refinery feedstock is much cheaper than imported oil in Eastern Canada. The situation is similar to that in the US where refineries running WTI or ND oil sell products for not much less than those running Brent or OPEC oil. The difference simply falls out on the refinery's profit margin.

Demand for refined product is essentially ubiquitous. Pipeline capacity in, is roughly equal to, pipeline capacity out, although that is a side issue and doesn't really matter. Just because refineries are scarce or inconveniently located does not mean their product is in low demand. To the contrary. They can buy low and sell high. And they have a twofold (price + geography) advantage over the other, remote refineries the oil is trying to reach. And the lower EROIE goes, the greater their advantage.

I think that is the dynamic.

I think you are missing a few things on the cushing bottleneck. 250,000 bpd of relief are expected within weeks as the Seaway pumping upgrades come online.
The 700,000 bpd southern leg of keystone XL is projected to be done in less than a year from now. In about 15 months the twin Seaway line should be complete expanding capacity by another 450,000 bpd. That puts capacity expansions well over a million bpd in significantly less than a year.
Not only that there are plans to expand Pipelines out of west Texas to bypass cushing of nearly 2,000,000 bpd over the next 2 years.
There will be Pipelines out of or around cushing to the coasts with additional capacity near 3,000,000 bpd within 2 years. WTI and Brent prices will converge to spreads under $7.00 per barrell

Problem is not from Cushing to the Gulf Coast but from Canadian border and North Dakota to Cushing. Keystone XL is the only planned pipeline I know of that will take crude from those points. Original Keystone pipeline from Canada to midwest is maxed out.

OK, what's your forecast of ND bakken production for October 2013 ?

October 2012 was at 682,393 from 4791 wells.


My forecast is 860,000 bpd from 6800 wells.

Increse from 2011 to 2012 was close to 240,000 barrels per day. Don't think this will be repeated due to supply contraints on labor and materials and maybe even capital. Unless WTI rises some I think 800,000 barrels per day is reasonable provided trains can handle the crude out of ND. If WTI rises to $100+ then maybe 860,000 will happen, IMO.

I heard Trinity is reopenning a plant to build tank cars, but maybe some tank cars in ethanol service can be shifted to move crude. My customer in ND shifts his tanks from ethanol to diesel to gas as needed by the market. If in 2013 we have another drought anywhere near like in 2012 the ethanol mandate will be history. Then lots of tanks maybe available.

I didn't try to analyse transportation capacity. I just used the current rate of well completions and forecast that into the coming year, thereby assuming recent economic and infastructure conditions will continue for the next 12 months.

I hoped other posters would scratch the totem pole.

A lot of the railway's pricing power will end when the Brent WTI spread falls.

Ron - I think the IEA does a good job of shooting themselves in the foot by their own words: "... the market would be oversupplied.". The stat was just released: 2012 posted the highest average annual oil price every recorded even when taking into account inflation. And this was the pricing dynamic "with the market oversupplied". Which makes one wonder how such organizations characterize supply and the impliations they appear to offer. Sugar coatings only work until you take a bite of that crap sandwich and discover what you really have.

I am getting bad omens from the swedish unemployment office, as well as Anders Borg, the minister of Finance. Looks like we are heading for an economic step down this new year.

So my bet is the author of this piece will very likely be right. But not for the reasons he thought of.

Kunstler offers up his end-of-year rant this morning (one I fear is spot on), and as much situational awareness as one is likely to find anywhere. I generally take his (and others') predictions with a grain of salt, but that's how they are presented. Still, understanding where we are, collectively, is a good start (or not) to a new year.

Oh yeah,, Happy New Year to all...

If Kunstler was a cartoonist he might have drawn this.....

Works for me... the music is from Grieg's Peer Gynt Suite if AWTK.

That was 3:30 of spot-on depressing.

I recommend NOT watching. That is depressing. All they forgot was golf.

Colombia Hits Oil Output Goal of 1 Million Barrels


Colombia was one of the 14 (out of the 2005 top 33 net exporters) that showed a material increase in net exports from 2005 to 2011 (BP + Minor EIA data, total petroleum liquids):

The (2005) top 33 were the countries with 100,000 bpd or more of net exports in 2005. Since 2005, we have lost an average of one major net exporter per year (either they fell below 100,000 bpd, e.g., Denmark, or they also slipped into net importer status in 2011, e.g., Argentina).

Thanks, WT, that's an interesting graphic. Could you please list the countries (by year) that have fallen out of your "top exporter" category? Thanks. It will be interesting to follow this year-by-year.

The year that each of six of the (2005) Top 33 net exporters (countries with 100,000 bpd or more of net exports, total petroleum liquids, in 2005) fell below 100,000 bpd in net exports are shown below.

Trinidad & Tobago and Chad approached the 100,000 bpd mark in 2011.

Note that production declines generally do not exceed low single digit values, versus the observed net export decline rates, i.e., "Net Export Math" at work. The 2005 to 2011 (or last year of net exports where noted*) respective rates of change in production and net exports are shown below:

Malaysia, 2007; -3.4%/year, -32.6%/year*

Vietnam, 2007; -3.0%/year, -29.0%/year*

Denmark, 2008; -8.7%/year, -21.0%/year

Argentina, 2011; -3.0%/year, -21.0%/year*

Syria, 2011; -5.0%/year, -15.7%/year

Yemen, 2011; -10.0%/year, -28.7%/year

The median rate of change in production was about -4%/year, while the median rate of change in net exports was about -25%year.

A New Year's Reflection

Some years ago (2009), on another forum, I posted ...

Over the last 6 years (2003-2008), US production has declined by 700 thousand barrels per day.
And that is with new fields like Thunder Horse (GOM, ~300,000 barrels/day) coming on line.
So this is a welcome addition to slow down our decline.
But it can't reverse it.
There isn't enough oil in America to reverse it.

US average crude production 2009: 5,353
US average crude production 2012: 6,340 (est)


US average crude price 2009: $57.18
US average crude price 2012: $93.47 (est)
[inflation adjusted]


Concur - with addendums. Production is a function of price and tech constrained by geology. Price is a function of supply and demand. Demand is a function of price, tech (efficiencies) and a bazillion other things. Now if I can only pick the right functions ... :D

Nope. The oil price is not higher. The US Dollar is lower...mostly due to money printing by Benny& Timmy.
Expressed in a store of value that cannot be printed at will (gold), the oil prices are actually lower:

Which, would matter if I were paid in Sovereigns, Krugerrands or Canadian Gold Maple Leaf coins.

What you are paid in is irrelevant to the subject.

...relevant enough when comparing dollars to dollars three years apart,,, point being that price has increased at a much faster rate than production, as has deficit spending. Give me enough bannanas, I'll shake out a few more monkeys. Doesn't mean there are more monkeys in the forest.

I suppose we could price oil in terms of shares of Citigroup stock.

If the US oil consumption was 18.7 million barrels per day, that's 6,716 million barrels in 2012.
Total public debt added , $ 1.27 T
so $1.27T divided by 6,716 bl = $ 1,891.

or, Debt per Barrel(DPB) of each barrel of oil consumed in the US
in 2012 was $1,891.
Is that be correct ?

edit above : is that correct ?

Also :
World oil consumption 2012 , 88mbd or 32.1 billion barrels.
Global debt added 2012, $3 T divided by 32.1 b b = $93.3 DPB .

I salute your admission of incompetence. It takes a man to do that. Many on this forum can't.

If being unable to predict the future with any degree of accuracy is incompetence then I doubt that there are very many competent people on earth. It is a guessing game. And just about everyone on earth has made a wrong guess now and then. Many on this forum have made wrong guesses and I know of not one who has not admitted such.

Ron P.

What makes one an incompetent is not "his inability to predict the future with any degree of accuracy" but venturing to do so publicly.
No one forced you to make any predictions. And if you could not refrain from making public predictions while admittedly "being unable to predict the future with any degree of accuracy", it would have been fair to add those words as a disclaimer at the bottom of your posts. The one with the "guessing game" would work too...

Really now. Public predictions are made every day. The EIA's "Short Term Energy Outlook" is a place where predictions are made every month. Picks are made of who will win in sports. They are often wrong. That is not, by any stretch of the imagination, an example of incompetence. People are asked for their predictions and they make them, fully expecting to not be on the money but with a faint hope to be close.

Again, making and missing a prediction is not an example of incompetence. That is just nonsense.

Ron P.

Assuming 6.3 mbpd is the approximate annual average for the US crude oil production (C+C), as referenced below the 1970 to 2012 rate of decline in annual US crude oil production would be about 1%/year.

So this is a welcome addition to slow down our decline.

In my opinion, an increase in production, to a level below the prior peak, e.g., 9.6 mbpd, C+C, for the US in 1970, does not reverse the decline. It's a reduction in the rate of decline, relative to the peak. As another example, check out Ron's production plot up the thread for monthly production from several deep water fields.

And incidentally, I suspect that we finished 2012 with the highest overall decline rate per year, from existing oil & gas wellbores, in US history.

"..And that is with new fields like Thunder horse (GOM, -300,000 barrels/day) coming on line."

I don't think Thunder Horse ever reached anywhere near that level. Darwinian had a post earlier this year that showed output being more like 200k tops and now at less than 120k barrels per day. Water cut was way higher than anticipated.

Thunder Horse peaked at 242,927 barrels per day in September of 2009. They averaged, in 2009, 199,674
barrels per day. In September of 2012, the last month we have any data for, they produced 20,144 barrels per day.

Ron P.

Rob Portman says oil production on public lands was down 14 percent in 2011

During a radio interview with Fox News Radio, Portman said:

"The president says, you know, ‘we're doing more.’ Well, on public lands, we're doing less. Last year, we produced 14 percent less oil on public lands than we did the year before. We should be doing more on public lands, and that's the outer continental shelf and what's going on in Alaska and so on."

In their haste to blame the President for the decline in oil production on public lands, they are overlooking the most important thing here. The decline rate of all oil produced on public lands was a whopping 14% in 2011. And that was the decline rate even after all new production was figured in.

But Leonardo Maugeri says the average decline rate of all already producing fields in the world is between 2 and 3 percent.

In fact, by balancing depletion rates and reserve growth on a country-by-country basis, decline profiles of already producing oilfields appear less pronounced than assessed by most experts, being no higher than 2 to 3 percent on a yearly basis.

Ron P.

2012 most expensive year for (U.S.) motorists: AAA

"The average gasoline price in 2012 was a record-high $3.60 a gallon, topping the previous high of $3.51 in 2011, travel group AAA said on Monday."

2012: Peak Oil Hits the Poor

So it ends, Peak Oil has been vanquished, all the media outlets say this so. Here are some stories from another view:

Record Average Gas Prices for the Year

While the national average this week (Thursday, Dec. 20, 2012) has hovered around $3.22, the national average for the year will be about $3.63 per gallon, said Gregg Laskoski, a Tampa-based analyst with GasBuddy.com. That’s 12 cents more than the average in the next highest year, 2011.
Experts blame tensions in the Middle East along with such weather-related problems as Tropical Storm Isaac. Hurricane Sandy shut refineries in the Northeast, and four of California’s 12 refineries were shut down last summer.

2012: Poverty stays high despite “recovery”- inequality rises

Today the Census Bureau released its analysis of U.S. poverty in 2011, and the official poverty rate essentially held at 15 percent, meaning that 46.2 million people live below the poverty line.
That’s still the highest level in almost two decades…
Although poverty levels held, there’s still bad news. Median real household income fell 1.7 percent, to $62,273, and income inequality rose in 2011. The Gini index, a common measure of inequality, rose 1.6 percent from 2010 to 2011.

2012: Food stamp use increases

Food-stamp spending, which more than doubled in four years to a record $75.7 billion in the fiscal year ended Sept. 30, 2011, is the U.S. Department of Agriculture’s biggest annual expense.


2012: Hunger and Homelessness Increase

Dec 20 (Reuters) - Across the United States, the number of hungry and homeless people is growing, …the U.S. Conference of Mayors said on Thursday.

…the mayors released a report that found requests for emergency food assistance rose in 21 out of the 25 cities it surveyed in 2012 and remained at the same level in three. More than half the cities said homelessness increased.

In 95 percent of the cities surveyed, food pantries cut the amount of food each person received and soup kitchens reduced meal sizes. In almost all the cities, pantries capped people's monthly visits as well. More than half the cities said homeless families with children were denied shelter in 2012.

Officials at the food bank said calls to its hotline jumped 25 percent last year and it also opened a new warehouse in June to double its capacity and keep up with rising hunger.

Michael Blue, a 62-year-old part-time bus driver in Washington, gets help from Bread for the City. He says work is so sporadic that he has to scrounge for cash to pay rent and utilities…
"They tell me that I don't qualify for help, but anybody who makes $13,000 or even $20,000 a year these days cannot survive," Blue said…."I am just being priced out of existence," he said.


I could make all the causal connections, but you’re a pretty smart group so we’ll pass on that. I will note one thing though- Peak Oil is hitting the news media’s least favorite group: the poor. Lower income folks are the canary in the coal mine for Peak Oil- especially the rural poor who must drive extensively just to access basic services.

2012 was the year that global warming passed PO as public enemy #1 for me- but PO is still increasing as supplies can’t meet demand and prices rise. Its interesting PO is declared dead during the year of highest average prices ever. Won’t be posting much here anymore but have a great year everyone.

...no, that is just a list of miseries under an implication. Perhaps allowing the value of sales and resources to flow offshore while ripping 50,000 factories and their jobs out of the country and shipping them overseas as well... amid massive gambling and fraud... while degrading in-place infrastructure in the name of "privatization"... games of the nobles: the concentration of wealth and power... could be implied just as well.

The Annoying Peasant

These factories have been gone for decades and their absence cannot explain the sudden increase in neediness. In fact, low natural gas prices this year have actually increased US factory production and employment as we are competitive exporting to Europe. The rise in food stamps and homelessness has increased greatly in the last two years, therefore the "implication" of a connection to oil prices is plausible. The annoying argumentative and smug nature of many here is one of the reasons it is not worth posting anymore

The situation set in motion years ago continues to unravel. Cities are going bankrupt. The banks gaming of the LIBOR is adding to that. Civil workers are being removed from their jobs. Their ability to defend their jobs is being attacked. The banks accelerated their foreclosures once the little question of legality was buried. The kids are living with their parents and never got a job or gave up trying to find a new one... along with all the people over 40 that gave up... so the actual unemployment is much larger than advertised before the key even turns in the ignition.

The price of oil is still going up and down with the perceived prospects of having a customer.

Sorry you felt put off by KD's response. I didn't even think you two were reaching incompatible conclusions.. you were just putting different slants on them.

There are some discussions here that descend into regrettable foolishness.. but I think both of you are talking about real concerns and providing good examples.. it's worth it for me, even if the tone of voice can be easily mistaken or sometimes inappropriately applied.


Recession = rationing energy by price!!!

Has anyone seen an article on how expensive energy needs to get to make various alternative sources the cheapest? At what $/barrel of oil equivalent does PV because cheaper, likewise for other things like geothermal?

The problem isn't 'the cheapest' but that oil and PV have different use cases and PV can't substitute for oil in many of the use cases.

The old tractor top post was an example. 20KWh dual phase is 50ish HP. The old 1 man small farm tractor is 40HP Given the new big tractors are 800+ HP hard to have electricity be portable enough for that use case.

One Horse Power is 750 Watts.
50 Horse Power is 37.5 Kilo Watts
"hours" and "phase" are strange distractions.

Deere's Revolutionary Electric Tractor
January 1, 2013

"Implement manufacturers wouldn't develop electric-powered equipment without a tractor that could produce it. And no one would make electric-powered equipment without a tractor to power them."

...A foot in the door


It is much easier to find data on at what point photovoltaic systems breakeven with fossil fuel generation of electricity. In 2006:


"It is recognized that widespread commercialization
of grid-connected PV systems will only occur if the market price of this technology decreases enough to make it a viable alternative to fossil fuels for electricity generation. In fact, the cost of electricity generated (CEG) from PV systems is substantially higher than the CEG from fossil fuel plants. The question to be addressed is whether PV technology could achieve the cost reductions necessary to reach the break-even price for a large market commercialization."

About $2.5/Watt (peak) TOTAL---Everything in the system included (no batteries, grid-tied).
In 2006, when this estimate was made, oil was $60/Barrel.
...not much of a data point...

Europe first, again, for electric drive.


I like keeping some direct mechanical options in the toolbox, the same way my AC Drill, my Battery Screwgun and my Eggbeater and Bit and Brace will always live side by side in my toolbox, but the FARM SHOW article sure offers a solid litany of the advantages of electric power just in a couple paragraphs of that article.

The spreader offers a clear example of the benefits of electric drives. Drive speeds are controlled independently of tractor ground speed or rpm. Speeds are easy to adjust and hold constant. Spinner discs can be shut down more quickly, thanks to the electrical braking of disc motors. The system is also easy to connect; simply plug a cable from the implement into the tractor's rear outlet and spread. No need to mess with hydraulics.

"Electric motor drives can be more efficient than mechanical or hydraulic-powered drives," says Hahn. "They are not affected by the temperature and, in the case of DC motors, offer infinitely variable speed control. They also eliminate the need for hydraulic hoses and pto shafts."

On a much smaller scale, but adhering to the same concept, I just grabbed a small DC power cord that runs one of my desk lights off of a simple solar getup, and plugged it into a Handheld 'WalkieTalkie' CB 40 channel radio that I've kept as a backup communication option for years, and showed my daughter just how many streams of communication are flying through the air on this legacy set of frequencies. It's still fully current for some folks, and a distant memory for others.. but remains a viable, cheap and simple way to make contact over a few miles, with no need for Tower Infrastructure, a Wired Network or any sort of subscription.

Simple, powerful, flexible, durable, (often) affordable electric tools. Hooda thunk?

PS.. (I've also just gotten my brother and myself each one of the $35 Raspberry PI computers, which run on about 3.5 watts and can display with HDMI or a standard Composite Vid signal, making them capable of working with an immense variety of monitor options and powering options. Will be looking to establishing a simple packet-radio toolkit for these and other simple computing systems, in order to be able to maintain some digital comm's in case of internet interruptions, etc..)

JK, please keep us updated on your Rasp Pi progress. Thanks!

Will do, as soon as my head stops spinning from all the options and directions I could follow with this thing!

Already, I'm not yet that Linux literate, so there's one learning curve right out of the box.. but the flexibility and now the ACCESSIBILITY of this sort of tool is just so incredible.


http://gnuradio.org/ - allows you to build things like cell phone basestations. Or cell phone tracking.


The surveillance mechanism works by monitoring the signals produced
by mobile handsets and then locating the phone by triangulation ?
measuring the phone?s distance from three receivers.

A HAM buddy is playing with the Pi and just got one of these, much like the Pi but with a few more features: VGA support, 4 x USB2.0, 9-12 VDC power, 2GB onboard flash (enough for Android 4.1). Android PC System 8750 v2 (neoITX). Fun stuff! I've seen mITX boards w/CPU for under $40, also very low power, really fast specs (what I'm using now).

Very nice, Fred, Ghung and Eric.. except that my head is spinning three pushes FASTER now!

I did get some nice mental downtime today, painting a nasty-beige 4 drawer metal filing cabinet from Craigslist ($20!) towards a nice Faux Green Marble.. it's going to be very sweet!.. but the buzzkill got me again when the Frau came home and declared the upstairs a brownfield site just because of a few Turpentine and Enamel odors.

Peace, I need some peace!

Re: $35 Raspberry PI computers.

Tks for that! I just spent a couple of days over the holidays with my son, unsuccessfully trying to convert an old Toshiba Satellite laptop by installing Linux... The Raspberry PI might be easier to work with as it come with Debian, right out of the box, well it doesn't really come with a box.

You could even build your own supercomputer with Raspberry PIs and legos!


Inspired by the low-cost computing power of the Raspberry Pi, a team at the University of Southampton has used the ARM-based Linux computer-on-a-board as a building block for a low-cost supercomputer—racked and stacked using Lego blocks. And they’ve published a step-by-step guide for anyone interested in creating their own Raspberry Pi high-performance computing “bramble."

Led by Professor Simon Cox, with Lego expertise lent by Cox’s 6-year old son James (who spent the summer learning to program on the Raspberry Pi using Python and MIT's Scratch), the team used 64 Raspberry Pi computers, each equipped with a 16-gigabyte SD card to construct a functioning computing cluster for under £2,500 (a bit over $4,000)—not including the Ethernet swtiches used to connect the nodes.

Imagine what you could do with 128, 256 or 512 Raspberry Pi computers! Add some open source machine platforms and maybe we could really start to put a dent in BAU. http://opensourceecology.org/wiki-gvcs.php

Let me know where you buy these things, the resellers are charging outrageous prices. Someone on Amazon was charging $50 for it (without any accessories)

Thanks a lot, the shipping charges are outrageous though. $13 for a $65 package and it's not even 1kg.

!!!!!!!!!!!!! That's cheap, I have had quotes of $30-$60 US for small items sent from USA to Mexico that could be popped into an envelope.


To put that into perspective, last month I paid almost $90.00 to FedEx an envelope cointaining a single document, from Florida to Brazil. Took four days to get there.

Ouch, no wonder some companies pay people to fly just delivering documents.


Synthetic gasoline can be made for $2 per gallon. It takes about 2 therms of natural gas to make one gallon of synthetic gasoline using the NG/DME/MTG process.

It does not happen because no one knows where the price of natural gas nor oil will be in a deregulated market and there are no subsidies for synthetic fuels.

They could add more biomass over time to control the costs, but the investment community wants a killing on a sure thing, so there is no money available to start it.

"Synthetic gasoline can be made for $2 per gallon...."

Not sure where this comes from. Are you counting the capital cost of the plant, plus the fact that the delivery cost of nat. gas by the processing/pipeline/distribution companies can double the price quoted at Henry Hub? With the efficiency of conversion at 60% is it still $2 per gallon for syn gasoline?

I will not argue the point.

The point is moot until the process is demonstrated commercially...I will arbitrarily set the threshold as the process providing at least as much volume as is currently provided by ethanol production.

I will go even further: when the NG-to-gasoline process provides an annual input of /Net Energy/ equivalent to that currently (1 Jan 2013) provided by the ethanol industry. To further bound the parameters, let us constrain these conditions to the U.S. and Canadian motor fuel markets.

I won't even bother to state the $2/gallon price as a parameter (or any other price for that matter).

Edit: You did recognize, I think, that if NG consumption were greatly increases (replacing some imported oil,replacing some coal electricity generation, then of course NG existing well depletion would increase, and NG prices would increase as well. Even if NG supply could keep up with this increasing demand, NG-to-Gas would /not/ be $2.00/gallon anymore, if it ever was to start with, which I do not know.

On the first article

"we can no longer afford this propping up industries that cannot sustain themselves on their own merit in the free market"

Free market you mean few environmental law, few work rights law, versus reason environmental and labor law that is "free market"? In a slave versus free people competition the slave works cheaper. There are reasons related to survival for "propping up" industries. You might feel that having our own food supply is a matter of nation security, or having a manufacturing base, or having a local energy source. Yes the "free market" will make sure that jobs go to the most predatory not to the most free. If we prefer we could put import tariffs equal to the cost of the community services the producer country choose to not provide.

Yes the "free market" will make sure that jobs go to the most predatory not to the most free.

Obviously you don't have a retainer to one of the predators teats! Those that do (which largely includes the media), will continue to sing the praises of the free market. Gotta keep that milk flowing.....

Free market you mean few environmental law, few work rights law, versus reason environmental and labor law that is "free market"?

And there would be no problem with a "free market" if one had a honest and robust court system so that harm could be adjudicated. The 'you have to be harmed' standard for having standing to bring a lawsuit along with the inability of courts to hold executives accountable makes it problematic to obtain accountability.

If justice was served, there would be a price to pay for mercury, sulfur and particulates from coal burning power plants. There would be a price to pay for the benzene from oil refining and the burning of fuels in vehicles.

There's a price to pay for driving your car without displaying a tax stamp. There's a price to pay for collecting rainwater.

On a related note, I'd like to see someone take a stab at quantifying the costs of mitigating the consequences of the inevitable increase in retained energy in the biosphere (aka AGW) that will accompany the continued use of fossil fuels. Obviously the environmentalists think the costs will swamp any savings from elimination of subsidies to alternative energy technologies. My intuition says they are correct, but hard numbers would be much more useful in debates.

Of course, until the pro-alternatives can muster the cash flow to challenge the cash flowing into congressional election campaigns and hidden payoffs, there will be no actual change. Ultimately I think the best way to address that is to strike at the root, to starve the beast as it were. But that is probably a discussion for a different venue.

"... starve the beast as it were."

That's been my strategy for years now. Disconnect, disinvest, deleverage; refusing to chain myself to distructive, disfunctional, failing systems whenever possible. Frees me up to make changes that actually matter, no matter how small.

Based on what you have posted in the past, it seems you really have done quite a bit to disconnect and deleverage from modern systems. How do you suggest Joe-suburbanite go about doing that?


Yeah, that's a tough question which can have many variables. Since the burbs have been described as "the greatest mis-allocation of resources", and are inherently connected to, and dependent upon, complex unsustainable systems, the ideal solution would be to get out. Impossible for (most) everyone. First question would be "go where - do what?".

My epiphany came while sitting in Atlanta traffic during an unusually brutal commute. I just decided I wasn't going to spend any more time being a part of the insanity. Once my mind was made up, I began taking a series of steps (and some mis-steps) to change direction. I made a list of things I wasn't going to be part of, what I could do without, and alternatives to the things I needed. I was surprized how small the 'needs' list was compared to the 'don't need' list. It's a fun and liberating process, taking the power back so to speak.

It's clear that many feel trapped in their current situation. 'They' have people right where they want them... except that 'they' is you. One just decides to not be 'them' anymore...

So I can sue in court to recover damages my great-great-grandkids (if they are born) will incur. The problem with resource depletion and climate issues, is that over 90% of the claimants haven't even been born yet.

I think you could sue now for damage that you have already suffered. The problem would be finding the right organisation to sue.

I reckon its already possible to show any damage that is a direct result of high temperature is down to CO2 and other greenhouse gasses. Hansen's climate dice work shows the dice are now sufficiently loaded, that hot weather is attributable to them at a balance of probabilities level. Storms, floods, droughts, not yet provable, but any heatwave damage since 2000 meets a balance of probabilities test.

I suppose that now that we are becoming independent in oil, that we can radically and rapidly decrease those parts of the Defense budget related to ensuring that oil can flow in international water, especially the Middle East. Now, of course that is not a subsidy because the oil companies pay for that. Right?

Price all externalities into the price of oil and coal, and then come back and we can talk about how the market should be set free.

How does $45 a barrel oil and $2 a gallon gas sound

On a widespread and sustained basis, it sounds like the U.S. and the ROW went into a Depression.

That being said, the Internet reports right now that gasoline in my U.S. city has a cluster of lowest-price station ranging from $2.56 to $2.62, and the cluster of highest-price stations are $2.82-$2.86/U.S. gallon.

My predictions for 2013:

1) There will not be any widespread epiphany regarding climate change....certainly not one that results in any changes in behaviors.

2) Barring a major ME or global war (unlikely and extremely unlikely) or a natural catastrophe such as a large asteroid strike, and also barring a global economic depression event, there will be no global sharp downturn in all liquids production.

3) Global population will be higher at the end of 2013 than now

We will keep shuffling along until the time inevitably comes when global all liquids production does turn down significantly, and with no turning back.

Just paid $3.71 here in New York State 100 miles north of NYC.

That is a major price disparity...

Hey, I live 100 miles north of NYC!

It's always fun to see the price variation across the USA. Looks like NY is on the expensive end of the spectrum these days!


I think Dutchess County tends to be more expensive than Ulster County. Of course Ulster County is big! You'll pay more in New Paltz than in Kingston!

At a sustained price of $45 a barrel of oil, US oil production would decline by 20% or more within 3 years. Bakken production would decline by more than half, as would nearly all other shale plays that are money losers below $70 per barrel. GOM oil exploration would stop as would enhanced oil recovery because its production costs are often above $60 per barrel. Gasoline might get to $2 per gallon for a short time but within 3 years would be back above $4 per gallon, IMO.

Interesting article, thoughts/own experiences? Do they match the description in the article, specifically for those in the U.S.

Greens Confront Own Need For Diversity

The Republican Party isn’t the only political force that has a diversity problem.

Environmental activists say their own movement needs to step up its game if it wants to play much bigger in Washington.

The green movement dreams of pushing major bills through Congress on the scale of President Barack Obama's health care reform law and the immigration overhaul expected to begin next year.

But those issues enjoy something the green movement does not: wide and deep support across key Democratic groups, including Latinos and African-Americans.

“You should fish where the fish are biting,” said Van Jones, the former green jobs adviser to Obama. “All causes that want longevity need to look to influence the emerging majority, which will be a nonwhite majority.”

http://newsbusters.org/blogs/jack-coleman/2012/07/18/roseanne-barr-loses... (they were just the 1st link I found with the comment)

But the Green Party has a real problem with diversity. So in that way, you know, it's been shocking to me and greatly disappointing to me. I just want to say, I don't know if you guys know this, but I ran as a candidate, as a spokesperson for the Black Caucus of the Green Party. And I was so proud because I thought, wow, this is a brand new day because I felt a little bit like Obama because, you know, I have white skin and I was chosen by that caucus to raise the specter of racism and, you know, lack of diversity but particularly, racism in the left and the Green Party itself. And, you know, people who have done that before me find ourselves smeared and, you know, it's just tight and white in the Green Party like it is in every other party.

Greens didn't nominate Jill Stein instead of Rosanne because of racism, they rejected Rosanne because she's nuts. Which is too bad, because when Rosanne talks about politics, she usually makes a lot of good points. But her frequent bouts of nuttiness make her too risky as a candidate. I've experienced her crazyness personally, and believe me, only a fraction of it comes across in her online quotes.

As the title of that post you linked to said, "Roseanne Barr Loses Green Party Nomination, Along With Her Mind."

(And the parent post wasn't talking about the Green Party, but rather a bunch of professional environmentalists who are joined at the hip to the Democrats)

The article up top http://www.commodities-now.com/reports/power-and-energy/13445-the-new-er... fantasizes that...

My conclusion is that China will use far less commodities than they did the past decade going forward for the next decade. They are coming into the constraints of large numbers where you have built for the sake of building, and you can no longer build another large new city every year because the demand just isn`t there.

Who knows, perhaps the author is right about a slowdown of infrastructure building - but what about all those cars they are selling in China?

(night traffic in Beijing)
China is now the world's largest auto market (see e.g. http://www.ft.com/intl/cms/s/0/d0b0406a-42ad-11e2-a3d2-00144feabdc0.html...), and it's hard to envision a reduction in oil consumption with the number of cars growing fast!

First it was 2 million, then 20 million now heading towards 200 million vehicles on China's roads. Their increased demand for oil could take us over the 100 million barrel per day mark worldwide in the next 10 years. Will the world be able to provide more than 100 million barrels of oil per day in 2020?

The question you should ask is this: Will the world be able to provide as much net energy in 2020 as it does in 2012/2013? Ie. out of a possible 100 mbpd in 2020, will there be more barrels actually making it to refineries than at present?

I haven't got the insights or statistics to answer this, but seeing as many believe the peak of global net energy from oil has been passed, I think not.

This is a fake image, widely shared and a fraud.

Note that is a triple layer freeway. (Why 3 levels? That takes extra $$$ and repair in a future becomes an issue as traffic flow comes to expand to capacity)

Then note the trees and grass at ground level. With the exhaust and shading - that would be another expense replacing the trees every so often.

You've made the claim of fakery - can you now prove this claim?

Can you provide evidence of forgery? I've just been looking on Google maps to try to find that intersection - the city is pretty big to say the least, so I didn't happen to stumble across it - but there are certainly a number of intersections/on/off ramps which look similar to that one. Intersections which look as if someone designed them to be as lethal as possible.

The story I recall when similar extreme traffic pix were posted here earlier this year was that they took a pic with a lot more spread or groups of autos and filled in the empty spots, possibly by simply merging two or more shots from the same camera position after the traffic had moved a couple hundred yards.

Regardless, the point it makes is the same.. it's really hard to exaggerate the auto problem in any way that puts the actual problem in any sort of a forgivable light.

Hehe, you wrote "earlier this year"...

I don't think this one is a forgery, it seems to be featured on this site:

Here's another image of traffic at night in Beijing:

Not sure I'd actually want it as a wallpaper on my computer...

I think those are both real and 1.3 billion Chinese aspiring to the happy motoring lifstyle of USians is a major major problem!

As for fake traffic images, this one I know for a fact is one such image:

I remember the forged traffic jam photograph.


This intersection on Google Maps might be the one shown. (Hint: turn on the "traffic" option to highlight the busiest roads. They are hard to see through the pollution.)

It's the only Beijing road I could find with five lanes on a carriageway, as shown on the photo. The others seem to be four lanes maximum.

Is the photo a fake? I'm undecided.

Looks to me like the fifth lane is just an entrance ramp that ends quickly enough. The road itself is "just" four lanes.

I don't think that's the one either - I don't see that particularly distinctive building.

That's even worse though - look at the section to the west...there's the main road, an off-ramp, and two on-ramps all converging on the same point. I think the Chinese population issue is going to take care of itself with roads like that.

There seem to be a lot of athletic fields around the city...I wonder if they even use them with all of the smog.

Golf courses - about four in this one small area and the olympic thingamajigger is to the south west: 40.010524,116.419287

Airport the size of a small city: 40.081224,116.595125

I just went on a "world tour"...I don't think there's anywhere that people aren't - how have we not turned this planet into a complete moonscape already?

Found it! You can see the low building with the scooped roof in the upper left quadrant.


Looks like it might be a big hotel or resort under constr. Big, connected Parkspace across all the rooftops, and Courtyard Cores down the centers for more Window area..?? Top right bldg seems to have a big Glassed-in roof. Restaurants/Stores/ Pool?

It looks like the Klingons have landed, but it is the Galaxy Soho.


Five continuous, flowing volumes coalesce to create an internal world of continuous open spaces within Galaxy Soho – a new office, retail entertainment complex devoid of corners or abrupt transitions

Zaha Hadid is quite a girl. Born in Baghdad,

Zaha Hadid, founder of Zaha Hadid Architects, was awarded the Pritzker Architecture Prize (considered to be the Nobel Prize of architecture) in 2004 and is internationally known for both her theoretical and academic work. Each of her dynamic and innovative projects builds on over thirty years of revolutionary exploration and research in the interrelated fields of urbanism, architecture and design. Hadid’s interest lies in the rigorous interface between architecture, landscape and geology as her practice integrates natural topography and human-made systems, leading to experimentation with cutting-edge technologies. Such a process often results in unexpected and dynamic architectural forms.

"unexpected and dynamic architectural forms" -- they aren't kidding!

You must have seen it somewhere?

The site is interesting. They have an interesting table design: hit the up-arrow at the top of the page.

That's it! Good job...I'd say that with the traffic pictured from The Googlez that the photo above is entirely plausible.


Don't forget all of your infrastructure when you rapidly expand your empire.

Perhaps these folks should have played some 'Sim City' first:


China now has significantly more miles of freeway than the US does, so I think they have been playing Sim City.

I don't think the US freeway model is a good one for China to follow because China simply has too many people to move them all by car. The US model doesn't even work well in the US. China would be much better off with an all-rail system.

Depends on what you are calling "freeway". China has more "Expressways" but the US has more "Freeways". However the difference is not "significant" either way. Expressways of China

The Expressway Network of China is the longest Expressway system in the world. The network is also known as National Trunk Highway System (NTHS). In 2011, 11,000 kilometres (6,800 mi) of expressways were added to the network, for a total length of 85,000 kilometres (53,000 mi) at the end of 2011.

China's expressway system is longer than that of the European Union and surpassed the length of the United States' Interstate Highway System in early 2011; however, when non-interstate freeways are counted, the U.S. still has a greater total length—approximately 57,000 miles (92,000 km)

Ron P.

From what I understand, the Chinese originally called their Expressways "Freeways", but changed the name because people thought that meant they didn't charge tolls on them. That was misleading because they do charge tolls on most of them.

They are actually built to US Interstate Highway standards and I think they probably just copied the US design guidelines. Those are very good design standards, but I don't think emulating the US Interstate system is a good idea in the Chinese context. The world does not have enough resources to support another 1.3 billion people living a US lifestyle, and that is where China is headed.


The link I posted in my OP was to an article about the Burj Khalifa skyscraper in Dubai, and the fact that it isn't linked to a municipal sewage system...its human waste is pumped into a continuous line of diesel trucks for transport to a disposal area away from the city.

So...my post had zero to do with Chinese motorways, and my reference to 'SimCity' was referring to the fact that it teaches one though a game of the necessity of providing your buildings with infrastructure such as clean water, electricity, and waste water/sludge removal.

I have learned myself over the years I have read TOD (since inception) to actually read the links that folks post.

As far as Chines motorways go...I always tell my conservative comrades at work who constantly wring their hands over their cartoon worries of 'the threat of the Red Dragon' that I would not trade places with a citizen of China...they face huge hurdles in sustainability. My comrades don't want to hear that message since it takes the air out of their justification for endless increases in U.S. 'Defense' expenditures.

In my haste, I thought your post was a response to the one immediately ahead of it, which was about the Chinese freeway system. Now that the two are widely separated by intervening posts, the context is thoroughly lost, and you can't change a message after someone has replied to it. However, the Sim City comment is applicable to both threads. The Chinese are probably a lot better at playing Sim City than the Arabs, though.

I used to play a lot of Sim City, and often built all-rail cities just to see how they worked. They worked remarkably well despite the objections of my Sims to the lack of roads.

Yep, I had a lot of fun playing Sim City years ago.

It was good for demonstrating very basic and simplified concepts in city planning.

It is an entertaining model.

Just watched a feature on NHK this New Year's morning about a Japanese bullet train driver and how he maintains his schedule -- manually making up for a 15-second departure delay due to loading passengers by goosing it on the way to the next station but keeping it just under his speed limit.
NHK noted that his annual variance from schedule is measured in seconds.
Reminded me how even Mussolini was praised for making the trains run on time.
And compare that to the U.S. commercial aviation industry...

Regarding the Shell rig in previous drumbeat:
Update: Shell drilling rig again under tow

Just before noon Monday, Shell spokesman Curtis Smith said the command team, which includes the Coast Guard, is still evaluating options on whether to try to get the Kulluk drilling rig to a safe harbor, probably on Kodiak Island, or whether to continue to wait out the Gulf of Alaska storms offshore.A morning break in the storms is not expected to last, he said."Weather is largely in play here. That is something that needs to be considered very carefully before we make our next move," Smith said.

Alaska has a way of kicking your ass big time.

Meanwhile the Noble Discoverer is still in port in Seward. You can see the upper part of the derrick near the right edge of this webcam view. Note that it gets dark early this time (sunset at 4:01 pm today in Seward), so depending on when you look at the webcam you may only see the lights of the the derrick.

EDIT: Note that the Kenai Fjords webcam seems to have its timestamp still set to daylight time. Not surprising, since I think they totally shut down their Seward office during the winter.

Update: Kodiak: Unified Command Plans to Tow Shell Kulluk to Port Hobron

Crews have reestablished tow lines for an unmanned Shell drill unit and said Monday afternoon that it will tow it Port Hobron on the southeast side of Kodiak Island.

The Alert, a tug boat from Prince William Sound, secured a tow line around early Monday morning and hours later the Aiviq, a vessel being used for towing, also restored a tow line to the Kulluk.

I expect it will be a tense night for those folks on the tugs. As of 1630 local, 12/31/12, the weather tonight is forcast to be "SE wind 55 kt. Seas 33 ft. Rain."

Update to the Update: Shell drilling rig to wait out storm in Gulf before seeking safe harbor

Royal Dutch Shell and a team that includes the Coast Guard have decided the Kulluk drilling rig and the ships holding it in place with tow lines should wait out another winter storm coming Monday night in the Gulf of Alaska, said Coast Guard Petty Officer David Mosley. The vessels will seek safe harbor, likely in Port Hobron on Kodiak Island, when the weather clears, the Coast Guard says. Meanwhile, technicians were being flown to the Kulluk to inspect the towlines already attached.

I expect that quite a few Shell execs will not be partying too much this New Years Eve!

Shell drilling rig grounds off Kodiak Island after towlines fail for 5th time

The Shell drill rig Kulluk grounded off Kodiak Island at about 9 p.m., according to the Coast Guard.The vessel, which again broke loose earlier Monday, is in a rocky area on the southeast side of Sitkalidak Island on the northern end of Ocean Bay, officials said at a news briefing late Monday.No one was aboard the vessel when it grounded, officials said.The condition of the vessel wasn't immediately clear, officials said. There have been no reports of fuel spills. The vessel was carrying about 155,000 gallons of diesel fuel, officials said.

Another story: Shell's oil rig runs aground in Alaska, raising spill concerns

After once again losing a towline to a tug, the Kulluk -- a $290 million offshore rig operated as part of Shell’s Arctic drilling efforts in summer -- washed up at 9 p.m. at Ocean Bay on Sitkalidak Island, located close to Kodiak Island's southeast shores. The U.S. Coast Guard was dispatching a helicopter to assess the situation late Monday.

The concern now is for the condition of the Kulluk, which is carrying an estimated 150,000 gallons of diesel and 12,000 gallons of lube oil and hydraulic fluid, Coast Guard officials told reporters Monday night at a news conference in Anchorage.

I think the odds are not good that they can successfully salvage the Kulluk. Its ice resistant hull is exceptionally thick steel, but they will have tow it off very quickly before it gets pounded to scrap by storms. The current marine weather forcast does suggest conditions will moderate somewhat for the next few days.

Unified Command for the Kulluk incident: Aiviq Tow - Gulf of Alaska

Unified Command Update #12: Kulluk grounded, vessel condition not yet confirmed

Anchorage, Alaska – The Unified Command reports that Kulluk grounded at approximately 9 p.m., Alaska time on the southeast side of Sitkalidak Island. The crew of the tug Alert was ordered to separate from the Kulluk at 8:15 p.m. to maintain the safety of the nine crewmembers aboard the vessel.

“The extreme weather conditions and high seas continue to be a challenge. We have more than 250 people actively involved in the response efforts,” said Susan Childs, Incident Commander, Shell. “Our priority right now is maintaining the safety of our response personnel and evaluating next steps.”

There were no personnel aboard the Kulluk at the time of grounding, and no injuries have been reported.

There is reportedly up to 150,000 gallons of ultra-low sulpher diesel on board the Kulluk and roughly 12,000 gallons of combined lube oil and hydraulic fluid. The condition of the vessel has not yet been confirmed and overflights are scheduled pending weather conditions. Unified Command, using a U.S. Coast Guard aircraft, plans to conduct a survey to assess the situation at first light. A response team will be deployed when it is safe to do so.

Additional information can be found at www.kullukresponse.com.


The site kullukresponse: https://www.piersystem.com/go/site/5507/ ... brought to you by The U.S. Coast Guard and Shell Oil. Standby for live streaming misinformation and photo blackout. There is a comments section!... that is offlimits.

"Since its introduction, PIER has become the most widely adopted full spectrum on-demand communication management technology. It is used by many of the world’s leading oil and energy companies..."

Update #13

The Kulluk grounded at 8:48 p.m. on December 31, 2012 on Sitkalidak Island on the northern shore of Ocean Bay at a depth of about 32 to 48 feet.

The Kulluk is currently situated at:
Latitude: 57˚ -05.4N
Longitude: 153˚ -06.4W

There are no residents on Sitkalidak Island. The nearest town is Old Harbor, which is located on the opposite side of the island from where the Kulluk is grounded. (...mostly on Kodiak Island. Old Harbor is an Alutiiq village on Kodiak Island. There is an airport and a lodge. The Google satellite image is very low resolution for Old Harbor.)


Map showing location of the wreck at Ocean Bay:

The island:


'ere's a nautical chart of the area:

weather wise, Kodiak Island is in the eye of the storm right now, low moving NE up the coast,typical day on the GOA in winter,nasty.

Probably shoulda stayed in Dutch Harbor, eh ? Hosers.
You can see they were threading the needle between shoals, trying to tow to Pt Hobron , in a winter cyclone. Not a prudent choice.
Leaving Dutch was not a prudent choice.
The other drill ship lost power after leaving Dutch in Nov headed for Seattle and had to be rescued and towed to Seward where it has been ordered to stay for safety vios.
A friend of mine was on the rescue tug , and it was a hairy scary situ at best.
And so goes the story of trying to tap just a little bit more of the devil's blood,,

Wind SE to S, 20-40 mph, snow and rain. Grounded on a lee shore. That thing's staying there for a while.


Wow, the crew were in their "Gumby-suits", ready to ditch. Training. They know the risks.
Tragic in so many ways.
Any Pirate knows it's spelled Arrrgh!!

HERE's another photo of the Kulluk, dated today, from the CoastGuard site...

E. Swanson

I believe the Kulluk was one of the ships built for Dome Petroleum during their exploration of the Canadian section of the Beaufort Sea in the 70's.

Kulluk was built for Gulf Canada for drilling in the Canadian Beaufort. It was built in 1982 by Mitsui in Japan. It drilled 12 wells for Gulf in the Canadian Beaufort between 1983-93. It was then used by ARCO to drill the Kuvlum wells in the Alaskan Beaufort. Shells current Sivilluq prospect is part of the same overall structural trend as Kuvlum.

According to the Oil and Gas Journal (v. 105, no. 37, Oct 2007), Kulluk has a double hull and bottom, and is divided into 24 separate compartments, and is designed to resist 4 ft of ice moving in any direction. I recall reading somewhere (can't now find the source) that the hull is 3 inch thick steel.

Some old info on Kulluk in use in the '90s at:

Kulluk was originally built in the 1970s by Gulf Canada Resources, although I believe Dome later bought it from Gulf, and then Amoco bought Dome and BP bought Amoco. BP was going to scrap it, but Shell bought it from BP for its Arctic drilling program. It wasn't the most rugged drilling platform up there because some of the others were capable of year-round drilling in the Arctic Ocean, but I guess it was the best that was available to Shell.

One would hope that Shell would have better success than Gulf Canada or Dome, because neither of them found commercial amounts of oil, both ran out of money and gullible investors, and as a consequence no longer exist. So far Shell isn't doing even as well. I don't recall any of the Canadian companies running a drilling platform aground during the Beaufort drilling frenzy of the 70s and 80s.

The sources I have indicate it was built in 1982 for Gulf Canada. Kulluk is a floater. Year round drilling was usually done with rigs like the CIDS, which was a concrete caisson design, floated into location, then sunk to the bottom. CIDS nly works up to about 50 ft or so water depth. I was out on the CIDS in the Alaskan Beaufort in the winter of 1984-5. I remember it well, because it got so cold in Deadhorse that the helos wouldn't fly, except in emergencies. I had to stay on the CIDS till it warmed up a bit.

My info on the Kulluk is below. If you have other sources saying it was build earlier in the '70s for Dome, please post them.

See Shell Alaska readies ice-class drilling units for Beaufort Sea from Oil & Gas Journal, 10/1/2007.

It was designed for Gulf Canada Resources Inc.’s Beaufort Sea drilling system division by Earl and Wright Consulting Engineers in San Francisco and Lavalin. It was built in 1982 by Mitsui Engineering & Shipbuilding Co. Ltd., at Tamano Works, Japan.

Also see Rig Zone - Rig Detail Kulluk

Classification: ABS
Rig Design: Earl & Wright/Sedco Arctic drilling vessel: inverted, truncated, conically shaped ice-strengthened hull
Built By: Mitsui at the Japan shipyard
Delivery Year: 1983
Flag: Liberia

No, you're right, it was built in 1982 - my source ftp://ftp2.chc.nrc.ca/CRTreports/CHC_Beaufort_History_CHC_TR_057.pdf didn't give a date, so I just assumed it was the late 1970s. I was really trying to point out it was built by Gulf and not Dome. Dome built its own fleet of drilling vessels. Its equivalent of the CIDS was the SDC or Steel Drilling Caisson (originally the SSDC or Semi Submersible Drilling Caisson).

I didn't work for Gulf Canada or Dome but I worked for Amoco when it took over Dome, and ended up doing systems support for the Canmar fleet. Among other things, I wrote a real-time system that took inputs from the platform's radar, weather station, and other data and calculated the probability of it being crushed by ice - in time for it to pick up and run for safety. It was an interesting exercise.

But mostly what I did was rescue software development projects that were failing - which many of Dome's were, and Amoco's old systems couldn't handle the complexity of Dome's operations. I became something of a software disaster-control specialist.

The ultimate problem was that Amoco shouldn't have bought Dome in the first place. The company was all hype and no oil, and in reality had a negative net worth. Everything it did cost money and nothing made money. everything it owned was just junk and worth less than it cost. The company's stock value was based on its oil prospects in the high Arctic, and while it spent huge amounts of money drilling wells up there, it made no commercially viable oil finds.

I say this because among the systems I rescued were the capital budgeting and economic evaluation systems. Once I got them going it became obvious the company was in a death spiral.

Yes, the SDC was similar to CIDS. SDC with the MAT (a lower base structure to allow drilling in deeper water) was also used on a number of Alaskan wells (Aurora, Cabot, McCovey, Phoenix, and one or two more). CIDS was stacked in Prudhoe Bay for many years. I think it is now in use at Sakalin in Russia.

conditions will moderate somewhat

I guess they mean in a relative sense :(


Yes, moderate in a relative sense. Winter in the Gulf of Alaska generally tends to be tough in absolute terms. The local marine weather forcast is at:

Latest forcast as of 400 AM AKST TUE JAN 1 2013 is:

Today: S wind 50 kt diminishing to 35 kt in the afternoon. Seas 30 ft subsiding to 22 ft in the afternoon. Rain.

Tonight: S wind 30 kt. Seas 15 ft. Snow and rain.

Wed: SE wind 30 kt increasing to 40 kt in the afternoon. Seas 13 ft building to 17 ft in the afternoon. Rain and snow.

Wed Night: SE wind 35 kt. Seas 16 ft.

Thu: S wind 30 kt. Seas 14 ft.

Fri: SE wind 30 kt. Seas 14 ft.

Sat: S wind 25 kt. Seas 13 ft.

Update at 2:35 pm local time Kulluk aground
Note: ADN has added a paywall as of the new year.

Two flights over the grounded Shell drilling rig Kulluk on Tuesday found no sign of a hull breach or fuel spill, the U.S. Coast Guard said Tuesday."The Kulluk herself seems to be stable," Coast Guard Capt. Paul Mehler said at a briefing Tuesday afternoon in Anchorage. "In other words, it is not moving. Aground but not moving."

Elsewhere in the article it says it "is upright, rocking with a slow motion, and stable." They plan to put a team aboard to evaluate the damage as soon as they safely can, and to develop a plan to salvage the Kulluk.

In my Inbox was a pitch for 10-86 plans.


Are these like MLP's? Are they used to build new pipelines from Cushing to the coast or capacity elsewhere. I'm sure the golden opportunities are history, but it seems like some capacity is/will be built to fix out of balance benchmarks. .

Happy New Year

These people are at least trying to think outside the box.

One of the goals is a solar cell production plant design that MetalicaRap will be able to print, that will utilize MetalicaRap's vacuum chamber and beam for the solar cell manufacturing processes[4]. For a typical family home electrical system we may bring the solar cell cost down from 10,000 euro to 400 euro by self printing. (solar cell installation, inverter, and other costs would obviously be on top of this price).

China's Hunger for Fish Upsets Seas

China's growing hunger for seafood is testing relations with other countries and worrying foreign officials and scientists over the potential damage its massive fleet could do to global fishing stocks.

In the latest example, Argentina said on Wednesday that it had captured on Monday two Chinese fishing vessels that it said were illegally fishing in its waters. Officials said Argentina's coast guard boarded the ships after firing warning shots to prevent them from fleeing to international waters, and that the vessels were carrying 10 metric tons of squid and fish.

Peak Fish anyone ?

California has created many areas along it's coast that prohibit fishing as well as limits to the number of fish kept by commercial and recreational fishermen. Biologists found that well known productive areas to catch fish were places where fish gathered to reproduce. So, the "take" harms the current and future population.
I kept one Halibut, released the rest in the last five years.

After years of vicious conflicts, it seems the New England fishing community might be getting a bit of the dawning truth stuck in their craws.. Fisheries Management has been trying to split the difference between quota limits and killing off their neighbors' livelihoods.. but in the end, it won't matter how nice we try to be in nutra-sweetening an ultimately hard reality.

Fishermen, whether in small day-boats such as the Chatham fleet or large draggers from New Bedford on multi-day trips, are just not finding fish, Dempsey and Our said.

For example, when fisheries service scientists revealed last year they had vastly overestimated the size of the Gulf of Maine cod population, New England fish council members worried that the resultant cuts in quota would close down the fishery by summer. Not only did that not happen, but fishermen this year have caught only 47 percent of the reduced quota, even after it was trimmed by 23 percent and cod prices tripled to as high as $3 and $4 per pound.


.. there has been an abundance of Lobster, so I hear.. but many of the groundfish species are, well.. floundering is I guess the word..

A significant food source for mature cod are baby lobsters....

The following item about Saudi Arabia on the Drudge Report caught my eye. I think that Saudi Arabia is a perfect example of a "Metastable" situation, i.e., it appears to be stable, but it is inherently unstable. After reading "On Saudi Arabia," I am mildly surprised that Saudi Arabia has not already self-destructed.

Could Saudi Arabia be next?

There are those who say that the Gulf kingdoms will remain secure for years to come. Don’t count on it. Watch Saudi Arabia. Remember what that British diplomat wrote 130 years ago. “Even in Mecca...”

Jeff, unfortunately the article was just about everywhere in the Muslim world except Saudi Arabia. After discussing the Arab Spring, Palestine and the Palestinians, Obama, Israel, nuclear weapons, and a number of other subjects, the question is finally asked:

And the Gulf? Arabia, where the first Arab awakening began? Where, indeed, the first Arab revolution – the advent of Islam – burst forth upon the world. There are those who say that the Gulf kingdoms will remain secure for years to come. Don’t count on it. Watch Saudi Arabia. Remember what that British diplomat wrote 130 years ago. “Even in Mecca...”

That's it? Nothing about Saudi Arabia except "watch them"?

Saudi Arabia is not remotely like other nations than have experienced Arab Spring uprisings. Don't get me wrong, there may be very good reasons for watching Saudi Arabia but the author of that piece, Robert Fisk, did not give us a single one. And since the title of his article was "Could Saudi Arabia be next?" very least he could have done was to give us at least one reason why Saudi Arabia just might be next.

I think he was just looking to fill space that his editors were paying him to do and that was the best he could come up with.

Ron P.

Shipping Loses as Faster Trade Means Record Fuel Costs: Freight

Accelerating world trade means the merchant fleet will burn the most fuel oil ever in 2013, driving ship owners’ biggest cost to a record and boosting profit for Aegean Marine Petroleum Network Inc. and other suppliers.

Demand for the so-called bunker fuel will rise 2.2 percent to 3.37 million barrels a day, according to JBC Energy GmbH, a Vienna-based research company. Prices will gain by the same amount to an all-time high of $690 a metric ton, according to McQuilling Services LLC, an industry consultant based in Garden City, New York. Shares of Aegean Marine, the largest independent fuel supplier, will jump 75 percent in 12 months, according to the average of four analyst estimates compiled by Bloomberg.

Surviving Progress

Watched this documentary via netflix today. Liked it, and thought it might be of enjoyment/entertainment/informative value to fellow TODers.

On balance, 75 % of global crude production in 2012 was not higher than 2005

I'm confused, looking at your first graph, all of 2012 was above 75,000 kb/d. And all of 2005 was less than 74,000 kb/d...