Drumbeat: March 22, 2013

For oil markets, China isn't what it used to be

Fear of a Chinese economic slowdown and fiscal worries out of Europe have had more downward influence on crude prices in recent days than instability in the Middle East has had toward the upside. But for several reasons, analysts argue that China has less pull on market prices than it did even a few short years ago.

"The relationship between the Chinese economy and oil demand have long ago ceased to be one-to-one," said Pavel Molchanov, an energy analyst at Raymond James.

Last year, China had a 7.8 percent economic growth, "yet Chinese oil demand last year was up only 4 percent – half the rate of GDP,"Molchanov said. "It's because China is becoming more efficient at consuming oil which has long been happening in western economies."

The Peak Oil Crisis: The Beijing Syndrome

We all know that economic growth requires the consumption of energy at roughly the same pace as GDP increases and indeed this is what has happened in China. Although the Chinese built lots of dams for hydropower, drilled lots of oil and gas wells, and in recent years imported lots of oil, some 70 percent of the primary energy that powers its rapidly growing economy comes from extremely dirty coal. Indeed since 2000 China’s coal consumption has increased three fold and is now over 4 billion short tons a year, nearly half the world’s coal consumption. Beijing plans to increase this consumption to 4.4 billion short tons in 2015. They are going to need it because they apparently plan to build another 360 coal-fired power plants in the foreseeable future.

Roger Helmer: Peak Oil or false summit?

The doomsters have spoken. We're facing "peak oil" – a point of maximum production, followed by an inexorable decline, when oil prices will skyrocket, and petrol and diesel cars will rust by the road-side.

In 1922, a US federal commission predicted that "production of oil cannot long maintain its present rate".

Back in the sixties, Professor Paul Ehrlich of Stanford University said that by the 70s, hundreds of millions would starve. He predicted that "within ten years" all major life in the seas would be gone.

By 1985, mankind would enter an age of scarcity, as resources were depleted. By 1999, the population of the US would drop to 22 million. Oh, and by the way, we'd run out of oil.

America's Big Fat Advantage

For all the Obama-era talk of decline, there is at least one reason why America probably won't, at least not quite yet.

"Peak oil" and our "oil addiction" were supposed to have ensured that we ran out of either gas or the money to buy it. Now, suddenly, we have more gas and oil than ever before. But the key question is: Why do we?

WTI Advances to Narrow Brent Discount to Eight-Month Low

West Texas Intermediate crude rose to narrow its discount versus Brent to the lowest level in eight months. The European benchmark was headed for a second weekly decline.

WTI advanced as much as 0.6 percent, paring its first weekly decline in three, as the euro strengthened against the dollar amid speculation the banking crisis in Cyprus will be contained. Cypriot lawmakers start a debate today on ways to unlock bailout funds to avoid a financial collapse. Libya shut two oil fields because of fighting, according to a report yesterday from the state LANA news agency.

China Crude Stockpiles Drop to One-Year Low; Diesel Supply Gains

China’s commercial crude inventories dropped to the lowest level in a year in February, while diesel stockpiles climbed to the highest in 10 months.

Crude supplies, excluding emergency reserves, fell 2.9 percent from a month earlier, according to the official Xinhua News Agency’s China Oil, Gas & Petrochemicals newsletter today. Inventories declined to 28.02 million metric tons, or 205 million barrels, the lowest since February 2012, according to calculations by Bloomberg based on the data. Diesel inventories rose 18 percent to 11.19 million tons, the highest since April.

U.K. Gas Prices Jump to Seven-Year High as Belgian Supplies Halt

U.K. natural gas surged to its highest price in seven years as imports from Belgium equivalent to almost one quarter of the nation’s demand halted and storage levels dropped to a record.

Gas for today jumped as much as 54 percent, reaching the highest level since March 17, 2006, according to broker data compiled by Bloomberg. Flows through the pipeline from Zeebrugge to Bacton on the east coast of England halted at about 7 a.m. London time after earlier today reaching a record 79 million cubic meters a day, National Grid Plc data show.

Britain's running out of gas: just how critical is it?

Why are gas reserves so low? Two factors are at play: the "dwindling" supply of gas from the North Sea and the "limited" size of the UK’s gas storage facilities.

Natural Gas Falls From $4 on Smaller-Than-Forecast Supply Drop

Natural gas futures slid after trading at an 18-month high above $4 following a government report showing that U.S. stockpiles declined by less than expected last week.

Gas slipped 0.6 percent after rising to $4.025 per million British thermal units, the highest intraday price since Sept. 15, 2011. Energy Information Administration data showed that inventories fell 62 billion cubic feet in the week ended March 15 to 1.876 trillion cubic feet. Analyst estimates compiled by Bloomberg showed an expected withdrawal of 70 billion.

Time running out on Russia-China gas stalemate

MOSCOW/BEIJING (Reuters) - A hardball game on price may leave Russia empty-handed after 15 years of talks on a deal to supply China with gas, with Beijing able to shop around thanks to a wider choice of suppliers.

As China's new President Xi Jinping meets Russian President Vladimir Putin, prospects are dim for substantial progress on a deal between the world's largest conventional gas producer and its fastest growing energy consumer.

Cheap natural gas helps Chevron leapfrog Shell in market value

Chevron Corp, after years of living in the shadow of Exxon Mobil Corp, has grown accustomed to having to punch above its weight, and it has now landed a notable blow against another big oil company.

Though it ranks fourth in oil and gas reserves among the world’s non-government-controlled producers, the California major recently seized the number two spot from Royal Dutch Shell Plc in terms of stock market valuation.

Cnooc Profit Falls on Capital Spend, Slowing Output Growth

Cnooc Ltd. reported lower 2012 profits that missed analyst estimates, as China’s biggest offshore oil producer spent more to revive output growth, an effort underscored by its $15.1 billion takeover of Canadian oil producer Nexen Inc.

Net income fell to 63.7 billion yuan ($10.3 billion) in the 12 months ended Dec. 31 from 70.3 billion yuan a year earlier, the company said in a statement to the Hong Kong stock exchange today. That compared with the 65.3 billion yuan mean of 29 analyst estimates compiled by Bloomberg. Sales climbed 2.8 percent to 247.6 billion yuan.

Rosneft closes TNK-BP deal, now world’s largest oil producer

Russian state oil company, Rosneft, has closed a 43-billion-euro deal making it the world’s largest oil producer.

That represents a victory for the company’s chief executive Igor Sechin, a close confidant of Russian President Vladimir Putin, and sees the government tighten its grip on the energy sector.

It is the biggest deal in Russia’s corporate history.

Gazprom, CNPC Discuss Advance Payments For Gas Via Eastern Route - Interfax

Russia's state-run gas company, OAO Gazprom, is in discussions with the China National Petroleum Corp. on advance payments for gas supplies to be delivered via the eastern route, a senior Gazprom official told Interfax Friday.

Looming divorce could threaten U.S. oil baron’s empire

Continental Resources chief executive Harold Hamm, one of America’s wealthiest and most influential businessmen, is embroiled in a contentious divorce that could lead to a record financial settlement and threaten his control of America’s fastest-growing oil company.

Sue Ann Hamm, Harold Hamm’s second wife and a former executive at Continental, filed for divorce on May 19, 2012, Oklahoma court records show.

BP announces $8 billion share buyback

LONDON (AP) — Oil company BP said Friday it will buy back $8 billion in shares after completing a landmark deal for TNK-BP.

Friday's announcement comes after BP completed the sale of its 50 percent interest in TNK-BP to state-owned Rosneft. The deal allowed Rosneft, the Russian oil giant, to tighten its grip on the country's lucrative oil industry.

Cameron Won’t Face Punitive Claims in BP Spill Lawsuit

Cameron International Corp. won’t have to face punitive damage claims and a Schlumberger Ltd. unit will be dismissed from lawsuits over fault for the 2010 BP Plc Gulf of Mexico oil spill, a federal judge ruled.

U.S. District Judge Carl Barbier in New Orleans refused yesterday to dismiss gross negligence and willful misconduct claims against BP, Halliburton Co. and Transocean Ltd., based on testimony in a non-jury trial over liability for the fatal 2010 explosion on the Deepwater Horizon rig.

Canadian and U.S. natives vow to block oil pipelines

OTTAWA (Reuters) - An alliance of Canadian and U.S. aboriginal groups vowed on Wednesday to block three multibillion-dollar oil pipelines that are planned to transport oil from the Alberta tar sands, saying they are prepared to take physical action to stop them.

The Canadian government, faced with falling revenues due to pipeline bottlenecks and a glut that has cut the price for Alberta oil, say the projects are a national priority and will help diversify exports away from the U.S. market.

Energy firms, environmental groups agree on tough new fracking standards

PITTSBURGH -- In an unlikely partnership between longtime adversaries, some of the nation's biggest energy companies and environmental groups have agreed on a voluntary set of standards for gas and oil fracking in the Northeast that appear to go further than existing state and federal pollution regulations.

The program announced Wednesday will work a lot like Underwriters Laboratories, which puts its UL seal of approval on electrical appliances that meet its standards. In this case, drilling and pipeline companies will be encouraged to submit to an independent review of their operations, and if they are found to be taking certain steps to protect the air and water, they will receive the blessing of the brand-new Pittsburgh-based Center for Sustainable Shale Development.

N.Y. Dairy Farm With Gas Leases Urges End to Drill Ban

A New York dairy farm and a Norwegian energy company asked an appeals court to throw out drilling bans imposed by two towns as a five-year moratorium on hydraulic fracturing in the state nears an end.

Attorneys for the dairy farm, Cooperstown Holstein Corp., and Norse Energy Corp. urged the four-judge state appellate panel in Albany, New York, to overturn lower-court rulings that upheld drilling bans instituted in the towns of Dryden and Middlefield, saying state regulations of the oil and gas industry supersede local zoning laws.

Senate Panel Approves Obama’s Choice for Interior Dept.

WASHINGTON – President Obama’s nominee to lead the Interior Department, Sally Jewell, cleared her first hurdle on the way to confirmation on Thursday, winning approval of the Senate Energy and Natural Resources Committee by a large bipartisan margin.

Obama Energy Pick’s Gas Study Faulted Over Industry Ties

President Barack Obama’s nominee for energy secretary is drawing criticism for leading a study that minimized risks of natural gas while failing to disclose that some of its researchers had financial ties to the industry.

The nominee, Ernest Moniz, is head of the Massachusetts Institute of Technology’s Energy Institute, which issued a report in 2011 that said the environmental risks of increased drilling and production “are challenging but manageable.”

Analysis: Thrifty truckers wary of pricey natural gas vehicles

LOS ANGELES (Reuters) - Truckers considering natural gas as an alternative to high-priced diesel say the cost of vehicles that run on the cheap and cleaner-burning fuel is still too high for them to see a timely payback on their investment.

A push to run more of the nation's truck fleet on cleaner, domestically produced natural gas is rapidly gaining momentum.

Suppliers like T. Boone Pickens' Clean Energy Fuels, Royal Dutch Shell and China's private ENN Group are scrambling to build natural gas fueling stations along U.S. highways, while Cummins-Westport Inc will begin later this year selling a 12-liter natural gas engine able to power the biggest trucks on the road.

Boeing Faulted by NTSB for Comments on 787 Battery Fix

U.S. officials rebuked Boeing Co. for comments its executives made at a media briefing on plans to get the grounded 787 Dreamliner flying again.

The National Transportation Safety Board said Boeing didn’t inform investigators about what it planned to say in the March 15 briefing in Tokyo, which is “inconsistent with our expectations” from a company involved in an accident probe, agency General Counsel David Tochen wrote in a letter yesterday.

The letter signals tension in an investigation with high stakes for Boeing, which is trying to limit damage to the image of its high-efficiency plane once it’s cleared to fly.

NextEra Sues Banks Over Solar Funding Equity Guarantee

NextEra Energy Capital Holdings Inc., a unit of NextEra Energy Inc., sued banks including Banco Bilbao Vizcaya Argentaria SA to clarify its financing obligations to solar power projects in Spain.

NextEra Energy, the largest U.S. wind-power operator, sued 16 banks yesterday in Manhattan federal court, asking a judge to interpret a 2011 credit “guarantee agreement” in light of recent changes in Spanish law.

Solar Glut Survives Suntech as Customers Seek Alternative

A day after Suntech Power Holdings Co. Ltd. became the solar industry’s biggest corporate failure, workers continued to load and unload trucks at its main factory in China, adding to the global oversupply of panels.

Seven employees and contractors passing through the gates at the facility in Wuxi, about 75 miles west of Shanghai, when questioned by Bloomberg News said Suntech was operating after this main unit tipped into insolvency. The company, which is seeking local government aid and hired an executive from a state-backed company in Wuxi, said it plans to continue working while a Chinese court restructures $2 billion in debt.

Renewed Tax Credit Buoys Wind-Power Projects

After a deep slump at the end of last year, the wind industry is picking up.

First Wind, a Boston-based developer and operator that was sitting on a pile of stalled projects with the potential to power roughly 300,000 homes, now expects to go forward with many of them.

Apple Says Data Centers Now Use 100% Renewable Energy

Apple Inc. now uses only renewable energy sources to power its data centers, the iPhone maker said in an updated report on its environmental policies.

The company’s data centers now run on energy sources such as solar, wind and geothermal, instead of coal or other fossil fuels, Apple said on its website. The centers house server computers that store and distribute songs, applications and other content from services such as iTunes, iMessage and iCloud.

New Reasons to Change Light Bulbs

People sometimes have trouble making small sacrifices now that will reward them handsomely later. How often do we ignore the advice to make a few diet and exercise changes to live a longer, healthier life? Or to put some money aside to grow into a nest egg? Intellectually, we get it — but instant gratification is a powerful force.

You don’t have to be one of those self-defeating rubes. Start buying LED light bulbs.

Family moves into first net zero Active House in the U.S.

We've seen plenty of impressive net zero houses in the past, from the motion-controlled CHIP House in California to the budget-priced Sosoljip in South Korea. But one issue that seems predominant in most energy-neutral homes is that they typically take on a design that doesn't suit many suburban areas. That may soon change though with the first Active House, which uses natural lighting and ventilation to reduce its energy consumption while still blending in with the architecture of the surrounding neighborhood.

As Pollution Worsens in China, Solutions Succumb to Infighting

So severe are China’s environmental woes, especially the noxious air, that top government officials have been forced to openly acknowledge them. Fu Ying, the spokeswoman for the National People’s Congress, said she checked for smog every morning after opening her curtains and kept at home face masks for her daughter and herself. Li Keqiang, the new prime minister, said the air pollution had made him “quite upset” and vowed to “show even greater resolve and make more vigorous efforts” to clean it up.

What the leaders neglect to say is that infighting within the government bureaucracy is one of the biggest obstacles to enacting stronger environmental policies. Even as some officials push for tighter restrictions on pollutants, state-owned enterprises — especially China’s oil and power companies — have been putting profits ahead of health in working to outflank new rules, according to government data and interviews with people involved in policy negotiations.

Irish Minister Optimistic on EU Carbon Fix Success

Ireland favors a European Union plan to bolster the bloc’s emissions trading system and expects EU lawmakers to support the measure, the country’s environment minister said.

Carbon permits for delivery in December jumped as much as 14.6 percent after the comments by Phil Hogan, whose country holds the EU’s rotating presidency until June 30.

Tories scrambling to keep energy-based economic agenda on track

MONTREAL—It’s hard for a seven-year old government to correct its course when the turn not taken is but a distant point in its rear-view mirror.

For Stephen Harper’s Conservatives, missing the fork in the road that could have led Canada to a more environmentally-sustainable economy is turning out to be anything but a shortcut to lasting prosperity.

Carbon Tax Proposition as a Trade-off for Keystone XL Pipeline is a Crazy Idea for Canada say Friends of Science

Carbon taxes in Europe have forced families into a 'heat or eat' crisis, white collar crime in the carbon trades and sky-rocketing energy prices that devastate small business. Carbon taxes do nothing for the environment while removing billions of dollars from the productive stream of value-added enterprises like manufacturing, innovation and hi-tech; why would Canada want to destabilize the only working economy in the Western World.

What Zombie Films Can Teach Us About Climate Change

Dawn of the Dead, George A Romero’s classic 1978 satire on consumer society, opens in a chaotic television studio. An unnamed expert and a TV presenter are sat across from each other, with panic unfolding all around them, and the expert is trying to convince the presenter that the dead are coming alive. The expert shouts accusingly to the presenter, ‘Do you believe the dead are returning to life and attacking the living?’ To which the presenter replies, ‘I’m not sure what to believe doctor. All we get is what you people tell us.’ As the camera pans away to a TV studio being rapidly abandoned by the traumatised staff, we hear the exasperated expert cry out: ‘What will it take to make you people see?’

This scenario, with the frantic expert desperately trying to convince an incredulous audience of the desperateness of the situation, has many echoes with the increasingly alarmed tone present in much of the climate change discourse. Clive Hamilton noted a mood of ‘barely suppressed panic’ amongst scientists in his 2010 book Requiem for a Species and the environmental journalist Ben Cubby recently commented on Twitter that, ‘Talking to well-informed climate scientists is starting to become a very depressing experience. We really are in trouble here.’ It seems fair to say there is, at the very least, a new sense of urgency, especially following the record Arctic ice melt in 2012. In this article I want to talk about this sense of panic, and how expert opinion shapes our understanding of climate change risk. I will attempt to show why powerful actors have promoted the claim of a two degree dangerous limit, and the negative implications of the two degree limit idea for democracy and social progress.

Pre-Viking tunic found by glacier as warming aids archaeology

"It's worrying that glaciers are melting but it's exciting for us archaeologists," Lars Piloe, a Danish archaeologist who works on Norway's glaciers, said at the first public showing of the tunic, which has been studied since it was found in 2011.

A Viking mitten dating from 800 AD and an ornate walking stick, a Bronze age leather shoe, ancient bows, and arrow heads used to hunt reindeer are also among 1,600 finds in Norway's southern mountains since thaws accelerated in 2006.

Can We Predict When People Will Abandon the Jersey Shore?

Diamond City, North Carolina, is not actually a city, in that no one actually lives there. People did live there, though, back in 1899. That was when a major hurricane hit the community, on a small barrier island near Cape Hatteras. Homes were destroyed, animals were killed, and graves were uncovered or washed away in the storm according to a conservation group in the area. By 1902, all 500 residents in Diamond City had picked up and left.

The people there didn’t have computer climate models, or rapidly rising seas, or any understanding of increasing storm vulnerability; they just had a desire not to deal with what they assumed would be a constant problem. That problem, of course, is one that anyone living on the East Coast is confronting, especially with the waters of Hurricane Sandy still slowly receding from our coastal consciousness. The question is, when should people in New Jersey, Long Island, Maryland, and elsewhere start thinking about leaving behind their own versions of Diamond City?

Climate change will hit farmers hardest, says scientist

An Australian climate expert says the science is now clear and that the section of the population in Australia that is most likely to be hit by climate change is farmers.

More on Bacton pipeline

The pipeline into Europe’s biggest market halted because of a water pump failure at the boiler house in Bacton, where gas is heated before it enters the U.K. grid, according to Interconnector Ltd.

“We are working hard to establish full capacity, but it is unlikely to be available before late afternoon,” the company said in an e-mailed statement. More information will be made available at noon, it said.

Inventories at Rough, the U.K.’s largest gas-storage facility, fell to an all-time low of 2,684 gigawatt-hours yesterday. The site is unable to flow at full capacity because of falling pressure, it said on March 19.

Withdrawals from Rough were at a rate of 17 million cubic meters a day after dropping to zero at about 5:45 a.m., National Grid data show.

Fingers crossed time :-(

A lot of commercial and institutional users in the US have interruptible natural gas (NG) contracts, i.e., when faced with low system pressures, commercial and institutional users have to curtail or eliminate NG consumption, in order to maintain deliveries to residential users. Are there similar arrangements in the UK?

Yes. It is called a Gas balancing Alert. If they don't get that pipeline fixed soon I'm sure one will be called. It is just possible this might be connected to emergency shutdown of Sellafield Nuclear Site.

Bacton back online according to National Grid data. Fingers still crossed.

Global crude + condensate (C+C) production increased from 73.8 mbpd in 2005 to about 75.5 mbpd in 2012*, an increase of about 1.7 mbpd. Crude oil, for the purposes of this discussion, is defined as less than 45 API gravity.

Question: What percentage of the estimated 1.7 mbpd increase comes from natural gas sources, in the form of condensate (natural gasoline), which is a byproduct of natural gas production?

Unfortunately, it appears that the Texas RRC and OPEC are the only sources for regional crude oil production data.

C+C OPEC 12 numbers from EIA, OPEC 12 crude numbers from OPEC (Compiled by Ron Patterson) follow. Condensate = C+C less Crude.

OPEC 12 (2005):
C+C: 31.8 mbpd
Crude: 30.7
Est. Condensate: 1.1

OPEC 12 (2012):
C+C: 32.9* mbpd
Crude: 31.1
Est. Condensate: 1.8

Implied increase in OPEC 12 condensate production: 0.7 mbpd

I estimate that Texas condensate production increased by about 0.3 mbpd from 2005 to 2012. So, the increase in OPEC 12 + Texas condensate production could easily have accounted for about one mbpd of the 1.7 mbpd increase in global C+C production from 2005 to 2012.

When we consider rising condensate production from other liquids rich gas plays in the US and from other regions around the world, it seems quite likely that global crude oil production (less than 45 API gravity) has been flat to down for seven straight years, relative to 2005.

An alternative way to approach this is to assume that the OPEC 12, accounting for 44% of Global C+C in 2012, are representative of global C+C production, which would imply that the global increase in condensate production from 2005 to 2012 was on the order of 1.6 mbpd (pretty much accounting for the 1.7 mbpd increase in global C+C production). Given the large increase in US condensate production from liquids rich gas plays, this is probably a conservative estimate.

*Based on first 11 months of 2012

west texas, you have mentioned that condensate has a lower energy content than crude oil. Do you know what the energy content percentage is? With ethanol having only 66% of the energy content of oil, and NGLs having approximately 70%, defining oil supply in terms of volume (barrels) rather than energy content is getting more and more misleading. (Of course I understand the misleading is on purpose.)

That same question was asked here: Randi Forums

A random question, but can anyone inform me of the differences between condensate and crude oil in terms of energy content and oil product refining?

And an answer was posted:

As a practicing petroleum reservoir engineer, I'll offer the following that's probably more than you wanted to read:

And his answer was far too long for me to post here. So you can read it at the link.

Ron P.

I read the link, and the link within the link to chapters of a Petroleum Fluids textbook. And while it was interesting to learn that there really isn't a clear line between oil and condensates, and that the energy content of either largely correlates to its API, it didn't specify what the API of condensate is on average nor how that could be translated into an energy content.

The Petroleum Fluids textbook claims that condensates should be called retrograde gases and retrograde liquids rather than condensates, and that the API of both (once in liquid form) runs between 40 and 60. (Let's say an average of 50.) Medium crude oil has an API between 22 and 31. (Let's say an average of 27.) This would imply that the energy ratio of condensates to crude oil is 27/50, or that condensates have 54% of the energy content of crude oil. But is the relationship between API and energy content this exact?

taomom - I think you're beginning to understand there is no easy answer. Which is good IMHO because it shows to be cautious when reading statements that use an "average" for projections. For instance if I said the average of US condensate is 50 API what does that mean? Does it mean that half the condensate in the country is 40 API and the other half 60 API and thus no 50 API exists but that’s the average? Or does it mean that on a weighted average US condensate is 50 API…IOW most of the condensate produced is close to 50 API? Or does it mean that half the volume of condensate produced in the US is less than 50 API and the other half higher than 50 API…IOW the medium?

As far as the condensate to crude oil ratio in your example what percentage of US crude oil production is between 22 and 31 API? How much crude oil do we produce with that gravity compared to heavier and light crude?

Some more details you may already be aware of: The API gravity of a particular crude is merely a measure of its specific gravity, or density. The higher the API number, expressed as degrees API, the less dense (lighter, thinner) the crude. In addition to API grade and hydrocarbons, crude is characterized for other non- wanted elements like sulfur.

Although light crude (i.e., 40-45 degree API) is good, lighter crude (i.e., 46 degree API and above) is not necessarily better for a typical refinery. Looking at the chemical composition of crude, as the crude gets lighter than 40-45 degrees API, it contains shorter molecules, or less of the desired compounds useful as high octane gasoline and diesel fuel, the production of which most refiners try to maximize. Likewise, as crude gets heavier than 35 degrees API, it contains longer and bigger molecules that are not useful as high octane gasoline and diesel fuel without further processing.

In a very rough sense the energy content of a hydrocarbon can be related to the number of bonds that can be broken when oxidized (burned). But depending on how a crude is refined that energy content can be increased or decreased. But that’s done by expending external energy to that oil. IOW there are products that contain more energy per unit volume than the oil used to produce them. And some less.

For instance if I said the average of US condensate is 50 API what does that mean? Does it mean that half the condensate in the country is 40 API and the other half 60 API and thus no 50 API exists but that’s the average? Or does it mean that on a weighted average US condensate is 50 API…IOW most of the condensate produced is close to 50 API? Or does it mean that half the volume of condensate produced in the US is less than 50 API and the other half higher than 50 API…IOW the medium?

Indeed. One of the lessons I learned -- sometimes the hard way -- over the course of my careers/jobs, first in tech and then in public policy, is to always ask to see the distribution rather than the summary statistics. Of course, you get a lot of blank looks from people who have just shoved a bunch of data into Excel or some statistics package.

This would imply that the energy ratio of condensates to crude oil is 27/50, or that condensates have 54% of the energy content of crude oil. But is the relationship between API and energy content this exact?

Okay, I am not going to try to improve on what Rockman has posted above and below but I must say that what you say here is definitely not right. There is a relationship between API and energy content but it is not a direct ratio as your example would indicate.

Let's take an example: Condensate has from 4 to 12 carbon atoms, but I think the average would be 8, the same as gasoline. Diesel, according to Wiki has between 8 and 21 but I have read that it normally has 16, twice that of condensate. So...

In technical terms, diesel fuel has an energy density of about 147,000 BTUs; gasoline has an energy density of 125,000 BTUs. In other words, it takes less diesel fuel to do the same work as a gallon of gas. Combine that with a diesel engine’s design, and you’ve got an engine/fuel combination that is 30-35 percent more efficient than its gasoline-powered competition.
TDI Academy: Clean Diesel vs. Gasoline

Ron P.

Well, those numbers would imply (given that crude oil is generally assigned 5.8 million BTUs per barrel, 42 barrels in a gallon, so 138,095 btus per gallon) that the energy content of condensate compared to the energy of crude would be 125,000/138,095 which equals 90.5%. Which is a much less shocking number.

I do very much understand Rockman's point above that it all depends on the mix of all the different kinds of oil and all the different kinds of condensate. And that various compounds are more or less valuable depending on the product you want and take more or less energy to refine. Which is probably why no one wants to even attempt an answer.

However, given West Texas's point that our oil production numbers are including creeping higher percentages of condensate, and if that condensate truly does have less available energy than than the crude,then the net available energy via what we define as "oil" may indeed be flat or declining. Throw in ethanol and NGLS, and the net energy picture gets even more distorted by considering volume rather than BTUs. So having some kind of ballpark number for condensate (like we have for ethanol and NGLs) would be very useful. Which is not to say either percentage I've suggested above is correct.

taomom - Good point. I misread where you were going. It might even be worse than just a decreasing energy content given that our economy depends so heavily on motor fuels. Just guessing but I suspect the motor fuel yields will probably decrease faster than the energy content. One reason why Gulf Coast refineries are anxious to get that Canadian oil.

One reason why Gulf Coast refineries are anxious to get that Canadian oil.

And Canadian producers are anxious to get that US condensate. They use it to dilute heavy oil and bitumen to get it to flow through pipelines to the US. Without the increased US production of condensate in recent years, Canada would be short of diluent to move its increasing production of heavy oil south. OTOH, without the exports to Canada, the US refineries would have too much condensate and not enough oil to produce gasoline and diesel fuel. As it is, the blend of US condensate and Canadian heavy oil is just about right for them.

Unless its on rail, no dilbit needed there for dilution. Steam can work wonders. Wasn't sure steadily seeing all new tankers in the south CN yard in Winnipeg (not the main Symington yard but near the VIA car repair shop), hey, maybe some are for the lp gas terminal SW corner of Winnipeg. But I am starting to see 100 plus tankers rolling east on CN when I ride the bus real regular. Sometimes 10 in a row of tankers are untagged (no graffiti), meaning fairly new. Freight in the front of the train and then tankers to eotd. Probably not destined for the Gulf Coast going on CN on that track.

There are a lot of new oil tank cars out there. The manufacturers are building them as fast as I can. In fact that's the main constraint on oil shipments by rail - there are only a few tank car builders, and they are overwhelmed with orders.

The ones going through Winnipeg heading east are probably going to refineries on the East Coast of both Canada and the US. However, they might well contain light oil because the East Coast refineries don't have the capacity to handle heavy oil that the Gulf Coast refineries do.

Here is the point that I am stressing: Based on available data, it appears quite likely that global crude oil production from oil reservoirs (less than 45 API) has not materially increased for seven years despite a doubling in global crude oil prices. The increase in liquids production has been primarily from natural gas sources (condensate + NGL's) and from biofuels.

Ron – Glad to shorten it up. Condensate is oil…period. Or, if more easily digested, we can call it all liquid hydrocarbons. Some oil you can toss chunks like a rock when the temp is below freezing and others can be so thin it can be used as cleaning fluid. As your engineer offers: “Labeling hydrocarbons as oil or condensate is pretty arbitrary”. At some point someone will call this liquid hydrocarbon condensate if it’s above a certain gravity. Someone else will call it condensate, regardless of its gravity, if it's coming from a well that is predominantly producing NG. BTW the same exact liquid hydrocarbon that could be classified “condensate” in La. could be classified as “oil” in Texas. Some hydrocarbons are predominantly liquids at reservoir pressures but when produced at a lower pressure the result is a predominant gaseous phase with some liquids typically called retrograde condensate regardless of its gravity.

The distinction isn’t as much about the energy content but what can be cracked out of a particular liquid hydrocarbons. Some have a much higher gasoline yield than others. Some yield mostly lower valued (but relatively high energy content) bunker fuel. One refinery may pay more for a certain liquid hydrocarbon than other refineries because it’s designed to get more value (but not necessarily more energy) out of that liquid hydrocarbon.

Most important unless one can access chemical composition of all the liquid hydrocarbons produced on the planet you can’t come up with a “typical” energy content of condensate (however someone may be defining that liquid) or oil. It’s a wide range. And the different refining methods spread the product range even wider.

Britain's running out of gas: just how critical is it?

Read more: http://www.theweek.co.uk/uk-news/52126/britains-running-out-gas-just-how...

Why don't they just frack?

1. The Chancellor announced tax breaks for fracking in the budget yesterday.

2. There is huge environmental opposition to fracking locally, a lot of it mis-guided and ill-informed. I think the key environmental issue is accidental release of methane direct to atmosphere making gas wells as potent source of GHG as coal.

3. Permission has (I think) been re-instated for more test wells.

4. Even if these are successful it will take a few years to ramp up production

5. The available resource is extremely uncertain.

6. The higher level of regulation makes the economics (even more) marginal

7. Even a rapid deployment frack rigs would struggle to match the terminal decline of North Sea gas production.

8. UK is up the energetic creek, but most people haven't noticed yet.

Interestingly, Osborne is giving tax breaks even though the fledgling shale gas industry has said it doesn't need them - one might question why? A cynic might think that Osborne is lining up a nice non-exec position for when his term as Chancellor ends....

UK energy policy is a farce. There is a push to build 20-30 GW of new combined cycle gas power stations, despite the fact that gas is so expensive that wholesale power prices would have to rise by at least 40% for those CCGTs to have sufficient run-time to warrant the capital expense (and that's assuming wholesale gas prices stay on the 60-70 pence per therm range (equivalent to $9.50 to $10.5- per mmbtu). Wholesale prices spiked to over $20 per mmbtu equivalent with the shutdown of the interconnector and to ~$19 per mmbtu when a gas processing plant in Norway had an unexpected shutdown a couple of weeks ago - these prices are NOT coincidental - they are the prices at which the UK can compete to attract LNG in the global market (or attract gas flows down pipelines where the sellers can replace the gas sold with LNG...)

Estimates around the size of the shale resource vary, with numbers of "100 years of supply" being thrown around like confetti - however, none of the estimates recognise that this is resource, rather than recoverable reserves, and none of them seek to analyse the sheer number of wells that would be required to be drilled to meet a meaningful percentage of UK demand (and, of course, the number of replacement wells required to keep up with decline rates). There was a (pretty badly written and edited) report published by the Institute of Directors which suggested that shale gas production rates would struggle to meet, let alone surpass, decline rates from North Sea production - ergo shale gas will likely be unable to have any meaningful beneficial impact on wholesale gas pricing - this brings us back to the question of why energy policy is to build many GW of new CCGT????

The UK is a small and densely populated island - we simply do not have the space required to drill the many thousands of shale gas wells required to make a difference to gas prices. Notwithstanding, if we can produce some to offset North Sea decline and mitigate the volume of pipeline and LNG imports, it would be beneficial to the economy.

Furthermore it seems the government appears to be just about ready to sign an agreement with the state-owned French electricity utility EDF to build new nuclear power stations. All that is required is a 40 year index-linked guarantee on the price they can sell the power at - this is rumoured to be just under £100 per MWH (wholesale 2013 prices) which is more or less DOUBLE the current wholesale baseload price or power. Assuming this plant can be built and operational by 2025 (I have my doubts) and further assuming some fairly benign inflation (more doubts...), the wholesale price of the first MWHs sold will likely be around £130... to which one can add something like £100 per MWH for transmission and distribution costs, making the likely retail price about 23 pence/kWh (almost double the current price).

No one seems to be looking at the demand side of the equation. Why burn gas centrally in new CCGTs at <60% thermal efficiency, when it would make far more sense to spend the capital on micro-CHPs in homes and small businesses achieving thermal efficiencies of up to 95%? There is also a close correlation between peak power pricing and peak heating demand in the UK - i.e. the power produced by micro-CHPs would be generated largely at the same time as peak power demand. A micro-CHP system in every UK home on the gas grid would reduce the peak power load by some 15GW (>15%).

Policy should also look at rolling at a fully-financed swap of LED lights for incandescent bulbs in residential properties. My calculations suggest the "payback period" would be easily less than five years for the most frequently used lights (kitchens and living rooms) and could result in a further reduction of peak power demand by ~4 GW (~6% of peak demand).

I could go on and on - we have a massive wind resource, there are plenty of potential for sites for pumped storage, solar PV is cheap enough and works well enough in summer to generate abundant daytime power and take care of all domestic hot water demand from April to September by routing excess production initially to immersion heating elements in hot water tanks, etc, etc, etc.

None of this will happen, because it's predominantly based on reducing demand for gas and power via distributed and/or renewable means. All of this would undermine the oligopoly position of utilities and reduce both wholesale prices and volumes sold.... not good for the utilities and therefore not good for politicians who rely on them for indirect funding largesse come election time and for well paid non-exec roles when they leave Parliament.

We could frack, and we have lots of potential - I live near a huge field in the North West, several thousand feet thick IIRC.

The trouble is that this is an overcrowded island and you can't throw a stick without hitting some over excited environmentalist lobby. The fracking experiment we had in Lancashire was shut down after a few minor earthquakes were attributed to it.

We don't have the drilling infrastructure or even the free space to throw a few thousand wells up overnight and get fracking. We tend toward the "three men and a whippet" style of operation which isn't the best way to help power a country.

I think the cold wet snow is getting me down today.

The 'crowded' landscape is key point, understandably lost on folks more used to the emptiness of large tracts of the northern US states. Anyone who has driven 5 minutes off the main road in the UK will be used to narrow, winding roads, navigating ancient Parish and field boundaries. Through villages, who's high streets are often too narrow for 2 cars to pass each other - let alone two trucks. Now suggest to the residents that drilling and fracking units' rigs, equivalent to a large, mobile circus, is going to be driving through frequently for several weeks... They won't be putting out the bunting.

That, and the fact that mineral rights are owned by the government, means that any progress in fracking will have to be done with a great deal of 'respect' for the natural animosity of local residents.


...Meanwhile, in the Climate Department, Kevin Anderson says that Climate Scientists are misrepresenting the data; just not in the way you think.

A one hour audio lecture/speach in MP3:

And the first chapter of his book:

Nice Doomy start to the day, I think I'll spend the rest of it playing in the snow.


ps the anti spam thing sucks, but I guess that's progress...

Here's a link to a YouTube video of Anderson's lecture. One can view the graphs he presented, which provides much more depth to his lecture...

E. Swanson

Any written version available ? No bandwidth here, at my father's, for video.

I always thought that IPCC was too conservative.


Alan, the link given includes both a PDF transcript and PowerPoint slides of the presentation...

E. Swanson

Reading Roger Helmer: Peak Oil or false summit? immediately brought to mind Greer's post this week: The Illusion of Invincibility . From Roger Helmer's piece:

In fact, the USA could well be self-sufficient in energy by 2030, and may by then be the world's biggest oil producer, ahead of Saudi Arabia.

Where there's shale gas, there is frequently oil as well. This is a geo-political game-changer. The US may be less enthusiastic about keeping the peace in the Middle East, and defending the straits of Hormuz, when it doesn't need Saudi oil. Europe should take note.

Some estimates in the UK suggest we may have gas reserves for 1,000 years – and there may be oil here as well.

Greer's post has some goodies:

Until recently, I’ve assumed that the failure to do basic research implied by these curious lapses was simply a product of the abysmal ignorance displayed by the media, and American society in general, concerning the important issues of our time. Still, I’ve had to rethink that, and a good part of the reason is a chart that was picked out of the mainstream media by one of the ever-vigilant Drumbeat commenters over on The Oil Drum—tip of the archdruid’s hat to Darwinian. Here it is: ...

[snip, graph]

... You can find this graph in various forms in quite a few places in the American media just now. You’ll notice that, at first glance, it appears to be showing domestic production of petroleum here in the US rising up inexorably to equal domestic consumption, and leaving imports far in the dust. Take another look, and you’ll see that the line tracking domestic production uses a different scale, on the right side of the chart, that just happens to make current production look three times bigger than it is.

Perhaps some of my readers can think of an honest reason why the chart was laid out that way. I confess that I can’t....

Two thumbs up for Ron.

Some estimates in the UK suggest we may have gas reserves for 1,000 years – and there may be oil here as well.

And he's making this prediction when UK is running out of gas in storage. Irony of ironies.

This MEP couldn't have scripted this better, IMO, advocate throwing more money and technology at developing whatever's there at exactly the time the UK is looking at a natural gas crisis. Stinks of a disaster captitalism ploy. Hmmm...

Brit Shale Gas


“It (Cuadrilla) said it had found 200 trillion cubic feet of gas under the ground, which if recovered could provide 5,600 jobs in the UK, 1,700 of those in Lancashire.” And then a slight modification of that 200 trillion feet number: “In a BBC Radio Lancashire debate, he reckoned it could extract 10% of the 200 trillion cubic feet of gas there.” So the original offering was 90% off.

Mr. Egan said: "From experience elsewhere in the world, 10% is probably a reasonable estimate and not an over optimistic estimate." In fact there are shales that might recover that percentage but the vast majority of shales containing NG will recover zero percent of the NG in place because not all shale formations can yield economic flow rates. Many such formations have been tested along the Gulf Coast and proved to not be part of the resource base. There are shales containing NG immediately above and below proven shale gas reservoirs that have been tested and forgotten. The Lancaster Shales may be a commercial play…or not. Only time will tell.

“Tina Rotherby, of the Residents Action Fylde Fracking, has concerns about the water returning after extraction. Mr. Egan said: "The treatment of flowback water is governed by the Environment Agency and [it] has confirmed the waste water is non-hazardous.”. It appears they may not use all the same nasties being used in the American fracs. So they are possibly using a less effective method or the American companies are catching so much heat because they aren’t as smart as UK drillers. Opinions will vary, of course.

From the Cuadrilla web site: “This estimate was a result of considerable scientific analysis of findings from our exploration work, which included taking samples from the shale rock during drilling and from flow-back analysis after hydraulic fracturing. Our geologists and technicians are experts in their field and have arrived at this estimation following careful analysis of the available data.” That’s referring to the estimate of the amount of NG in place…not producible.

“Once Cuadrilla feels confident that natural gas from shale can be extracted at a commercial rate, it will re-start the license and planning process undertaken during the exploration phase.” Perhaps I’m misreading the intent of that statement but it seems to imply that none of their drilling has yet to yield a well that can flow at a commercial rate. Obviously the play won’t be developed if such a rate can't be established for the majority of future efforts. Given the current state of UK NG supplies this could be a great stock to buy…as long as you don’t hold on to it for too long.

Best of luck to the Brits. They’ve got a long way to go IMHO.

A bit on the detail side here on the tight "shale" rocks, but....

If I mined up a bit of rock, say a handfull of it, and powdered it to dust, would I get a stream of gas out in the process, or would it be enough to put the rock on the desk and watch it evaporate out?

Actually Jim Hansen found it a month earlier and commented:
The Master Resource Report

And his source was Citigroup Head of Commodities Research Ed Morse and his CNBC appearance:
US Is on Fast-Track to Energy Independence: Study

Also, as well as this chart found on this CNBC page, an embedded video of Ed Morse giving his opinions that we are on the fast track to energy independence.

Ron P.

Here’s why copper has lost its indicator role

After all, a physician’s handwriting is tough to read, and so is that of copper, whose “doctor” title refers to it as an indicator for economic trends and equity markets.
“Correlations have certainly broken down between equities and copper prices,” said Brinker Capital senior portfolio manager Andrew Rosenberger.

“Market participants used to look towards copper as an indicator of equity returns,” he said. “That may be true in a capital-expenditure driven economy like we had in 2005-2008, but this recovery, to date, has been devoid of meaningful capex.”

I think this is the clearest indicator yet that the old economy is dead and that this is the 'weirdest' recovery from a recession the world has ever seen. The real economy is down in the dumps and is being held at bay only through cheap money lending.

Indicators are still quite mixed. Housing starts and jobs have looked pretty good lately. But then there's the whole Cyprus thing.

And this: More Americans debt-free, but the rest owe more

More Americans are debt-free than in 2000, but the ones who have debt owe nearly 40% more, and seniors have the biggest percentage increase in debt, the Census Bureau said Thursday.

The percentage of U.S. households carrying any debt dropped to 69% in 2011 from 74% in 2000, the government reported. But the median debt load rose to $70,000, from an inflation-adjusted $50,971.

Debt owed by seniors doubled, to a median of $26,000, according to the Census. A median figure means that half of households carry more debt while half carry less.

(One reason seniors have so much debt is they're helping out their children through school, job loss, divorce, etc.)

Seems like the gap between the haves and the have-nots is growing.

One, I was talking about global indicators. Two, jobs don't tell the whole story, like how many part time workers are there and AFAIK labor force participation is at multi-year lows. Then there's the CPI calculation changes which in turn changes most of the other data because almost everyone uses it for calculations. I know for sure that my government massages the numbers.

I don't really track economic numbers and stats so maybe others can comment.

I don't really track economic numbers and stats so maybe others can comment.

Calculatedriskblog is a good resource, I feel. Their URL is on the L-side navigation links on TOD's pages as Calculated Risk.

Thanks for the link, but I am not sure I'll add another blog to my reading list. As it is my head will explode with all the information out there. Yesterday I was watching a rerun of an old TV show where the main characters says, I used to think that more information means more answers, it doesn't, it only confuses you even more.

Seems like the gap between the haves and the have-nots is growing.

Yeah, Leanan, it is changing quickly, IMO. The dollar stores and the high-end stores are booming. The middle class is disappearing. Heck, you cannot have that many people driving around anymore.

Tiffany not feeling blue: Stock up 20% this year

Sprawling and struggling: Poverty hits America's suburbs

The number of suburban residents living in poverty rose by nearly 64 percent between 2000 and 2011, to about 16.4 million people, according to a Brookings Institution analysis of 95 of the nation’s largest metropolitan areas. That’s more than double the rate of growth for urban poverty in those areas.

“I think we have an outdated perception of where poverty is and who it is affecting,” said Elizabeth Kneebone, a fellow at the Brookings Institution and co-author of the research. “We tend to think of it as a very urban and a very rural phenomenon, but it is increasingly suburban.”

Just spoke this morning with a couple that are opening a business downtown and have moved back from the burbs to an inter city neighborhood.Her husband had lost his job and they sold their big house in the burbs of 10 yrs,she said in 6 months she knows and talks to more neighbors than she had in the last 10.Her words were in the burbs cars come home and into the garage and you never see them again.She said their three kids know more kids now than their old neighborhood.She also made the comment on their gasoline bill dropping by being centrally located.

IME, this is definitely true. Everyone talks about how rural areas have a sense of community, and that is often very true. But the same is true of urban areas. You're far more likely to know your neighbors (and play with them, if you're a kid) in the city than in the 'burbs.

U.S. population growth slows, especially in far suburbs
I believe this trend is continuing. The counties in New Jersey that are growing faster are clustered around Newark and Philadelphia, except for problematic Essex (Newark) and Camden. The counties distant from those two areas are growing slowest, e.g. Sussex at the Northwest edge and Cape May at the extreme south.

It's something that I've been expecting to happen, people for one reason or another having to move into the cities. Eventually, following my conjecture, these neighbourhoods will form into what I call ghettoes (ie. capable of getting by whilst being hemmed in by forces beyond their control). Essentially as the economy and institutions collapse people will be thrown upon their own devices to create a working economy, albeit a local one.

Ghettoes don't necessarily have to be poor, they're something that are created by external forces beyond the control of the inhabitants. The key is that the inhabitants are forced to find new and sometimes inventive ways of surviving under adverse conditions and as a result gain a unique identity.

The 30 somethings and below have figured out less is more half of college grads make a high school wage with 28K ave debt.Walmart said the ave shopper is 28 minutes from big box they want that down to 8 minutes hence the Neighborhood Markets were born.On our local level retailers are moving in to expand the customer base.On our local level the county commision was/is worried on road repair cost.The money to be made in real estate is in the 60's and before areas.Most of the structures built from mid 70's on won't last 40 yrs without some major repairs I've been working on those love shacks for 40 yrs.With Peak oil doing it's slow crawl the money is being quiet and moving in.

Seems like the gap between the haves and the have-nots is growing.

This graph seems to support there is roughly a noisy plateau for the wealthiest for the past 13yrs or so.

"but this recovery, to date, has been devoid of meaningful capex.”"

There is certainly no capex going on where I work. Small scale short payoff projects, and those forced upon us by regulators are all that is going on.

“… some of the nation's biggest energy companies and environmental groups have agreed on a voluntary set of standards for gas and oil fracking in the Northeast that appear to go further than existing state and federal pollution regulations.” What a smoke and mirror misrepresentation to the public IMHO.

They go further than the regs in SOME states and much further than fed regs. But not close to the regs in Texas and La. Not much details on the theoretical new regs but from what I’ve pulled they are not as comprehensive as ours. And the regs in Texas and La. are not VOLUNTARY…they are mandatory and if you’re caught breaking them the penalties are significant and could include losing the right to every drill another well in the state. Long ago I pointed out that my Yankee cousins didn’t need to reinvent the wheel…just copy the regs in Texas or La. But now they’ve built their own “wheel’ which for the moment doesn’t appear as sound as ours. And on top of that the wagons owners have a voluntary option. And who will oversee the effort: a committee composed of politicians, environmentalists and oil companies. I’m sure that will work smoothly. LOL. In Texas we don’t have a committee that has oil companies as members making the regs. They are engineers and geologists who work for the state. In all the time I’ve drilled in Texas not once has the TRRC asked what I thought about a pending reg. They simply publish the regs and tell me to comply…or else.

“We believe it does send a signal to the federal government and other states," said Armand Cohen, the director of the Boston-based Clean Air Task Force. "There's no reason why anyone should be operating at standards less than these." True. And even less reason for any state to be operating with lower standards then we have in Texas or La.

“Shell said it hopes to be one of the first companies to volunteer to have its operations in Appalachia go through the independent review.” You gotta love those spin masters with Big Oil. LOL. A very true statement, of course. Neither Shell Oil nor any other oil company has volunteered in Texas or La. to have their operations go through independent review. In Texas and La. independent review of all aspects of oil field operations by Shell oil et al are MANDATORY…no volunteers needed. In fact these non-voluntary regs are not just at the state level. In La. each parish (counties to the rest of you) requires a non-voluntary review and approval of the Air Quality of your production operations: don’t meet their mandatory rules and you won’t ever be allowed to produce your well. And that Air Quality permit is reviewed annually. Just paid an independent auditor $8,000 to do just that on two of my wells.

If you have the interest and a lot of spare time go to the TRRC and DNR web sites and review the regs. You don’t even have to read and understand them: just look at the titles of each section and count the rules. And if you have more time go to the Corps of Engineers site and review their O&G regs for drilling especially in La. They are the one fed agency we deal with on a regular basis.

The oil guys are a bit upset over this game:


A little close to reality?

Hi Rockman,

I know you are not usually consulted on the regs in TX and Lousiana, but I am confident that you are familiar with them. You often point to these two states O&G Regs as somewhat interchangeable, in that they both do a decent job of protecting the environment. If you had a brother in Pennsylvania in a position of power to choose which of these State's regs to use as a basis for PA regs, would you choose the TX or LA regs, or is there not a substantial difference?

Upthread there was some discussion of condensate "average" density (I mean an estimate of the weighted average density for all condensate worldwide) vs crude average density. If we measured petroleum liquids by mass rather than volume, wouldn't that better reflect the actual energy content of the petroleum liquids?



DC - Easy answer: LOUISIANA!!!! As tough as Texas is no state can nail you to the cross tighter than La… and extract their 10# of flesh. LOL. This is especially true when it comes to severance tax. Have you read my comments that I can't pump RAIN WATER off my drill site in La.? I have to have it sucked up by a vacuum truck ($175/hr + mileage) and pay a disposal company to take it ($3 -$6 per bbl). Yes…rain water….not frac fluid. And for the love of Dog don’t let operators up there know I told you this…my life wouldn’t be worth a plugged nickel. LOL. I’m sure some folks in La would love it: there would be operators in PA that would have to pay consultant companies in La to help them with their regulatory paper work. There are few companies operating in La that can handle it by themselves. Compliance is a real cottage industry over there.

API: Yep…I think RMG made that point a while back about how we measure oil. I think another advantage was that it eliminated the refinery gains from the stats.

I can't pump RAIN WATER off my drill site in La.? I have to have it sucked up by a vacuum truck ($175/hr + mileage) and pay a disposal company to take it ($3 -$6 per bbl). Yes…rain water….not frac fluid

Hmm, sounds like there is money to be made with a device designed to collect rain water, store it, then evaporate it, quickly, using the sun.

And I wonder what would happen if you evaporated frac fluid .....

I was also going to state Louisiana. The rules are simply stricter here.


China had a 7.8 percent economic growth, yet Chinese oil demand last year was up only 4 percent - the Chinese have become more efficient in using oil.

Part of this is the subway/Metro building boom in China. Shanghai is well on the way to becoming the #1 Metro system in the world (by every metric), with Beijing a rival for #2 with other great Metro cities (NYC, London, Moscow, Tokyo, Seoul#). By my last count, 44 Chinese cities were at least planning a Metro line and 25 had at least one line open or under construction.

Add to this their HSR, a shift of freight to rail and electrifying 20,000 km of rail lines this decade.

Best Hopes for Oil Free Transportation,


PS: French fuel (gas + diesel) consumption for the first two months of 2013 was down -3.5% from the same months of 2012. The recently (this month) announced expansion of urban rail in Paris is breathtaking. The earlier plan by the Conservatives would have doubled the Paris Metro and added 2 million daily riders.

The Socialists expanded that plan by over 50% (in euros) and added a new RER extension with 620,000 daily riders to the earlier Metro plans, plus more connecting links between Metro lines.

Look for an in process essay "A Revolution in Paris" on my blog

Europe, Cyprus locked in multi-billion-dollar game of chicken

"The next few hours will determine the future of the country," government spokesman Christos Stylianides said before Friday’s session.

The proposals, which amount to Plan C, include seizing state-sponsored pension funds, putting up state assets that include rich natural gas deposits, and splitting the country's second-largest bank into a “good bank” and “bad bank,” which would hold the riskiest assets.

...The rejection of the initial plan to tax bank deposits touched off a standoff between Cyprus and European officials, who are showing no signs of budging on their efforts to rein in Cypriot banks – even if it sends the local economy into downward spiral.

That could trigger the country’s departure from the common currency, with potential fallout in much larger economies of Italy, Spain and Portugal.

"Cyprus is playing with fire," Volker Kauder, a leading conservative ally of German Chancellor Angela Merkel, told public television ARD.

So what happens if they leave the euro? Seems to me like that's inevitable, and not just for Cyprus.

well why should it be inevitable? politicians always talk about growth, when it will return,
how to "sustain" growth (whatever that means). now if cyprus leaves the system it says
that something's wrong in the religion of growth where more and more "free" trade will
bring more and more happiness to everyone. so everybody has an interest to pretend
that everything is ok, and keep cyprus and everyone else in euro.

incidentally latvia has decided to become a part of eurozone


But what would happen if a country left the euro? Is it like the Hotel California - once you're in, you can never leave? Would it really be that bad if Cyprus or Greece left the euro?

as far as i know there is no procedure how to actually leave the euro. so any such thing would
be really complicated in practice. how about us constitution? if california wanted to introduce caldols (californian dollars) would that be possible? i mean is there a legal framework for that?

anyway as i see it there is very few people who want that greece or cyprus leave the euro (including in greece and cyprus), and at very least it seems to me that those who want to leave have not very much real power.

Would it really be that bad if Cyprus or Greece left the euro?

this is an interesting question because one can interpret it in so many ways.
but i think the main point is that those who have power
prefer to continue as before. for example germany's exports would most likely drop dramatically if
southern europe would leave euro. so you can't really find anyone in germany who would
actually push countries out of euro. on the other hand for greece and cyprus i think it would
be a dramatic loss of face, and somehow a return to a second class country, to leave euro.
so even if people in greece and cyprus are highly critical of eu, i think few people really
want to leave the euro.

The last time states tried to leave the union, there was a war over it.

But I'm not really sure why there should have been. States still talk about leaving, and while it doesn't seem likely at the moment, it also doesn't seem likely to start a war these days if it did happen.

Certainly Lincoln's own words indicate that patriotism, nationalism, and the belief in the United States Of America as a sacred project were central reasons that he thought war was an inevitable consequence of attempts at secession. Many, many thousands of US citizens have cared enough about the USA to both kill and die in the service of the nation (continuing today in Afghanistan, etc.). Loose talk about secession in Texas and elsewhere has so little public support that nobody takes it seriously.
But I think a serious attempt at secession in the US would end up in armed conflict eventually, for the reasons that Lincoln spoke of.


Abraham Lincoln explained the nationalist goal as the preservation of the Union on August 22, 1862, one month before his preliminary Emancipation Proclamation:
“ I would save the Union. I would save it the shortest way under the Constitution. The sooner the national authority can be restored; the nearer the Union will be "the Union as it was." ... My paramount object in this struggle is to save the Union, and is not either to save or to destroy slavery. If I could save the Union without freeing any slave I would do it, and if I could save it by freeing all the slaves I would do it; and if I could save it by freeing some and leaving others alone I would also do that.... I have here stated my purpose according to my view of official duty; and I intend no modification of my oft-expressed personal wish that all men everywhere could be free.

Impressive too how then one could hold a personal belief and yet state you would suborn your own beliefs for what you believe to be a higher duty.

Can you imagine what the press or party would say today if a person claimed a belief contrary to the party line, or said they would vote contrary to the their personal preference?

We're getting awfully polarized and too black-and-white for my taste, but I guess in reality that was ever the case, as secession and war both occurred after all.

You can leave the EU, then you leave at the same time the EURO. However, the interesting think is that all countries with problems fight hard to stay in the EURO/EU.

If Cyprus stops using the Euro and tries to return money to the wealthy:

1. Cyprus keeps it banks closed.
2. Cyprus prints a new currency.
3. Cyprus exchanges its Euro denominated bank accounts to the new currency on a 1 for 1 basis.
4. Cyprus opens its banks.
5. The new currency of Cyprus immediately devalues.
6. The people of Cyprus can not afford imports.
7. Everyone tries to withdraw their money from the banks.
8. Foreigners withdraw the money from the banks and exchange the new Cyprus currency for their local currency accepting massive losses, such as 10% to 50% of the original value.
9. The banks in Cyprus are no longer a prime destination for foreigners to deposit their money.
10. Cyprus and its banks can not get loans from anyone in the European Union.
11. Wealthy Europeans and Russian mobsters are angry for losing billions of Euros.
12. Unemployment in Cyprus increases.
13. Cyprus prints more currency.
14. The Cyprus export businesses prospers.

Cyprus would be wise to seize all of their insolvent banks, put their bankers in prison, convert all of the insured deposits to their new currency, return 0% of the uninsured deposits, take all from bondholders, take all from shareholders and default on all foreign debt. Consequently Cyprus would not be able to borrow money from abroad, its imports would be disrupted and wealthy foreigners would be angry at Cyrpus. Otherwise it would be fine.

From the CIA World Factbook for Cyprus:
GDP (official exchange rate): 22.45 billion (2012 est.)
GDP - composition by sector:
 agriculture: 2.4%
 industry: 16.7%
 services: 80.9% (2012 est.)
Labor force - by occupation:
 agriculture: 8.5%
 industry: 20.5%
 services: 71% (2006 est.)
Unemployment rate: 8% (2012 est.)
Public debt: 80.9% of GDP (2012 est.)
Exports: $1.889 billion (2012 est.)
Imports: $7.716 billion (2012 est.) (34.4% of GDP)
Imports - commodities: consumer goods, petroleum and lubricants, machinery, transport equipment
Reserves of foreign exchange and gold: $1.207 billion (2011 est.
Debt - external: $106.5 billion (31 December 2011 est.)

Cyprus (2013): 125 people/km2

A question: Do you believe, as I do, that the national debt of the various nations will self-correct with widespread default? And that, whilst those nations defaulting would no doubt have trouble borrowing, their taxes could well go down as the expense of debt service would no longer be a line item in their balance sheet?

Just wondering if anyone else sees the same thing on the horizon as I do.


The import/export ratio says it all, and the high debt on an 80% service economy says it again.

Peril for Euro Zone Hangs on Small Sum

The future of the euro zone has been put on the line for a few billion euros.

Eight months after Cyprus requested a financial rescue, bleary-eyed finance ministers cobbled together a package early Saturday that has become so contentious that it risks the country's euro-zone membership.

The issue that has generated the furor: €5.8 billion ($7.5 billion) that the euro zone insists Cyprus extract from its bank depositors to cut the size of the rescue package to €10 billion.

That amount is chump change for the euro zone—the equivalent of about 0.06% of its annual economic output....

...Then, the euro zone enters unknown territory. Instead of an irrevocable currency union, it becomes, as one senior European official has described it, a marriage of convenience. If one country can leave, then others can, too. Markets, said Mr. Annunziata, "will have to take into account that European policy makers are willing, under some circumstances, to open the door and let a country out."

They Really Do Care About Cyprus

If Cyprus was insignificant, as opposed to small, then the other Eurozone countries would simply pony up the dough, or wave goodbye and let Cyprus exit the Eurozone.

But they can't just pony up the dough, as that would continue a bad precedent.

And they can't just wave goodbye. Why? Because Cyprus's significance far outweighs its size. If Greece had left the Euro, there would be no precedent value to Cyprus's doing so and this crisis would have been but a blip. But it doesn't matter how big the first domino here is: the EU has sworn that the Euro is inviolate, that it's impossible to undo, that there's no provision from anyone leaving the union, etc. If any country leaves the Euro, the statement of absolutes is exposed to be false. And worse, from the standpoint of the elites…what if a country leaves the Euro and survives?

Quite a conundrum they have over a few billion euros.

I think that we are increasingly seeing a kind of political paralysis, in the US, Greece, Cyprus, etc., as politicians--faced with having to choose among an array of bad choices--elect not to make any choices.

Although in this case I suspect the politicians took the choice (the now discredited plan A), but the populace was about to revolt over it. I'm beginning the suspect given the constarainst (Merkel doesn't want her taxpayers to take the hit), plan A was probably the least damaging to the residents. I suspect plan Eprime -or whatever eventually comes to pass will be much more costly.

in fact there have been 2 versions of plan A:
1) eu (or "troika", by the way the word troika comes from russian. tri is 3 in russian
and troika means a carriage drawn by 3 horses) demanded that all depositors should be taxed
2) it was cyprus politicians who had this idea

anyway i don't see why some other less crazy plan would necessarily be more costly?

somehow cyprus is like iceland couple of years ago. the banking sector
is way too big for such a small country.

it will be interesting how russian depositors react when
banks will open (maybe?) on tuesday.

i don't see why some other less crazy plan would necessarily be more costly?

Why if I understand it correctly, its simple numbers. The only pile of money big enough is the bank deposits. The combo of held bank deposits (plus whatever assets the government owns to back up the deposits simply can't cover the full amount of the deposits. So it can either be an orderly tax, -or disorderly as people try to grab a hold of whatever they can. But in the end how can one get around the problem that the island is broke? No, they avoid the "tax" for now, but that doesn't make the funds necessary to fill in the hole appear, so now the local economy will take it on the chin, as well as the deposits.

About 10 years ago I was offered an investment in a Cypriot bank. I can't remember the details but it went something like: in Canada banks have to hold something like 10% of their loan value in cash , which limits their ability to invest. At the time the Cyprus banks were required to hold something like 1% reserves (actually I think I recall the number 600/1!). Oddly, at the time I thought there might be a downside to that rule. I wish I had the details.


Yes, that's right. Canadian banks are required to hold 10% of their deposits on reserve, either in cash or on deposit with the Bank of Canada (the central bank). That means that they can only lend out 90% of their deposits as loans, and if they do get in trouble anyway, the Bank of Canada has sufficient reserves on deposit from all the banks to bail them out. The BoC also has the power to create more Canadian dollars as required if it runs out of reserves.

As a result, none of the Canadian banks has gone bankrupt or become insolvent.

If Canadian banks did become insolvent, the BoC would just lend them money out of reserves to bail them out, or create new money and lend it to them. Of course, that would inflate the Canadian dollar and make it worth less, but that would just make Canadian industry more competive against countries using the US dollar, Euro, or British pound. Canadians could not afford to buy as many imported goods and would have to substitute domestic goods instead.

The Cypriot banks have no such reserve requirements, nor does Cyprus have the power to create Euros out of thin air. As a result, they are screwed. The Euro was a bad idea for countries such as Cyprus, and they really need to think about whether they want to stay in the Euro Zone or bail out.

The island may be broke, but the banks are broken. As in any bankruptcy, the bondholders should go first, then depositors, with the gov't stepping in to either make depositors whole or giving them rights to assets (which will be worth little, for now at least).

My guess is that once you scrape off the banks, there is probably personal debt akin to Greece -- the results of living beyond their real production income for too long. Kinda like the middle class in the US.

Funny, they could simply have inflated if they're weren't in the Euro, and in a couple of years pocketed 6 or 10% of the savings. Make it an explicit cut and everybody is in an uproar.

Hard not to like silver these days.

"politicians--faced with having to choose among an array of bad choices--elect not to make any choices."

But indecision is still a decision. Also called the status quo option.

It is BS to assume that the future of the Euro zone depends on 10 billion EUR. It is about rules and politics, Cyprus screwed up and Merkel is under pressure to show that the money of German tax payers is not longer available for nonsense like the Cypriotic business model.

The Only LED I can recommend - the Philips L-Prize


Highly energy efficient (only one with significant savings over CFL), very good light quality, VERY well built and durable.

And dimmable (with some loss in light quality).

Best Hopes for Me outliving the L-Prize bulbs I have bought,


HereinHalifax says that the L-Prize "is in a league of it's own".

Jeffrey Brown bought some on my recommendation and said he thought that they improved his productivity :-)

My two cents to folks interested in LEDs, pay attention to the lumens rating.

A 60watt incandescent bulb outputs roughly 800 to 1,000 lumens, so make sure to make sure the LED you purchase is within the same range.

Also, I have a smorgasbord of LED bulbs in my house, 4 different manufactures. None have yet failed/burned out yet (just FYI).

Philips seems to sell a 230 V version of the L-Prize in Europe. I'm not sure it is new but I couldn't findany last year.I might buy one this week-end if there is some available at the nearby seller.
French website

That is the cheap "look-a-like".

L-Prize is 940 lumens 9.7 watts (Philips says 10 watts), CRI 92 (from memory).

Your link is 806 lumens & 12 watts.

Wait till they release the "Assembled in Wisconsin" version in 230 V :-)

Best Hopes,


I picked up two of these this week for our bedroom at the big home store, off the clearance rack for $13/ea. Check for discounts, as I think they are being replaced with a newer model.

Your link is to the L-Prize - VERY interesting if they do an upgrade !


After verification I'm sorry to say that you are mostly right: The link I gave corespond to the Philips bulbs of the previous generation and are the only one available in 230 V that I can find. I was misled by a UK site that described them as the real McCoy. Note that these Philips bulbs are not cheap: 30 to 40 Euro each ... definitively not a good deal for an "older" generation. So we will still have to wait for a 230 V version :-(

"HereinHalifax says that the L-Prize "is in a league of it's own"."

And it must be so, cause I've never seen a piece of electronics keep getting more expensive consistently. I think the last one I got was about $40USD shipped.

On a related note, I see more and more permaculture, gardening, solar, etc. type books on Amazon (the real foundational ones that everyone says to buy) consistently dropping out of the 'used' bookseller market - the average price on those tomes (i.e. Bill Molinson, Eliot Coleman) are trending toward the $40 mark too. Some are available in mass-market paperback or kindle editions in the ~$20 range new (and a few copies are frequently showing available used for more than new); the general trend has become apparent to my gut at least.

Do I detect a growing momentum of people "catching on" ???


EDIT: I notice they are back under $30 on Amazon - Philips must've upped their production line again? When I bought mine a few months ago, they were headed back for $50, and there was only one or two sellers on Amazon with them in stock!

My Wife, Daughter and I went to a Permaculture/Transition meetup and gathering on Thursday night, watching the film 'In Transition', with Rob Hopkins and selections from sampled communities around the globe, and then last night had a potluck at my UU church with the Weston Price group, and Leslie introduced THEM to Transition and Permaculture concepts.. surprisingly new to many of them, but they were eager to hear about it. I entreated them to watch 'Farm for the Future', by Rebecca Hosking, who had visited TOD a number of times as she researched the project.. but it ties in well with the areas of wholesome food production and Pasture remediation that is of great interest to the Weston Price community.

I'd say there are a lot of related and compatible groups out there, and are going to be finding each other and cross-pollenating, as we all take gradually more advantage of the bits of all this that we don't need to reinvent over and over.. we can work on the same open-source model as software does, which is great because it seems to naturally incorporate an 'evaluate and debug' process as you pick up 'libraries' from other creators, so its components can be renovated and improved as they migrate.

Amid all these topics covered, there is also an amusing and maybe annoying number of weird notions as well.. but as a Chiropractor and I reminded ourselves at the dinner last night, it's not like there aren't ALSO a bunch of wild, dangerous and unprovable fantasies that are part of the Mainstream narrative. It's just a matter of how to process the various stories that float around.. some may be as wacky as they sound, and some might only SEEM wacky because we're acclimated to some other nonsense and forgot to really check it against proper evidence.

'A Farm for the Future' http://www.youtube.com/watch?v=xShCEKL-mQ8
'In Transition' ('From Oil Dependence to Local Resilience') http://vimeo.com/8029815

Interesting End Credit on the In Transition movie, which features scenes from all over the world, saying that no flying was done to create this film. They apparently had each transition community find a local videographer to create each respective segment.

Another form of Tele-commuting that could be seen as untenable by some, but then proven by others.

I absolutely agree about the L-Prize bulb being worth the money, but I'd note one other factor in the way of adoption with LED bulbs: the horrid experience most have had with CFL bulbs - sure, we all use them now that you can find them for $5, but we were told the CFL's would last 10 years - I've hardly had any last more than a year, and this is any brand (including, I'd note, Philips), in any fixture. The things are pretty universally crap. Now, as an EE, I understand that the 300V power supply in a CFL is probably a lot more fragile by necessity than the 10V power supply in the LED bulb, but they both produce a lot of heat, and heat is that which kills electronics, such as power supplies. If I hadn't seen the 20-yr accelerated test of the L-Prize, surrounded by dead CFL's, and an EE tear-down of an L-Prize, showing all the high-temp name-brand capacitors inside, I wouldn't be caught dead buying them either. As it is, I'm afraid to put a $40 lightbulb in anything but an open, upward-facing fixture with no more than an open-air lampshade around the bulb...I don't care if they do say they will work in anything except an enclosed fixture - they aren't going into my ceiling fans (besides, that's $160 per fixture - not that I need that many lumens! [I tend to gravitate toward single 4-10W CFL's when it's dark out anyway, my melatonin-producing machinery don't like to be antagonized apparently])


I am now about 4 years in on my Cree LR-6 can lights - in standard 6" ceiling cans - with no airflow to speak of and about 13W consumption. Many are left on way too long way too often, and yet none have failed, and illumination is still good (might be a little dimmer, but then I haven't dusted them off either).

I have a variety of other LED bulbs (most but not all early variants with Cree LEDs) including L-prize and NONE have yet failed. I did have a few early Walmart specials that I simply threw away because the color was so bad and they were SOOO dim, and one failed very early on, but I don't count those as real bulbs. A couple of bulbs with integral fans (which I always thought was a poor notion) are noisy on start-up, and I suspect those will eventually fail, but so far they soldier on.

Almost all of my CFLs have failed early, IMO. I don't much buy those anymore. Time to get on an L-prize per week rotation and get to all LED bulbs. They are funky looking, but they sure do work.

You could go with a new lighting fixture under the ceiling fan, and install a single L-Prize bulb.

I also saw the tear down. The DoE has run them for 20,000 hours at 45 C. So far, zero failures out of 200 bulbs.

The heat build-up appears to be minimal.

I just got one from Amazon (only one was available at that price) for $25.77.

Best Hopes for more versions of L-Prize technology Bulbs :-)


I find it odd when people say their CFLs die quickly. I've been using CFLs in apartments (since 2000?) and my house (since 2009) and have had very few failures. I bought my first CFLs before 2002, not sure if it was 2001 or 2000. I still have one of those bulbs in use today.

I have something on the order of 50 CFLs in my house mostly 13w but some 12, 10, 9, and 8 watt versions in the mix. Some were bought at Kmart way back when they went into bankruptcy in 2002, some were bought at walmart over the years, some from Lowes or Home Depot. Some were free from the electric company. If I had to guess I have at least 4 different brands and more than a dozen different models of CFLs in use.

It's been at least 3 years since I've bought any and I have enough spares to last me years if I lose a couple a year. (in fixtures that hold 4 or more bulbs, I unscrew several of them until they turn off just to have a place to keep them). I have had failures, I've probably taken 5 or so to the recycling center in the last decade. I probably have one or two in the closet waiting to go to the recycling center. But by far I have more working for years at a time than I have had failures early or otherwise.

I have a lot of windows, have way more fixtures than are absolutely needed, have floor and desk lamps, so maybe the key is that I don't stress the fixtures or house wiring running too many bulbs in one location. Probably a factor that I'm using some of the under 10 watt bulbs in combination with the 13 watt bulbs keeping the heat / power draw down in the fixtures.

My biggest complaint about CFLs was that you get less lumens/watt when you go below the 13 watt size. So if I want two 9 watt bulbs instead of one 13w or two 13w bulbs to avoid glare I end up paying more per lumen on my electric bill.

Hopefully with LEDs when they get to the $2 a bulb area I'll be able to choose lower wattage bulbs without getting less lm/watt in the process. Something around 800 lm at 4200K and at 8 or 9 watts would be ideal for me if it is a well diffused light. It'd be nice to also be able to get something in the 700 lm at 4200K and at 8 watt for can lights (more direct lighting less diffusion).

Saw a few CFL's go bad in some houses (I do residential with the mentally challenged and I do get around), but in 4 years in same apartment, still the same cfl's for me. Moisture and temperature changes might be part of the play. Voltage fluctuation? CFL's do not recycle anywhere and a maintenance guy says that they can be a fire hazard, and every single one comes from China. When mine die - I will get LED's - very nice for bike lights.

CFL's do not recycle anywhere and a maintenance guy says that they can be a fire hazard, and every single one comes from China.

They have a box you put them in near the door at Home Depot and they recycle them.

"The Home Depot is proud to offer free CFL recycling in all U.S. stores." per http://ext.homedepot.com/shopping-tools/light-bulbs/allaboutcfl.html

Also some CFL bulbs are made in the usa so don't beleive everything your maintenance guy says.

I've had terrible luck with CFLs. I've been using them far longer than most; I used them for a hobby years before they were generally available for household use.

I hate them. They're expensive and they don't last nearly as long as promised. My theory is that they are more vulnerable to vibration and voltage fluctuations than incandescent bulbs. I often lose them after a lightning storm.

Yeah, maybe I haven't made the connection - we get a good bit of lightning here too, and ceiling fans are what they are. There just doesn't seem to be any premium options out there in CFL, and all the LED's are first-tier companies, so maybe that's enough. Most CFL's I've had are too hot to unscrew by hand when they've been on - that's just too hot for any kind of decent lifetime, IMHO. So far, seems the LED's stay just under that temp (although 10W of CFL heat is pretty equiv. to 10W of LED heat, since I assume >50% of that goes to heat in both cases, you just get more light from one), so maybe I'll get lucky. A lot of downward-facing fixtures have a hidden area in the top rear (i.e. inner top ring of fan light). If I was really future-proofing, I'd get out the dremel or the saw and cut some air slots in those inconspicuous locations and add life to all my bulbs...


Interesting, mine seem to be resistant to lightning (oooppps! what have I just done?) while stuff on phone/cable lines has suffered. From the various tales I hear here, it is very much a case of YMMV. Still, I look forward to LEDs getting into sensible price ranges but lightning is one of my worries with those.


What Zombie Films Can Teach Us About Climate Change

A very interesting posting. It teaches what I have held for some time, that IPCC is increasingly too conservative, and that the warnings that we cannot go beyond two degrees (C) of warming is contra-productive since it seems to imply that we can wait until the two degrees to do anything.

Of course, it may already be too late to do much more than prepare for a minimual survival of humanity (and the rest of the biota on Planet Earth); but at least we may be able to do that if we seriously entertain the notion that total anihilation is a possibility.

Best hopes that some small part of your DNA survives.


I ran across this article: Counting the Hidden Cost of Energy. If we believe it, a comparison of costs, including grid costs (in an Australian context), is as follows, based on a recent study:

Grid costs increase with higher levels of penetration. The above amounts are for 30% penetration.

I did not drill down to the underlying study of the grid fractional costs, but it seems apparent that dollars per megawatt-hour favors plants that run at full capacity day and night, whether or not that energy is needed.

But excess nighttime electricity is wasted without grid storage, so the cost of that storage should also be added to plants that do not easily follow the load, and not unfairly assigned to daytime excess of wind and PV production.

Power companies often give lower rates for nighttime consumption just to dump that excess, e.g. "security" floodlighting.

I did not drill down to the underlying study of the grid fractional costs, but it seems apparent that dollars per megawatt-hour favors plants that run at full capacity day and night, whether or not that energy is needed.

No, you have it backwards. Of course it is cheaper to produce power if you can do it constantly, at full capacity all the time. But the load just doesn't work that way, more power is demanded during peak hours. Peaker plants are used for peak hours and because they only operate at peak hours they are more expensive to operate. But they are a necessary evil for proper grid operation.

Power plants don't give cheaper rates at night just to keep the power plant running. They produce power at night because customers want the power at night. And they drop the rates during off peak hours in order to try to get more customers to use power in off peak hours.

There are even "intermediate load plants" that fill the gap between base load plants and peaker plants.

Intermediate load plants fill the gap between base load and peaker plants. From a cost and flexibility standpoint, they typically operate between 30 and 60 percent of the time. Intermediate plants are larger than peaker plants so their construction costs are higher, but they also run more efficiently.
Understanding Base Load Power

Coal plants are usually base load plants and try to run at full capacity most of the time. But nighttime power is never wasted. If less power were demanded at night then they would simply produce less at night and save a lot of fuel in the process.

Ron P.

Well I had in mind nuclear plants where fuel costs are inconsiderable and it is a lot less risky for everyone when they maintain constant power output, not so say that the additional profit is the compelling motivation.

How can you explain lower nighttime power costs, otherwise? The cost per kWh would be the same if it were derived solely from marginal fuel and operational cost.

Nighttime power costs and nighttime power prices are two different things. Price is always impacted by market conditions. So is cost to some degree, but not necessarily to the same degree.

If there is heavy base generation that is hard to shed and low consumption, the spot price will be way lower than if there is peak generation feeding high consumption. In W Tx the price goes to zero a not insignificant fraction of the time, and no source of power is free, of course.

For any particular plant it depends on the accuracy of Darwinian's assertion that "nighttime power is never wasted." The bars in the above graph presumably reflect operation at full capacity less downtime, averaged over a year. If there were wastage, and a baseload plant were to reduce nighttime power to eliminate it, then the overall yearly generation cost per kilowatt hour would be increased. Coal plants would have a smaller increase because of the reduced fuel usage, but the kWh cost for nuclear plants would probably double during operation at half capacity, or possibly more than double after taking into account the increase in operational complexity and thermal cycling.

My point is the low relative costs of nuclear and coal in that graph assume those plants run at full capacity. If the extra power is at times not needed then (if diverted to grid storage) some of the grid costs could be transferred from the renewables columns to the baseload plants, or (if the plants reduce power) the cost per kWh could be substantially higher.

but the kWh cost for nuclear plants would probably double during operation at half capacity, or possibly more than double after taking into account the increase in operational complexity and thermal cycling.

Absolute nonsense. Nuclear power makes up only 19 percent of US power. If every nuclear power plant ran full power all night they would still need extra power from other conventional plants, even at 3AM.

And coal plants can easily reduce their power in a matter of minutes by reducing the fuel input. When the coal into the boiler slows down the power output drops pretty quick. If coal plants generate less power they burn less fuel. And power plants are highly fuel intensive.

Do you actually believe that power is shut down evenly across all power plants on the grid when less power is needed? No, please read the link I posted. It explains it in great detail. The peaking plants are shut down first, then the intermediate plants. And that should do it, all night long. But if not it is very easy for gas or liquid fuel plants to lower power and also coal plants if necessary.

Nuclear plants, what few of them there are, can run full steam all night and still more power would be needed.

Ron P.

When electric power companies talk about energy conservation they generally mean reducing the peaking end of the Load Duration Curve since that is where the highest marginal costs occur. Ideally the baseload plants can always run at capacity (the lower horizontal line in the wiki article) but could also run above capacity for a small percentage of the time (the upper line), and there would be every incentive to get rid of those periods of very low demand.

North Carolina requires power companies to submit "Integrated Resource Plans", here is a recent Duke Power submission (this downloads as a .pgm file, rename to .pdf).

Based on such documents an industry watchdog NC WARN says there is too much baseload capacity (Duke has ~5 GW of nuclear capacity in NC):

10. Duke Energy provides two load duration curves in its IRP, Figure 3.1
(without energy efficiency) on page 54, and Figure 3.2 (with energy efficiency) on page
57. The load range for 2010 is 4500 MW at the lowest end and almost 17,000 MW at
the upper end, with the average 2010 hourly sales approximately 10,900 MW. An
important factor emerges from reviewing Duke Energy’s load duration curves. When all
of its baseload plants are in operation (12,679 MW) they provide more electricity than is
needed for 87% of the hours in a year; in other words, not all of the existing baseload
units can operate for most of the year. For most of the year, the plants are either shut
down and idle or spinning (still operating but not connected to the grid).

11. Further, in its load duration curves, Duke Energy then forecasts increases in
load for each of the hours for 2015, 2020 and 2025.5 Even using the load duration
curve without energy efficiency, Duke Energy still has excessive baseload through
2025; with Duke Energy’s projected energy efficiency programs, the current baseload
plants provide excessive load for more than 50% of the year. With additional energy
efficiency measures or combined renewable energy sources, less and less baseload will
be needed.

No carbon cost for nuclear?

I had the impression they were talking about a carbon tax--this is Australia, not the U.S. we are talking about here.

Would you mind pointing out the carbon tax reference? I can not find it.

Just a couple of points to be aware of (from an Australian context):

George also contested King’s claims that wind generation was adding extra costs on the consumers. He noted that South Australia had already achieved over 20 per cent renewable energy generation on a capacity basis (and more than 25 per cent on a production basis) – and had done so without the addition on any new peaking gas plants to provide reliability.

“Not one MW,” he said. “There is no evidence that wind energy will drive increasing volatility and potential unreliability in the NEM unless that power is firmed by open cycle gas to provide reliability.”

Furthermore, according to Australian Energy Market Operator, the increased level of wind energy deployment in South Australia has reduced the occurrence of high priced volatility events in the electricity system, and lowered the wholesale cost of electricity.

George also noted that there had been no new investment in plant to manage volatility and interruptibility. It had not been needed. These are important points, particularly in the light of renewed attempts by the nuclear lobby to discredit renewables on the basis that they are intermittent.

This week, nuclear lobbyists writing in The Conversation quoted a year-old report from the Nuclear Energy Agency which said the cost of “grid integration” of wind and solar were high – as much as $44/MWh in the case of wind, and $83/MWh in the case of solar – inferring that the same would be the case in Australia.


The article that Gail quoted:

This article was co-authored by Martin Nicholson.

He is well known for pro-nuclear stance.

Some weird facts about South Australia where I'm from originally. It has
- plans for half of Australia's installed wind power
- the world's biggest uranium deposit at Olympic Dam
- possibly the third highest retail electricity prices after Denmark and Germany.

They can accommodate high wind penetration because they have gas fired base and intermediate load and under the national renewable energy target a lot of wind power gets sold interstate. A major problem is the fact they are on the east Australian gas grid which will export LNG from late 2014. Minor success in fracking won't hold down the gas price.

Antinuclear sentiment runs high in South Australia so it looks like they will build more wind capacity and pay whatever price for gas backup, say $9 or $10 per GJ/mmbtu.

Does the grid allow South Australia to import power from Tasmania through New South Wales ?

The interior of South Australia should be excellent for both solar PV and solar thermal.

Best Hopes for South Australia,


Occasionally Tasmanian hydro is exported to the mainland via the underwater HVDC cable normally limited to 500 MW. One time when Adelaide was in a heatwave the thyristors on the Tas end overheated. The other converter station is next to a brown coal fired power station Loy Yang north of Melbourne.

Oddly a new development could affect both the South Australian wind build and also illustrate the economics of HVDC and energy storage. In the waters south of Melbourne there is King Island swept by the Roaring Forties tradewinds. KI was at one time noted for its use of a flow battery to store small scale wind power. I understand that vanadium battery has now been replaced by a lead acid battery array and ultracapacitors. The latest idea is to build a 600 MW wind farm and a second underwater export-only HVDC cable to land west of Melbourne, cost $2 bn.
Despite much criticism Australia's renewable energy target has been renewed for 4 years, that's on top of carbon tax. Read 'no nukes'.

SA's capital city Adelaide has solar panels everywhere thanks to abundant sunshine and a one time generous feed-in tariff. That's unlike cloudy Germany but electricity prices are still high.

There are some initial discussions to build a solar thermal power plant with storage at Port Augusta, but it may well turn out to be a hybrid solar thermal plant instead - that seems to be Alinta's (coal energy company) choice.

Hey Alan

Long time lurker, but I thought I could contribute on this one as I work for a company that have wind farms in South Australia. There are two interconnectors between Victoria and South Australia out near Mildura but are only smallish. There is plans to upgrade these lines but when that happens no one can say. There is one interconnector between Victoria and New South Wales about 1000MW and the HVDC interconnector between Tasmania and Victoria. So yes South Australia can import from Tasmania, but through Victoria not New South Wales and only about 250MW.

Hope this answer your question.


Yes that is the one.
See the footnote:

This article was co-authored by Martin Nicholson.

Yes, the article Gail links to is based on a report produced by the Nuclear Energy Agency, which was created to promote nuclear power.

The nuclear industry has as much right as anyone to weigh in, of course, but their agenda should be kept in mind when reading their reports.

Missed the footnote to Martin Nicholson..

I do not think the question should be one of a wind power agenda versus a nuclear power agenda but one of co2 or no co2 and what solves that problem quickly. The fight should be one of removing FF pollution particularly coal/electric production and automotive use of FF.

If we come to the point where we shift into a new order of systems energy containment we risk reaping high winds that would destroy any wind towers I have heard being now built. The same I would think would be the case for nuclear plants particularly those on water cooling systems.

Don't forget that the two windfarms in Cuba that were directly in the path of Hurr. Sandy were basically unscathed by the storms, while a Nuke plant in the States and other fossil plants had to shut down due to complications from the weather.


The South Korean situation is even more extreme than the one shown for Australia.

The cost of buying power from generators using oil and other pricier fuels was 155.70 won a kilowatt hour, compared with 40.9 won from nuclear and coal-fueled generators

from http://mengnews.joinsmsn.com/view.aspx?gCat=050&aId=2968600

Of the two cheaper alternatives coal and nuclear, South Korea is showing a strong preference away from its existing nuclear towards more coal.

from http://www.iea-coal.org.uk/site/2010/news-section/news-items/south-korea...?

Power plus: Shelby rolls out 1,200-hp Mustang

An aftermarket firm with a famous name is introducing today what it bills as the most powerful production muscle car on the planet.

Only 100 will be built per year.

There is nothing listed as far as the fuel economy, or should I say fuel ineconomy?

Best hopes for more sanity in power requirements going forward.

Power plus: Shelby rolls out 1,200-hp Mustang

It's not completely unprecedented. I recall many years ago that an extremely wealthy Brit was found to be driving around the Continent in a 1000+ hp Rolls Royce. He had lengthened the engine compartment about a foot and dropped in a V-12 Rolls-Merlin aircraft engine of Spitfire fighter origin. Rolls-Royce also supplied them to the US for use in the legendary P-51 Mustang fighter (the original Mustang).

They found this out because Ferrari and Lamborghini owners wrote to the manufacturers complaining that they had been speeding down the autobahn or autostrada at 120 mph or so when a Rolls-Royce pulled up from behind and signaled to pass. They speeded up to 170 or so, and then the Rolls pulled out and passed them.

Probably chauffeur-driven. Hit it, Jeeves! We're late for tea.

"The Fed Is Printing Money, But Where Is It Going? They Know But Will Not Say"


"The Fed Has Not Been Printing Boatloads of Money"


Good point made, that the Fed has not been printing money. The fact is that in our system (called fractional reserve), the banks are the ones who print the money. Right now the banks are doing fine, taking money from the Fed at 0.25% interest, and loaning it back to the Government at ~ 1.91% or so. No need to loan it to businesses, and less risk. As long as the Fed overnight rates are less than Treasury rates, we can expect inflation to remain under control.

Once there is a hint of inflation, though, all bets are off. The Fed will raise their rates until they exceed Treasuries. Then the chaos will begin. At least in my opinion.


Americans Just Keep Driving Less And Less

The population-adjusted all-time high dates from June 2005. That's 90 months — over seven years ago. The latest data is 8.59% below the 2005 peak, a new post-Financial Crisis low. Our adjusted miles driven based on the 16-and-older age cohort is about where we were as a nation in March of 1995.

Fascinating article on the timing of refinery maintenance, oil shipments, and the resulting impact on world oil prices. I've been wondering what caused the recent crash in Brent. Looks like it's a very temporary situation.

Oil price downshift may soon be at an end

Found this part particularly interesting:

On balance, global crude oil runs are not expected to recover fully until June or July, according to the IEA, and will remain below fourth-quarter rates. But critically the market is nearing the trading window when Asian refiners start buying supplies for running in the third quarter.

Dealing in May-loading West African cargoes — those that will arrive in Asia in June — is about to begin in earnest. This is precisely when global crude runs are expected to rebound “in a big way,” to use the IEA’s words.
As such it is reasonable to expect physical Brent markets, and linked derivatives, to start recovering soon. From there, as the noise from turnaround season fades, demand will take center stage. Refined product prices have not kept pace with the strong showing for West African or US Gulf Coast cash grades recently, suggesting a risk to refiners that they may not be able to pass on the full cost of expensive crude to consumers.

So the demand for oil is temporarily low due to unusually high refinery maintenance but as they resume expect the world oil price to recover and then some, it seems. But if consumer demand continues weak (i.e. Euro crisis), refiners' margins could be impacted. This is a cycle we have seen for some time which I view as the underlying cause for refinery closures. Another impact of Professor Rock's POD thesis -- as described in his doctoral dissertation :).

ps, China watchers who are looking for signs of a popping of the real estate bubble there should be looking closely at the Silicon Valley real estate market. My contacts there report a huge surge of Chinese "all-cash" buying. One reported a house that went on the market two days ago already has 48 offers, most of them all cash offers from Chinese buyers. Sounds like a mad rush to get money out of the country.

EDIT: For Westexas

Likewise, soaring consumption in major oil producers such as Russia, Saudi Arabia and Brazil is not immediately noticed. Already traders are warning of gasoline shortages in Russia this summer as the country shifts to cleaner fuel specifications that may force it to import fuel from Belarus. Brazil has become a net importer not only of refined products but also crude oil amid production shortfalls and rapid demand growth. And Saudi Arabia’s voracious appetite for its own oil, combined with the commissioning of a new refinery at Jubail, could easily diminish the impact of rising output from the Kingdom in the coming weeks.

Climate change will hit farmers hardest, says scientist

From the Leanan's article up top. Should have been pretty obvious to everyone that climate change will affect farmer's hardest. They do depend upon the climate for their production after all. Add resource scarcity (particularly energy) and a collapsing financial system to that and you get severe problems in food production.

I believe that food production is going to be forced to change radically with protected and controlled environments becoming essential. This will require more energy, more resources and more money. The result being the agricultural share of the pie is going to increase substantially at a time when the pie is shrinking.

Even so, I doubt agricultural production can be maintained at anything like the current rate.

Lockheed Martin Says This Desalination Technology Is An Industry Game-Changer


Above JW asked that if one were to get a chunk of one of the shale reservoirs being developed would you see the NG streaming out of it. A very god question and an answer I suspect some don’t fully understand. So I cheat on the protocol and post here since we’re about to jump into another DB. Hopefuly our moderators will allow this break. This post may also help our Brit friends to gauge some of the current hype recently posted on TOD about the potential shale play in their part of the world. .

First, that piece of shale rock just sitting there will emit a very insignificant amount of NG if any at all. They measure the NG content by doing just as JW suspected: grind it up in a blender, capture and measure the amount of NG released. This is where those in-place RESOURCE numbers come from. If that piece of rock contained Y cubic feet of NG per cubic foot of rock then the math is simple: total RESOURCE = Total volume of rock in the reservoir times Y cf of NG.

But here’s the problem: the NG in that piece of rock can never be produced…ever. Folks need to remember that the production from the pure shale reservoirs come from the existing natural fractures. The rock itself (called the matrix) has such low permeability it can’t flow NG/oil at a meaningful rate…certainly not enough to be commercial. The natural fractures contain hydrocarbons because they have had millions of years of that very slow leakage from the matrix to accumulate that NG/oil. The permeability of fractures is at the complete opposite end of the spectrum: they provide the highest permeability ever found in nature. But the volume of hydrocarbons held in those fractures typically represents a very small portion of the rock. Thus the high decline rate of fracture reservoirs: a low volume of hydrocarbons drained by the most effective permeability found in nature.

Thus while a large amount of NG analyzed from a piece of shale rock can give an indication of a potential for that formation to produce there is no correlation to how much might be produced. There are many shale formations that contain significant amounts of hydrocarbons trapped in the matrix that will never be developed because they lack enough natural fractures. Consider the Eagle Ford Shale in Texas. It has a fairly high NG/oil content and relatively abundant fractures. But there are other shale formations above and below it that have NG/oil in the matrix that aren’t being drilled because they lack those fracture systems. They could just as easily be drilled and frac’d like the EFS but wouldn’t be commercial because the induced fractures won’t drain the matrix. The EFS wells are not frac’d to produce the matrix but to reach out and intersect natural fractures that the well bore didn’t intercept. This is also why horizontal wells are critical: a much greater probability of intersecting natural fractures then a vert well.

Which is why one has to take those RESOURCE numbers with caution. Two formations may have 1 trillion cf of NG RSOURCES in-place but one may have an abundant fracture system that may produce 100 billion cf of NG RESERVES while the other has a very poorly developed fracture system and thus may have only 10 billion cf of NG RESERVES…if any at all. It’s also good to remember that the quality of the natural fracture system is never equally distributed across a play. Geologic conditions control how well fractures are developed and those are never consistent across a trend. Thus the concept of “sweet spots”: those better areas of production companies do their very best to focus on early in the effort. Every unconventional and convention play has followed that dynamic: the second half of the wells drilled are significantly less productive then the first half.

Of course, that assumes the same completion techniques. Which isn’t valid in the current plays like the EFS. Vertical EFS wells were completed (and frac’d) long before the current horizontal drilling boom. The vertical wells went through the diminishing dynamic I described. Horizontal completions have reset the statistics. But the same dynamic applies to the current drilling boom: the sweet spots are focused first. And they’ll typically coincide with the sweet spots indentified during the days of vertical drilling. There’s an easily studied analog to this transition: the Austin Chalk fractured carbonate reservoir in Texas. Initially developed vertically those sweet spots were drilled until they ran out and the play floundered. Then came horizontal drilling in the late 80’s and the AC again boomed. During its day it was the hottest play in the US…thousands of oil wells drilled. But you see almost no mention of AC activity today despite the high oil price and longer laterals with many frac stages. And for a good reason: most of the potential locations, sweet and not so sweet, have been drilled. No play, no matter the price of oil/NG or tech improvements, lasts indefinitely: there are physical limits to their extent.

Plays like the shales and the Bakken will continue to be developed as long as the economics hold. But there will come the day when very few of those wells will be drilling because there will be few leases left to drill. Just like the Austin Chalk today.

First, that piece of shale rock just sitting there will emit a very insignificant amount of NG if any at all. They measure the NG content by doing just as JW suspected: grind it up in a blender, capture and measure the amount of NG released. This is where those in-place RESOURCE numbers come from.

I have suspected this for a good while now. Good to have it confirmed. Thanks.

JW - I took advantage of your question to provide a basis to evaluate some of the stories developing about potential shale plays around the globe. Such as recent stories about shale plays in Poland, England and elsewhere. We’ve already gone into detail how different dynamics in energy companies, mineral ownership, infrastructure, public sentiment and politics will impact development. But before any of these factors come into play there has to be commercially viable shales to develop.

It was recently reported that ExxonMobil has given up on efforts on Polish shales. I’ve yet to see a an explanation from XOM but I can guess. Perhaps their initial analysis of the matrix revealed an inadequate amount of NG. Or perhaps they found abundant NG in the matrix but the formation lacked sufficient natural fractures to exploit. Now jump to recent stories about frac’ng shales in England. One pubco is pushing the potential in one area where their analysis indicates and significant volume of NG RESOURCES in-place on the order of 100 trillion cubic feet. But if you check out the company’s web site you’ll find a very carefully worded statement way down below the dramatic 100 tcf banner: they’ve analyzed the NG content in the matrix but have yet to drill a well that flowed at a commercial rate. This shale may have a great potential to aid the English if there is an exploitable fracture system. Or little potential help if it doesn’t exist. Time and enough wells drilled will have to answer that question.

I’m sure as we continue down the PO path we’ll see more stories about the potential of other yet exploited shale formations. Good to understand what components are required beyond demand, technology and prices.

Rock, if you happen to see this comment it's just to thank you for all your great insights.