Drumbeat: April 13, 2013

China Must Exploit Its Shale Gas

Instead of fighting hydraulic fracturing, environmental activists should recognize that the technique is vital to the broader effort to contain climate change and should be pushing for stronger standards and controls over the process.

Nowhere is this challenge and opportunity more pressing than in China. Exploiting its vast resources of shale gas is the only short-term way for China, the world’s second-largest economy, to avoid huge increases in greenhouse gas emissions from burning coal.

Oil Falls to One-Month Low on Retail Sales

West Texas Intermediate crude fell to a one-month low after U.S. retail sales and consumer confidence declined, signaling lower fuel demand.

Futures dropped 2.4 percent as Commerce Department figures showed that sales slipped 0.4 percent last month, the most since June. A gauge of U.S. consumer sentiment also declined to a nine-month low. Cyprus was said to seek an increase in the 10 billion euros ($13 billion) in aid pledged by the European Union. The Standard & Poor’s GSCI Index of 24 commodities tumbled, led by metals and energy futures.

Iran's OPEC Governor: Consumers, Producers Satisfied with $100 Price

TEHRAN (FNA)- Both oil producers and consumers are satisfied with the current oil prices between 100 to 110 dollars per barrel, Iran's Governor at the Organization of Petroleum Exporting Countries Mohammad Ali Khatibi said.

"At the start of the spring we are approaching a period of falling oil consumption which naturally will impact the oil market," Khatibi said.

Gasoline Slides to 12-Week Low on Supply Gain, Retail Sales Drop

Gasoline sank to the lowest level since January on concern that U.S. and European economies are weakening, reducing fuel demand at the same time refineries increase output.

Prices slid to the lowest intraday level since Jan. 18. March U.S. retail sales fell the most in nine months. Cyprus said it will seek more aid from the European Union. Gasoline supplies and refinery inputs rose last week, government data show. The motor fuel is the worst performer this month in the Standard & Poor’s GSCI Index of 24 materials.

Commodities Slump as ‘Death Bell Rings’; U.S. Stocks Drop

Metals and energy sank, sending a gauge of commodities to an eight-month low and extending a slump that Citigroup Inc. said may mark the “death bell” for the four-year rally in materials. The Standard & Poor’s 500 Index fell from a record as retail sales and consumer confidence slid.

Oil Rigs in U.S. Rise for Third Week, Baker Hughes Says

The number of oil rigs drilling in the U.S. rose for the third consecutive week, rising by 30 to 1,387, Baker Hughes Inc. said.

Oil rigs have jumped by 63 in the past three weeks, the biggest three-week advance in more than a year. They reached the highest level since Nov. 23.

U.S. Won’t Allow Crude Exports Within the Next Decade

The U.S. won’t allow companies to export domestic crude oil within the next 10 years, according to more than 60 percent of those polled at a Bloomberg Oil Forum.

Thirty-four out of 82 traders, analysts and energy professionals attending the forum in London, or 41 percent, said the U.S. would never allow exports, while 22 percent said only after 2023. The U.S. will condone exports within the next five years, according to 13 percent of those polled, while the remaining 23 percent suggested sometime between 2018 and 2023.

India: Oil companies need full compensation to be profitable

COIMBATORE: Oil marketing companies (OMCs) would slip into the red in 2012-13 if the government does not offer full compensation for their under-recoveries, analysts tracking the sector said. They need a further support of about Rs 61200 crore from the government to stay profitable for the financial year, estimates showed. While the share of upstream oil companies such as ONGC in the under-recoveries, the difference between the purchase price of crude oil and the retail price at which petroleum products are sold, is expected to be around Rs 15100 crore, the government would have to fund the balance of Rs 46100 crore.

Ethanol Narrows Discount to Gasoline to Tightest in Three Months

Ethanol strengthened against gasoline for a fourth day, narrowing the discount to the least in almost three months, on speculation that demand for the biofuel is outstripping supply.

The spread, or price difference, narrowed 0.32 cent to 37.98 cents a gallon based on settlement prices, the tightest since Jan. 16. Stockpiles of the fuel last week were 18 percent lower than a year ago and at the all-time seasonal lows in records going back to June 2010, data from the Energy Information Administration show.

Total Bids for More North Sea Forties, Books Third Tanker

Total SA failed to buy more North Sea Forties crude, having bought nine cargoes since March 27, even as it bid at a higher level than yesterday’s trade.

The oil company, Europe’s third-largest, also chartered a supertanker to transport North Sea Forties crude to South Korea. That increased total shipments to the country so far this year to 13 million barrels, according to a shipbroker report.

Petrobras Debt Crunch Buoys Exxon’s Prospects in Brazil

Petroleo Brasileiro SA’s worst debt position in a decade is boosting chances the Brazilian oil company will step aside and let Exxon Mobil Corp. and Royal Dutch Shell Plc buy offshore exploration licenses in Latin America’s biggest auction this year.

Gazprom, Egypt Discuss Energy Cooperation

Gazprom and represntatives from Egyptian government and energy companies met in Moscow to discuss the opportunities for the bilateral cooperation development in the oil and gas industry.

Iraqi Kurds urge US neutrality in oil dispute

WASHINGTON (AP) -- Iraq's northern Kurdish region is pressing the Obama administration to remain neutral in a sensitive dispute with the Iraqi central government over whether it can export oil and gas without Baghdad's approval.

Lead narrows for Chavez heir amid crime, shortages

CARACAS, Venezuela (AP) — Nicolas Maduro hopes to ride a tide of grief into Venezuela's special presidential election Sunday and win voters' endorsement to succeed the late Hugo Chavez, the adored larger-than-life leader who chose him to carry on the messy, unfinished Chavista revolution.

That will mean inheriting multiple problems left behind by Chavez, troubles that have been harped on by opposition challenger Henrique Capriles.

Consultant Recants in Chevron Pollution Case in Ecuador

HOUSTON — An environmental case that has pitted Chevron against Ecuadorean Amazon villagers for two decades has taken another bizarre twist, with an American consulting firm now recanting research favorable to the villagers’ claims of pollution in remote tracts of jungle.

DOE finalizing plans to dump man-made uranium in Nevada

WASHINGTON – A Department of Energy plan to drag hundreds of canisters of radioactive nuclear material into the Nevada desert for a “shallow land burial” is raising safety concerns as experts worry what could happen if the security of the bomb-making material were compromised.

E.P.A. Will Delay Rule Limiting Carbon Emissions at New Power Plants

WASHINGTON – The Environmental Protection Agency said Friday that it would delay issuance of a new rule limiting emissions of carbon dioxide and other greenhouse gases from new power plants after the electric power industry objected on legal and technical grounds.

Human Ecology

As Earth Day approaches, we asked: What makes this planet so remarkable?

Jeremy Grantham, environmental philanthropist: 'We're trying to buy time for the world to wake up'

You've probably never heard of him, and for years Jeremy Grantham liked it that way. But now the man who made billions by predicting every recent financial crisis is speaking out.

Climate Change and the Peak Oil Flip-Flop

There’s a new twist in the “peak oil” debate. Is it good news for the climate?

Harper ministers head in opposite directions on climate-change debate

OTTAWA - Just as one federal cabinet minister is urging a more sophisticated tone to the climate-change debate, a second cabinet minister finds himself trying to prove he is not a climate-change denier.

Canada's Plan to Break the Carbon Bank

Canada is on track to blow past our carbon budget. The tar sands alone are being put on a path to grow to at least three times the size that the International Energy Agency calls the upper limit for demand and production for a 2C warming limit. If the Keystone XL debate is anything to go by, the Harper government is hedging its bets on breaking the carbon bank, something which could come at the expense of Canadians' own bank accounts.

World climate change goal at risk as emissions surge - U.N.

OSLO (Reuters) - A global goal for limiting climate change is slipping out of reach and governments may have to find ways to artificially suck greenhouse gases from the air if they fail to make deep cuts in rising emissions by 2030, a draft U.N. report said.

A question for the regulars. How much natural gas is the Canadian tar sands eating up ?

From memory a while back, I think it's about 0.9 mcf/bbl for the SAGD ops. Will vary by operation depending on SOR and steam generating efficiency, of course.

To that you need to add the methane used to make hydrogen used for removal of the sulfur and hydrogenation. Bitumen is ~4% sulfur. Upgrading by thermal cracking needs less hydrogen, but part of the bitumen becomes pet coke, so required gas for extraction per unit of liquid product goes up. You would have to follow the bitumen through the refining chain to account for it all.

Interpolating some NEB data, I would say that Canadian oil sands projects are currently consuming close to 1 billion cubic feet per day of natural gas. This compares to total Canadian production of around 15 Bcf/d and exports to the US of around 9 Bcf/d.

Oil sands consumes about 6% of Canadian NG production at this point in time. The Alberta government intends to take additional oil sands NG consumption out of exports to the US, reducing them somewhat; Canadian consumption will probably remain unaffected.

If we go at it from the other end, assuming EROEI of 5:1, then we get:

Annual Alberta oil sands production: 640 mbpa
= 1.75 mpbd
* 5:1 net energy return = 0.35 mbpd oil equivalent in NG
* 5800 cu ft NG per barrel oil equivalent = 2 billion cu. ft. per day

So RMG's numbers suggest an EROEI of 10:1, about twice what I was assuming. Any links to the NEB data?

The raw EROEI numbers probably don't directly equate to the amount of NG consumed, but rather to the entire production cycle. The actual quantity of energy consumed is greater than is suggested by the NG consumption. For example, it probably doesn't include the diesel to operate the equipment on-site or the amount of energy lost in transmission or refining. The total amount of Natural Gas is probably closer to the "10:1" number (not really 10:1) suggested by RMG.

Just my (very small) 2 cents worth,


On page 47 of the RSC report from a few years ago it says that for a steam to oil ratio of 2.5 to 1 requires natural gas of "roughly 20% of the energy contained in the produced bitumen." That would suggest EROEI of 5:1.


According to this article, Christina Lake has a Steam Oil Ratio of 2:1 and that's noted as leading the industry, so overall I wouldn't be surprised if overall SOR is 2.5 to 1.


So RMG's numbers suggest an EROEI of 10:1, about twice what I was assuming. Any links to the NEB data?

I've always had doubts about the EROEI's bandied about in the media, since they didn't match what I had seen in the field. I think that an EROEI of 5 would represent a worst-case situation. I know that the biggest operations up there have an EROEI of 12:1 or higher. As a guess, I think that an average of 8:1 to 10:1 would be more reasonable across all the operations, old and new, big and small.

There are some complicating factors which the casual viewer would not realize:
1. The oil sands upgraders generate process gas, which they then burn for fuel.
2. The oil sands upgraders generate coke (solid carbon) which is either sold to steel mills or burned for fuel
3. The oil sands in-situ wells produce associated gas, which is then burned for fuel.
4. The biggest oil sands operations have their own power plants, which are co-gen plants putting power into the grid.

While the NEB came up with a ballpark consumption of about 1 Bcf/d, that was just purchased gas, which is all they see on their reports. The oil sands operations are generating nearly that much of their own fuel themselves - about 0.8 Bcf/d. When you are doing an EROEI calculation, do you include that as "energy invested", or just part of the process? Remember, the gas wouldn't be produced if there were no oil sands operations.

The oil sands plants also generate electricity as a by-product of their operations. They need low-temperature steam for their processes, but they generate high-temperature steam and reduce the temperature by running it through steam turbines to generate electricity. They sell the surplus electricity into the grid. Then they use the low temperature steam coming off the back end of the turbines to extract bitumen from the oil sands. The question is, "Do you charge the natural gas against the electricity production, since that can pay for it all, or do you charge it all against the oil sands operation?" In an EROEI calculation, you have a choice.

So, it's not as simple as it seems, and I think some people used a simple calculation to come up with an EROEI of 5:1, which doesn't reflect the real, complicated world.

For a more complicated picture, see http://www.ercb.ca/sts/ST98/ST98-2012.pdf It's a huge document, but the meat of what I said is on page 5-54. It breaks consumption down into purchased gas, produced gas, process gas, and cogeneration.

Thanks RMG. I've looked at that document before but didn't see those charts, it's so huge.
10:1 would seem to provide a larger buffer of safety if NG becomes expensive and scarce.

Regarding where do you charge the natural gas, I assume they aren't using combined cycle solely for electricity are they? That wouldn't leave much steam left over for bitumen extraction. Are they getting 60% thermal efficiency like a modern gas power plant? Is the specialized cogen reducing that efficiency? Then maybe you'd allocate the efficiency difference to the EROEI calculation.

So theoretically the oils sands could become totally direct-energy independent if they needed to, by using their own produced process gas. But then the ultimate EROEI question becomes, as a post higher up pointed out, how do you quantify all the embedded energy in the machinery and external things that are needed to build the upgraders? (That's why many projects just don't go ahead, all this stuff costs so much money). If we're planning on depending on the oil sands for a large chunk of North America's liquid energy going forward then this needs to be factored in. But how much of that embedded energy comes from oil, versus coal with a quite high EROEI? It's not so easy to determine this.

Here is a bit more information on cogeneration in the oilsands - at SAGD facilities (like the one that I work at), the electricity is generated before the steam. NG is burned in a turbine which spins a generator. The exhaust from the turbine is then directed through a HRSG (heat recovery steam generator - a series of densely packed tubing modules) with additional heat provided by a duct burner (like an afterburner on a jet engine). This creates steam for the SAGD process. It's very efficient, actually. This setup provides as much steam as 4 OTSG's (the standard boilers with the rows of tall skinny stacks that you see in photos of every SAGD facility), consumes about the same amount of gas, and you get 80 MW of power for free!

So it's combined cycle. But the steam from the HRSG is going to the SAGD process, not to a steam turbine to produce more electricity, correct? That would drop the gas-to-electricity efficiency of the whole process a bit. The only electricity production would come from the initial Brayton Cycle, not the Rankine, if I understand it right.

Edit: oh OK, based on RMG's original comment, they use high pressure steam from the HRSG to generate electricity through a steam turbine, sending the low pressure steam on the back end of that down to SAGD. And they are also making electricity from the gas turbine from the combustion. So the two of those turbine processes will add up to some efficiency percentage, you need to subtract that from the optimal 60% of a regular combined cycle plant to see how much is eaten up by SAGD cogen.

Yes, that's an interesting question, how do you account for cogen in calculating EROEI. You'd need the heat regardless of whether you're making electricity out of it first, so in that respect some of that electricity generation should be included in the ratio. But on the other hand, if oil sands didn't use that cogen heat from burning NG (say, 50% of the total) then someone else could instead make electricity in a regular combined cycle plant and just dump that heat (40% of the total) because they have no cogen opportunities, and it's wasted, so it's "free" heat for the oil sands in that respect.

I think its closer to 1.6bcfd,or 1mmcfd for every 1000 bd.Canada produced 13.4bcfd in 2012


According to EIA data US Nat Gas production was 22902 BCF in 2011 and consumption was 24385 BCF. If we assume the difference was imported from Canada we get 1483 BCF for the year or 4.06 BCF/d. The high point for US net imports of natural gas since 1990 was in 2000 at 11.4 BCF/d.

2010 Natural Gas Exports and Imports Summary

At the NEB report above (paste into search bar) net exports are 6.7 Bcf/d in 2010 which agrees fairly well with the US Net Imports from EIA data of 7.6 Bcf/d (US gets some natural gas from Trinidad and Tobago).

Where did you get the 15 Bcf/d export number? You might have inadvertently used the Value of gross exports in Can $.

There is a nice net export chart (easier to read in billions m3) showing the decline in net exports from 100 billion m3 in 2001 to 67 billion m3 in 2010.
This decline likely continued in 2011.

Using EIA data for 2012 production of dry gas was 24042 billion cu ft and consumption was 25,457 Bcf so net imports were 1415 Bcf or 3.88 Bcf/d.


he said 15 was total canadian production and 9 was for exports.


My mistake, thank you for pointing it out. RMG did say 9 Bcf/d for exports not 15. Looking at the report I cited from the NEB, he used gross exports for 2010 rather than net exports which was 6.7 Bcf/d.

I have found import export data from the EIA search EIA naturalgas data
Net Exports of natural gas from Canada to US for 2012 were 5.4 Bcf/d, in 2007 it was 9 Bcf/d.

A chart for net exports can be found at images - dc78image
use the search box at the upper right of the webpage to find CanNGne.png

I am trying to avoid links as suggested by Darwinian (Nice idea Ron, thanx.)


I used gross exports rather than net exports because I didn't think calculating the net was relevant to the discussion. There is lots of natural gas in North America, and some of the Eastern Provinces (which like to call themselves the Central Provinces) import natural gas from the US. The exports all come from the Western Provinces and to a lesser extent the Maritime Provinces.

There is a fundamental problem in Canada in that most of the population is in the Eastern half of the country, and most of the natural resources - particularly energy resources - are in the Western half. That is generally resolved by exporting resources out of the western half and importing them into the eastern half, generally from the US.

It's not really important as far as natural gas is concerned. Canadian gas production and exports to the US are declining primarily because US shale gas production has been undercutting Canadian conventional gas on price. Canada has its own vast shale gas resources - probably as big as the US has - but they won't go on production until after US shale gas rises in price or companies start shipping LNG to Asia.


Maybe you think of Canada as starting West of Ontario? In that case Gross exports would be the only number that matters;) You didn't really need to calculate it, just read a couple of lines lower in the chart.


EIA 2012 annual data: U.S.-Canada bilateral natural gas,


U.S. imports......2.96 Tcf
U.S. exports......1.59 Tcf
U.S. net imports..1.37 Tcf (3.75 Bcf/d)


Thanks for pointing out that page and see my comment above (response to Jukka's comment).

You subtracted total US Natrural Gas(NG) pipeline exports from Canadian NG imports, the difference is US NG exports to Mexico (1.69 Bcf/d in 2012). If this gets added back to your 3.75 Bcf/d the Canadian- US net exports are 5.44 Bcf/d in 2012.


From Commodities Slump as ‘Death Bell Rings’; U.S. Stocks Drop

The International Energy Agency yesterday reduced its estimates for global oil demand.

I believe that the economically sustainable price of oil today is about $90-$95 (WTI, add $12 or so for Brent). It looks for all the world that once it exceeds that range demand falls, and with it, price.

So, I would look for the plateau to continue in this range until all of the $90-$95 oil is pretty much gone, at which time supply will not be sufficient for the demand and price will have to go up Which will crash the economy because it will then be a case of "pay or do without."

Should be interesting times ahead... how long can Bakkan, Eagle Ford, etc., sustain at $90/$95?


Along those same lines, here is an interesting question:

If, like, $20 oil brought out regular, conventional oil...

and if, like $40 oil brought out offshore oil . . .

and if, like, $60 oil brought out Canadian tar sands oil . . .

and if, like $80 oil brought out shale oil . . .

What is left for $100 oil to bring out? Kerogan? I don't think so.

What is left for $100 oil to bring out?

Condensate, NGL's, biofuels, and other non-crude* oil liquids. We have probably not seen a material increase in global crude oil production since 2005.

*Crude Oil = less than 45 API gravity crude oil

Yup--kind of like replacing granola cereal with Puffed Wheat.

And here is another thought:

In looking at the Hubbert Linearizations of Staniford and Laherrere this week, I suddenly remembered one of the arguements against it--that production these days is manipulated/adjusted/held back by OPEC, whereas HL only works if everyone is producing as hard as they can.

But if you think about it--only SA does any manipulating any more and in the scheme of things, even if true, it is so minor that I can't see where that arguement holds up any more.

Furthermore--how can you argue with a straight line--I mean the two axis have to be almost 100% ocrrelated once it straightened out. Maybe WebHubbleTelescope can explain why a straight line isn't correlation--or is the problem trying to pick out where the peak is on the straight line?

Anyway, just some questions I don't have answers for.

And at a minimum, Deffeyes--using HL--nailed a major inflection point in global crude oil production, when he predicted a global crude oil peak between 2004 and 2008, most likely in 2005. (He was apparently plotting C+C.)

Iran, Iraq, Libya, and Sudan are producing less than they would under "ideal" conditions. Caspian, Central Asian and South China Sea reserves are probably being exploited at less than the maximum rate due to various economic and geopolitical considerations.

In my mind the biggest argrument against Hubbert Linearization is that we have seen where it has gone non-linear in several cases. Unfortunately I can only say that based on memory of seeing such here on TOD. All it takes is increased output for a brief period to shift the "linearization" a fairly long way when the line is that shallow.

I believe quite a few of us have noted the Hubbert linearizations have provided a reasonable model describing the use of $5 oil, $10 oil, $20 oil, $40 oil, $80 oil, etc as each comes online as economic realities demand it.

The extraction rate of the Hubbert model ( AKA "The Logistic Equation" ) looks a lot like a bell curve. Not the exact same curvature, but I believe the integral of both is the same ( unity... or "all of it" ). Comment invited if I have it wrong.

The economic driver though is exponential. Look at the price points for oil over the last few decades. Convolve the economic driver with the Hubbert curve for oil at any given price point and the result looks like a shark fin. That would be the integral of the combined production for all price points. It is my belief that we are just coming to the point where production levels off... and stay there until the economic driver collapses.

At this point, it now takes an exponential price drive just to keep production constant.

>>"At this point, it now takes an exponential price drive just to keep production constant."<<

It is interesting that you mention this, as I decided to look at Staniford's graph up to 2011 more closely. Keep in mind that I don't have his numbers, so can only try to make sense of the data points, but at the bottom is a close up of the main part of the graph with the different years pointed to (unfortnately, being a blow up, it is a little fuzzy).

For instance, note that from 1991 to 2003, all the data points are basically parallel with the trendline, just slightly below it, while since 2003 all the data points are basically parallel with the trendline, just slightly above it.

Immediately below are the statistics for both sections of data points:

1991-2003 Average year-end oil prices (WTI+Brent)= $20.91
2003-2011 Average year-end oil prices (WTI+Brent)= $70.20

1991-2003 Average yearly oil price increase= 8.7% increase
2003-2011 Average yearly oil price increase= 23.9% increase

Since it would appear that both sections are basically parallel with the trendline, but just a tad above or below it, it suggests that almost 4x higher oil prices will still barely impact the URR.

Anyway, I thought that seemed rather counter-intuitive (and could be wrong, of course.)

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In sweden it is quite common to collect the forks and sometimes even the tree stumps then logging. They are used as a thermal fuel.

The situation may of course be a little bit different from other countries since there are no coal but plenty trees. Then the forks and the tree stumps have been used there is however nothing more to get regardless of how you plan to use it.

Where I live they have 'chunk' trucks. Giant open top box semi's loaded with the broken ends and too short pieces, after the 'saw logs' are taken. This goes into making chips for a variety of uses, paper and cardboard are just 2 examples. 20 years ago this was left to rot. Wood scavengers cut some of the small stuff for house wood, if it is convenient - which is illegal.

I can easily see a day when wood theft starts up again in earnest. It is hard work but the return on the time/fuel/equipment is high enough for those with meager or no income.

What is left for $100 oil to bring out?

More bicycles?

At least that's what I hope.

"More bicycles?"

We call all hope so; only that would be good for Florida, but not so much for, say, Chicago.

Best hope would be for more PV by a ton!

So, "Best Hope for more PV." (And attendant mass transit, electrified of course)


"We ca[n] all hope so; only that would be good for Florida, but not so much for, say, Chicago."

The Netherlands is a higher latitude than Chicago and though it's probably not nearly as popular in the winter, they do get along:


My ASRAE guide indicates that winters in Chicago (at O'Hare)are much more severe than the Netherlands. I compared Chicago to Einhoven, about avg for there. Chicago winder design temperature is -6F compared to 16F. Even summers are worse; 88F dry bulb compared to 80F. So overall the Netherlands is probably a nicer place to ride a bike all year long.

If you want to compare the upper midwest US weather to anywhere in the world, I would pick Siberia.

Also consider to it barely snows in th Netherlands, while the midwest gets a fair share of snow.

Yet it can be done. The weather in Montreal is colder than in Chicago and we get more snow, but it has been observed in the past few years that more and more people are using their bicycle in wintertime, perhaps 5-10% of the summer crowd. The city is now doing what it can to keep the cycle lanes open in winter (they can be closed for a few days after a large snowstorm, while the snow is being pickep up).

Winter cycling is not for everyone and has its risks - you have to be fitter than the average and slippery roads can be hazardous - but it is picking up nonetheless, to some extent. It has become a part of the "transportation mix" in Montreal.

Studded tires really make a difference for winter biking. They're not "magic", in that one must still ride carefully, but they go a long way towards making winter bicycling doable.

My wife bought one of the new fat-tired bikes with about 21 speeds. Her front tire is named "Big Fat Larry" and her rear one "Surly Nate" - it says so on their sides. Although they are big, they are light and only inflated to about 8 psi so they get lots of flotation in the snow. She's been using it for riding around on frozen lakes and through snowdrifts, and having a lot of fun.

It cost a lot of money but it looks like it might have been a good investment since it looks like we're going to have about 8 months of winter this year, here in the Canadian Rockies. Currently we have a heavy snowfall warning in effect.

Hey, I just got one of those! A Salsa Mukluk, with Nates front and back. I assume you got a Surly? I took it camping up the cross country trails at Whistler the other week, a lot of fun.

Yes, that's exactly what she's got - a Mukluk with big Surly tires front and back (with different tread patterns, but looking at them I can see why). She's had great fun with it.

I'm grounded for the moment because I had a hip replacement a month ago and my surgeon hasn't bicycle-rated me yet. However, after I get his clearance I'll be out on my own modest bike for a few easy rides - assuming it stops snowing eventually.

Hopefully you can be back on the ski slopes next season. A friend has had a hip replacement and was able to get back to skiing within a year (she is 50 something), hopefully your recovery is going well. Hey with the way your ski season is going you may be able to ski this season ;)


iee. Chicago sucks! :) Didn't expect the North Sea to have that much moderating influence.

But 'Mericans are tough, right?

Our bikes tend to be skinny-tire race bikes unsuitable for anything but sunshine and smooth roads. Otherwise they're fenderless mountain bikes and uncomfortable for road riding. Dutch bikes are often upright with big seats, wide tires, and they don't feel the need to go 20 mph everywhere either.

They don't wear helmets, either. The Dutch and the Danes take a utilitarian approach to biking without all the paraphernalia that Americans think they need.

What is left for $100 oil to bring out?

An increase in the extraction of Venezuelan extra-heavy oil in the Orinoco Belt is pending. There is significant bitumen in Kazakhstan and Russia which may not be waiting so much on a higher price of crude oil but on the decline of less expensive fields. A higher price might cause other countries to reopen old wells using enhanced recovery techniques. It might encourage exploration at greater ocean depths. The Arctic and Antarctica are unexplored possibilities. Oil exploration in the South China Sea is still being disputed.

None of those possibilities may be sufficient to offset a decline in Saudi Arabia's production. When Saudi Arabia's production peaks, world production might peak.

At some price it becomes profitable to convert natural gas and coal to liquid fuels. At something above $200 / barrel of crude oil it become profitable to use PV panels to combine CO2 and water to make gasoline.

"At some price it becomes profitable to convert natural gas and coal to liquid fuels. At something above $200 / barrel of crude oil it become profitable to use PV panels to combine CO2 and water to make gasoline."

That is assuming that enough people can afford the gasoline made from $200 "oil". It has been pointed out here several times that Americans can reduce their extravagent fuel usage significantly and still maintain a decent life style but the complexities of greater demand (Chindia) and higher extraction costs may engender economic strains not yet contemplated.

What is left for $100 oil to bring out?

Another coup attempt in Venezuela?

A greater penetration of hybrid and plug-in cars?

Another round of Enhanced oil recovery at old fields?

More attempts at polar oil?

"What is left for $100 oil to bring out?"


I believe that the economically sustainable price of oil today is about $90-$95.

Let's assume you're right - and it is a good assumption on your part - then that means that the real price of oil has been declining these past few years as inflation increases but the nominal price is stuck. The same with gas prices. It hasn't it 4 dollars a gallon nationwide for a while now, while nationwide inflation and nominal wages keep rising, modestly, but nevertheless rising.

However, as you point out, the Bakken/Eagle Ford plays will never allow for there to be cheap oil again. But if the bottom is rising very, very slowly, the economy might continue to wean itself off.

Re: E.P.A. Will Delay Rule Limiting Carbon Emissions at New Power Plants

This move shows how difficult it will be to actually accomplish the major reduction in CO2 emissions which would be necessary to halt AGW. The basic fact is that coal burning power plants can not meet the proposed emission reduction without some sort of real CO2 sequestration. These regs are rather like the new rules on abortion clinics in Virginia, which don't outlaw abortion, but force the providers to spend so much money upgrading their facilities that few would stay in the profession. Both are methods for bypassing our present political stalemate, each trying to achieve a goal without actually addressing that goal up front...

E. Swanson

The Plymouth Volaré of nuclear plants is in the news again...

Point Lepreau operating at less than 1% capacity

More problems at the Point Lepreau nuclear generating station have had the plant operating at less than one per cent power since Wednesday night, NB Power acknowledged late Friday.

"We were at less than zero (per cent) late Wednesday night and early Thursday morning," utility spokesperson Kathleen Duguay stated in an email to CBC News.

"We have been evaluating the benefit of going to zero since early last week."

NB Power says it continues to have problems with the chemistry of the water in Lepreau's non-nuclear boilers, an issue that caused the reactor to be turned off once already in December.

See: http://www.cbc.ca/news/canada/new-brunswick/story/2013/04/12/nb-point-le...

And for the utility that can't get no break....

NB Power to begin study of options for Mactaquac Hydroelectric Dam

For the past 45 years, the Mactaquac Hydroelectric Dam has been a reliable and clean source of power in New Brunswick, but faulty concrete is forcing NB Power to decide its future well ahead of the century it was expected to last.

NB Power president Gaetan Thomas says studies and public consultation will have to begin in the next year if a decision on the future of the 653-megawatt facility is to be made by 2020.

"We are very keen to establish a full dialogue with New Brunswickers," Thomas said in a recent interview.

"Mactaquac is a large portion of our renewable energy for the province of New Brunswick."

In fact, the dam produces enough electricity to meet about 20 per cent of the province's energy needs.

See: http://www.theglobeandmail.com/news/national/nb-power-to-begin-study-of-...

NB Power is struggling under an enormous debt load, it has two white elephants on its hands and energy sales are on a downward slide. It can't get much worse, ignoring for the moment that they're trying to keep electricity rates artificially low to prevent further erosion in sales.


"We were at less than zero (per cent) late Wednesday night and early Thursday morning," utility spokesperson Kathleen Duguay stated in an email to CBC News.

"We have been evaluating the benefit of going to zero since early last week."

LOL! Sounds like they are going to have to start ramping up production if they want to get all the way up to zero, eh? I'm sure there are lots of potential benefits in there somewhere... including a nice bonus to Ms. Duguay for a job well done.

Hi Fred,

Actually, I was being kind when I said "two white elephants"; I could have included Coleson Cove. This 978 MW oil-fired station was commissioned in 1976 (opps!). In 2001, NB Power spent $2.2 billion to refurbish the plant so that it could burn Orimulsion, a bitumen-based fuel that was to have been supplied by Petróleos de Venezuela S.A. There was a MoU in place but no signed contract, and PDVSA left NB Power standing at the altar (double opps !). I hate to think what the next ten to fifteen years hold in store for this Calamity Jane.

Of course, had these billions of dollars been invested in energy efficiency and load management....


Well.. I never really looked it up on the map before, but between Pt. Lepreau and Seabrook in New Hampshire, the Maine Coast is pretty well surrounded. At least we got rid of Maine Yankee, but recent seismic activity in NB and in Southern Maine, and the Travails of Vermont Yankee lend no comfort to these remaining members of our little Nuclear Family.

Did you really get "rid of" Maine Yankee? The high level waste is still sitting in Wiscasset, isn't it?

We are pretty far along the way.

There is no reactor any longer. No new fuel is being added to the pot. The high level wastes are at least fully encased and in a secured area.

The Maine Yankee group is pushing a suit for damages against the US Gov't for failing to live up to its obligations in removing the waste, while I feel that the arrangements that had someone writing up such agreements was not done with the best interests of the People and the Nation truly at heart. It could be said that these contracts were set up while we still just didn't know.. or it could be that industry and connected individuals were unconcerned about 'Privatising Profits and Socialising (unmeasurable and possibly unmanagable) costs'.. particularly costs relating to overall liability, ie long-term waste obligations and project insurance.


I don't pretend it's over, and I don't tend to insist on or expect such absolutes, but I'd be a lot more comfortable if Point Lepreau, Seabrook and Vt. Yankee (to name a few) were in the same shape as Maine Yankee is today.

Southern California Edison's troubled San Onofre Nuclear Generating Station is still off line (since January 2012) and the Plant's operator wants to declare 70% of power to be 100%. This is their attempt to avoid license hearings and a re-certification process that the plant likely can't pass.
Rate payers are still being billed for the plant ops and mtnce, and there are 14,000 tons of radioactive waste stored there.
From the Los Angeles Times:


can you be more hypocritical than this:

Instead of fighting hydraulic fracturing, environmental activists should recognize that the technique is vital to the broader effort to contain climate change

the more fracking the better for climate...

I have the perfect solution. Let's eliminate the 'Climate'!

Fish harder.

Assumes, of course, that NG from frac'ing (not talking about oil here, understand) emits zero CO2. WRONG... maybe less, but not zero.


By what I understand, fracked gas is better than coal for CO2 emission but not by much when you count all the fugitive methane that also gets released. Perhaps no better at all. But at least it is lower on SO2, mercury, lead, radioactive ash, etc. So it does beat coal on pollution. (Assuming water supplies are not harmed by improper disposal of frack fluids or broken casings.)

Coal is worst on everything. Well, burning shale as they do in Estonia is even worse,but else,coal is the most polluting energy source. Anything else is an improvement.

WARREN BUFFETT WINS AGAIN: Train Traffic Is Going Through The Roof

That bet is already paying off. In 2011 the seven largest freight railways had operating revenues of $67 billion (up from $47.8 billion in 2009). Net income was $11 billion, with returns on equity averaging 11.1%. By 2035 the demand for rail freight is expected to double. A great deal of new business is coming from shifting consumer goods. Containers are lifted off ships and trucks, loaded onto trains and whizzed to their destination. This business pays well and is growing fast.

Tony Hatch, a rail analyst, says improvements in scheduling and timekeeping mean that trains are now winning business they might not even have bothered bidding for before. Although railways cannot deliver to your door, as lorries can, Mr Hatch says big-box retailers are making more use of them because it is the cheapest way to move bulky things long distances over land. Using rail means accepting slightly higher inventories, he says, but it is often worth it.

Moving goods by rail is four times more fuel efficient than by road, and railways can increase their capacity in the future. So America’s trains may soon nibble at trucks’ market share--particularly for journeys that take longer than a day by road. Truckers are battling high fuel and labour costs, shortages of drivers, congestion, tighter rules on how drivers must operate and chronic underinvestment in roads.

I have always been stunned how it is possible to compete with lorries against trains then i come to labour cost. The differnence in capacity is huge. Regarding underinvestment in roads I could only tell about railroads in sweden and most of them where built more than one hundred years ago. There have of course been investments since then but it is nothing compared to the road network.

In the US, domestic intermodal container shipments were up 12% in the last year. Investment in intermodal yards and equipment to efficiently move 53' x 9.5' high containers from wellcars to lorries is partly responsible for the growth in intermodal.

Just heard something on "Real Time with Bill Maher" that I didn't know. (I recorded it last night to watch today.)

In the April 26, 2010 edition of "The Weekly Standard" published the quote below. The magazine went to press on April 16, 2010, four days before the Deepwater Horizon disaster. The Weekly Standard is a right wing conservative magazine. The article was also published on American Enterprise Institute's (AEI) web site. The article was written by AEI scholar Steven Hayward and called the environmental threats from off shore oil "largely obsolete."

The two main reasons oil and other fossil fuels became environmentally incorrect in the 1970s--air pollution and risk of oil spills--are largely obsolete. Improvements in drilling technology have greatly reduced the risk of the kind of offshore spill that occurred off Santa Barbara in 1969. There hasn't been a major drilling related spill since then, though shipping oil by tanker continues to be risky, as the Exxon Valdez taught us. To fear oil spills from offshore rigs today is analogous to fearing air travel now because of prop plane crashes in the 1950s.

I googled it and got the exact quote.

Ron P.

That is the trouble with bad predictions--no one keeps track of them. Speaking of AEI--two of their main guys wrote the book "Dow 36,000" just before the dot.com crash in early 2000. I hear them interviewed all the time--no one ever brings up that stupid book they wrote--no one remembers it.

The last time I read anything from Steven Hayward he was still convinced that we could supply the world with oil forever from the Green River kerogen formation - if only the government would let the oil companies get access to it.

To fear oil spills from offshore rigs today is analogous to fearing air travel now because of prop plane crashes in the 1950s.

He's really shooting himself in the foot with that analogy given that prop plane technology was highly developed and extremely safe by the 1930's and 40's, has this man never heard of a DC-3?! There are some of them that are still providing service to this day... would that modern offshore oil rigs have a long term safety record even half as good!

Maher also pointed out we've had something like 216 years of war since the Declaration of Indepence. This, of course, ignores the French and Indian War, 1754–1763 , which was the part of the Seven Years War that lasted for 9 years.

“We’re at War!” — And We Have Been Since 1776: 214 Years of American War-Making Posted on 20 December 2011

Their statement would be correct if they were referring to offshore drilling in the same depth range as the blow out at Santa Barbara (188 feet). Of course the search for oil is now occuring in deep water where the technical challenges and risks are much greater. The Deepwater Horizon disaster occured in 5000 feet of water.

I could draw parallels between many things that were said about the Titanic before her maiden voyage.

"13 Spills. 30 Days. Nearly 1.2 Million Toxic Gallons."


"In gushes, drips, and spills. With leaks, derailments, and ruptures. Oil companies from North and South America have littered the world with more than 1,185,000 gallons of crude oil, tar sands, and other fossil fuel waste in the last month. Tcktcktck has a new infographic that tells the toxic tale..."

Strange are the ways of the world ... fracking and the farmers of Rajasthan state, India:


Attaboy, keep holding it. LOL. Well that's globalization for you.

But seriously I think they are pushing their luck, they will start growing it someplace else if the supply problems become frequent.

The spot price of natural gas (NG), along with the spot price of power, was so high in January, 2013 in New England, that power plant operators turned to petroleum as a backup. Given that the huge surplus in NG is gone, and given the fact that we almost certainly finished 2012 with the highest overall decline rates from existing wellbores in US history, next winter could be very interesting.


Petroleum is rarely used for power generation (only 0.3% of total annual generation in 2012 for New England) because it typically is more expensive than other fuels. This expense makes the increase in petroleum-fired generation between January 2012 and January 2013 notable. When power prices became high enough and natural gas scarce enough, the petroleum-fired generators operated more than usual. Data from the New England power system operator (ISO-NE, chart below) show that oil-fired generation rose on certain days in response to high wholesale power prices. Some of the decrease in natural gas-fired generation was also made up by coal and nuclear plants running at higher rates in January 2013 compared with the rates in January 2012.

Consumption of residual fuel oil for electric power generation in New England increased 380% between January 2012 and January 2013, with additional increases in distillate fuel oil and kerosene consumption. Overall, consumption of all petroleum liquids in New England for electricity generation during January 2013 was estimated to be 446,000 barrels, up from 127,000 barrels in January 2012.

I'm curious how important cheap natural gas is to tar sands production and possible expansion. Given that oil from bitumen is (I think) among the highest cost oil being produced, and given that transport bottlenecks and other possible factors are limiting the selling price, how concerned should producers be?

Given that over a billion cubic feet of natural gas per day is being used in Alberta for turning bitumen to oil, even a few extra dollars per thousand cubic feet would start to add up. Here's my rough math:

$4.26 per thousand cubic feet x 1.1 million x 365 days = $1.7 billion per year on natural gas at current prices.

(No doubt the industry isn't paying $4.26 currently - lots of hedging/longer contracts I'm sure. And 1.1 billion per day is just a guess based on it being more than a billion per day.)

If getting bitumen out of the ground and to market is bringing huge profits right now, maybe nat gas going to $6 per mm btu won't affect future production all that much...

No, the oil sands producers are not paying $4.26/kcf for natural gas. The Alberta spot price is currently around $3.50/GJ, and the producers are not paying that much - they are buying it under long-term contract and/or producing it themselves.

The math is fairly simple: If producers take 1 GJ of gas (approx. 1 kcf) worth $3.50 and use it to produce 1 barrel of syncrude currently trading at $100, they are $96.50 ahead. If they produce 1 bbl of WCS, currently worth $80, they are $76.50 ahead. If they produce 1 bbl of crude bitumen worth (say) $60, they are $56.50 ahead.

If, for some reason the price of gas rose to equivalence with oil at $100, that would be about $17/kcf on an energy equivalent basis. Assuming no increase in oil prices, syncrude would net $83/bbl, WCS $63, and crude bitumen $43.

However if the price of NG hit $17/kcf in North America, it would create a bigger crisis among the general consumers than the oil sands operators. Oil sands companies would manage to get by on their somewhat reduced operating margins. In truth, they have a lot of flexibility to cope with rises and falls in gas prices - they've done it before.

What is the average profit (total cost - sale price) on a barrel of syncrude, WCS, and crude bitumen? Do you see near term future production as being more or less expensive to bring to market?

I couldn't come up with an average profit because all the companies are different, and it depends to a large extent on their capital expenditures and the interest they are paying on their loans. Their operating costs are not as large as their capital costs.

Future production will be more expensive because newcomers will have to pay more money to build their operations. The old operations like Suncor and Syncrude have already amortized a lot of their capital expenditures, so their costs are lower than anybody new coming on the scene.

I ask because it must be the amount of profit per barrel that matters, not the difference between the cost of the natural gas inputs into a barrel and the sale price. If the total profit on a barrel is $96.50, then paying $5 per barrel more for gas won't have any real impact on decisions about investing in new capacity or maintaining existing operations.

But of course turning bitumen into oil and getting it to market involves many costs beyond that of the natural gas. It is where the profits are tight that relatively small added costs start to make or break decisions to green light projects. A few dollars more for natural gas starts to matter, just as a few dollars less for the sale price because of transport bottlenecks.

Arguably a bigger risk to expansion plans in Alberta is the possibility of a carbon fee or tax. It is only a question of when this will happen. Just a guess, but it won't take long after the Arctic Ocean is ice free in September. Cheap oil producers will be able to deal with the tax. Established oil sands producers, at least initially, will too. But plans to expand to 5 million barrels a day - I'm not so sure. Carbon is going to have to stay in the ground, and in general it will be the least economic carbon that does.

I wouldn't be surprised if the fiercest opposition to paying for carbon emissions comes from the marginal producers, if this isn't already the case. But at some point the logic of industry paying for what are now externalities will seem obvious to most.

"Arguably a bigger risk to expansion plans in Alberta is the possibility of a carbon fee or tax. It is only a question of when this will happen. Just a guess, but it won't take long after the Arctic Ocean is ice free in September."

This is the "panic and repent" scenario, effectively. Major evidence of climate change prompts a massive re-evaluation of priorities. The thing is, we are seeing dramatically shrinking sea ice, yet Canada's government is now conservative and pushing very, very hard to expand fossil fuel extraction.

I haven't seen the panic or the repentance yet. Just the opposite, the "fish harder before they're all gone" syndrome.

I've had the impression that the impending Ice-free September is just generating enthusiasm for more Arctic drilling and cheaper shipping thru the Arctic. Party on ;(

I ask because it must be the amount of profit per barrel that matters, not the difference between the cost of the natural gas inputs into a barrel and the sale price.

"Profit" is something of a nebulous concept that the accountants have to deal with. "Operating margins" and "cash flow" are more serious day-to-day concerns. I think of it as a question: "Are you here for a good time, or a long time". If you are here for a good time and a short time, focus on profit margins. In fact, most of the oil companies I've worked for were focused on profits and are gone now, and some of them (e.g. Amoco) were pretty big. OTOH, Suncor didn't make any profit at all for the first seven years of its first oil sands project, and now it is the largest oil company in Canada, after having bought the former state-owned oil company Petro-Canada.

Arguably a bigger risk to expansion plans in Alberta is the possibility of a carbon fee or tax. It is only a question of when this will happen.

The governing Conservative Party in Alberta has made noises in this regard, but there is a fundamental constraint. If they introduce a serious carbon tax, they'll be gone in the next election. The political spectrum in Alberta ranges from right (Conservative Party) to far right (Wild Rose Party). If the Conservatives P.O. the oil industry, the election will go to the Wild Rose - not so much because of the oil company money, but because most of the electorate identifies with the oil industry.

I wouldn't be surprised if the fiercest opposition to paying for carbon emissions comes from the marginal producers, if this isn't already the case.

No, the fiercest opposition will come from the Alberta voters. They 1) like oil companies, and 2) hate taxes. And most of them think that global warming is a good thing, particularly this spring (or The Winter That Never Ends to be more exact).

I'm not saying that this is a good thing, I'm just saying that I live in Alberta and know how the people think. The majority of them are well off to the right of my own personal standpoint.

With Harper in? We have seen the mugging of the ELA and other assorted muzzling of scientists. No, no carbon tax remotely possible at the national level.

To be blunt, I would doubt that even if the NDP polled 70% in BC that a carbon tax would would be enacted in BC. With the exceptions of the Greens that some individuals really like but then do not vote for - no party in Canada is totally united on a carbon tax. Carbon tax in Alberta with the bifurcated Conservative ruling party(ies) with no real opposition parties possible for years - talk about that is lip service and nothing more.

If Canada could not get the software up and running to have a working database on long guns under the Liberals - what makes people in the middle and sceptics to believe that a new carbon tax would not just benefit people in the know.

No, you will continue to see a lot of provinces giving incentives to home-owners for low flow toilets, more efficient furnaces, insulation, led's etc. And the tar sands will have the infrastructure all set into place to ramp up to maximum production in a very short time frame when the price improves. The only question for me is what is the limiting factor for tar sands extraction and conversion. My very uneducated guess is water.

but how much natural gas is actually there? i mean for how long oil sand producers
can count on having cheap natural gas available?
and what about other users of natural gas? does canada really have so much
cheap natural gas that it is sufficient for everyone and everything?

"what about other users of natural gas?" The oil sands operator probably not care if other users can't afford the gas or think it is to expensive. That's the way it is in a market economy, it is not a matter about who need the most, it is a matter who pay the most.

It is actually the Alberta government that is allocating gas to consumers. The government has deemed the oil sands to be a high priority consumer, and anybody outside of the province is a low priority consumer. It's not really who pays the most, it's really a matter of who's an Albertan and who's not. Alberta owns the gas and until it hits the provincial border, it controls it. After that the Canadian or US governments have a say, but not necessarily a big one.

I'm sorry, it's just the way the rules work. It's the old, "Let the Eastern B*st*rds freeze in the dark" concept, but expressed in more obscure terminology and backed up by some of the clauses in the Canadian Constitution.

Japan shouldn’t engage in ‘competitive devaluation,’ Treasury says

In its twice-a-year assessment of whether any nation is a currency manipulator, Treasury said it will “closely monitor” Japan’s policies and the extent to which they support the growth of domestic demand. The new Shinzo Abe administration has pushed for aggressive bond-buying at the Bank of Japan, and the yen USDJPY -1.3103% has dropped 13% against the dollar this year. The Japanese currency rose in Friday afternoon trade after the report was released.

Beggar thy neighbor and something about teapot, kettle and black.

That is the thing about the US monitoring currency manipulation by other countries - the US is a very large and obvious manipulator of its own currency. Why is it complaining about other countries doing the same thing?

Federal Reserve Chairman Ben Bernanke has been on the defensive at international gatherings for the central bank’s bond-buying efforts that have weakened the dollar.

The Bank of Japan, the Bank of England and the European Central Bank also have engaged in bond buying.

I get the impression that the US thinks it should be the only country allowed to blacken pots and teakettles. Other countries doing it is just -- unAmerican.

Some countries are allowed to have what others are not. Once upon a time it was fully accepted with slaves in some countries.

According to former Assistant Treasury Secretary Paul Craig Roberts, the Fed is instructing the Japanese to devalue their currency, to prevent the US dollar from being abandoned. I'll provide a Google search phrase to avoid the spam filters:

If Bullion Were Not a Threat Government Would Not Attack It- Paul Craig Roberts USA Watchdog

And this interview was before the massive assault on gold and silver on Friday. It seems the world is pretty much out of gold, the eastern central banks bought hundreds of tons of real gold contracts on this latest takedown, and there won't be the real gold to honour those contracts over the next few months. Then it's game over.

Oh my, a goldbug.

Well, more like a debt-, military-backed fiat currency anti-bug, which by default pretty much makes one a gold bug.

No, not really. Gold is just another speculative investment, no different from stocks or bitcoin. I think that is a cultural problem, we've become conditioned to accept that we can collect tokens and store our wealth in them. Which in reality we cannot. Because we have surpluses in food, energy, etc. we can pretend that these tokens represent stored wealth, but when push comes to shove they're worthless.

When surpluses disappear items of utility will be real wealth, tokens from a bygone system or defunct bubble not so much.

we've become conditioned to accept that we can collect tokens and store our wealth in them.

You'r saying using money is a cultural problem? How do you suggest modern society function without money? Barter? Just because paper money will die in the next year or so doesn't mean society will stop, and society needs money to function. Gold has been money for 5000 years, why would that change now?

Gold is just another speculative investment, no different from stocks or bitcoin.

LOL. So stocks and bitcoins have a 7000 year history behind them? The value of gold may go up or down in paper currency, but it will always be worth something unless we are reduced to barbarism (which I don't expect). I know, I know, farmland is better because you can't eat gold, etc. But what if I don't have the skills or the temperament to be a farmer or I don't have $1 million to buy 100 acres of farm land or if I don't want to live in a rural area, then what should I invest my money in? Or what if the area where you do farming is adversely affected by climate change or political instability?

Gold is just another speculative investment, no different from stocks or bitcoin.

Don't want to get into another gold vs fiat debate but gold has it's uses. It certainly isn't like stocks and bitcoin. I can hold it in my hand and it retains it's value independent of the SEC, Dow or Nasdaq. It however has become another speculative investment which is tragic. I buy gold but never as an investment, it's for emergencies only, so I don't fret about it's price going up or down.

Gold does have uses largely as jewelry and a few industrial uses. But the current price has little to do with that and is largely speculative.

I can tell you that the semiconductor biz is working REALLY hard to get rid of gold. Even though they use it in tiny thin little wires and as very thin plating on contacts, it becomes very expensive when you build a lot of chips.

"I can tell you that the semiconductor biz is working REALLY hard to get rid of gold."

Translation: "The semiconductor business will be using cheaper materials and producing less robust products that will fail more rapidly."

speculawyer, the price of everything traded in the market that is not consumed immediately is speculative. So what? Gold is a reliable way to preserve your wealth across generations.

Well, my point is that gold is not as solid as many believe. The price of gold is merely dependent on what people are willing to pay for it, not some intrinsic value such as ability of farmland to produce food. Today's 7% drop in the price of gold can attest to that.

How can you say that gold is not solid -- you are arguing that paper money IS solid, when the Fed prints up $85 billion every single month? The current paper price for gold is mostly speculative. The decade long rise to $1700 was mostly based on fundamentals, however.

When the value of currencies starts dropping exponentially from hyperinflation, people will be willing to pay a LOT for an ounce of gold.

Gold DOES have intrinsic value -- as money!

Today's 7% drop is due, as you say, to paper speculation, which has now completely divorced itself from the physical market. I'm going to get some more this afternoon at firesale prices! Gold investment is for the long term, for when the monetary system collapses (well, if we're near the end now, then that isn't long term...)

Your comment apparently ignores the fact that gold is widely produced and "consumed" by individuals. People in China and India traditionally purchase gold in the form of jewelery. The price of gold tanked during the Asian Crisis of '98, because gold purchases fell off a cliff in SE Asia. Also, the PC industry, another user of gold, appears to be in decline, as mobile devices are now all the rage. While we don't know the exact reason for the recent slide in gold prices, including the sharp drop on Friday, it's plausible that the individual Asian may be turning away from gold as a consumer product. Perhaps it's a sign that Mr. Market thinks the global economy is headed toward another recession...

E. Swanson

Did you listen to the interview? The Friday smash was orchestrated by the Fed. The Asians bought hundreds of tonnes on Friday, precisely because the Fed smashed the paper price.

Search: Maguire - There Is Absolutely No Physical Gold For Sale king world news

The industrial uses of gold are miniscule compared to investment demand, which is now off the scale.

Yes, I heard him make that statement. It would appear strange for the price to drop steadily since late 2012 if there were a shortage in the market. I don't know about today's market, but this chart covers 2011 and 2012...

E. Swanson

All commodities are dropping, not just gold, though it's more pronounced in gold. Copper has dropped, Brent is at $100. Yet markets have not fallen by much. Cognitive dissonance ?

This just in, price of gold and silver will probably being going up, up, up!

Rio Tinto’s Kennecott mine in Utah- the US’ 2nd largest silver mine and world’s largest copper mine has just suffered a massive landslide.

4 million ounces of annual silver supply and 400,000 ounces of annual gold supply have just been covered in a major US landslide.

America is a country in which you find a strange mix of nationalistic, Christian, and Jewish exceptionalism wrapped up into one package.

As such, Americans think they can do whatever they want and are always right. And other countries shouldn't be able to do that they want and are generally wrong.

Americans are learning the hard way that this isn't true. That, when push comes to shove, other nations will act in their own interest, as is natural, and may not accept the old "Treasury bonds for all of your energy and goods" deal forever.

Americans are learning

Is there any evidence that American's are learning? From where I sit it seems that we just double down on our self-righteousness.

What's up with Rockman? - or did I miss some news - haven't seen a comment from him for days.

He's gone AWOL

He's been posting at peakoil.com... didn't even say goodby :-0

I hope he comes back. In the past I have found the peak.oil.com discussion board slow to load and difficult to navigate. I prefer TOD

I just looked at the peakoil site and found one Rockman comment. You are right - very slowwww to load and tough to use. Maybe he will come back - are you listening, Rockman?

ROCKMAN, ROCKMAN, ROCKMAN. Come back. Honestly, this site seems much more robust than peakoil.com and seems to have a lot more participants and comments. Am I wrong?

Big hole here without the Rock. I miss his misspellings.

I miss his detailed descriptions of the technology of the oil patch, and his insights into the economics of it. He's an incredibly good writer about rather complex things I have learned an awful lot from his posts.

But most of all I miss his sense of humor. He's really quite a funny guy. I mean, I could read a long posting of his on staged fraccing or oilfield geology or what have you, and although the concepts were clearly and straightforwardly presented, I somehow always ended up with a chuckle, if not more.

C'mon back Rockman!

C'mon back Rockman!

Maybe we could all sign a petition asking him to come back and then post it in the comments over at Peak Oil dot com >;-)

One more petitioner here. You're missed, mister!

The ROCKMAN is a good teacher and an honest man. Too few of both in this world.

Miss ya, ROCK!


Mark Twain-

"Always tell the truth. This will gratify some people and astonish the rest."

I think he got upset at the new spamming technology on TOD; having to wait until reviewed (some times).

That is the only thing that has happened here lately that impacts everyone, and I don't think anyone has said anything to "dis" him on this site.


Yeah, it upsets me too sometimes, but there is a way around it. It only holds you up when you post links. So if you just copy the headline of the article and paste it into your message in bold, like this:

Oil Industry Eyeing More Breakthroughs This Year

Then people who wish to read the article can just copy and paste it into the search bar of your browser, it will pull the article right up. That is a real headline just posted a few hours ago. You can try it. It may bring up many articles but because the words match exactly, it will be the first one at the top. It works.

But of course you would do this only if you wished your post to appear immediately and did not want to wait a few hours for it to be approved.

Ron P.

And if you have the Firefox QuickDrag add-in then you don't even have to cut and paste. Just highlight and drag...

Thanks for mentioning this QuickDrag feature. I didn't know it was there.

How about just replying to your own comment with the link?

Well if your reply contained a link, it would still held by the spam filter until the moderator approved it. So it would gain you nothing.

If any post contains a link it is flagged by the spam filet and held for approval by the moderator. It doesn't matter if it is an original post or a reply.

Ron P.

I don't think so, he never posts links, only rarely. His knowledge database is big enough. Maybe he just got bored, who knows. Definitely miss him though, you can never have 'too many insiders'.

I sent Rockman an email, and this is part of what I received back:

"My account was blocked. Got a private message from one of the (Oil Drum) moderators that didn't like what I had to say."

His account is not blocked.

Hi Leanan, Maybe you could send him an email telling him he's sorely missed here and to please come back. I too have learned so much from his posts, and also love his writing style. (I rarely comment on TOD, but have been reading it for several years.)

I second that.

Please add my name to the "Get ROCKMAN Back" list!

You presume Leanan sees R.'s departure the same way ? She may not.

At any rate, a more appropriate intervention is to factually correct R.'s claim of account being blocked. Westexas has precedence in that activity and Leanan does not.

Then the two part's of R.'s email reply to Westexas can be sorted out.

The PM by a mod may be a case of hurt feeling's by R.

Personally I'd like to hear from the mod who PM'ed R. as to the back story - that would go to the intentions of sent PM - was it intended to hurt R.'s feeling ?

Sounds like there may be a misunderstanding that can be clarified. Or not.

The Oil Drum is a lot poorer for his absence.

Ron P.

He's sure been a guru to this little Joe! :(

Cheers, Matt

Hope ROCKMAN comes back! His postings are among the best here; written with an insiders knowledge and professional integrity. And always fun to read.
Can we send him fan mail?


Peak oil isn’t dead: an interview with Chris Nelder

This is a great article with charts and covers everything concerning peak oil. I wish all the deniers would just read this article. Bold theirs. (BP is Brad Plumer, not the oil company.)

BP: Now when you say “mature” oil fields are declining — these are older fields in places like Saudi Arabia or California that used to produce cheap, easy-to-extract oil. And we’re replacing them with fields that decline more quickly and are difficult to produce?

CN: Look at Ghawar in Saudi Arabia [the largest conventional oil field in the world]. We know that its water cut has been increasing — they’re getting more water with the oil that comes out, which is an indication that the field is in decline. That’s a field with a high flow rate and cheap production costs.

And we’re replacing it with tight oil wells in the U.S. that decline 40 percent in the first year, where the production cost is over $70 per barrel. Or deepwater wells, which deplete at 20 percent per year. Or tar sands, which is expensive. Anticipated production growth for tar sands has consistently failed to meet expectations, year after year after year. Ten years ago, tar sands production today was expected to be twice what it actually is.

Ron P.

You're right. A very good analysis that is easy to understand. Hopefully some will.

Anticipated production growth for tar sands has consistently failed to meet expectations, year after year after year. Ten years ago, tar sands production today was expected to be twice what it actually is.

Well, I looked at that and thought, "Whose prediction ten years ago?" How about the National Energy Board?


Canada’s Oil Sands: Opportunities and Challenges to 2015

In 2004, Canadian oil sands production will surpass 160 000 m3/d (1.0 mmb/d); by 2015, production is expected to more than double.

So I checked the NEB statistics, and as of last month, March 2013, the oil sands were producing more than 320,000 m3/d (2.0 mmb/d). I don't know whose predictions he was talking about, probably Fox News, but the NEB's predictions were a bit too low.

He is probably refering to the CAPP forecast which seem to have consistently been overly optimistic. The 2006 forecast for example predicted oil sands production to be about 2.1 mb/d in 2010 and 3.5 mb/d in 2015. The most recent forecast from CAPP (2012) predicts 2.3 mb/d from oil sands in 2015.

The NEB forecast has to looked at in context with its price assumption, which is 24$ per barrel WTI.

In light of oil prices rising above wildest expectations the relatively modest rise in oil sands production has to be considered quite disappointing.


They are referring to CAPP forecasts. In 2004 the forecast for oil sands in 2015 was 2.6 MMb/d, search

2004 CAPP Crude Forecast

In 2011 CAPP forecast oil sands at 2.2 MMb/d in 2015, and in 2012 the forecast had increased to 2.3 MMb/d.

IMO if the recent CAPP forecasts are correct for 2015, then the 2004 forecast was pretty good, only off by 13 % (2.6/2.3) 11 years out is a darn good projection.


WHO RISK ASSESSMENT Human infections with influenza A(H7N9) virus
13 April 2013

As of 13 April 2013, a total of 49 confirmed cases of human infection with avian influenza A(H7N9) virus have been reported to WHO by the China National Health and Family Planning Commission. Among these cases, the ages range from 4 to 87; 15 are female. Eleven persons have died, and the majority of the additional cases are considered severe. Of the 49 cases, 6 have been reported today and further investigations are taking place. The cases have been reported from three provinces: Anhui, Jiangsu and Zhejiang, and two municipalities, Beijing and Shanghai. All locations are in Eastern and Northern China.


Genetic and laboratory characterization of the first three of these H7N9 viruses isolated from humans indicates that:
• the virus contains a group of avian influenza virus genes from three different avian influenza viruses;
• to date, genetic analyses of the isolates have shown certain changes, including amino acid substitutions associated with increased affinity to alpha 2-6 receptors, which suggests that the H7N9 virus may have greater ability to infect mammalian species, including humans, than most other avian influenza viruses;
• there are sequence variations among the genes of three isolates that suggest there has been more than one introduction of this virus from animal into humans;
• these viruses are expected to be sensitive to the neuraminidase inhibitor drugs oseltamivir and zanamivir, but resistant to the antiviral drugs amantadine and rimantadine;
• the isolates have a haemagglutinin structure that is associated with low pathogenicity in birds.


What is the risk of human-to-human transmission?

There is no evidence of sustained human-to-human transmission. However the two possible family clusters suggest that limited human-to-human transmission may occur where there is close contact between cases and other individuals, as occurs in families and, potentially, healthcare settings. Moreover, the genetic changes seen among these viruses suggesting adaptation to mammals is of concern, and further adaptation may occur.

Some people are reporting seeing the northern lights pretty far south tonight.

There's a map here showing where your chances are good.

why is it that every single time there is one of these CME's, the weather around here sets in cloudy and showery for a few days? It seems to defy probability...

It ionizes the atmosphere, increasing concentration of condensation kernels. Then it rains more.

No you explain why I have missed every earthquake in my life. We have them every once in a while in south Sweden where I live. The land is moving upwards again after it was pushed down during the ice age and the rebound causes the occasional low intensity earthquake.

Ah, that must be it... ;-)

Oil Sands 'Money Left on the Table' and More Myths

Economist Robyn Allan on why Canadian petro fortunes aren't hurt by lack of pipelines.

By Robyn Allan, 11 Apr 2013, TheTyee.ca

CIBC World Markets on April 3 claimed Canada stands to lose $50 billion over three years. "Economist Peter Buchanan forecasts that this 'money left on the table' will be about $20-billion this year, $15.2-billion in 2014 and $16.5-billion a year later," reported The Globe and Mail.

-- snip --

I wrote Mr. Buchanan and asked why he had not considered the benefit Canadian oil producers receive when they purchase western Canadian crude for use in their refineries. They are able to profit because they did not pay Brent, but charge consumers as if they did.

I also asked why the pipeline transportation costs of getting our crude to the US Gulf Coast were not netted off the differential and why no consideration was given to value lost in Canada when bitumen is exported for upgrading and refining in other countries. I asked if he would please provide the prices, differentials, and volumes relied upon to create his vast estimates.

After aggressive public promotion and extensive media coverage of CIBC's estimate and assertion by the bank that "the failure to invest in needed transportation infrastructures could still prove costly for Canadian producers, governments and the economy" Mr. Buchanan refused to address the substantive issues and would not be accountable for his figures. He told me "the details are only available to major institutional clients of the firm, as is the case with the other things that we publish."

If bank economists and financial analysts -- with declared conflicts of interest -- are not willing to be accountable or transparent for the figures they release publicly, their figures should not be trusted.

Lots more background in Allan's piece. Well worth reading if you want to understand aspects of the economics of the Tar Sands.

Let me make a point here. I wonder if this post will make it through the new filter. Others have not.

Some good posters like Rockman are inevitably going to be driven away if their posts are not even displayed. That is the truth. And that's probably what happened to him.

Kangbashi, Ordos: China’s Most Famous Ghost City Comes Alive

"I asked Sunflower what it was that she liked about Kangbashi so much.

“It is very small, the people know each other,” she replied. ”In Guangzhou, lots of people are around but you don’t feel anyone. It’s a fast food city. It is very busy. Here it is very comfortable. There are no long lines, and the people are not strangers.”

She paused for a moment as we looked out over her city. ”I love the phrase ‘not so many people,’” she added.

“Do you think Kangbashi will be a success?” I asked.

“I think so, I hope so,” she replied. ”More and more people will come.”

Cognitive dissonance in a nutshell. "I like this place because it's small - I hope it gets big (so I can hate it)."

Interesting story of a ghost town at the seedling stage of being populated. Talks a little about how most of the shops pay no rent and they're moving in government workers, schools, hospitals to start the demand cycle.

"There are also other incentives that the local government provides to residents in Kangbashi. For those bold enough to venture out here, free transportation on public buses — which means they can easily get to and from the established center of Ordos easily and cheaply — and also discounts on gas and utilities are provided."

It appears that everyone there has a car (or two) and the high prices demanded by non-local real estate owners has apparently been one of the major hurdles to overcome.

It actually looks like there are separated bike lanes on a few of the roads looking at Google maps. There are other things that look bike-lane-ish, but I think might just be unsegmented parking. Some of these places are just bizarre.

A discussion on immigration for Australia...

http://www.abc.net.au/iview/#/view/1100107 (ABC, 58min, i-view).

Poor Dick (will that be filtered?) Smith. After he drops the word "perpetual" for the tenth time, the rest of the panel simply switches off.

Worth a watch, but I just shrugged my shoulders at the end.

Cheers, Matt

Altex Energy : Our Model

Production Risk

Production from SAGD sites takes time. Many SAGD projects expect to be producing about 30,000 bpd. However, the formation must be steamed [at 1000 degrees Celsius] for about six months before any production is achieved. When bitumen production does commence, it rarely is at or near the target volume for the facility. Thereafter, production often grows quite slowly. In many cases, target production volume is achieved, but only after several years. The problem is that the SAGD owners(s) must commit to pipeline capacity, at or near the start of the project, not knowing if they will ever reach (or exceed) the target production volume. Because pipeline capacity is a “take-or-pay” commitment, the effective toll for moving small volumes during the first few years on a pipeline with excess contracted capacity is high.

Diluent Transportation Penalty

The producer then transports this diluent barrel up to its production site (which costs another ($1.00-$2.00) then mixes it with bitumen (10 API) until the mixture is about 70% bitumen and 30% diluent (19-21 API). This product is called dilbit and is typically about 21 API. The dilbit barrel then transported using pipelines to a terminal then a distant refinery where the natural gasoline is extracted and, indicatively re-sold into the Alberta marketplace as diluent. In sum, cost of procuring and transporting diluent to Alberta, mixing it with bitumen, then transporting the dilbit to a distant refinery, creates an economic penalty equal to about $20.50 per barrel of diluent purchased. Because the diluent makes up about 30% of the dilbit barrel, the diluent penalty is $8.79 per barrel ($20.50 x 30/70) of bitumen transported.

Followed the link above from Robyn Allan's post (see my comment above). It's always instructive to read a companies business model/plan. They tend to be quite instructive.

Six months of steaming before production can begin... little wonder the EROI of SAGD is dismal!

Also... Altex Energy : Our History

This was because the cost of transporting this diluent on conventional pipelines, both to the market and then back again to the bitumen production source, effectively doubled the pipeline cost per barrel of bitumen. For example, assume 6.7 barrels of bitumen are transported in one direction (to the USGC) and 3.3 barrels of diluent are transported in both directions (From the USGC to Alberta, then from Alberta to the USGC). The round trip transportation of diluent effectively doubles the barrel-miles of transport. This round trip transport of diluent was made necessary in the post 2005 world because the volume of diluent required by the producers exceeded Alberta’s indigenous supply. Hence, diluent, primarily in the form of natural gasoline (a mix of pentane and hexane), has been imported into Alberta to meet the bitumen producer’s demand.

If I recall correctly PipelineOnRails is shipping undiluted bitumen which will have congealed solid by the time it cools to ambient temperature. Shipping what is effectively a solid and eliminating the transport of diluent seems a heck of a lot safer then moving dilbit by rail or pipeline.

That said further exploitation of the Tar Sands will be catastrophic!

"The round trip transportation of diluent effectively doubles the barrel-miles of transport."

I have to say that it only recently dawned on me what a good deal this is for the railroads--the tanker cars are never empty--they carry diluent north and then dilbit south--just one cirular money-making convyer belt. I am probably imaging this, but it seems all the tanker cars travel up one side of the Mississippi and down the other.

From what I have read, not necessarily. Some rail cars have just bitumen inside, and upon arrival at the destination steam is used to warm the bitumen. These tankers have two ports on the top. You will notice some tankers have only one, but all the new tankers I was seeing in the small (not the mega Symington yard) CN yard in southern Winnipeg by the VIA maintenance shop had two ports on top.

Another thing in favour of shipping via rail without dilutent is that in case of a derailment, the clean up, especially when cold, would start out with skidloaders and small cats.

Still, I would rather see it in the ground. But a guy can't help shelter rail riders for two years and develop an interest in trains and enjoy watching them glide over the Red River. Red and Ass. River are still frozen btw. Snow tonight.

What Altex is doing is hauling bitumen south and condensate north. Alberta has a surplus of bitumen from the oil sands which the refineries on the Gulf Coast want, and Texas has a surplus of condensate from the Eagle Ford which the oil sands producers in Alberta want. The transporters can make money on both the haul and the back-haul, which is unusual in the railroad business, but lucrative for the transporters who can do it.

The condensate is actually used to dilute bitumen for pipeline transport (dilbit). I don't know why you would want to put dilbit into a tank car, because you can get bitumen in and out of one by just heating it. It's like hot molasses versus cold molasses.

A tank car built to haul both bitumen and condensate is a bit unusual, but I know suppliers build them. They are more complicated than normal tank cars because they need to have steam coils to heat the bitumen, and better pressure seals to handle the higher vapor pressure of condensate versus normal crude oil. But, if they want to make money hauling both ways, that's what they have to use.

However, the formation must be steamed [at 1000 degrees Celsius] for about six months before any production is achieved. When bitumen production does commence, it rarely is at or near the target volume for the facility. Thereafter, production often grows quite slowly. In many cases, target production volume is achieved, but only after several years.

They didn't say "1000 degrees Celsius", you put that in. If they injected at 1000°C they would melt the equipment. Typically injection temperatures are 200 to 350°C, but it depends on the company and the formation. The main constraint is to prevent live steam from leaking into the producing well and causing a condition called "steam lock". Ideally they would like bitumen to flow in at around the boiling point of water. Hot but not too hot. If it's too hot it can melt the seals in the pumps.

Production from an individual well starts slowly right from the start but plateaus after 6 months to a year and stays there for several years, and then declines because most of the oil in the formation has been produced. However, companies like to pre-condition the producing well by injecting steam into it (this results in faster recovery later) and that might take a few months.

This company (Altex is a transporter, not a producer of bitumen) is probably talking about production from the entire project. Individual wells come on production fairly fast, but it takes a long time to drill all the wells on a lease. However, from the producer's perspective that is not problematic because it gets early cash flow from the first wells to finance drilling the rest of them.

From my comment on February 12, 2013. I note that you were among the many that responded to it!

How to get oil sands crude to the coast, minus the wrangling

Shipping bitumen by rail is an old idea gaining steam as pipelines go under the microscope

PipelineOnRail promises a solution. Pure bitumen is about as fluid as molasses. But there are two ways to make the stuff flow, Perry says. Using thinner is only one way. “What we do is heat it up. The stuff that comes out of those steam-assisted gravity drainage plants is pretty near 100 degrees Centigrade. They’ve injected that steam into the ground at nearly 1,000 degrees.”

"They didn't say "1000 degrees Celsius""

Yes, I did add that, hence the square brackets. I shouldn't have assumed our TOD long term corporate memory would last as long as two months. My apologies!

Thats 1000F not 1000C. No one is using steam at 1000C, but 1000F isn't out of the question.

This is why nobody should use F. To avoid the confusion. Use C instead. Even better would be if we all moved on to K, but I guess that is to wish for to much.

Pure bitumen is about as fluid as molasses. I could add that at 200-300°C bitumen is about as fluid as water. Some reservoirs are that hot. The difference between "heavy oil" and "bitumen" depends on reservoir temperature.

I used to work with a field (Lloydminster) that had the oil come out of the ground hot enough to flow even though it was about the same specific gravity as bitumen. The biggest problem was that they had to insulate all the tanks and put natural gas heaters in them to keep the oil hot enough to flow, and they had to use insulated trucks to get it to the processing facilities. Then the facilities had to use heater-treaters rather than separators to separate the oil from the gas, water, and sand. Then, they had to blend condensate into the heavy oil to get it to flow through the sales pipelines.

It was chemically the same as "dilbit" but they didn't call it dilbit because it was just heavy oil blended with condensate. You see the essential difference there, don't you?

An interesting juxtaposition on Business Insider:

Grantham Is Wrong — We Are Not Headed For A Disaster Of Biblical Proportions by Ramez Naam, author of The Infinite Resource: The Power of Ideas on a Finite Planet and

Peak Oil Demand Is Already A Huge Problem by Gail Tverberg.

Shorter Naam: Our big brains will get us out of this mess.

Yes, more or less - more tech and more development is the solution to the problem of too much development.

On the one hand, it's worked so far. The US is less visibly polluted than in 1950. People are fed. There is enough housing (whether you get to use it or not is another matter). Places like China have a rapidly rising standard of living. I think we all know that the key to this is energy, though, and that we're in the middle of a major energy transition as well. Solar and wind are growing exponentially, to the point where they are starting to threaten other forms of generation (if only at the margins so far).

On the other hand, the US is very much reaching the "inverted totalitarianism" state, and corporations are taking over. The banks are literally criminal enterprizes which are protected by the full force of the US and EU governments. Making a living (house, food, debts and bills paid) is getting harder rather than easier for most Americans. Oil is not getting any cheaper, except momentarily. Climate change threatens to get seriously powerful in short order. Pretty much everything living in the ocean is overfished.

So, what will it be? I feel like I am watching two movies at the same time. Despite all the threats, the show still goes on. There has not been a revolution in any of the PIIGS countries - heck, Syriza couldn't even form a government, despite all that's happened! The Euro still stands. China continues to grow despite everything. Climate change hasn't hit us hard enough that it really disrupts the "show".

How long can "BAU" go on? Well, if solar and wind ramp up very fast, perhaps the whole technological enterprise can go on. I am also not sure we're really past the carrying capacity of earth - I am thinking of a book called "The World Inside". The wild world is literally on the verge of being totally replaced by the human/domestic world, but as much as I hate the idea, I am not sure that humans need tigers, lions, or songbirds.

If we are in crisis, it's a slow, malingering one. Maybe ten years hence, many of us will be reduced to poverty. Maybe ten years hence, solar and wind will power the world. Maybe both. I am less sure that the whole thing will fall down - eventually things must change, and it will be an eyeblink in history I am sure, but that eyeblink may be 50 years.

The wild world is literally on the verge of being totally replaced by the human/domestic world, but as much as I hate the idea, I am not sure that humans need tigers, lions, or songbirds.

We definitely need phytoplankton which produces an estimated 50% of our oxygen. And enough net-oxygen producing greenery on land to produce the other 50%. And are you, or anyone, going to be able to assess the knock-on effects of any single species disappearing? The web of life is incredibly complex.

And are you, or anyone, going to be able to assess the knock-on effects of any single species disappearing? The web of life is incredibly complex.

Unfortunately most people don't get it!

I had a conversation with a Brazilian doctor not long ago who just couldn't parse the concept of someone not wanting to eradicate every last mosquito on the planet. Even those that are vectors for diseases such as malaria or dengue fever.

I was trying to explain to him that in my view, besides having their place in the complex web of life, their presence helped in keeping humans from encroaching on certain critical wildlife habitat... Apparently anyone opposed to humans spreading into every last square millimeter of space is persona non grata!

I told him I was president of the International Society for the Preservation of Wild Mosquitoes >;-)

I think that within about 10 years we will enter a multi-decadal period of significant involuntary adjustment of business, economic, and political systems. Note that the national security establishment of most nations is essentially totalitarian backed by a socialized armaments industry. Under stress, this pattern will be spread throughout the political and economic system, which is what was seen for the major combatants in WW I and II. However, with modern information technology, central planning can be done far better. Lenin said "Communism is Soviet power plus the electrification of the whole country." The next stage of totalitarianism will be Leninism plus command, control and communications using a post-internet information technology. This will provide for direct central coordination and control of production after financial systems collapse and money becomes irrelevant.

This is the only way to implement enough of the "ideas" that Naam describes to achieve a reasonable stair-step down. Actually, multiple stairways down will be taken by different nations, having differing steepness and differing run and rise between nations and between times.

We are not that far off from serious change. I give the BAU patchwork another 3-10 years. If you take a serious look at the numbers...oil consumption and prices, demographics, market indicators, federal budgets, central bank balance sheets, etc., that's where it generally leads.

However even when catabolic collapse starts in earnest, for many life will go on relatively unchanged. Think about the collapse of communism in Soviet Union and Eastern Europe as an example.

Merrill, the 2nd link goes to a paywall. Here's a free link:


I don't think any of their minds are nearly infinite enough.. and those who have got infinite minds, wouldn't bother with such things at all..

'The question is,' said Alice, 'whether you can make words mean so many different things.'

'The question is,' said Humpty Dumpty, 'which is to be master — that's all.'

Alice was too much puzzled to say anything; so after a minute Humpty Dumpty began again. 'They've a temper, some of them — particularly verbs: they're the proudest — adjectives you can do anything with, but not verbs — however, I can manage the whole lot of them! Impenetrability! That's what I say!'

'Would you tell me please,' said Alice, 'what that means?'

'Now you talk like a reasonable child,' said Humpty Dumpty, looking very much pleased. 'I meant by "impenetrability" that we've had enough of that subject, and it would be just as well if you'd mention what you mean to do next, as I suppose you don't mean to stop here all the rest of your life.'

'That's a great deal to make one word mean,' Alice said in a thoughtful tone.

'When I make a word do a lot of work like that,' said Humpty Dumpty, 'I always pay it extra.'

I have a couple of points in response to the "Grantham is wrong" article:
1) The fact that they have to publish these articles now, when they didn't for decades, means that the cornucopians are on the defensive
2) The cornucopians still have a problem distinguishing between BAU, BAU lite, and collapse. For example, he mentions, perhaps correctly, that the population will level out at some point. But in response, you could argue that it is leveling out at a very high level. In addition, a leveling out of population is in fact a marked change to BAU, as BAU depends upon increasing population to pay off debt; our entire economic and political systems would change without a growing population, and this implies conflict ahead. Moreover his ideas on solar power are so absurd that they are difficult to respond to; at best solar power will be a local mitigating strategy as has been discussed at length before

The ultimate point being that we doomers/catabolic collapse/Limits to Growth people have a well defined view of the future that is backed by data, current events, and an understanding of human nature that stretches across disciplines; there very well may be different versions of this collapse and that is part of the fun of the debate, but we all sort of agree on the basic outline

In response, the cornucopians can only muster up a half-hearted "humans are clever and we have solar panels" defense. It's getting pretty pathetic.

The problem with global collapse scenarios is that they are not realistic about political developments. Once the economy slides significantly, globalism will be reversed, and nations will adopt a second generation version of something similar to North Korean principles of juche: political independence, economic self-sustenance, and self-reliance in defense.

The United States, for example, will do relatively well, since we have ample natural gas and coal supplies to tide us over until nuclear can be restarted and alternative energy buildout can occur. We would also likely reinstall dams to generate hydroelectric whereever historic dam sites were located. For example there are a multitude of rivers in the Atlantic seaboard that had mill ponds along them. And in general, the US has enough energy resources, agricultural land, forests for timber, and synthetic and natural fiber production to have a reasonable standard of living for its projected population.

The human nature that you can count on is "I've got mine Jack".

"The human nature that you can count on is "I've got mine Jack"."

Uh Huh, I didn't see that after 9-11.. I think many reacted differently during the depression, and in response to Hitler.

There are things we pull out of the woodwork when times are dark that surprise those of us who have been treated to the cynicism and callous selfishness that has grown unhindered in a time of plenty.

9/11 is actually an interesting example, since an attack on the US which caused 3000 dead was followed by two wars resulting in about 10,000 US and allied dead, on the order of 500,000 civilian and military deaths in Iraq, Aghanistan and elsewhere, and an expenditure on the order of $2 trillion. This kind of expensive retalliation and revenge cannot be afforded in the future, so overwhelming force is less likely to be used and the body counts will be more even in the future.

We have always been at war with Oceaniana.

You're picking a pretty rarified example of 'Human Nature' by looking at just the US National Response to 9-11, particularly a US led by Neocons tied deeply into the Oil Industry. This was also the set of wars that had the greatest number of people around the planet marching in the streets to protest it, BEFORE the war had even begun. Just because they had the (oil) power to ignore us, doesn't mean we weren't there, and in greater numbers than them.

Sure, there are great examples of the darkest sides of human nature.. but unless you're going to advocate for those self-annointed 'victors' to write not just the history of it all, but also the definition of Human Nature, then I'd suggest looking further out into the populace.

Remember the Maine! To Hell with Spain! Spanish-American War: https://en.wikipedia.org/wiki/USS_Maine_%28ACR-1%29

World War 1: http://en.wikipedia.org/wiki/Assassination_of_Archduke_Franz_Ferdinand_o...

World War 2: http://en.wikipedia.org/wiki/Reichstag_fire

I often compare the Twin Towers to the Reichstag Fire. It seems history is littered with events where a (relatively) small occurrence has been taken, inflated, and then fingers point it was THEM! They cause all of your problems! GET THEM! and war ensues.

Once the economy slides significantly, globalism will be reversed, and nations will adopt a second generation version of something similar to North Korean principles of juche: political independence, economic self-sustenance, and self-reliance in defense.

I doubt that. 'globalism' is a lot more than trade liberalization. In the post-WWII era we have seen the development of truly universal human values such as anti-racism, the dignity and autonomy of the individual, a predilection for democratic processes, rights for women, etc. I would even extend it to a preference for non-violent conflict resolution, even if honored more in the breech than the observance. Unilateral military aggression seems less frequent now than in the past.
For example, even the belligerent actions of the US in Iraq were undertaken as part of a US/Great Britain condominium. Involvement in Afghanistan was under NATO auspices.
Economic strains have not prompted any defections from the EU, that is telling in itself.

The cost of transportation:

from article "At 210 mph in a Bugatti, for a long, long time":

" Even from kilometers away, the sound of the 8-liter W16 engine suddenly ingesting 1,250 gallons of air and about 2 gallons of premium unleaded a minute is pretty emotional. Bugatti says the waste heat from this engine could warm 10 family homes in the winter."

Comments here have prompted me to look more closely at Staniford's work, which led me to BP's data on global production. In looking at that data, I found a rather interesting tidbit that I haven't seen reported anywhere else: BP reports production both in terms of bbl and tons, and from the data, the average weight of a bbl of produced oil has been declining steadily since 1965 (when their figures begin). No idea why this should be true, but it suggests that the energy content of the reported liquids may be declining. (?)

I also found the tonnage data interesting, since it can be compared to the CDIAC data on global production of fossil carbon, where recent (time overlapping) data indicates that the average ton of oil contains .78 tons of carbon, a number that seems to have remained fairly steady (though is increasing slightly). This enabled me to reconstruct a plausible production history of world oil since 1870 using CDIAC figures, and run a Hubbert Linearization based on tons instead of bbl.

Like the bbl data, the tonnage data settles down to a roughly linear pattern starting in 1983, and the data from that point forward points to URR=325,000 million tons. The halfway point of that number was reached in mid-2010.

Good point. It's my understanding that BP's production data count Crude + Condensate + NGL's. What is presumably happening is that Condensate + NGL's as a percentage of total petroleum liquids is increasing (as crude oil as a percentage of total petroleum liquids declines), and I suspect that global crude oil production* has probably been flat to down since 2005.

*Crude oil = less than 45 API gravity crude.

I've been trying to wrap my head around this particular debate, on the bifurcation into high and low API gravity, and the conclusion I've come to - which seems almost too simple...is that it's just easier to drill for gas than to dig or otherwise produce tar. So we might be losing the middle but the reason the overall trend is towards condensate and NGL is simply that they're just easier to produce than bitumen and kerogen.

It occurs to me that Canada is an outlier here. It would be interesting to see the API gravity creep with Canada taken out of the picture.

I too would like to see the HL that KAP55 produced.

Historically, oil companies have produced the light and medium weight oil fields first because they are the easiest to produce and yield the highest proportion of transportation fuels (gasoline and diesel fuel). They picked the low-hanging fruit first.

The fact that production now consists of larger proportions of condensate (ultra lightweight oil) and bitumen (ultra heavyweight oil) indicates that they have picked most of the low-hanging fruit and are now working on the fruit on the top branches and the mushrooms growing around the roots. Most of the fruit has already been picked and they are working on what is left.

As they say on Game of Thrones, "Winter is coming".

Yeah, I wonder about the quality of the newer Bakken wells. The need to drill to replace older wells and they even need to drill faster if the newer wells are not as good as the older ones. But perhaps the shale is relatively uniform such that the quality won't drop much.

What I have read about the tight oil production areas, they seem to have sweet spots, wich are now already developed. New fields have to come from second grade sources.

I found that very interesting--funny no one else has tried to do that (Hubbertize the production by weight.) If you feel like posting your graph, it would be very welcome.

Not having access to the BP data, I just did a very (though not perfectly) accurate reproduction of Staniford's graph in order to get the cumulative per year, then plotted the increase in oil price against the cumulative.

Immediately below is that graph, which uses the data from 1998-2011 since that gives the highest R-sq for the trend line. And immediately below that is just the same graph but with the trendline extended forward to a cumulative of 2500 which is what Staniford's HL model predicted as the new ultimate.

On one hand, the forecast of over $350 for that last barrel of oil seems too low (all the oil companies all can't make money on that last barrel of $350 oil). On the other hand, the way the economy is going, I am beginning to wonder if any economy in the world will be able to pay $350 for any barrels of oil.

So in a way, it suggests that HL is also unrealist from the standpoint that there are a lot of things against getting a lot (may most) of that remaining oil out of the ground.

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TEHRAN (FNA)- Both oil producers and consumers are satisfied with the current oil prices between 100 to 110 dollars per barrel, Iran's Governor at the Organization of Petroleum Exporting Countries Mohammad Ali Khatibi said.

He must know a different set of consumers. Most consumers I know do not find >$100/barrel oil to be a 'satisfactory' situation at all.

Bring Rockman back or I'm leaving