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DrumBeat: December 3, 2006
Posted by threadbot on December 3, 2006 - 10:59am
Good forecasts/bad forecasts: how does the US DOE/EIA come out?
Forecasts are only of value if they are reasonably accurate. In that regard, I decided to look at an analysis I made in 2001, “Analysis of the IEO2001 Non-OPEC Supply Projections” In the document, I analyzed the U.S. Department of Energy/Energy Information Administration’s (US DOE/EIA) International Energy Outlook 2001 (IEO2001) and compared their forecast to my forecast for selected non-Organization of Petroleum Exporting Countries (non-OPEC).
Exxon puts £200m North Sea oil assets up for sale
As the region's production has declined, the majors have started to look elsewhere for new production; squeezing the last few drops out of an oilfield is often not worth the effort for a large company. Instead, the majors have made way for smaller independents.
Listed Oil Juniors Hitting Success in Africa
In the coming years, Africa will show a growing commitment towards taking advantage of the knowledge and risk-taking structure of the respective gas and oil juniors. The time that majors were ruling the Dark Continent is over, especially due to the fact that the search for new elephant fields has shown little positive results.
Blowing the Whistle on Big Oil
Bobby L. Maxwell’s lawsuit says Big Oil cheated on royalties it owed and that the government did not want to hear about it.
Nate Hagens on "The Reality Report" (downloadable audio)
Former Wall Street researcher and investments manager Nate Hagens discusses the recent Association for the Study of Peak Oil and Gas USA conference in Boston, Mass.
Iran calls for new cut in OPEC oil output
TEHRAN (AFP) - Iran's OPEC envoy Hossein Kazempour Ardebili has called on the oil cartel to agree a new oil output cut at its next meeting to counter an oversupply of crude."Some factors like the decrease of world economic growth and accumulation of oil and stockpiles of its by-products indicate that the market needs a cut in OPEC oil output again," Kazempour Ardebili said, according to the official news agency IRNA on Sunday.
Venezuela’s Economic Boom Buoys Chávez
Often lost in the campaigning between Mr. Chávez and his electoral challenger, Manuel Rosales, is that Venezuela, with the largest conventional petroleum reserves outside the Middle East, is having one of the most significant oil booms in its history. Economic growth this year is set to pass 10 percent, making Venezuela the fastest-growing economy in the Americas.
Russian-European Energy Hysteria
Russia's tight grip on energy fuels fears in West
For the West, the threat from Moscow was supposed to end with the collapse of the Soviet Union 15 years ago. But Russia's growing energy clout is generating renewed cause for anxiety.
Even Putin concedes: 'This golden era... can't last' - Spending spree in Russia is fueled by its oil and gas
Nepal introduces new rural energy policy
The Nepali government has introduced a new rural energy policy aiming at providing access of clean energy to the rural population and reducing their dependency on traditional energy sources including woods.
Oil lubricates Beijing-Caracas relations
CARACAS - As its trade with Venezuela increases, China's political influence in the Latin American country also grows, which may well serve both countries' interests.
India: Double whammy for oil companies
Domestic oil companies will have to contend with lower refining margins as well as the negative margins in marketing now following the retail price cut.
With Norway's petroleum era beginning to wind down, attention is being turned to the potential of thorium as the next power adventure for the country.
State action needed now to avert a Connecticut energy crisis: Soaring electricity costs will hurt businesses, residents; slow state economy.
Stalled subdivisions leave Metro homeowners on barren blocks home alone
In some half-finished subs where neighbors aren't moving in, blight is. Vandals and thieves have smashed windows and stripped copper pipes from the abandoned Taylor Meadows condominiums across from the house where [subdivision resident Christopher] Lightfoot lives.
How to build intelligent suburbs
The urgency of climate change makes the rebirth of our cities crucial to the planet, and its people
Heinberg: Exploring the Connections between Energy Descent Plans and the Oil Depletion Protocol
NASA: alternative fuels for aviation
Methane quashes green credentials of hydropower
Some of the latest findings point to a disturbing conclusion: that the global-warming impact of hydropower plants can often outweigh that of comparable fossil-fuel power stations. If that's correct, current energy strategies, particularly in developing nations, will need to be rethought.
Biofuel plant 'could be anti-green'
A biofuel production plant to be built in Scotland with £9 million of taxpayers' money is in danger of becoming a "major green con" and could increase rainforest destruction, environmentalists warned yesterday.
Australia: King coal under siege
Honda Establishes Solar Cell Subsidiary Company
Honda Motor Co., Ltd. today announced plans to establish a wholly-owned subsidiary, Honda Soltec Co., Ltd., which will produce and sell the next-generation thin film solar cell independently developed by Honda. The new company will lead Honda to make a full-scale entry into the solar cell business.
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Well, we know you cannot be proven wrong as ARAMCO is the only organization with the data needed to make the proof and I doubt they will release it just so we can post it on TOD. So lets try another approach.
We know that oil sold for an extended period for $20 a bbl. Since this was "old" oil from established fields the lifting costs were likely around the $5 estimate that you quote. And we know that during this period KSA ran up huge deficits. If you have 4,000 princes to support and they all need new 747s to transport their fleets of vintage Bentleys well, soon you are into real money.
Today oil goes for $60 a bbl. Another thread on TOD worked some numbers and derived an estimate of $19 per bbl investment for each bbl of new oil. All those rigs don't come cheap.
Then we have "lifting" costs for all that old oil. Taking millions of gallons of seawater, running it through a treatment plant, inject it into the field through hundreds of new injection wells, extract it at a 40% water cut and then run it through a series of separation plants - that is not be a cheap form of "lifting". That process uses a lot of energy and the opportunity cost of that energy is three times higher than it was 5 years ago. So we will double your $5 figure and call it Operating costs of $10 a bbl.
At $20 oil the KSA royalty was around $15 and this still put them in deficit. Playing with the numbers suggests they need around $25 a bbl royalty. If the graph shown elsewhere on this thread is correct then $60 oil gives them enough to operate the Kingdom and also pay down their foreign debt.
Total the above estimates and we get:
Capital costs per bbl $19
Operating costs per bbl $10
Needed royalty per bbl $25
Estimated Costs per bbl $54
Not all of KSA production is Saudi Light. More of it tends toward heavier fractions and must be sold at a discount. How much of a discount? For the sake of argument we'll set the discount at $6 a bbl. So KSA costs of prodcution are around $54 a bbl and the selling price of their oil is also $54 a bbl. I think this is the reason they need to ensure a scarcity of oil and want to see the world price back up above $60.
If the price drops much below the current price, then KSA is faced with a difficult set of decisions. Do they ask the 4,000 Princes to forgo the new 747? That will not make for happy times in the Kingdom. Do they make the ordinary citizens pay market prices for housing, health care, water, energy, and stop subsidizing job creation? That will not make for happy times in the Kingdom. Or do they stop the investment in all of the new fields and projects that they have underway? That will not make for happy times in the future Kingdom.
My take on all of this is that the KSA leadership read Twilight in the Desert, looked at the numbers, and realized they have a big looming problem. So they are now spending like mad to ensure the discovery and production of all that CERA theoretical oil. And given the structure of the Saudi state they cannot afford NOT to look for it. We think of Iraq, a state failing due to internal contradictions, as a violent intractable problem. Just contemplate what would happen if KSA started to implode.
I know there are a lot of people here who argue that they have peaked. However, put yourself in the shoes of their government for a moment. Imagine that you still control enough oil to influence the global price, and that you have been getting $70/bbl for your product. Now you see the price sliding. I can tell you that what most businesses do in a case like this - if they control enough production - is take some product off the market. Refiners don't run their refineries as hard in the winter. Why? Demand is down, and doing so would flood the market and crash the price.
So, putting myself in the shoes of the government of KSA, I would do what I could to prevent oil prices from crashing. It wasn't so long ago that price were $40/bbl. This is a nonrenewable resource - once it's pumped out and shipped, that's it. So I want to get as much as I can for it while it lasts. If I think the price will be higher in the future as supplies dwindle, I am certainly not going to pump all I can now to ensure that everyone has cheap oil.
My $0.02 for now. I am sure we will get into this a bit more in my debate with Jeffrey.
RR, you are absolutely right on this one, and despite what some folks will say, that's no conspiracy theory that's just plain good business....just because the oil production chart tails down for a few months, people believe it's because the world has PEAKED!! Look backward down the chart at the dozens of times the production has dropped....and especially look backward to 1979 to 1982, almost a half decade of MASSIVE drop in oil production.
The Saudi's will only crank production back to max if (a) They see alternatives gaining fast and risking destroying demand (b) they seem some other country find enough oil to start pumping and snatch their markets or (c) They have cash trouble and run the risk of default or internal unrest. Otherwise, they talk, talk talk, but they will sell oil at the maximum price they can get...and we would do the same....
RC known to you as ThatsItImout
Wouldn't it still be called "peak oil"?
Isn't "peak oil" the top of the production curve...no matter what makes the production go down from the top?
Rick
The problem with calling those other issues "peak oil" is that they can come back online and cause production to rise. A geological peak can't. So I don't consider those other factors a peak. If they happen at the same time as a geological peak, then you will see that peak earlier than you otherwise would have. If not, it will be a false peak.
Of course then we have the situation where supply/demand tightens up as excess capacity is used up. This causes prices to rise as supply is rising, but can't keep up with the increases in demand. This is my Peak Lite scenario.
It seems to me that the peak could be caused by a voluntary reduction (plus other factors). Then when the time of the ramp up comes, the production increases, but it does not ever again exceed the peak caused by a multitude of factors (including geological).
I guess what I am trying to say, is that I believe the peak will be (or has been) reached and caused by a multitude of causes, with the geology just being one of the causes.
Rick
Right, but if those other factors happen in the abscence of a geological peak, then production may rise again. No doubt when the geological peak occurs, there will be areas with shut-in production. But unless you can get a production decline from the other factors that is not permanent if you aren't pushing up against "The Peak."
Does anyone have access or a larger summary of the Nature article on methane and hydropower?
Try going in via this link (at the bottom of the page).
The gist of the layman's article is via the release of organic materials flooded by the dam. Wonder how background, "normal" releases and loss of terrestial photosynthetic capacity were handled, also the aquatic reservior production of carbon lost to the sediments over time. Interesting study potential.
Does not seem to address smaller scale hydro projects, either with penstocks or disbursed microhydro.
RR,
Good explanation. Thats always been my point about the difference between "geological" or true peak, and "logistical" or peak caused by logistical factors such as lack of manpower, lack of machinery, political instability, lack of investment capital, lack of demand, etc, etc. Logistical peak can be recovered from, as in the 1980's. But "true geological peak" can never be.
Westexas makes the great case of this in regards to Texas and lower 48 U.S.
There was no war, the technical talant was as good as anywhere in the world, there was plenty of money, and there was the best machinery in the history of the industry....but when Texas went into it's "geological" decline, no amount of money, no amount of effort and no amount of drilling could reverse it.
When that happens, EVERY OTHER FACTOR becomes moot. That is the question we are all asking: How close is the world to that point? Because once it happens, looking for alternatives, and restructuring consumption downward has got to happen FAST. If the U.S. peak was any indication, we will get no advance warning, and the price signal will tell us nothing. American oil was as cheap as it had ever been (inflation adjusted) at the time of the U.S. peak, and everyone was living large. Only months later, we were over the top and starting the long, long decline.
Right now, if you factor in inflation, oil is still relatively cheap (taking a price between $58 and $62 per barrel) when compared to inflation on everything else since the early 1980's.
Even the optimists know this: Light sweet liquid crude, and that prestine natural gas are one shot deals. We may be able to find alternatives, synfuels, etc., but the time of pulling this miracle elixer out of the ground and out of the ocean floor can only happen for us once on this Earth. That first time was a "freebie" in a way. All the rest we will have to design ourselves, at great cost and effort. If we are too lazy to get off our lazy arses and start now, we will have only ourselves to blame for using up the last of a miracle of nature as great as natural water or the giant tropical forests, there will be no "store" to run to and buy what is the only GEM of nature and God of the likes of this planet ...there will be no putting the toothpaste back in the tube.
Forgive us, we do take it so for granted don't we?
Roger Conner known to you as ThatsItImout
I wonder how much of the total US economy is auto based? Road building and maintaining machines, parts and repairs(street lights, signals), auto parts stores, insurance, law enforcement, tort, hospitals, (Houses with) attached garages, war in the ME, vacation, the list is endless.
How much do we spend paying for cars?
How much effort was spent feeding and maintaining a horse or ox?
Is it possible that the "logistical peak" in the '80s was easily recovered from because we were not at "geological peak"???
The "geological peak" you describe is some imaginary value and date.
Production of oil is NEVER devoid of logistical factors such like "lack of manpower, lack of machinery, political instability, lack of investment capital, lack of demand, etc, etc."
The world is not a test-tube where all of these "logistical" factors of Production can be controlled.
The theoretical peak may be any date you choose but once the geopolitics intervenes this TimezUp we will not have the same luxury of bountiful easy oil to recover from this "logistical peak", like we did in the 1980s.
This "logistical peak" is not likely to ever be recovered from again.
Resolved: World Net Oil Export Capacity is Now Declining Because of Involuntary Reductions in Production and/or Because of Increases in Domestic Consumption in Major Oil Exporting Countries
A Guest Post by Westexas (Jeffrey J. Brown)
To what extent do you and I debate the topic in the comments section following each post, or do we just see how it goes?
Roger, as you know the argument is that the world, mathematically, is at the same stage of depletion that other large producing regions started declining, such as the Lower 48, Mexico and the North Sea, or were close to a decline, such as Texas, Russia, Saudi Arabia, etc.
The decline in world production supports the HL (logistic) model. The argument is not that just because we had a decline, we are post-peak, the argument is that the decline fits the mathematical and historical models.
In further support of this argument is the near certainty that all four of the current super giants are almost certainly in decline or crashing, while the only super giant on the horizon--Kashagan--won't hit peak production, at best, until about 2020.
Yes, we have talked about that before, and the evidence looks like the rope is geting short, that's true for certain. I am just careful not to underestimate the oil industries abilities, and have no way to know for sure that some of our "trusted" suppliers aren't holding out on us. (My "running in the blind argument). I do accept that given the weight of the evidence, and given my belief that we will get no real warning in the price signal, we should be on almost full "war" type footing on the alternative energy front and on the restructuring front, to reduce consumption and diversify our sources. We should also be building strategic stocks of propane, oil and natural gas to the maximum possible, and building a "post depletion" infrastructure plan, including a shift to rail, barge and warehousing and away from complete reliance on JIT inventory systems.
I am so prone to fear yet, but I do have one major concern: If the decline was very fast and very severe, we could run the risk of losing our ability to modify, by losing what is known as the "four C's": Communication, Control, Command and Coordination. Then, making the technically sophisticated changes would become increasingly difficult as each day passed. That is one more reason I am such a believer in distributed power built into, not in place of, the grid as it exists, so that we get reduncy and distributed technology and know how.
I think we agree that the time to make the "mitigation" changes is NOW, whether we are sure peak is at hand or not, we should behave as it it is already here, in fact, possibly even behind us, and we just don't know it yet. After all, that actually could be the truth.
Roger Conner known to you as ThatsItImout
Roger the time for mitigation projects has long since past. This is now the time to build lifeboats. The bottom line is that when the world recognized Peak production and permenant declines, much of the world's leading exporters will cut or stop exports altogether. It makes no sense for countries to continue to export oil and gas to the west when much of them have their own populations to support. Perhaps some oil will still imported to the US, since the US is the leading exporter of food, but it certainly won't be enough to preserve our standard of living. Whether the US can contine to produce the same volumes of food without plentiful and cheap oil is a big question. The US is now the third most populated nation (300+ million), especially when you consider the rapid deplention of the major aquifers.
Finally to put ones preservation in the hands of the US gov't seems foolish to me. Our politians have been arguing for the past twenty five years on silly stuff, and make poor decisions because it gets the re-elected, (Ie bigger entitlements, new highways, etc). Its likely to take another twenty years before they start making sound policies, unlike the silly energy policies which have only hasten our demise. By then the Union will have all but disolved as states and local gov't realize that Washington isn't going to save them. Thats assuming that they continue to exist and have enough capital to finance projects with.
This past summer OPEC admitted several times they were pumpint all-out and could do nothing more in spite of the highest prices ever.
So at Peak Production the world still had a small cushion left over consumption and the Market did not get the signal of shortages some expect.
The giant fields continue to role-over and the sauds and others find their frantic drilling can't prevent decline... and the puddles coming online in 2005... ah, make that 2006.. okay, definitly by 2009...
Good luck with your proJecTIONz.
Iran knows it's dayz are numbered (just as the Russians do). Their Window of Opportunity is short.
Iran will be the geopolitical cause once again for the decline - but this time from Peak Production (who cares what Geological Peak Date Woulda, coulda, shoulda been if we lived in a perfect test-tube world where all the kingz horses asses sing Kumbia and share nice, and where planz on chaulkboardz always bear fruit).
But don't worry - the yerginz et. al will likely have another chance to obsfucate the obvious - after the Iranian Mullah's 12th Phantasm fails save to their shiite desperate, moronic and fanatic asses, world oil production will again recover ... maybe... for a few years.
Dec 2005 is the World's Peak Production until proven otherwise by Reality. Until then all you have is prOJectIonz and false hope to deny it.
http://www.strayreality.com/Lanis_Strayreality/iraq.htm
This paper examines how the need to gain unfettered access to Iraq's Extraterrestrial (ET) Heritage has played a critical role in influencing US foreign policy in the Persian Gulf region ever since the Carter administration.Do the Alienz zpeek with a Z lizp?
Of course we have had several drops in production over the years. The one you mention here was caused by the Iran-Iraq war and the tanker wars that sprang from this war. Then there was the collapse of the Soviet Union, then OPEC closed the taps in 99, opeaned them a little the next year before getting serious in 2001 and closing them again.
Only when you have a drop in production when everyone is producing flat out can you suspect we are at the peak. In all the history of world oil production that has never happened.......until now.
Ron Patterson
That does complicate matters doesn't it. Especially for the politically correct and culturally ignorant.
Therefore, the concept of a geological peak, may be a bit misleading in the since that we could have a voluntary peak that is, not strictly speaking, constrained by short term geological considerations.
Isn't it true that the Kuwaitis have decided to not wait until they a decline in production is not a choice?
I think it would be more accurate to say that we may have a peak based upon geological considerations, but not one based upon an absolute inability to produce more in the short term.
I find that highly unlikely. The fact that Saudi has admitted to a 5 to 12 percent decline rate means exactly that. They are declining by an average of around 8 percent. Saudi produced an average of 9.55 mb/d last year. Now is that decline rate voluntary?
A year ago last September Saudi produced 9.6 mb/d. This September they produced 9.0 mb/d, a decline of 6.25 percent. And it can be assumed that they found some new oil, or pumped faster from some old oil patches, to get their decline rate down to 6.25 percent.
But this is all beside the point. IF they are just resting their fields, this does not mean they can go back to pumping a lot more oil later. They are resting their fields because they were overproducing them before. Even if they are just resting their fields, it means they will never likely go back to what they were producing before.
I don't think so. If they are telling the truth when they say their existing fields are declining at 5 to12 percent per year, then they are at geological peak.
No, that is not true at all. The opposition party in Kuwait has discussed this but to no avail. Kuwait is still producing flat out, or was until November 1st anyway.
Well a few countries have yet to peak, Nigeria, Angola, Brazil, the Caspian area and perhaps Russia. But Russia is very close. But I have absolutely no doubt that Saudi Arabia is post peak, as well as Iran, Venezuela, US, UK, Norway, Mexico, Indonesia and about a dozen other major producers.
There will always be some problems an/or conflicts in the world that keep a few nations from producing full tilt. That is to be expected. But right now if Nigeria and Iraq had no problems, we would still have peaked, so far, last December because last December those same problems held back production then as well.
Bottom line, when we peak, or when we peaked, it will be because everyone is producing every barrel they possibly can, or could.
Ron Patterson
At ASPO I was fortunate to sit next to a Fund Manager who'd been in the energy game for many years. He seconded this concept and says, in his opinion, OPEC producers have a much different awareness of these issues than when he started out. He said the views he hears at OPEC meetings now are very different from 10 years ago.
OPEC shouldn't be holding back production because of temporary "imbalances" imo, but, rather, because Oil in the ground is money, it's capital. OPEC and other producers should form a plan for reducing production and exports, and announce it.
It's not for nothing investors over the past several years have been accumulating the longest-dated Brent and WTI contracts--not only as a bet on depletion, but, as a currency diversification. I've used the weak dollar as my own guide since 2003, and that's been a pretty good Pole Star.
BTW Robert, I hope you have considered presenting at ASPO next year in Cork, especially as you are relocating to Scotland.
Gregor
Gregor,
Do you live in Cambridge?
I met a Gregor on Friday (Peak Oil never came up) - just wondering if it's you.
Garth
I am skeptical first because if you truly put yourself in their shoes, you find it unprecedented for them to want to cut back their supply unilaterally and quietly to support worldwide prices at the cost of their own treasury. Especially if they actually believe they have no shortage of oil to sell, they have no incentive to do this unilaterally instead of going to OPEC as they have always done in the past and pursue quota reductions. Perhaps they would have a motivation to do this unilaterally if they were facing production difficulties anyway. If they were trying to support prices, I would also expect them to trumpet their reductions to alarm the oil market (thereby increasing prices), not do it silently and even less to announce repeatedly to the world that there was no market for their oil, which would have the opposite effect of causing prices to go lower.
This inconsistency is also part of my skepticism. It is a different thing to say you are selling less due to lack of demand, and to say you are intentionally cutting back to support prices. Of course I understand that you can cut back to support prices if supply is excess. However, I do not believe they were unable to sell their oil at the time (except possibly poor quality oil) due to the fact that other suppliers were able to increase their sales of oil at high prices at the same time KSA was saying there was no demand for their oil (which should have the opposite effect of lowering prices). Only later did KSA say their reductions were intentional to support prices, and significantly later did they ask OPEC for reductions.
Your explanation can make sense, but when you break it down, it actually gets pretty convoluted and inconsistent with KSAs own usual practice. I can't prove anything, of course, just my opinions.
But why are the Saudis deciding to test the upper boundaries of what people will pay for their oil now?
Why didn't they try it 5, 10, 15 years ago? THIS is what makes me wonder what is missing from the equation of their behavior.
This, I think, is the answer to my question above. KSA knows the price will be higher in the future so they are trying to see what higher price they can get for their oil without throwing the world into chaos.
This all paints a picture of "something ain't right in the desert".
If this is the motive then why do they need to call on all of OPEC to reduce production? Let the other folks pump their oil while the Kingdom throttles back production to maintain the target price. The faster the other guys pump the more control, and the greater price we can demand in future. This is, after all, what it means to be the swing producer.
The only rationale I can come up with is that they need revenue of X amount to run the kingdom, recover the oil and explore for more. They may have already voluntarily pulled volume off the market to sustain the price but any further unilateral volume reduction reduces KSA net earnings below their comfort zone - see the remarks elsewhere in this thread (from Charles McKay I think) about the impact on Saudi psychology of their past deficits.
If this logic is correct then KSA current revenues are now close to current expenses. If they had a big excess of revenue over expenses they would just do what any swing producer does and act unilaterally. My hunch is that they cannot afford such a loss of revenue hence they have to jawbone the other producers.
Of course they run into the same problem if the US fails to support its currency (and this may be the reason the VP was summoned to KSA). And if they face both a dollar decline and a price per bbl decline then the problem compounds.
Interesting times in the ME.
I've asked him several times why he thinks we are at $60(+)/barrel these days even though he believes ,currently, there is really no geological supply crisis. I'm not sure if he is ignoring me or just thinks my question deserves no reply.
I have answered this question at least half a dozen times. It is because there isn't nearly as much excess capacity in the market as there was a few years ago. Peak Lite. Demand rising faster than supply.
Any time they cut production - which has happened many times in the past - they are trying to prop up the price. Any supplier typically gets as much as they possibly can for their product. Just because they were selling oil for $40 a couple of years ago doesn't mean they weren't testing the upper boundaries of what people would pay for it.
They are, to some degree, captives of the market like everyone else. At some point, the market simply got away from them and oil went up to >$60 and guess what? The world didn't end and economies didn't come crashing down, and 'alternative' energy sources didn't suddenly take over and make crude oil obsolete. So, yes, I agree with RR. They got used to >$60/bbl and, through no direct market manipulations of their own, have come to realize that they can have at least 2 cakes and eat them too: Get premium prices for oil; rest the aging fields by allowing production to drop somewhat.
My bet is that if they had to produce say 11 mbd they could open all the stops and do this, but not for very long, and production after such a surge would probably drop even more than where it is now. So, go figure, if SA were to open all stops and surge world production to a new peak would this be a logistical peak or a geological peak? Silly question.
The weakness of the POV that SA is cutting output because it wants to maintain price are:
To maintain thier status as swing producer?
If yes, then rig increase speaks of a "need".
To harm Iran's military potential economically by lowering oil prices?
If yes, then rig increase speaks of a "need"
To maintain thier own internal spending/lifestyle?
If yes, then rig increase speaks of a "need"
I think that the writing is on the wall. They "need" to drill and find more, just like everyone, everywhere else. Why increase drilling expenses if there is so much oil in what they have already have.
We are in deep trouble...
But Robert, isn't this another way of saying that they are already producing at maximum capacity and do not have any headroom to further increase production in the near term?
This does not imply that they are at Geologic Peak. I also suspect that the reported high NA inventories are likely due to the delayed onset of winter; it is possible that KSA is just seeking to ensure that no short term surplus disrupts the market.
But in the past KSA has always argued for steady low prices in order to dissuade investment in alternative energy and other provinces. Why the change? Perhaps their new strategy is to keep the price high so that they can afford to lease every rig in the world and prevent any exploration anywhere else. Beyond that it's a mystery.
Cheers!
No. It doesn't mean they are producing at max capacity. But it may mean that they see all of the excess disappearing in the not too distant future unless they accelerate some of their projects.
Refineries, for instance, have greatly increased capacity over the years. When they do a project, they will have excess capacity for a while. As demand grows, they look out and decided that another project must be done. If demand grows faster than expected, we will need to accelerate the project. We weren't ever necessarily producing full out, but we saw that we would not be able to meet future demand without the projects.
Why the change?
They may have figured out, like many of the rest of us, that this ethanol business is a scam that won't put a dent in our oil consumption.
The Saudis have had a change of view on the "proper" price of oil. But it shouldn't be too much of a mystery since higher oil prices are clearly in their interest. The real mystery is how they were persuaded for so long to keep the price so low. I'd propose 2 explanations for their change of heart. First, they saw that $75 oil didn't crash the world economy, which many had feared. And second, the Saudis have a new king, and he is not so closely aligned with the US. This realignment is illustrated by another recent Saudi move; showing the US military the door.
The Saudi British Bank has estimated that Saudi Arabia's 2006 budget surplus will be almost $30 billion. The Saudi stock market index (Tasi), is by far the region's largest and most influential, despite market corrections since March earlier this year."
http://www.tradearabia.com/tanews/newsdetails_snREAL_article115001_cnt.html
If the Saudi budget surplus is about $30 billion, adding back government expenses, that actual profit on oil may be somewhere around $40 billion or more. Let's for simplicity say it was $120,000,000 per day and they produced 9 mbpd - that comes to a profit of about $13.50 per barrel - which is considerably less than the figure commonly quoted in the media.
Since this is an average, the marginal cost of new production is higher. So the marginal cost of new production actually could be as high as $54 - so maybe a US based price of $60 isn't so great for them after all.
Please fell free to correct and refine my numbers.
From a business standpoint, I would be very worried if they WEREN'T investing in their fields. If it's as clear cut as you suggest, then they would want the price of oil to reach astronomical levels and siphon what they can from the worlds check books before having to inform their population that the Camel is now back in style...
I worked for ARAMCO from early 1980 till mid 1985. Though I worked on their computers, I did have some contact with oil field engineers. Saudi Arabia was then injecting millions of gallons of water per day. The water injected into Ghawar, Berri, Abqaiq, and Safaniya may have increased slightly since then, but not that much. Also there have been workovers on many of the wells, but there were always workovers. That is nothing new either.
All the old oil is still being produced at about the same price, adjusted for inflation of course, that it cost in 1980. In fact, it may cost less because the infrastructure, gosps, water injection plants, and other facilities are still there from earlier days.
There is just no way that the cost of producing oil from these old fields has increased dramatically. And these old fields still produce about 90% of Saudi's oil.
New oil is of course a different matter. Shaybah, though discovered in 1968, but because of its remoteness was not put on line until 1999, is the only new field of any size in Saudi Arabia. Shaybah today produces about 600,000 barrels per day. It is probably true that each barrel of new oil cost them as much as $19 a barrel to produce. But the old oil, 90% of the oil, comes at a much cheaper price.
And KSA's deficits have nothing to do with the lifting cost of oil from their old fields. Saudi is spending billions on infrastructure that has nothing to do with producing oil. And new oil infrastructure is costing them billions more. They are pulling in drilling rigs from all over the world in a desperate attempt to stem the sharp decline rate from their old fields. But this cost is for oil not yet pumped, some for oil not yet found. That oil will have a much higher cost per barrel. You cannot honestly add this new cost to price it cost to produce oil from their old giant fields. You may must take the profit from those old fields and spend it trying to find and develop new fields. But you cannot then legitimately claim that the lifting cost for the oil from these fields has increased! That is, you cannot legitimately add that cost to the lifting cost of oil from the old fields.
One more point. Saudi Arabia uses natural gas to generate electricity for all its gosps, water seperation plants, water injection and such. NO, the price of lifting that gas has not increased three fold since oil was selling for $20 or less a barrel. And they are still using most of the same equipment that they were 20 to 25 years ago. At any rate the cost of that gas is only a tiny fraction of the lifting cost of a barrel of oil.
The cost for lifting old oil from old Saudi fields is probably less than $5 a barrel.
Ron Patterson
Ok, as you are now adding the qualification "old oil/old fields" to your original assertion, we need you to tell us how much of KSA production is from old oil/old fields. Otherwise, this distinction is pretty meaningless.
And BobCousins wrote:
Not really! There is no limit to what anyone can spend trying to produce new oil, whether or not they are successful in producing a single drop or not.
If they choose to spend a fortune trying to get their production from 9 mb/d up to 10 mb/d, then that is their progressive. But one cannot legitimately add that cost to the cost of raising the original oil. It simply does not work that way.
Hell, if they spend $45,000,000 a day to produce 9 million barrels of oil, then they decide to spend $90,000,000 million dollars a day searching for, and perhaps producing a few more barrels, can you legitimately claim that their lifting costs have tripled?
NO, you are the one trying to make new rules. The cost to lift a barrel of oil is the cost it costs to lift that barrel, not barrels not yet found. That falls under an entirely different budget.
Ron Patterson
You are exactly correct. Your piece further up the thread said it perfectly.
Lifting costs (IMO: All costs required to develop a field) in KSA are around $4-$6 / bbl.
Most of KSA's oil is from fields with low lifting costs and depreciated Capital Equipment.
So, how do lifting costs increase?
- Bring in new rigs at todays $/foot rates to keep a field going.
- Explore and develop NEW FIELDS at todays $/foot
The bulk of KSA oil is still coming from mature fields and mature infrastructure.However. If an accountant decides to fold in the new costs for exploration and development of new fields into the generalised lifting costs of a country or region, then the aggregate lifting costs will ultimately go up.
Examples abound. In the North Sea, if you find a puddle that can be exploited from an existing platform and existing pipeline infrastucture, then lifting costs are substantially reduced (circa $14 / bb l was a figure I was quoted in 2001). I have seen lifting cost calcs of as low as $8 / bbl.
Platform and infrastructure costs were frequently 'front loaded' onto a new field in the UKCS - hence the need for a massive ramp in production in the initial phase. Nothing new here.
Fields that are isolated from existing infrastructure are a separate issue. Lifting that oil is always based on the economics of bring that oil to market. There is no cross-subsidy in such cases. A field development stands or falls on its own economics. Development of such a field depends upon a 'price' . That price is based upon a floor price for oil and the floor price is always pessimistic. (Too many oil companies have had their fingers burnt in the past to get optimistic about high oil prices).
A lot of it is down to accounting tricks, smoke, mirrors and a long term view of the floor price and the likely fiscal and tax regime of the government involved.
Any new field (in KSA , West Africa, UKCS - name any place you like) will have higher lifting costs. Rigs, People , Services, Technology etc are all now exposed to an inflation rate in excess of general inflation. This is due to demand for such services outstripping supply.
Great news if you are a Service hand right now, pretty grim if you are an oil company unable to find a rig for a hot prospect.
But if you look at it over 20 years, then the oil cos and service cos were not the place to put your money.
Internet Porn and recreational drugs were....
So, you can make 'lifting costs' mean whatever you want it to mean on a balance sheet, but KSA still has the lowest lifting costs.
This may change as more kit and rigs and kids are required to keep old fields producing. But it still has a way to go yet when you fold these new costs into 9 million bbls / day.
I see you didn't answer my question, but have introduced another red herring, that of exploration costs.
I find it hard to believe that Aramco have a separate division of staff who manage these "old wells", who are still being paid at 1980 wages, renting buildings at 1980 rates, and paying 1980 prices for paper clips etc.
The proportion of "old wells" could be anywhere between 1 and 99%, you haven't suggested a figure. In order to figure out what what Aramco's break even price is, we need to know this figure, as well as the cost of production from the "new wells".
You seem quite certain about this $5/bbl figure, but are unable to give the rest of the data that would make it meaningful. I conclude that you have no better idea of Aramco's profitable price point than anyone else.
in 1980, KSA's lifting costs were closer to $2 / bbl.
Cost / Number of bbls flowed.
KSA is blessed with massive, onshore fields that were once under high pressure at relatively shallow depths.
This is why KSA has been a fount of cheap oil throughout most of its history to date.
Look at the number of wells required to flow this wealth and compare it with the number of wells required by its next nearest contemporary (in time, not size). This would be Texas.
KSA benefitted from its particular geology and the lack of development required to bring it on stream and up to full flow.
Things may now change, and lifting costs will rise, but for the bulk of its history, KSA oil was at very low lifting cost.
What will change KSA's lifting costs will be the new arrivals, many of which are Jack Ups. Also any new fields that are stranded and require piping to current infrastructure will also increase lifting costs. But even so, they are in pretty good shape wrt lifting costs.
Compare it with Thunderhorse or Jack or the Barents Sea.
And, at the end of the day:
Engineer: ' what are our projected lifting costs?'
Accountant: ' What do you want them to be?'.
in 1980, KSA's lifting costs were closer to $2 / bbl.
Cost / Number of bbls flowed.
KSA is blessed with massive, onshore fields that were once under high pressure at relatively shallow depths.
This is why KSA has been a fount of cheap oil throughout most of its history to date.
Look at the number of wells required to flow this wealth and compare it with the number of wells required by its next nearest contemporary (in time, not size). This would be Texas.
KSA benefitted from its particular geology and the lack of development required to bring it on stream and up to full flow.
Things may now change, and lifting costs will rise, but for the bulk of its history, KSA oil was at very low lifting cost.
What will change KSA's lifting costs will be the new arrivals, many of which are Jack Ups. Also any new fields that are stranded and require piping to current infrastructure will also increase lifting costs. But even so, they are in pretty good shape wrt lifting costs.
Compare it with Thunderhorse or Jack or the Barents Sea.
And, at the end of the day:
Engineer: ' what are our projected lifting costs?'
Accountant: ' What do you want them to be?'.
Thats deficit is probably not something the Saudis have forgotten about. Again does it really matter what their historical costs are? What SA and other countries are really shooting for is a price which will cover oil extraction and development costs + governmental adninstration costs. Otherwise they would eventually exhaust all their savings and be forced to greatly reduce their standard of living.
Much of the existing infrastructure was scrapped at that time.
Alan
In the comments following that story, one person wrote:
So far, so good. Then finishes up with:
Oh boy.
"Many men stumble across the truth, but most manage to pick themselves up and continue as if nothing had happened." - Winston Churchill
It occurs to me that one needs to be careful with the idea of 'peaking' in terms of the industrial societies most of the TOD readers live in.
These societies have physical wealth in things like metals which are incredibly vast, and yet, it is a commonplace in a forum like this to discuss how extraction operations can only reach ever lower grades of resources.
In energy production, this is a massive problem, as the basic reason for this extraction is to provide more energy. Energy, further, which when liberated, is gone.
But physical materials are something else. If you make the assumption that fuel costs will, say, treble, in ten years, what will happen to all the cars which are no longer driven? After all, they don't just vanish because of peak oil.
To be even more logical, why would any mining operation attempt to compete with literally millions of tons of now highly refined metal on the market? What is the EROEI of mining 40 million 1.5 ton highly pure ore deposits?
Especially as it is reasonable to assume that the economy will not be growing, which means that this metal is not exactly going to depleted any time soon.
I think one has to be very careful in making assumptions based on the idea that just because we all 'need' cars or beverage cans, there will always be cars or cans, which means that all the metal currently in such is simply not available for other uses, like wind turbines, or river barges, or rail cars.
It is reasonable to discuss whether a society or its members can so change their priorities and practices that survival in changed circumstances is possible. Or whether a society can meet various challenges along the way - certainly, as in the case of the Soviet Union, 1918 to 1938, tens of millions died while a new paradise was being built (yes, bitter sarcasm), but the Russians did manage to industrialize themselves, at a cost which is frightening to consider. (And to add to the complexity of that cost - if they hadn't, what the Nazis would have done is a nightmare to contemplate.)
In a sense, maybe we could truly start to refine our scenarios to take into account the physical reality we live in, right now? The one where such resources as glass or metals are not in short supply, and won't be, unless growth as defined by consumption alone is truly impossible to stop in our societies. (As in America, with more cars than drivers - which is a fact approaching insanity.)
As a final note - food is much closer to the energy side of consideration, which makes some sense, when you consider that food is essentially fuel. Any dark future based on food problems is wide open for discussion in my book.
We've known how to make glass for five thousand years or more, but until recently, it cost so much in energy that it was a luxury good. The glass windows were removed from the castle when the lord was away. Only the wealthy could afford mirrors. Glass beads were not cheap costume jewelry.
And yet this was the normal condition of homo sapiens for 99+% of his existence on earth. Ergo, according to your reasoning, since this new condition is so special (which you don't explain how or why), homo sapiens will now always be able to do what they have been unable to do for 99+% of their entire history.
If you don't believe knowledge and technology can be lost, go study anthropology in more detail. It has happened often in humanity's span on this planet that we can detect which means it has probably happened even more since we rarely get more than an archaeological glimpse at the past. If we can see this occurring in these small glimpses then it must indeed be a common thing across all that span for which we don't have clear archaeological data.
Never mind glass. Think on this: Sex Toys (which are made from petroleum products):
http://www.counterpunch.org/rosen12022006.html
Now what you gonna do, come peak oil? When its cold and dark and the power is off...
And guess what: You have offshored this industry as well.
In 70 years time, squabbles over Grandma's heirlooms may be whole different game.
And I thought peak chocolate was bad news.
So, at a minimum, Sweden should have a bit over half of their current electrical power.
Alan
There will be patches of civilization that survive in some places, some times. All will not be lost - just most of what we call the global village.
Magnus might be right about his patch of civilization - I apologize for assuming he was speaking for the world as a whole.
I hope this local patch of civilization will adapt well to the post peak oil changes. I think the potential is there, some of the work is already done and relevant things are being done. But there is at least an order of magnitude between what I worry about and the "civilization will fail" talk that is fairly popular on ToD.
I think the global village will prevail in electronic communications, medium and high value shipping and railway travel.
This will give very strange times when highly developed areas calculated to be worth a lot full with people used to an affluent life that have invested in uncompetitive infrastructure falls into depression withouth being able to do much about it. The wailing and anger will probably be quite loud on the net.
Hydro power plants are simpler and wear down a lot slower. There are already manny small and medium sized powerplants that have been run for 50 years with very little maintainance. A lot of the medium sized and most of the large ones are well maintained today and thus having half of them still running in 50 years with minimal maintainance done by a failing society seems to be a fair margin.
This leaves about 1/4 of todays capacity. Even 1/10 would be immenese ammounts if power compared with anything before 1930.
Albanian and North Korean, Zimbawae (sp ?), Zaire hydro stations have all kept going as their societies "retreated".
Hydro equipment can lose efficiency, bit typically keeps going "no matter what" !
Alan
Even assuming we can generate just 1% of the electricity we do today, we have a wealth of energy that no one from 1880 could have imagined.
As I think on the various plausible and less plausible ideas of collapse in regards to peak oil, the nagging question of how much is just a failure of imagination keeps rising.
This doesn't mean we aren't heading for massive problems, this doesn't mean technology will rise to the occasion, but merely, when you write about a barefoot child, is it because no one thinks about footwear except in terms of stores and factories? Not to say they are wonderful, but aren't wooden clogs/sandals also practical? And more, why wouldn't people try to find a solution to their children having footwear, whatever it may be? After major plagues and wars, it won't be as if shoes will be hard to find for those who aren't too picky.
This may seem like nit picking (another activity sure to come back into fashion - just as bed bugs are making a big come back), but it is meant to try to add a bit more grounding to a broader discussion.
To use a framework which applies to energy, and we are heading for real problems in that area, and lay it over other things seems questionable.
We will not be running out of the iron necessary to build a rail network because mining it is becoming more energy intensive, nor is energy necessary to create that rail system unavailable. What we may not have is the will to build it, while instead keeping our SUVs and McMansions and home theaters running, while drinking drive thru coffee.
This intersection is one of the things which makes the peak oil discussion interesting, which is much more about social values than material things, in my opinion.
My guess is that it goes to the military, or to agriculture. Remember, we have a much larger population to support than we did in 1880. About four times as many people, in the case of the U.S.
In this direction, the way that Japan essentially removed firearms from its culture for a couple of centuries is an example. The sword had a higher value to the rulers of Japan than the advantages of firearms in warfare.
Yeah, I agree.
Exactly.
On the bright side, though it sucked to be a peasant in that system, it did save their forests.
One of the smartest posts I've read in a long time & I wonder why others don't see this when they imagine shrinking energy supplies.
Bucky Fuller once wrote that the American economy operated at 4% efficiency. When asked how he arrived at this WAG he replied that he could only base a number so high on his icurable optimism.
Anyone who rails at the excesses of suburbia knows that we could live - well - on much less energy.
The end of suburbia is hardly the end of the world. Whoever survives and lives post peak is going to live very differently than we do now. I expect - on about as secure a grounding as Fuller claimed - that energy will not be the most critical resource in short supply.
From the Detroit News story on undeveloped subdivisions:
"He lives on Tiara Lane in the Monroe Meadows subdivision on an unfinished cul-de-sac, where one lot is undeveloped, one house is being auctioned and another one sold for $209,000, about $100,000 less than what Slavik's home is worth, he said.
Yeah, right. Now before we get the string of panic mongers who are going to say that this is the DOOOOM!!!, housing bubble crash that PROOOOVESS!! Peak Oil, stop and think about it for as second:
309,000 bucks for a HOUSE IN MICHIGAN??! :-O
Peal Oil may be here and it may be rough, I can't know that, but all human stupidity is not connected to peak oil....just like the Tulip Bulb craze, the tech bubble in Silicone Valley, and the coming Euro bubble smackdown, the greater fool theory of investing will always hold.
Roger Conner known to you as ThatsItImout
I havn't seen anyone equate the housing bubble collapse directly with peak oil, more that the collapse of house values is leading the US into an economic slowdown that will put further downward pressure on the value of the dollar.
A weak dollar makes oil (and other) imports more expensive for the US, so the housing bubble collapse could lead indirectly to a peaking of oil imports to the US without an actual golbal prodution peak.
If the US dollar goes very low the demand destruction could offset the actual peak by quite a significant amount.
It is amusing that Slavik thinks his house is worth 309,000 if a comparable house close by sold for 100,000 less. But that just tells you all about the world of pain that lies in wait for millions of soon-to-be upside down homeowners are in for as prices return to mean, and they most definitely will return to mean.
How did that guy even get approved for a mortgage. Almost certain a combination of stated income and some toxic ARM.
Her problem is that they can't pay the property taxes. And they can't borrow against negative equity. What to do? Bob advised her to contact the tax authorities and see about a payment schedule.
Of course, the underlying assumption is that the early signs of the suburban meltdown are transitory, and things will get better as oil prices drop--because Daniel Yergin told us we won't peak for decades.
I think that we are in for Peak Doo-Doo next year.
- Book a holiday.
- Light a candle on a rafter in the loft.
- Go on holiday.
:-)And the Repub's passed tighter bankruptcy laws...so the banks could keep on making loans that they shouldn't have (and they know it)...this added fuel to the economy...and the bubble got alot bigger...and hey! looky over there at those damn illegals - they are causing the problem of why I don't have a $50,000 job flipping burgers at McD's.
that lady is what's known as another fucked borrower - www.anotherfuckedborrower.com
Sorry for the language but that is the site name!
She's reallllllly upside down!
Unless she can pull some kind of financial rabbit out of a hat, my advice to her would be to BAIL!!!
Get out of there, even if it means a bankruptcy, hangin' out in a shelter for a while, etc. That's still far preferable to working yourself literally to death trying to win a fixed game, which is what I think the US middle class is trapped in.
In Japan they have a sort of "drop dead due to overwork" syndrome, I think we'll be seeing a lot of this in the US.
And its a lot more common than you'd think (although on the decrease since the bubble).
The fact the Japanese even have a word for it is pretty scary.
Living and working in Japan, I have seen guys seriously damage their health by overworking.
I can't imagine it ever being a problem in the US. People here don't do it to get out from under loans. Its more of a lifestyle/mental health issue.
Banks don't care about the loan. Banks no longer make money the tradional way with mortgages. These days banks, off load the debt to the bond market and GSEs (Freddie, Fannie) and profit from collecting fees and servicing the loan. In this situation the banks didn't care about who was borrowing and what would become of them when the bubble popped. All they cared about was collecting load processing fees.
However, the banks did forget about something very important: Litigation. There is a whole ocean of hungry Sharks...I mean lawyers, that want to take a bite out of banking profits.
I have a reliable source that tells me much investment is being made in the Euro by those pulling out of the Dollar.
Marco.
Marco,
I am sure that is true....and probably by Americans....remeber the last time they had this "Euor" mania, American capitalists like Warren Buffett jumped in....of course, our capitalists would sell their own wife as to a turkish horehowse for a pittence....
I was being sarcastic in the other post, but it was my way of saying I have ZERO faith in the Euro....I think it's a glorified traveler's check that has no standing in law or history, backed by a "group" that really does not even exist as a group having ignored or renounced almost all the laws and charters of the "group" without bothering to replace them. Europe has a worse energy situation than we do, a worse demographic situation, a worse ethnic and immigration situation.....it's the most idiotic currency situation in the world, but it is sucking outside money into Europe to finance their poor management. Incredible.
RC known to you as ThatsItImout
If they are "poor", the the US is ??
Best Hopes for Good National Management,
Alan
Marco.
Marco.
Describing the euro as a traveller's check is not actually a bad description. Now, 350 million Europeans can buy and sell without any any currency consideration in the way.
For many European companies, this was a blessing, even if the banks ended up losing some fat fees.
And having the world's largest exporter stand behind the currency is certainly not a reason for no faith, especially since after their experience in the 1920s and 1930s, Germans are extremely concerned about inflation, even as they bend to the breaking point the rules they wrote for other euro members to follow. And the Germans are simply one voice among several, of course.
The euro is not magic, and is part of a larger currency universe - the ECB will do just about anything to prevent 2 dollars to the euro, for example, as that would kill the exporting side of the EU economy.
What makes the euro interesting it is that is the first means of exchange which seems somehow disconnected from government since gold and silver were used. Which may certainly be one good reason to have little faith in it.
I do believe that Americans tend not to understand what a change the euro is for Europeans, and the effects are not primarily monetary.
Roger, apparently you haven't been to Michigan in a while. Over $300k houses are common in the Detroit suburbs and around Ann Arbor at least. In Michigan we have a lot of high paying jobs, ample fresh water, good transportation infrastructure, four seasons, good recreation opportunities, and some of the best universities in the nation.
According to the Census bureau, last year, Michigan had the 9th highest economic output of the US states. In 2000, Michigan was 22nd among US states (& DC) for per capita income. Now it's 26th and falling fast.
If you think that high oil prices haven't affected the sales of Michigan's biggest industry, and contributed to the real estate collapse in this region, you haven't been watching the news. This may not have happened where you live, but around here, there was a real estate bust in the early 70s, a real estate boom in the 80s, a small bust in the 90s, and a huge real estate boom from around 95 to around 2003. The booms and busts track *really* well with the highs and lows of the domestic auto industry.
I don't think you would find many reputable economists in Michigan who think that the real estate bust here has *nothing* to do with the decline in the US auto industry. There also probably aren't many who would say that high oil prices had *no* effect on the decline in the US auto industry. There are certainly other causes as well.
The housing bubble bursting is part of what's wrong with the endless growth economic lunacy that we've adopted as our global religion. So this is a problem with endless growth economics (which is more voodoo than science). Peak oil indirectly impacts this voodoo court astrology bullcrap because the entire economy is linchpinned around energy. That's simple physics. As cheap energy sources begin to vanish, the entire notion of the growth economy comes under increasing pressure from higher and higher energy costs. Thus, the problem here is that if we are at or very close to peak oil, when this housing bubble unwinds, it may be the last of its kind, ever.
So please try to get your arguments correct rather than constructing yet another strawman that you can knock down to make yourself feel important. Your assumptions are erroneous from the start therefore your conclusions have an extremely high probability of being equally wrong.
Cheers,
-- Mort.
Strikes me that you may have already lived through a similar scenario. Does the doom and gloom on TOD ring true from your historical perspective of the 1930s?
Do you feel that there has been a change in the general character of society? I think of the present as a winner-take-all, me-first sort of society with little concern for what happens to the other guy. I look at the pre and immediate post-war periods as exhibiting much more social solidarity. Am I in the ballpark on this? Do you see any big variance in social attitudes over that period?
Thanks in advance.
I don't know anything about this lawsuit, or whether there is any merit to it. However, I will note that the guy potentially stands to gain millions from his actions:
There there's this:
See, there's the problem right there. Rumor has it that some with Master's degrees from Texas A&M can be a little unbalanced. I am an exception. :-)
Alan, Graduate of the University of Texas
by Rear Admiral Hyman G. Rickover, U.S. Navy
Overall, an impressive look to the future in 1957 !
He believed that wind & water power would not be adequate for the needs of industrial civilization and solar photovoltaics were still unknown then. Today, he would probably have a different opinion.
He did leave open "from some energy source as yet unknown" so he recognized the potential for future developments.
Best Hopes,
Alan
How true. I forget whether it was Tainter or Diamond where I read about famines in the Roman Empire and the amazingly huge percentage of the load of food being hauled that was used up in the hauling process. The upshot was, famines in more remote areas were simply not dealt with because the energy necessary to transport the food was not available.
The paving is not done to roman standards, on lightly used roads it lasts 20-40 years withouth maintainance, longer if we dont spread salt to save some lives thru less winter time accidents. Most bridges would probably last a hundred years but most of them are for crosssing small streams that have had wooden bridges and then stone bridges since the viking age.
The point is that land travel will never again be what it were during Swedens history up to industrialism even if the road maintainance for some strange reason would be nothing more than wheelbarrow reshuffling of the km3:s of blasted rock and gravel alongside the major roads.
And we still got railways, the main lines of the flat low grade railway network built to accomondate anemic steam locomotives is still there, electrified and with lots of double tracks. Most of the spur lines are gone due to competition with trucks but investments in the main lines have been large for about 15 years and seems to continue the national railway budget is about 3/4 or the national road budget.
Passanger travel and goods travel are at all time high, travel by car and transportation by truck is of course a lot higher. Back in the 1800:s famine were gone due to food distribution via tiny steam ships and railways. We could have a distribution system far more efficient then the roman one by pedaling(!) trains. During WW-2 some steam trains were run on firewood, pellet burners would of course work a lot better and we got these overhead electrical wires and electrical locomotives.
It's possible he believed that US production would peak in 1970, and that the "Global Economy" would not alleviate the decline which would follow. If that had been the case, we would have had only 13 years to electrify.
Now we have, let's see, minus one year till peak? We are so screwed...
Several TOD commenters expressed concern recently regarding U.S. finished gasoline inventory decreases as evidenced by the weekly EIA reports. Total gasoline stocks are presently at the bottom range of the last five years as seen in FIGURE 1 and apparently crude prices increased partly as a result of this information. However, one can also see that total stocks were above five year highs over several periods and, as seen in FIGURE 2, crude stocks are above the top range of the last five years by some 20 mb. At first glance there seems little to be concerned about.
FIGURE 1: 2006 U.S. Total Gasoline Stocks including Blending Components. Graph from the EIA Weekly Gasoline Report.
FIGURE 2: 2006 U.S. Crude Oil Stocks. Graph from the EIA Weekly Crude Oil Report.
However, if one subtracts out the blending components, we see finished gasoline stocks are well below the 5 year range as seen in FIGURE 3.
FIGURE 3: 2006 U.S. Finished Gasoline Stocks (Conventional + Reformulated). Source: EIA Historic Weekly Data.
Reformulated gasoline imports dropped from around 200 kbd in January 2006 to 0 kbd by this past summer and it would seem this is the main cause of the 2006 decline. From the EIA report (pdf) on the switch to ethanol from MTBE, one might expect that the finished gasoline stock decline in 2006 is a one-off as the industry adjusts. However, FIGURE 4 shows this is not a trend isolated to 2006.
FIGURE 4: Average U.S. Finished Gasoline Stocks 2001 - 2006. Source: EIA Historic Weekly Data.
Not only has demand exceeded supply in 2006, but for the last six years as well. Since 2001, stocks have declined at approximately a rate of 7.3 mby or 20 kbd. Note that this is a rather small rate (we will return to this shortly). The EIA data show that this trend started at least in 1990. Since then, stocks have declined slowly and recently at a faster rate.
FIGURE 5: U.S. Finished Gasoline Stocks 1990 - 2006. Source: EIA Historic Weekly Data.
Before jumping to conclusions, let us also examine the other side of the story -- U.S. finished gasoline demand and utilization of refinery capacity. FIGURE 6 shows the finished gasoline balance between demand, imports, exports, and production for 2006 (Data for exports was available only through September).
FIGURE 6: Demand/Supply and Export/Import Balance. Sources: EIA Historic Weekly Data and EIA Monthly Export Data.
The weekly export rate (in kbd) was approximated as equal to the monthly rate (in kbd).
The balance should be roughly equal to draws and inputs to finished gasoline inventories. A back of the envelope calculation using the average of the blue series predicts a draw from stocks of approximately 20 mb as of September '06 from January '06. FIGURE 3 shows this is in rough agreement to reported finished gasoline stocks as expected. The pink series whose average is +65 kbd shows that if we were not exporting finished gasoline (to the tune of ~139 kbd) stocks would be increasing. Apparently we're exporting our finished gasoline stocks.
A brief glance at refinery capacity utilization is also revealing. The EIA data show on average in 2006 utilization was at 89.24% with an operable capacity of approximately 17,300 kbd which translates into approximately 9,861 kbd of operable capacity for finished gasoline (over 1mbd in excess capacity). This assumes ~57% of the capacity can go to finished gasoline. The EIA says as much as 60% is possible. In order to cover the 74 kbd average draw from stock an increase of utilization to 90% on average would have been required (+0.76%). Similarly, the average utilization from 2001 to 2006 would have to increase from 91% to 91.2%, an increase of one fifth of one percent, in order for it to have covered the 20kbd on average draw from stocks mentioned earlier. All things being equal, had utilization averaged 91.4% over the 2001 to 2006 time frame there would be a record surplus of gasoline stocks of approximately 44 mb above 2001 (~90 mb above current levels).
FIGURE 7 shows 2001 to 2006 average U.S. finished gasoline production capacity ( assumed 57% of operable capacity), U.S. demand, and the three cases corresponding to 91, 91.2, and 91.4 % utilization for U.S. production plus imports minus exports. The difference between the demand curve and the yellow curve should be equal to daily stock draws and puts. The difference between the yellow (actual, 91%), aqua (91.2%), and maroon (91.4%) series is the difference between what would be in 2006 record lows and record highs in finished gasoline inventory. The pink series shows the ample production capacity.
FIGURE 7: 2001 - 2006 U.S. Demand and Operable Capacity.
Sources: EIA Historic Weekly Data, EIA Monthly Export Data,
and EIA Operable Capacity and Utilization.
The weekly export rate (in kbd) was approximated as equal to the monthly rate (in kbd).
While finished gasoline stocks have declined to below 5 year lows the fact that stocks have been declining in a similar fashion since 2001 says that 2006 is not particularly different from the immediate past. Were the U.S. headed towards a shortage reducing the export of finished gasoline would remedy it. However, the extremely slow rate of 20 kbd at which stocks have been declining since 2001 and the marginal adjustment of refinery utilization (assuming the production capacity is not a fiction) that would arrest that decline suggest it is not one caused by either refinery bottlenecks or supply shortages. The obvious conclusion is that stocks have been allowed to diminish.
Hint ! Hint !
Best Hopes,
Alan
In the same time period (2001 to 2006), our total petroelum imports have increased from about 3.8 Gb per year to about 4.5 Gb per year (I'm using 360 day years), as our consumption has increased and as our domestic production has fallen.
However, if production capacity growth stagnates (see the link Hothgor provides below) and demand increases at the same rate it has since 2001, demand will meet present production capacity levels sometime in 2009. If at the same time stocks are permitted to continue their declines, we may find ourselves with little excess capacity, dwindling stocks, and PO at the door.
Regarding the import/export numbers, I etimate that Total Liquids exports by the top three, KSA, Russia and Norway, are falling at about 8% per year this year.
I mentioned that I felt that gas companies were manipulating the market for better margins and profits for themselves. Shutting down a refinery that is making a ton of profit is incredibly stupid from a business standpoint. That would be like someone selling their IPO Google stocks and reinvesting it into Wal-Mart stocks...
Of course the author was hell bent on proving shell is manipulating prices. Shell's explanation is buried halfway down and sandwiched between more accusations of price manipulation.
It seems to me that we have reliable info with HL predictions on regional oil URR and regional peaks...true or false?
Do we also have a reliable HL modeling for global URR and peak...why or why not?
What about KSA? do we have a reliable HL model?
Can we transfer understanding of modeling other regions to what data we do have for KSA with some assurance of reliability?
Does knowledge of the extraction practices and exploration activity in KSA confirm the notion that our HL model for KSA is accurate?
What are the chances that KSA has remaining reserves equal to the official KSA claims?
Are the odds 1 out of 2 that the official KSA claims are true?
Are the odds 1 out of 5, or 1 out of 10?
How about 1 out of 100?
I'm looking for a sense of how TOD-ers feel about the notion that KSA is at or near peak, or whether folks think that KSA has much more supply available as they claim.
What are the odds, based on the various forms of data and analysis available?
- Further development of mature fields - A spike in production for a few years, often stealing from the future with minimal increases in URR.
- Manifa (different spellings) - High probability of success. New refinery to take high vandanium crude.
- Khurais - High risk, high cost reservior with some new production, but improbable to reach 1+ million b/day.
- Numerous small fields that have ignored in the past. Not major sources of new production, likely a few 100,000 barrels/day so these will slow the decline.
IMHO, KSA is "assuming the best" case regarding decline. Take the 95% percentile estimate (5% chance of it being that good) and "round it up". Ghawar may be hard to model due to it's uniqueness, creating a wider range of estimates.Also, they CAN turn on the manifolds and produce more; but at the cost of damaging their reserviors and reducing URR. I SUSPECT that they are at the level of minimal damage today. They are producing more than their PetE's would like them to, but not dramatically more.
Anyway, that is my take.
They are being truthful in the narrowest sense but not forthcoming. One should NOT relie upon their statements !
Best Hopes for reality based planning,
Alan
The Hated Evil Empire Race is also finally being won by the Americans.
This hatred of the Evil US/Neocons etc distracts from the fact that other countries have Grand Designs.
Sometimes it is even used as an excuse for the "other countries" grand design by the politically correct and culturally naive.
The same silliness sold by Reagan, and Bush et. al., to gain support from the gullible public is used by the politically correct to defend and excuse the actions of the radical islamists ruling Iran.
I don't blame westerners for the anger and frustration they feel towards their government's past or present actions. But that anger and frustration clouds your judgment.
Whether it's terrorist attacks aimed directly at civilians, or arming militias in foreign countries to undermine those governments, the actions of the Iranian Radicals is excused or ignored and instead the we hear - "BUSHs FAULT."
The anger and frustration towards the US makes Most people here at TOD "completely irrational" when it comes to Iran. That and the fact that most here do not understant the minds of the radical islamists, their religion itself, their history and certainly not their planz for the world's future (a shiite-Islamic world - by ANY means necessary).
No matter how hard it is for the supposedly "rational" of the west to believe, the islamic radicals currently ruling Iran truly believe in the return of their beloved 12th Imam - just as the fundamentalist christians believe in the imminent return of their Christ. (and yes there are some more sensible, secular influences in Iran but they do not have the power to stop the radicals and the pressures of Peak Energy will only increase the number of radicals and their power).
* Ayatollah's of the Apocalypse understand Peak Oil.
* They believe the Chaos caused by Peak Energy will bring the return of the 12th Imam.
*
They believe their cause is Divinely Inspired and Protected - that they cannot fail - they do not fear repercussions from mere mortal earthly armies commanded by Infidels.The ignorance of Westerners of the Islamic radicals religious beliefs, as well as the westerners mistaken assumption that all people think like a "rational" westerner, is what prevents you from understanding the threat of their fanatism.
I do not apologize for or excuse the past actions of the West. But I also will not use those actions to excuse the actions and Grand Designs of the Islamofascists of Iran.
Thank godz the Saudis and other Arabs as well as Germany's Angie Merkel and a few other western leaders are not politically correct, ignorant, selectively blind and gullible.
Earlier this year Ahmadinejad said the 12th Imam would return within 2 years. They have plutonium and uranium from africa and n. korea.
AFTER TSHTF people like you will blame Bush... because you are simply to ignorant to know any better.
Neither do you.
Alan
You and others prefer to make me the focus instead of focusing on the very real Threat from Radical Shiite Iran - "kill the messenger" or accuse him of warmonering etc, etc.
I'm sorry I don't have the time to spend collecting the data and links necessary to dispell the ignorance repeated ad nauseum by the politically correct Majority here at TOD.
What I have said is true and is well known to those who study Iran - as well as the true moderates in Iran (who are even more worried than me), Iran's arabic neighbors and a good portion of the world's academic community that studies Iran (as well as Angela Merkel who knows a Fascist when she sees one).
A few weeks back Oildrum hosted a forum focused (as usual) on everything from the perspective of the the "declining western empire." The author of that forum declined to even try to discuss the perspective of ANY other nation on the planet - as if they are all just bystanders responding to the one remaining "evil empire."
That's Too bad. The self-absorbed western narcisists might learn something by taking a look at Peak Oil from the perspective of the Iran. Maybe you folks could find one willing to take the time to TEACH you.
It is too bad that repeating the early 1930s Nazi propaganda about Jews is completely unacceptable, but comparable anti-Moslim slander is acceptable here.
Yes, I have learned from an Iranian. A young electrical engineering student, drafted into the army, he spent GW II on Kharg Island, with a close-up view. Unemployed for a year after, he finally found work. I am trying to get him into an Iranian hydro operator training program being run by Iceland for the Iranians.
Quite devout but anti-mullah. The support for Dr. Mahmoud Ahmadinejad is based more on anti-corruption (the former president still has his fingers in the till, most money for subway expansion goes through his pockets as one example) and populism. However his power is FAR less than that of GW Bush. The Iranian seperation of powers is closer to the "weak President" model that was considered by our Constitutional Convention than the "strong President" form eventually adopted.
My friend thinks that the Jews in Isreal should stay there but "why bring more" and that Isreal and Palestine should merge into a secular democracy with no more bloodshed. He is aware that most "Jews" in Isreal are not religious and not truly Jews in his eyes, but they should stay anyway. "People should not be chased out of their homes". "But why should some Russian who had never prayed to God once in his life be allowed in, while those that have lived there a thousand years are chased away ?"
Perhaps unrealistic, but not an evil POV per se. And certainly not pro-Isreali but hardly anti-Semetic.
Alan
Not true. We have anti-Semitic propaganda here, too. Where have you been?
I'm not thrilled about it, frankly, but here at TOD we have equal-opportunity Christian, Jewish, and Moslem-bashing. :-P
Yup.
It just goes to show you.
We are all human animals, even at TOD.
And we are susceptible to the same follies as those of the general sheeple herd.
Bahh Bahh, we hate Jews.
Bahh Bahh, we hate Americans.
Bahh Bahh, we hate Arabs.
Bahh Bahh, we hate those who our trusted leaders tell us to hate.
Bahh Bahh.
Kill. Kill.
Hate. Hate.
We are special.
In the end of days, we will be the last ones standing.
Praised be ... [Fill in name of your deity here]
Look up the word bigot - I am not a bigot if I describe the Iranian Mullah's accurately. I know what I say does not apply to all shiites or all muslims, just the radicals.
"It is too bad that repeating the early 1930s Nazi propaganda about Jews is completely unacceptable, but comparable anti-Moslim slander is acceptable here."
There has been plenty of nonsense spouted about Israel and the jews here ("Israel is not sustainable" - Why pick them as unsustainable now???? - because it is easier to go along with the Iranians who have oil ???).
I do not paint all of islam with the same brush anymore than I do all christians or other religions/ethnicities. Just the radicals who HIDE behind their Religion like they hide behind their civilians. They know the West's propensity for Political Correctness and know the PC will stand up to defend them.
Your friend sounds very familiar to me too - sane and rational in the non-zealot way.
Mahmoud Ahmadinejad is a different animal completely. He and the Mullah's he speaks for do believe in the return of the 12th Imam. They do understand Peak Oil and the chaos it will cause. And that in the agony of that chaos their ranks will grow in number.
Chancellor Merkel does share my "bias" towards the present Iranian leadership:
And the Iranian president was NOT misquoted:
And many of the Iranian "moderates" are just as radical as Ahmadinejad:
Calm down. It isn't necessary to paint any group as evil: our ingrained genetic desire to survive will setoff a Global Moshpit Machete' Dance in due course Everywhere unless the naked ape becomes smarter than yeast.
Your neighbor is much more likely to kill or maim you postPeak than someone half a globe away.That is why I like this EnergyBulletin article called The Lottery. If people really consider this dark satire, it could hopefully jumpstart some productive Detritus Powerdown and Biosolar Powerup action. If not, the scenario of the Three Days of the Condor will be practiced by everyone everywhere-- the Thermo-Gene Collision is what detritovores do best when the Commons becomes Uncommonly Depleted.
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
I know that the Iranians are not evil - even their horribly misguided current president and his advisors (same with our own horribly misguided leaders).
I'll try to calm down and I will give "the lottery" a read later.
Best of luck to you in your profoundly locale.
I hope you don't mind if I borrow that quote and forget the proper attribution ;). Time now to read "The Lottery"...
After relooking at my text, I decided the better wording arrangement is: "Global Machete' Dance Moshpit".
Either way conveys the same meaning to me and describes pretty accurately what I imagine will happen.
But this is mostly feelings from the small pieces of Iranian culture I have read about and second hand information from people who have met refugees from Iran. Perhaps its only that I like to find good things in people.
I dont know what would be the best thing to do to support a process where the religious zealots loose power and state builders and people who respect personal freedom gain power.
I think a military attack would be the worst possible thing to do. Perhaps the best thing to do would be to encourage trade and exchange with the best parts of our culture? And we need to cultivate(!) our culture, if we water it down to some double moral unthinking soup with loss of respect and individuality full of scared people we get nothing to better the world with. (Oups, rambling :-( )
I would hope the world would find a non-violent way of dealing with Iran (Bush apparently thought "regime change" would come from within...) but the United Nations is a collection of impotent politicians and I do not think they will do anything useful in the matter.
Also, I think the current Iranian rulers will find a way to get Israel or some arabic country to "throw the first punch" via their Foreign Legions or sleeper cells etc. They need the Chaos for the return of their beloved 12th Imam. They have no interest in peace - only in a Shiite-Muslim World Order.
And thank you for your "rambling" - I appreciated it.
Oh the symmetry!
Big thxs for this link! It is very thought-provoking, and helps cement my fast-crash doomer beliefs if widespread mitigation measures don't begin.
The comparison between the two superpowers is very illustrative, but perhaps a US-Zimbabwe comparison can shed additional insights as most TODers have read my numerous earlier postings on Zim's decline:
1. Zimbabwe: former breadbasket of Africa
US: current breadbasket to the World
2. Zimbabwe: current basketcase of Africa
US: future basketcase to the World
3. Zimbabwe: Project Murambatsvina [Taking out the Rubbish]
US: Coming collapse of Kunstler's suburbia
4. Zimbabwe: Draconian laws on humans rights, press, etc
US: Patriot Act
5. Zimbabwe: Project Sanity
US: World's highest incarceration % & KBR Contract
6. Zimbabwe: Not that far from descent into Olduvai Gorge
US: Grand Canyon is magnitudes bigger and steeper
7. Zimbabwe: widespread torture by TPTB
US: Bush's water-boarding, Abu Graib, Gitmo, etc.
8. Zimbabwe: collapsing medical care
US: 40% of American un-insured
9. Zimbabwe: currently world's highest inflation rate,
worthless currency
US: tremendous debts, coming worthless currency
10.Zimbabwe: corrupt officials & businessmen
US: new corruption disclosures daily
I could go on into much greater detail, but please google for yourself. BTW, dog food and slaughterhouse scraps cooked outside over a wood campfire is now quite common in Zimbabwean towns and cities:
----------------------------
Meat waste from abattoirs and commercial dog food are now a major source of protein for an impoverished population.
"
I feel so humiliated. I never dreamt in all my life that I would queue up to buy dog meat. I feel worthless - and what is dignity in Zimbabwe? We have all been reduced to nothing, to worthless human beings," she said. "At least when I cook the dog food or meat shavings, if I am lucky to get them at our nearby butchery, I can taste meat. It gives the vegetables a different flavour and I get the protein that has been lacking in my diet."-------------------------------------
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
What I find most fascinating about the Thermo-Gene Collision, as explained in the hundreds of pages at Dieoff.com is that it is all
so obvious, but people just cannot bring themselves to reasonably deal with it, even after disaster is obvious. For example:-----------------------------------
Harare city authorities are thinking about introducing water rationing, as most parts of the city are in their third month without water.
Residents of the Midlands town of Kadoma said the
supply is so unreliable that people have resorted to scooping rainwater out of unprotected sources like potholes.------------------------------------
Will our capital city--Washington, D.C. get its act together before common citizens are enlarging potholes so as to
bail larger amounts of rainwater?My guess is that the 100,000 acre Bush family paradise in Paraguay shows that the US elite would rather
bail outside the US.Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
Essentially it's "areas flooded by hydro projects release methane from decaying biomass or soil storage, so let's burn more coal". Perhaps some thought should be given to coal power as well... doesn't anyone ever recommend conservation? Or population control? Or even a little family planning?
http://www.americanscientist.org/template/AssetDetail/assetid/25710?fulltext=true
Unlike nuclear fusion, this is the type of research that should be able to produce usable results in a 10 -15 year time frame, making it a potentially useful tool in dealing with peak oil and GW. The article from Norway seems to indicate that their research is not very expensive, less than $1 Billion. Is there a US program? Sounds to me that there should be, and it should be well funded.
Are any readers are more familiar with the prospects and problems of thorium technology?
Tony Verbalis
I also believe I've heard something about neutron radiation being a problem, but unfortunately i can't provide any details.
Google Egil lillestol, a senior physicist at CERN, or Carlo Rubbia (Nobel prize) also CERN. Rubbia and Lillestol believe that the nuclear industry oppose the thorium architecture and see it as a threat. Lillestol has been pretty blunt about this in Norwegian media.
And yes, it's a more secure architecture than anything else since a meltdown is physically impossible.
http://thoriumenergy.blogspot.com/
Advantages: No fuel fabrication, meltdown proof, higher thermodynamic efficiency, easy fuel/waste treatment, 1/100th the waste stream and fuel stream.
the story on methane and hydro power is behind a paywall.
Nature 444, 524-525 (30 November 2006) | doi:10.1038/444524a; Published online 29 November 2006
Methane quashes green credentials of hydropower
Jim Giles
Top of page
Abstract
Emissions from tropical dams can exceed fossil-fuel plants.
At the time, it must have sounded like a sensible case of sustainable development. During the 1980s, about 2,500 square kilometres of Amazonian rainforest was flooded to create the Balbina dam to feed the energy demands of the Brazilian city of Manaus. A sizeable chunk of rainforest was lost, but Brazil gained access to a non-polluting energy source. It's a compromise Brazil has made many times; more than 80% of the country's domestic electricity is generated by hydropower plants.
R. ANTONIO/GAMMA
The greenhouse-gas emissions from regions flooded by dams may have been grossly underestimated.
Yet the clean, green image of dams may have been seriously overstated. Researchers are gathering in Paris next week to discuss greenhouse-gas emissions from tropical reservoirs. Some of the latest findings point to a disturbing conclusion: that the global-warming impact of hydropower plants can often outweigh that of comparable fossil-fuel power stations. If that's correct, current energy strategies, particularly in developing nations, will need to be rethought.
The problem lies with the organic matter in the reservoir. Large amounts are trapped when land is flooded to create the dam, and more is flushed in after that. In the warm water of tropical dams, this matter decays to form methane and carbon dioxide. Although both are greenhouse gases, the main worry is methane, which has more than 20 times the warming impact of carbon dioxide over a 100-year period. In the specific case of Balbina, there is now a rough consensus: in terms of avoiding greenhouse-gas emissions, a fossil-fuel plant would have been better.
But that is where the agreement ends. On one side of the debate is Philip Fearnside, a conservation biologist at the National Institute for Research in the Amazon in Manaus. His work, based mainly on theoretical calculations, looks at water leaving dams. Many dams release water from several metres below the surface, so the flow goes through an abrupt pressure change. Fearnside calculates that this causes methane release, much as carbon dioxide fizzes out when carbonated drinks are opened. His latest results suggest that a typical tropical hydropower plant will, during the first ten years of its life, emit four times as much carbon as a comparable fossil-fuel station.
Lining up against him in a decade-long dispute are Luiz Pinguelli Rosa and his colleagues at the Federal University of Rio de Janeiro, who accuse Fearnside of exaggerating reservoir emissions. They complain in particular that Fearnside has extrapolated from measurements taken on the Petit Saut dam in French Guiana; the data were taken in the years immediately after the reservoir was created, when the store of organic matter would have been greatest.
With few data sets available on tropical dams, the debate has increased in acrimony without approaching a conclusion. Environmental groups question the impartiality of Rosa's work, which is funded in part by the hydropower industry. Rosa strongly denies any bias, and in turn accuses Fearnside of seeking to show that "something is wrong with dams".
If these estimates are correct, figures for annual global methane emissions need to be increased by a fifth.
The Paris meeting, which runs on 5-6 December and is organized by the United Nations Educational, Scientific and Cultural Organization (UNESCO), is unlikely to settle their dispute, but researchers will discuss new methane data. On 14 November, for example, Frédéric Guérin of the Laboratory of Meteorology in Toulouse, France, and his colleagues published results on methane release from sites downstream of three tropical dams1. They found that so much methane builds up in the dam that downstream emissions, which are rarely factored into estimates of a reservoir's impact, should account for between a tenth and a third of total emissions. Another new paper estimates that, for Balbina, downstream emissions alone have the same greenhouse warming potential as 6% of all the fossil fuels consumed by São Paulo, a city of more than 11 million people2.
Even without these downstream emissions, the global impact of dams may be significant. Danny Cullenward, an energy-policy expert at Stanford University, has made preliminary calculations of the impact of Fearnside's findings. Cullenward stresses that more data are needed, but his estimates suggest that dams release between 95 million and 122 million tonnes of methane per year. If correct, estimates of annual global methane emissions (which do not generally include dam emissions) need to be increased by a fifth. Even extrapolating Rosa's figures gives Cullenward a total of 23 million tonnes.
ADVERTISEMENT
Many think enough is known to start acting now. Some worry about the huge dam projects tentatively planned for tropical areas, such as a $5-billion project on the Congo river. Another concern is the Clean Development Mechanism (CDM), a system that allows developed nations to fund clean-energy projects in developing nations in return for credits that can be used to meet Kyoto Protocol targets. Current rules allow certain hydropower projects to be funded under the CDM, a situation some scientists and environmental groups would like to see revised.
But matters are unlikely to change without more data, so researchers at the UNESCO meeting will discuss which questions to prioritize and how best to work together. More substantial progress could begin in 2008, when the Intergovernmental Panel on Climate Change (IPCC) will decide whether or not to start work on a special report on renewable energy. Previous IPCC special reports have had significant political impact, and the dams question is likely to fit very well into the scope of the proposed energy study, says Bert Metz, a climate-policy expert at the Netherlands Environmental Assessment Agency and co-chair of one of the IPCC's three working groups.
Top of page
References
Guérin, F. et al. Geophys. Res. Lett. 33, L21407 (2006).
Kemenes, A., Forsberg, B. R. & Melack, J. M. in Proc. 8th Int. Conf. Southern Hemisphere Meteorology and Oceanography, Foz do Iguaçu, Brazil, 24-28 April 2006, 663-668 (INPE, São José dos Campos, Brazil, 2006).
Top of page
Related links
RELATED STORIES
Tide of censure for African dams
Damming evidence of human interference
EXTERNAL LINKS
International Rivers Network Report on tropical dams
Philip Fearnside's home page
The Inga III dam under developmentnear the mouth of teh Congo., 3.5 GW (3 1/2 nukes) will trap almost no carbon. It is like Niagara Falls would have been in 10,000 years. A large river falling off of an escarpment through a series of rapids. Just flood the rapids.
The original methane source material could be dramatically reduced by harvesting the timber and burning the slash left behind. Nothing left to ferment. As for organic material washed downstream and trapped in the sediemnt, most dams have limited amounts of sediment, and it is typically mostly inorganic.
Much of that organic matter would end up in a river bed in any case.
Best Hopes,
Alan
http://news.yahoo.com/s/ap/20061203/ap_on_bi_ge/speed_interviewing
When these worms hit the seas...
...and probably more on-shore drilling disasters like the still erupting mud volcano in Java. But as this TIME magazine articles points out: it creates an opportunity to Add Soap, then Spin:
----------------------------------
An Indonesian mining company blamed for a disastrous flood of mud in Java tries a novel way of cleaning up its image.
It's tough to put a positive spin on the massive eruption of mud that has displaced more than 12,000 people and buried a large swath of eastern Java in roiling, putrid sludge. But PT Lapindo Brantas, the Indonesian mining company widely blamed for releasing the reservoir of pressurized mud following a drilling accident last May, has come up with a novel form of damage control: sponsoring a sinetron, or
Indonesian soap opera, on Surabaya TV station JTV. The 13-part series, Gali Lubang, Tutup Lubang (Digging a Hole, Filling a Hole), is a love story set among refugees left homeless by the mud volcano. "We wanted to show a real story about human interest," says JTV executive producer Awi Setiawan, who adds thatLapindo paid about $3,300 per episode......
one environmental group estimates [the mud volcano]has already caused $3.6 billion in damage.---------------------------
Coming to primetime TV soon:
The O. C.-- drama tentatively entitled, "The Oil Curse" of S. Cal young adults' relationship woes as beaches for miles around are covered in oil-slicks and dead sea-life. Blond, abdominally ripped Surfers fight big biceped burly platform workers as the Googlers board their private jets for Dubai.Flipper-- massive GW-caused methane clathrate landslide setoffs a tsunami of viewers' emotional tears as a young boy struggles with his pedal-trike to get a beached porpoise back to the ocean from Macon,Georgia. Will he cover the short ten-mile ride to the newly reshaped seashore in time?Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
http://members.tripod.com/~earthdude1/texaco/texaco.html
"The water of Lake Peigneur slowly started to turn, eventually forming a giant whirlpool. A large crater developed in the bottom of the lake. It was like someone pulled the stopper out of the bottom of a giant bathtub. "
I just bet Texaco did some speed interviewing back then!
Thxs for the trip down memory lane--I remember reading about this event in the newspaper.
One simple related change would be to strongly encourage or require gas stations to charge about 3% more for gas and diesel purchased on a credit card. People would think more about how much and how fast they drive if they paid immediately for every tank, instead of putting it off for 30 days or longer.
Interesting article whereby the author argues for reduced global shared carrying capacity.
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
Anyone care to speculate on why Brent Spot is selling at a $2 premium to Nymex Crude Futures? It is usually the other way around.
Ron Patterson
http://ecen.com/eee55/eee55e/Growth%20of%20Methane%20Concentration%20in%20the%20Atmosphere_55e.htm
... but, besides the memorable image of the wok, I'm seeing an allegory here. A great deal of education is necessary if people don't even understand the idiocy of burning coal inside their own house. And I mean this wrt not just to people's ability to cope in their individual circumstances but to make reasonable decisions in wider contexts.
Back in early 2005 on Jay Hanson's Dieoff_ Q& A forum, AngryChimp asked for predictions on the first American city to go over the cliff from Dr. Duncan's Olduvai Gorge Theory. My reply is posted below:
------------------------------------------------
Re: The Cliff
Hello Angry Chimp,
Interesting question. Lots of unknown variables. Difficult to quantify. Assumptions,assumptions, must have data. Must crunch numbers--do not know how--need to consult FOUNDATION for predictive analysis and directed control of collapse dynamics. Cannot talk, need numbers!
Variable Assumption Confidence
====================Oilpeak reached Oct. 2004 [Ron P.], down 4% from there 62%
Oil import level, down 2% US outbid others for tankers 53%
Natgas not peaked yet, NAFTA still intact for Canada gas 70%
US coal mining strong, mining expansion underway 88%
US GDP down 2.5%, unemployment at 7%, dollar down 7% 41%
US military, rising % of total US oil up 15% 92%
US Strat. Petro Reserve, not touched yet, saved for elites 100%
US Insurance costs for oil delivery, fear premium up $12/barrel 74%
US Insurance costs for ELECT. Security from eco-terror $.015/kwh 53%
US Global War, required blackouts at night, daily rationing 27%
Global Warming, stressing grid capacity and maint. upgrades 5% 55%
Glbl Wrmng, extreme weather fluc. stressing grd and repair 5% 68%
Peakoil public % informed,understand and remain calm 20% 75%
Peakoil public % informed, not understand, indifferent 64% 52%
Peakoil public % informed, understand and mad as hell 16% 61%
Social Security pymts, reduced 7%, retirement age up 5 yrs. 66%
Suicide rate, reduces elect. demand, age adjusted, up 3% 65%
Birth rate, less travel, more sex, increases demand 2% 93%
Auto deaths, less travel, increases elect demand 3% 81%
Plane travel is less, increases elect demand 1% 100%
Fuel shift, plane to elect. generation reduces cost .0003/kwh 68%
Fuel shift, auto to elgen, never going to happen,nowhere,nohow 100%
Fuel shift,reduced imports&exports,reduces costs .0012/kwh 62%
Govt reg, emission requirements raised, costs .0089/kwh 76%
illegal immigration,raises demand 1%, unsure data prob 70% 65%
NE power grid,uptime reliability >98%,flex capability load>10% 91%
SE power grid,uptime reliability >97%,flex capability load>11% 85%
SW power grid,uptime reliability >96%,flex capability load> 9% 95%
NW power grid,uptime reliability >99%,flex capability load>12% 75%
NCEN power grid,uptime reliability >97%,flex capability load>11% 93%
SCEN power grid,uptime reliability >97%,flex capability load> 4% 87%
elect demand ratio adj, shift from elect stove to BBQ prob 18% 63%
elect demand ratio adj, shift from elect dryer to outside 17% 78%
elect demand ratio adj, buy extra freezer for hoarding prob83% 89%
elect demand ratio adj, turn heat thermostat dn 6* prob 63% 63%
elect demand ratio adj, air conditioning up 6* degrees prob 74% 71%
NE cust. pymt ratio, paid to unpaid bills 120 past due prob 62% 89%
SE cust. pymt ratio, paid to unpaid bills 120 past due prob 57% 87%
and so on...
and so on...
Crunching the numbers reveals: 1st permanent blackout occurs:
St Louis, Missouri. February,2011 -- 60 day window,confidence 97%.
OIL BARGE upstream late 99%[crit. keystone:10 day resupply window!!!]
to river ice jam 96%, 30 day window.Weather 5 degrees below normal
82%,120 day window.Area GEN capacity reduced 28%,60 day window 90%.
ROLLING BROWNOUTS 87%,30 day window, spikes riot potential 10%[crit.
10 day window!!!],and pymt refusal ratio 37%[postshift brownout term.
window for 180 days]. Insufficient elect. load shift from other areas
91%, 60 day window,due to high weather demand 95%, 60 day window, and
line limits load flex capability of 10% 500,000 watt/hr overloads on
frozen transformers cascading shutdowns 89%, 45 day window. Credit
line refusal for MO>POWER 78% and rising, junk bond status nil,NPV of
assets<NPV of Liab predating crisis 120 prior window @confidence 75%,<br> accts uncollectable proj.> oper. costs DEC-JAN timeframe--> EMPLOYEES
WALK 92% or NO RESUPPLY FEB 95%, peak median 30 days,AVG 60 day
window,rolling 10 day data recalculation overlaid 100 day moving
average. Perturbation allowance at 2% regression to MEAN.
FOUNDATION SUPERCOMPUTER CLUSTER #23 runtime 1.0002 hrs, media 128
terabytes, memory cache optimized, 256 bit encryption SSL 2.0
I think something similar to this above scenario would be the kind of math/science horsepower we could harness to really accomplish something for DIEOFF. But I think the elites are way, way ahead of us in this horserace. Time will tell. Comments anyone?
Bob Shaw in Phx,AZ Are Humans Smarter than Yeast?
----------------------------------------------------
As you well know: St Louis has had two major blackouts since then due to weather-related events, but sometimes I wonder if these events merely help confirm that my prediction is
on-track. Yikes!Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
New Orleans, St. Louis and Chicago all have 6 Class I railroads (of 7 in North America), more than any other city (Kansas City has 5, hardly anyone else has even 4). All 3 cities also have access to the Mississippi River system (weak in the case of Chicago) (from memory).
So there should be multiple back-ups for getting stuff in.
Best Hopes,
Alan
Thxs for responding. Yep, it will be sad if Olduvai events occur anywhere. Long blackouts are bad enough, but it boggles the mind for Tainterian forces to actually culminate in major cities staying dark. I would expect the very small areas with PV, wind, or hydro to be govt. military bases or worst case to be warlord forts.