This is not about blowing smoke, even at the end, I don't think
Posted by Heading Out on May 16, 2006 - 12:05am
Typhoon Chanchu, which means "pearl" in Chinese, was about 600 kilometers (372 miles) south of Hong Kong early Tuesday, the observatory said. It was moving at 16 kph (10 mph) and packing maximum sustained winds of 170 kph (105 mph), the observatory said.Chanchu was the strongest typhoon on record to enter the South China Sea in May, the observatory said.
The storm roared towards Hong Kong after whirling over the Philippines last weekend, killing at least 37 people and leaving thousands homeless..
There is a different problem in India where the price of oil is subsidized.
finance ministry on Thursday rejected petroleum ministry's plea to slash duties to ensure that petrol and diesel prices were raised by a small amount.The current plan appears to be to allow oil retailers to issue bonds which will allow them to continue the subsidies. The problem, of course comes when it is realized that this is not a temporary price hike, but is likely to be here from now on. As a result, in much the same way as the American suggestions to give individuals a tax break, or a hundred dollars, the problem is not being addressed, but there is an attempt to paper it over (with money). The subsidy is also extended to fertilizer, apparently, which is, due to the same underlying cause, also not likely to drop in price.There is, however, near unanimity on not raising the prices of cooking gas and kerosene and making ONGC, Oil India and GAIL India foot one-third (Rs 24,000 crore) of the revenue loss incurred by Indian Oil, HPCL and BPCL.
The oil marketing companies face a shortfall of Rs 73,500 crore this fiscal due to their inability to raise retail prices.
And next door in Bangladesh the power supply problems are taking away a potential growing advantage that the textile workers there might have as China moves to raise its minimum wage, as a way of attracting more labor into the textile industry over there, which is facing a shortage of help. The problems in Bangladesh are thus not only occurring in the farming areas where the lack of power is raising concerns for he availability of future food supplies. At the same time the IMF is urging them to increase oil prices.
At the other extreme, Saudi Arabia are quadrupling their exploration activities in order to increase oil reserves. But there is an interesting quote hidden in the story
Aramco, the state oil firm of the world's top exporter, has 260 billion barrels of proven oil reserves and a sustainable production capacity of 10.8 million barrels per day (bpd), said Mohammad Al Qahtani, manager, production and facility development department.Seems to me that may be around 2 mbd less than we have heard recently, and hence the need for more exploration. Though later in the story they do return to that number.
"Over the next five years, we are almost more than quadrupling our exploration activities, keeping the level of exploration for the non-associated gas programme and also heavily increasing our exploration in the crude programme," Al Qahtani said.. I had intended to refer earlier to their plans to explore up along the border with Kuwait, where, if my memory serves, they are anticipating finding around 260 billion barrels, to help them toward a total new addition of 900 billion barrels by 2025, which means that they will have only produced around 15% of their reserves. (You should probably go and read the article to reassure yourselves that I am not making this up).He said Aramco was employing technology to overcome the challenges to exploration in the kingdom which is characterised by a diverse geology, harsh environment and some difficulties in acquiring land seismic data.
Aramco has been using advanced and smart well technology at Abqaiq field, which has been producing since 1948.
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I invite any Thai readers we may have to contribute their observations about the situation there. Or anyone else who is intimately knowledgeable about it.
I look forward to commenting directly on your report.
Here's some info below for your Thai article. I am curious what your angle is going to be. The first note says that the Thai economy will ONLY grow by 3.5 -4% if oil stays around $80/barrel. I wonder what happens if oil drifts down to $65/barrel?!
The second note mentions that the economy grew faster in the first quarter - 6%!! - than it has in over a year even with a lot of politcal uncertainty. Is your article going to be about how high oil prices don't seem to be having much of an effect on the Thai economy??
http://english.people.com.cn/200605/13/eng20060513_265156.html
"Thailand's economy is likely to increase 3.5-4 percent this year, lower than the projected 5 percent, if global oil prices continue to soar, according to the Kasikorn Bank.
Kasikorn Bank President Prasarn Trairattanaworakul was quoted by Thai News Agency as saying Friday that Thai economy will grow at between 4-4.5 percent this year if oil prices hover around 80 U. S. dollars a barrel. Any further rise in fuel prices above the line could push the country's GDP growth down to 3.5-4 percent.
He predicted the Bank of Thailand would likely to hike the benchmark of 14-day repurchase rate by at least a quarter of a percentage point to 5 percent in line with the U.S. Federal Reserve Board.
This will make commercial banks in Thailand adjust their rates upward to place lending rates at 8-8.5 percent across the board. However, savings rates will vary depending on the liquidity situation of individual banks."
Bllomberg says:
http://www.bloomberg.com/apps/news?pid=10000080&sid=aPEjIcWg7LwA&refer=asia
"Thailand's economy probably grew at the fastest pace in more than a year as exports and tourism gained, Finance Minister Thanong Bidaya said.
Southeast Asia's second-biggest economy expanded almost 6 percent in the first quarter from a year earlier, Thanong said in an interview today at the Asian Development Bank's annual meeting in Hyderabad, India. That would the fastest pace of growth since the 6.3 percent rate in the third quarter of 2004."
Gratuitous picture--sorry, it's a tradition!
Mohammad Al Qahtani (on the right)
Cheers! Dave
Political tensions to keep oil prices high: Qatar minister.
Abdullah al-Attiyah
We are now at the point where the world's largest producers are actively trying to talk some sense to the speculators: there is now 8-10 times more oil being traded daily on NYMEX and ICE than is physically being exported globally. Next will come action. And if you think Aramco cannot affect prices...
a) Impose a stiff gas tax and actively promote disengagement from the petroleum business, reducing consumption in the US by over 20% and/or
b) Succumb to a protracted economic recession that will slash consumption just as much, taking with it the so-called "growth" miracles of Asia.
Bush&Cheney may not do (a) for reasons well known to all (though if push comes to shove even that can change), but the Saudis certainly think past the 2008 elections. As for (b), if prices stay at these levels for another 3 mos. it is a foregone conclusion.
If you ask how the Saudis can lower oil prices, I must again emphasize that right now apparent prices are being set by speculators on NYMEX and ICE, not physical supply and demand. It is child's play to wipe them out - if you want to and have the means: which the US and the Saudis certainly do.
Hint: raise margins on futures contracts to 100% of value. All it takes is ONE phone call from the CFTC. But of course you will only do that in prior consultation with the world's largest producer. You don't want them angry at you.
In less than three months, many certainties as to the future were turned upside down ("inescapable" dollar-denomination, "return" to cheap oil, "peaceful" solution to the Iran/USA conflict, "sustainability" of the US real-estate bubble, US "domination" over two other key global players - China and Russia,...) and a great number of indicators now point at converging directions, all of them sources of unbalance for the current system (vertiginous rise in gold and precious metals prices, escalation of inflationary pressures, increase of the interest rates, EURUSD approaching 1.30, large amounts of central banks' reserves being switched to Euros, rise of Asian currencies, stock market and currency crises developing in various areas in the world, growing amounts of articles published in the international and national press using words such as "crash, crisis, collapse, risk, conflict, ..." ).
We are going through a "learning" phase for the system's players. Some of them properly anticipated the evolution and bet on a breakdown of dominant trends. While they still seemed marginal and irrational to the majority a few weeks ago, they now appear to have "won" when the majority has "lost" following the system's "normal" trends. This "lesson" conveys cumulative effects and soon considerably strengthens all breakdown tendencies, resulting in switching from trigger-phase to acceleration-phase. It also reinforces the conviction of the strategic players who got involved into breakdown policies (or who anticipated the breakdown), and weakens in a sustainable way all regulation capacities of the system now faced to a soon generalized crisis of confidence. Well, in the current system, one inherited from WWI and transformed by the fall of the Iron Curtain, whether it is in the financial, economic, monetary or strategic sector, everything relies on the trust granted by each of us to one central player (the US) and to the different components of its might. The passage from trigger phase to crisys acceleration phase marks the collapse of this trust, sector by sector.
And I agree with you that Aramco can't affect the price by producing more oil :-)
Sheikh Yamani Mecca!
Oh. Sorry. That was a James Brown song.
Subkommander Dred
Could you explain this statement with the relevant numbers, please?
But I thought all they have left is sour... :-)
This apparently means they have ~151 Gbs left. Unless they find ways to increase their proven reserves.
They have 260 billion barrels of PROVEN reserves, at 10mbpd "sustainable production capacity" that must be close to what, 80 years worth?
But wait!
They need to Quadruple their exploration to find more "proven reserves"....now!?
What's the rush?
Furthermore one could put 2 and 2 together and say that they are entering their "bumpy plateau" at 15%.
This actually means the rest of the world is in deep doo doo and that the U.S and the North Sea hitting max production at 50%, is not the normal M.O.
Wow!
But back to the original starting point, hurricanes.
We must be very careful in trying to dis-entangle hurricane effects (should the Gulf of Mexico be hit by major hurricanes this summer) on oil and gas production from what is true "Peak Oil" or geological peak, which is hard to dis-entangle from "logistical peak" (a peak caused by lack of equipment, manpower, and investment, as opposed to a limit imposed by geology)
The danger is that everytime weather impacts productions, the loonies go screaming "See, it's peak, I told you so, I told you so...!!", only to have production recover later and ("opps, my bad, don't panic...yet..") be make the serious concerns about real geological peak to look foolish....
One would think that the United States could (either through it's oil companies or through government) create some larger "tank farms" to have what could be called a "commercial reserve" somewhat similiar to our SPR (Strategic Petroleum Reserves). It is time to admit that there are limits to JIT (Just In Time) inventory control, especially when it relates to a critical resource.
The other issue is still lack of diversity in transport fuel supply. One poster mentioned the use of LPG in bi-fuel vehicles. There are also efforts that can be made to incorporate CNG (Compressed Natural Gas) and LPG into our commercial delivery fleet to reduce the pressure on our Diesel and gasoline supplies. It ASTOUNDS me that many summer only uses of gasoline and Diesel (lawn mowing, recreational boating, RV's, motor scooters and recreational 4 wheelers, recreational go cart tracks, and many other applications) do not see the advantage of going "counter season" and incorporating nat gas and LPG into more of their fuel consumption. Nat gas is seasonally cheaper in the summer due to being "off peak" on demand.
There are some very lucrative business opportunities in this.
We should at least make our fossil fuel providers compete against one another, and then we can work to make them compete against alternatives as these become available.
Roger Conner known to you as ThatsItImout
I think it is very hard if not impossible to differentiate between from your "true" geological peak and the logistical peak.
In reality every field, regional or national peak we have seen to date has been a logistical peak and I expect every other peak including global peak will also be logistic in nature. There is no such thing a geological peak in the real world.
I say this since every peak we have seen today could have been delayed and/or higher given more equipment, manpower, investment etc. We've never seen (nor will ever see) a true geological peak since in the real world we never have infinite equipment, manpower or investment.
Hurricane damage is interesting since it affects the logistics, destroying equipment but it also shows how tight the market is these days by the price response from a few hundred thousand barrels per day lost.
I am afraid I must disagree with that. One of our fellow posters, WestTexas, I think does a great job of pointing out a true geological peak...that being the example of Texas itself.
There are no real constraints on the number of rigs that can be placed and operating in Texas. They are at the very epicenter of the oil service trade. The rigs are available. The money, if the oil is able to be extracted in volume, is there. The workforce, more than anywhere else in the world, is there, and more can be trained fast if needed (almost all the best research on drilling technique comes from there, with Universities engaging the petroleum trade's research the best in the world), but, they have not, in three decades, been able to surpass their old peak, despite changes in oil price, in taxation, in legislation and in technology. I think we can easily say Texas is a true geological peak. Likewise, the U.S. lower 48. There are no political/logistical holdups, there is one issue only....geology limits the amount of oil that can be pulled, even if the equipment/money/workforce were infinite, no one now believes the old peak can be exceeded.
The Atlantic North Sea may be at this point now, and Alaska almost certainly is (unless vast new fields are found). But is Saudi Arabia, Qatar, or Iraq? We just don't know.
I have said before that my understanding of the Peak Oil theory, per M. King Hubbert, Colin Campbell, Ken Deffeyes early work (before he went off the deep end lately) and Matthew Simmons is the true geological peak, i.e., Texas and U.S. lower 48, is the definition of "Peak Oil". Anything else is not to me "true peak".
Frankly, we don't need to distract ourselves with the "faux peaks", caused by everything from hurricanes to wars to obstinent dictators. So many of the giant fields of the world seem to be at or nearly at the real thing (or like the U.S. and Alaska, well beyond the real geological peak), hurricanes, wars, or money be dammed.
Roger Conner known to you as ThatsItImout
For the Texas peak to be geological and not logistic you would have to believe that a had ten times as much infrastructure been deployed, ten times as many wells been drilled in the year after peak than was actually the case peak couldn't have been delayed for a year.
I expect that had there been ten times as much activity than there actually was the Texan peak may have been delayed somewhat (at expense of more rapid post peak decline).
I guess it's really a pedantic point but I think peaks occur when the geology and economics of the situation means that the amount of infrastructure that can be deployed (limited by economics) isn't sufficient to maintain the flow rate (limited by geology). Is that geology or logistics?
I think you're quite right to say we shouldn't confuse the geological/logistical peak with external influences like hurricanes and wars, their impact is secondary and imposed on top of the fundamental geologically/logistically constrained curves.
Based on Khebab's Hubbert Linearization (HL) work, Texas peaked in 1972 at 57% of Qt. Saudi Arabia, in 2005, was at 58% of Qt. My theory is that the swing producers peak later than the overall regions; however, Texas production has dropped by about 75%, while overall Lower 48 production is only down about 50%.
I haven't been able to find a rig count, but the Texas rig count exploded in the Seventies, resulting in a 14% increase in the number of producing wells by 1982. By 1980, literally every rig that could drill was turning to the right in Texas and the Lower 48. From 1972 to 1982, Texas oil production dropped by about 30%. I suppose that if we had an infinite number of rigs, we could have slowed the decline rate, but the key point is that one Gb and larger oil fields drive the oil business.
At peak production, the large oil fields are--by and large--fully developed. So, we can use secondary and tertiary recovery techniques, or we can do what the Saudis have been doing--drill horizontal wells into a rapidly thinning oil column, but it is virtually impossible for a collection of smaller fields to make up for the declines from one Gb and larger oil fields.
Even if we chase down every single smaller field, with an infinite supply or rigs, we would only be "borrowing" so to speak from future production. It's a gross simplification, but provided that an operator does not produce a field at a high enough rate to damage the reservoir, the production rate tends not to have a major impact on ultimate production. So, one can--very loosely--compare an oil reservoir to water in a bottle. Pouring water out a very slow rate suggests limited volume. Pouring water out at a very high rate suggests a large volume. Note that this appearance has no bearing on the reality of the volume of the water in the bottle.
So, if a region is at the 50% of Qt mark, they can maximize their "pour rate" by using horizontal drilling and by developing every small field that they can find, but note that this has no effect on the volume of water in the bottle.
Why do you say that Deffeyes has gone off the deep end lately?
In reply to PhilRelig,
Deffeyes to me is a giant in the field of oil depletion study, and one of the most known and respected voices in the movement, so his words carry weight, both inside the "depletion aware" community and outside of that community with those who are interested, are just learning, or are looking for any way possible to dismiss the whole "depletion issue" as doomsaying lunacy.
Deffeyes twin major remarks in many people's mind now are...
>picking the exact month of world peak as December of last year.
>"Stone age by 2025"
For some of us who have long been admirers of the long history of Deffeyes excellent work on depletion, the above public pronouncements were, to say the least, dissapointing. The type of remarks above have, I feel, only served to undercut his credibility and to risk turning interested people in the issue away from real exploration of the depletion crisis, which I think is real, and potentially critical soon. Those wondering if oil and gas depletion is just another doom scenario (i.e., Y2K, killer bees, etc.) will be given reason to believe this is so by such hyperbolic remarks by Ken Deffeyes, a giant in the study of oil depletion.
We will need all the allies we can find to try to get even a fraction of the public to understand what may be upon us.
The "depletion aware" or "Peak aware" intellectuals who have done the pioneering work in this field can best serve the effort of informing the public, I feel, by being very measured in their remarks and resisting the temptation to use hyperbole in their speech.
I am giving Ken Deffeyes the benefit of the doubt and assuming the instances cited above were only a momentary lapse. Our detractors, who look for any reason to dismiss the whole "depletion" issue will not be nearly so forgiving, and use any ammunition provided by our intellectual leaderrs to discredit what is a serious and critical issue.
Roger Conner known to you as ThatsItImout
when i hear him growl "Stone age by 2025" i hear him playing the curmudgeon, and not making a detailed or serious prediction of the future.
maybe if you think of him as if he were a prophet, in the mold of other big names in peak oil, you'd take the stone age comment another way.
anyway, Deffeyes' clarification on the stone age comment seems to confirm my interpretation (at the bottom of this page):
http://www.princeton.edu/hubbert/current-events-06-03.html
geez, if people hadn't been looking for a prophet (in the sense of other peddlers of arcane knowledge) that clarification would not have been needed.
similarly, on calling the peak ... why not? call the peak and then have the fun/risk of seeing if you are right.
Right now, in the US, that is still the case, but NG production here (US and likely North America generally) has peaked, and a lot of the summer load of air conditioning is carried by Nat. Gas fired electricity plants. If we have a few really hot summers, on top of a normally cold winter or two, this summer decline of NG prices might not hold. I guess that I just don't believe that switching out to an LNG vehicle would be a great long-term strategy.
Of course, moving to a fleet of many fuels is theoretically a good idea---it spreads the risk around. However, it is possible that the fuel-stations might find the stocking of many fuels a bit of a problem. And then, Lou Grinzo I think would have us all in electrically powered vehicles, just varying how the electricity is made--another way to spread the risk around.
It seems to me you are ignoring an important point.
Nat gas is seasonally cheaper in the summer due to being "off peak" on demand.
Ok, not so much ignore as disreguard. Large parts of the nation HEAT and COOK with Natural gas. Are you SERIOUSLY suggesting that heating and cooking supplies should be burned to 'entertain onesself'?
to eric blair
and other responders
I think people are going to "entertain onesself" whether I like it or not.
There would be more ideal situations if boaters would switch to sail instead of power boats, if off road 3 and 4 wheelers were replaced in masse by bicycles and people used strictly human power lawn mowers, but what do you think the likelihood of that is?
Several other posters made points I would like to address:
>One denied there was a seasonal price spread summer to winter and another went so far as to imply that winter was the cheap season (?)
So I will simply enclose some links to examine, and leave folks to study on their own.
http://www.energyshop.com/es/homes/gas/gaspriceforecast.cfm
http://www.tfc-charts.w2d.com/chart/NG/M
http://dnichols.wustl.edu/honors2006/NDunlap%20Thesis.pdf
http://www.naseo.org/events/winterfuels/2001/presentations/Henning1.pdf
Page 10
Page 16
Page 24
(The NASEO report in pdf is very interesting in many ways, actually)
Now, back to your point, <Large parts of the nation HEAT and COOK with Natural gas.>
Yes, but they do not heat with it in the summer as a general rule. This is why summer is counter season to the demand for nat gas. The cooking load has to be considered relatively modest, and yes, if I thought I would be putting people out of cooking fuel by transfering some margin of consumption in the transportation/vehicle over to nat gas, I would be against it. That does not seem to be a problem however.
>Some folks made the argument, correctly so, that natural gas production is peaked in North America. This seems to almost certainly be true. However, we must recall that North American oil production peaked no later than the early 1970's and yet here we are in 2006 burning crude oil products! We are in about the same place with natural gas now that we were in regards to crude oil in the late 1970's. Peaked, but certainly not out.
In the larger scheme of things, we as a nation can use geothermal heat pumps for heat, solar hot water, and insulation to cut down the "leakage" of natural gas (hypothetical question: which is more "wasteful" I wonder, wasting natural gas to heat water in hot sunny Arizona where the sun should be doing it, or using it to displace some crude oil consumption in the summer off demand season in a boat or lawn mower....(?)
It just seems to me that every industrial country except the U.S. has a more "diverse" and adjusted system of providing fuel. Note that for the moment we have left LPG completely out of the discussion, but it has very great possibilities as another "counter season" fuel, and can be produced by both crude oil and natural gas processes.
Cars and trucks for instance can be built "bi-fuel" so that they can move back and forth between LPG and gasoline with varying demand/supply situations and the change of the seasons.
I again challenge anyone to look up at the left of this column, at the great pyrotechnic show that is the oil field flarestack...and you will see the same stacks at refineries around the world....Methane, Hexane, Butane, the gases that constitute propane.....wasted into the air in a wash of BTU's heading into the sky (the flarestacks of Arabia are actually visable from the space shuttle), and yet we say, don't waste it in a boat or an RV or a lawn mower.
I am beginning to think that we all, MYSELF INCLUDED need to go back to the VERY BASICS of the fossil fuel industry and more importantly, the ECONOMICS of creating markets for fuels, and restudy ALL options. We seem to be buried in myth.
Roger Conner known to you as ThatsItImout
Alright, now try actually looking at the prices for residential gas for the last, say 15 years, in the United States? They follow a very distinct pattern. It is kind of hard to miss. They form a sin curve with the peaks always (with few exceptions) June-August and the lows in December and January. Last time I checked, people weren't buying their heating gas on the Nymex futures exchange, just like they don't fill up their cars at Ras Tanura.
Besides, trying to shift the load to another already depleting energy source is about as logical (and, in the long term, about as sustainable) as trying to balance on your left foot, instead of your right.
And, once burned, it is burned. Is the 'highest best use' of natural gas a displacement for gasoline? For making electricity? Or is heating and cooking that 'highest best use'?
Back in the day, it was illegal to burn natual gas for electrical generation. But then again, back in the day, oil was used to make electrical powerr.
The last two winters were warmer than usual and it looks like the winter peak may be a victim of global warming, though of course it's too early to tell by five or ten years.
Where on earth did you get this idea? Looking at the actual history of natural gas prices, it would seem that your statement is the exact opposite of the truth.
HO, love reading your posts. However, here you have made a major blunder. Appreciating Asian currencies are an unmitigated disaster. Asian countries are export led. Nobody over here would call an appreciating currency "bright". In fact, the appreciating currency stands to put most of these countries economies right into the crapper. Singapore might be the exception to this. There are cries everyday for the central banks to intervene and prop up the dollar. Exports are much more important than imports to these economies.
Haven't you guys ever been shaken down by professionals before?
Sorry ...
If you increase internal consumption and go for a more balanced trade with other countries you will achive higher standart of living without crashing your own economy. Just raise sallaries, build infrastructure, increase social programs etc.
Kiwi has fallen from 0.74 to around 0.62 US.
At 0.74US expoorters were grizzling and
laying off staff. But at 0.63 the oil
import bill is up 15% before even considering
oil prices. With international oil prices
rising, a massive balance of payments
deficit has grown into a monumental deficit
(8.9%GDP).
Raising interest rates kills the stagnating
economy and kills the housing market, but does
attract international money and helps fund
imports. Lowering interest rates fuels
inflation (especially of the housing market)
but drops the Kiwi dollar, increasing the
deficit. It's all a no win situation
(just as the IMF planned it to be?)
Before becoming a TOD reader I think I would have found this comment comforting. They are doing all they can, will boost production kind of idea. Now I look at it and think, Oh hell, that field hasn't got long to go and the production drop off won't be 2% it'll be off a cliff. Are we here separated from the rest of the world in what we see when we read the same words in a press release or are we just cranky contrarians?
Mind you it also wiped out a lot of sugar cane. Now if Australia was heavily dependant on Ethanol post peak then this would be more a crisis not just not having sugar for my cornflakes. Makes you think about climate change affecting sugar cane growth in countries like Brazil.
Come to think of it, the beach will be a lot closer too. In the Rhone Gulf (currently known as the Rhone Valley, before the sea level rises 50 metres)
Sorry, had to!
"A rebel group has threatened that civil war would occur if the Ethiopian government does not remove troops that it has placed in the Calub and Hilala gas fields in order to safeguard the area for international investors."
http://allafrica.com/stories/200605150555.html