Closing Prudhoe Bay
Posted by Heading Out on August 7, 2006 - 12:04am
Because of severe corrosion in one of the pipelines, BP is temporarily closing the production from the Prudhoe Bay oilfield, and, in the process, cutting off some 400,000 barrels of oil a day, some 8% of US production. The NYT story suggests that this might raise prices by as much as $10 a barrel.
ANCHORAGE, Alaska - In a sudden blow to the nation's oil supply, half the production on Alaska's North Slope was being shut down Sunday after BP Exploration Alaska, Inc. discovered severe corrosion in a Prudhoe Bay oil transit line.MSNBC, Yahoo, Reuters.BP officials said they didn't know how long the Prudhoe Bay field would be off line. "I don't even know how long it's going to take to shut it down," said Tom Williams, BP's senior tax and royalty counsel.
Once the field is shut down, in a process expected to take days, BP said oil production will be reduced by 400,000 barrels a day. That's close to 8 percent of U.S. oil production as of May 2006 or about 2.6 percent of U.S. supply including imports, according to data from the U.S. Energy Information Administration.
and then let's not forget:
OPEC production down in July 0.8%.
Tomorrow will be an interesting day. More under the fold.
UPDATE: From Rigzone
The Department of Energy Monday said it would consider offering refiners oil from the nation's emergency oil stockpile to address supply concerns in Alaska resulting from BP's shutdown of Alaska's Prudhoe Bay field.
Officials at BP, a unit of the London-based company BP PLC, learned Friday that data from an internal sensing device found 16 anomalies in 12 locations in an oil transit line on the eastern side of the field. Follow-up inspections found ''corrosion-related wall thinning appeared to exceed BP criteria for continued operation,'' the company said in a release.The story is also on BloombergWorkers also found a small spill, estimated to be about 4 to 5 barrels. A barrel contains 42 gallons of crude oil. The spill has been contained and clean up efforts are under way, BP said. ''Our production while all this is in place is going to be marginal,'' said Will Vandergriff, spokesman for Gov. Frank Murkowski. ''That presents some technical problems because it's a high capacity line and it's meant to be filled.''
The pipeline leak and the discovery of corrosion ``have called into question the condition of the oil transit lines at Prudhoe Bay,'' Bob Malone, BP America President, said in the statement. ``We will not resume operation of the field until we and government regulators are satisfied that they can be operated safely and pose no threat to the environment.''Unfortunately the leak problem is not, apparently confined to the pipeline. BP has recently closed a dozen wells at Prudhoe Bay because of leakage problems.
The story is also being carried in the Juneau Daily News which also noted that the story broke as the Alaskan legislature were voting on changing the states production tax laws. Sadly it also carries news that the champion Iditerod racer Susan Butcher has died at the age of 51.
UPDATE: 10:45 am Eastern
Thanks to Gunga2006 , here is a bit more information
BP spokesman Daren Beaudo later said it would take 24 to 36 hours to shut down the eastern half of Prudhoe Bay, but did not give an estimate on closing western wells. The shutdown does not include the Lisburne field, also on the North Slope, as inspection results showed that pipeline integrity was intact. . . . . . . Beaudo said the line continued to leak and that BP had collected another 70 barrels since finding the corrosion. Chappell said BP had never previously had to shut down the oilfield, which includes 22 miles of pipelines. However, it has had to curb production at Prudhoe Bay several times in the past year due to a series of incidents and spills on the North Slope, an oil-rich area that pumps a total of about 800,000 barrels per day (bpd), nearly as much oil as consumed by Australia. . . . . Output from the northern state peaked at over 2 million bpd in the late 1980s, but has more than halved since then. Chappell said it was premature to estimate what impact the outage would have on BP's annual production target of 4.1-4.2 million barrels of oil equivalent per day (boepd). At 100,000 bpd, BP's share of Prudhoe Bay accounts for 2.5 percent of that total, although its overall Alaskan crude oil output was a higher 268,000 bpd last year.And from The Street
Domestic inventories of crude, which are up 4% over last year, will help reduce some of the shock of the BP closure and force the U.S. to likely look abroad for more. But the shutdown of the country's largest oil field will likely keep prices high until it returns to full output. BP, though, could not estimate when that would occur. "While this is within the capacity of world reserves to cover, the market is already tight and this will only add to that perception, and intensify the response to threats, both real and imagined, yet to come," said John Kilduff, an energy analyst at Fimat USA in New York. The BP shutdown is just the latest factor contributing to the spike in crude prices, which have risen 21% this year. Clashes with Iran, the world's fourth-largest oil producer, over its nuclear program, militant attacks on Nigeria's oil infrastructure, downed production in the Gulf of Mexico and recent clashes between Israel and Hezbollah have further elevated prices.The timing of this is unfortunate for pipeline proponents, since the issue of the gas pipelines is not yet resolved. It was only last week that the BP Chief Executive, Lord Browne, was up there trying to sound nonchalant about the situation.
BP Plc Chief Executive John Browne said Thursday he hopes that a final agreement on financial terms for the proposed natural gas pipeline can be reached soon, but there is no need to rush, despite pressure from the Bush Administration and Alaska's governor. "It would be easy for me to say that there's a short window and give you a lot of arguments about that. Actually, the window is reasonably long for any project," Browne told a luncheon audience in Anchorage. . . . . . The visiting BP executive said his main reason for coming to Alaska was to check on repairs and upgrades at BP's North Slope operations. The repairs and upgrades were needed after a corroded Prudhoe Bay crude oil pipeline the company operated leaked about 200,000 gallons earlier this year. Browne said BP has launched an aggressive program to fix corrosion on its aging pipelines. "I take full responsibility for ensuring that those steps are carried through," Browne said.
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If the SPR is drawn down because of pipeline corrosion, when will the be the next good time to fill it back up? Probably at the end of the hurricane season, sometime between the war with Iran and the summer driving season...
It might be an interesting bidding war against the rest of the world!
I quess the ultimate sign of peak oil having finally arrived will be the potential draw down in the SPR not being replaced for a variety of reasons, too expensive, can't afford it, don't want to disrupt the tight market right now, wrong time of year, waiting for a big check from the chinese to clear at the bank, when the weather...
Interesting times alright.
Whenever people talk of how high commercial stocks are, they neglect to say that 10mmb are from the spr that might never be repaid.
Right now the Republican party controls all four of these bodies - they have a majority in the house and the senate, the president is Republican, and most of the Supreme Court justices were appointed by Republicans.
All of the House and 1/3 of the Senate is up for re-election in November 2006 - they're finishing up primaries(nominations) now. Paradoxically, as the Senate cannot be gerrimandered, their races are much more competitive. While Bush cannot be re-elected for a third term, the issue is whether the Democratic party gains control of the House and the Senate this year - it looks somewhat possible right now. The fact that it's somewhat close is disappointing because this is probably the least popular president + Congress in history.
Bush could very well destroy the SPR (a really, really big oil drum supposed to hold a month's supply of our oil use for emergency + military reasons) for political reasons - his administration, to a degree unlike any in history, has politicized virtually all domestic policy.
Perhaps you meant you were feeling REALISTIC today?
~Carroll Quigley, Tragedy and Hope: A History of the World in Our Time (New York: Macmillan, 1966), pp. 1247-1248.]
This begs the question: ¿Who gets to chose the policies?
As Deep Throat said: "Follow the money"...
"[T]he powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country, and the economy of the world as a whole. This system was to be controlled in a feudalist fashion, by the central banks of the world acting in concert, by secret agreements, arrived at in frequent private meetings and conferences.
The apex of the system was the Bank for International Settlements in Basle, Switzerland, a private bank owned and controlled by the world's central banks, which were themselves, private corporations. The growth of financial capitalism made possible a centralization of world economic control, and use of this power for the direct benefit of financiers and the indirect injury of all other economic groups."
~Carroll Quigley, Tragedy and Hope: A History of the World in Our Time (New York: Macmillan, 1966) p.324
Who writes the policy? An offshoot of the Round Table Group, of course, that was established in 1921, The Council on Foreign Relations. This group states it is not part of the US government;
"Is the Council on Foreign Relations part of the U.S. government, the United Nations, or organizations such as the Royal Institute for International Affairs and the Trilateral Commission?
No, the Council is a nongovernmental, nonprofit, and nonpartisan organization."
http://cfr.org/about/faqs.html
Yet it is able to formulate policy such as the merging of the United States Mexico and Canada into a "North American Community".
http://tinyurl.com/ej63j
Lou Dobbs cover the story awhile back and it was on youtube but it has been removed. You can find the transcript here:
http://tinyurl.com/e8xgn
Why would you need to be part of the government if everybody in the government is a member?
Check the link below to see the extent of the current administration's membership in the CFR;
http://tinyurl.com/etzkx
==AC
At the end of the war of 1914, it became clear that the organization of this system had to be greatly extended. Once again the task was entrusted to Lionel Curtis who established, in England and each dominion, a front organization to the existing local Round Table Group. This front or
{p. 952} ganization, called the Royal Institute of International Affairs, had as its nucleus in each area the existing submerged Round Table Group. In New York it was known as the Council on Foreign Relations, and was a front for J. P. Morgan and Company in association with the very small American Round Table Group. The American organizers were dominated by the large number of Morgan "experts," including Lamont and Beer, who had gone to the Paris Peace Conference and there became close friends with the similar group of English "experts" which had been recruited by the Milner group. In fact, the original plans for the Royal Institute of International Affairs and the Council on Foreign Relations were drawn up at Paris. The Council of the RIIA (which, by Curtis's energy came to be housed in Chatham House, across St. James's Square from the Astors, and was soon known by the name of this headquarters) and the board of the Council on Foreign Relations have carried ever since the marks of their origin. Until 1960 the council at Chatham House was dominated by the dwindling group of Milner's associates, while the paid staff members were largely the agents of Lionel Curtis. The Round Table for years (until 1961) was edited from the back door of Chatham House grounds in Ormond Yard, and its telephone came through the Chatham House switchboard.
The New York branch was dominated by the associates of the Morgan Bank. For example, in 1928 the Council on Foreign Relations had John W. Davis as president, Paul Cravath as vice-president, and a council of thirteen others, which included Owen D. Young, Russell C. Leffingwell, Norman Davis, Allen Dulles, George W. Wickersham, Frank L. Polk, Whitney Shepardson, Isaiah Bowman, Stephen P. Duggan, and Otto Kahn. Throughout its history the council has been associated with the American Round Tablers, such as Beer, Lippmann, Shepardson, and Jerome Greene.
The academic figures have been those linked to Morgan, such as James T. Shotwell, Charles Seymour, Joseph P. Chamberlain, Philip Jessup, Isaiah Bowman and, more recently, Philip Moseley, Grayson L. Kirk, and Henry M. Wriston. The Wall Street contacts with these were created originally from Morgan's influence in handling large academic endowments. In the case of the largest of these endowments, that at Harvard, the influence was usually exercised indirectly through "State Street," Boston, which, for much of the twentieth century, came through the Boston banker Thomas Nelson Perkins.
Closely allied with this Morgan influence were a small group of Wall Street law firms, whose chief figures were Elihu Root, John W. Davis, Paul D. Cravath, Russell Leffingwell, the Dulles brothers and, rnore recently, Arthur H. Dean, Philip D. Reed, and John J. McCloy. Other nonle~al agents of llorgan included men like Owen D. Young and Norman H. Davis.
{p. 953} On this basis, which was originally financial and goes back to George Peabody, there grew up in the twentieth century a power structure between London and New York which penetrated deeply into university life, the press, and the practice of foreign policy. In England the center was the Round Table Group, while in the United States it was J. P. Morgan and Company or its local branches in Boston, Philadelphia, and Cleveland. Some rather incidental examples of the operations of this structure are very revealing, just because they are incidental. For example, it set up in Princeton a reasonable copy of the Round Table Group's chief Oxford headquarters, All Souls College. This copy, called the Institute for Advanced Study {ed. comment: the Australian National University in Canberra also has an Institute for Advanced Study. It's the leading research institute in Australia, and is staffed by Far Left academics in the Humanities, and by Economic Rationalists}, and best known, perhaps, as the refuge of Einstein, Oppenheimer, John von Neumann, and George F. Kennan, was organized by Abraham Flexner of the Carnegie Foundation and Rockefeller's General Education Board after he had experienced the delights of All Souls while serving as Rhodes Memorial Lecturer at Oxford. The plans were largely drawn by Tom Jones, one of the Round Table's most active intriguers and foundation administrators.
The American branch of this "English Establishment" exerted much of its influence through five American newspapers (The New York Times, New York Herald Tribune, Christian Science Monitor, the The Washington Post, and the lamented Boston Evening Transcript). In fact, the editor of the Christian Science Monitor was the chief American correspondent (anonymously) of The Round Table, and Lord Lothian, the original editor of The Round Table and later secretary of the Rhodes Trust (1925-1939) and ambassador to Washington, was a frequent writer in the Monitor. It might be mentioned that the existence of this Wall Street, Anglo-American axis is quite obvious once it is pointed out. It is reflected in the fact that such Wall Street luminaries as John W. Davis, Lewis Douglas, Jock Whitney, and Douglas Dillon were appointed to be American ambassadors in London."
~Carroll Quigley, Tragedy and Hope
and just as important, Citizens have responsibilities.
As for being consumers, that's how Americans were conditioned since they were born, Ronald McDonald and and Santa. It's hard to think out of that. Plus, this is a resource wasteful society for just the things you need like food, even without involving luxuries. And then, government sets up how the infrastructure is to suit the interests of corporations and results in the maximum consumption just to exist within it. This is just what happens when you put this technology and resources on a population of humans. It's nobody's fault. It's a phenomenon that happened and will end.
I completely disagree. Thinking like that is what's gotten the US into this horrible mess in the first place. It isn't "irrational" to get involved in your country's governance; its the most rational thing in the world. What could be of more value to an individual than to have some part in the process of ensuring that he or she plays an active role in the voting process, and thus has some hand in bringing responsible persons into power. There is no more basic duty as a citizen of a given country. If people aren't concerned about this, then they'll get the government they deserve -- and it won't be the one they want.
Americans don't get involved because of a sort of national hubris that says that no matter who's in power, our 'democracy' is so strong that things will just carry on the way they always have. As we can see now, this is hugely incorrect assumption that has engendered truly tragic results.
Other countries have citizens that are much more involved in the voting process. Witness the voter turnout in the world - country by country. The top 30 all enjoy over 80 percent turnout... while the US, at #139 is at 48.3 percent.
In short, contrary to your statements Americans are to blame for not getting involved in the voting process. If people from other countries can do it, there's absolutely no reason why high voter turnout shouldn't happen here. If it did, there would be hundreds of thousands of less casualties all around the world, and America would be much less hated.
Who was it that said, "If we hang apart, we hang like cool man"?
This might be true, but unpopularly elected governments (aka dictators) have a much worse track record...
Yes but the odds are very very good that the US and the rest of the Corporatocracy put the "unpopularly elected governments" into power for precisely that reason. Class warfare, so the countries would always be in turmoil and much easier to exploit....
==AC
"Even men who were engaged in organizing debt-serf cultivation and debt-serf industrialism in the American cotton districts, in the old rubber plantations, and in the factories of India, China and South Italy, appeared as generous supporters of and subscribers to the sacred cause of individual liberty."
~H.G. Wells: The Shape of Things to Come
;-)
==AC
Peakniks who understand very well the type of deliberate obfuscation the media and politicians have engaged in to hide the realities of peak oil should recognize that this level of deception is the rule, not the exception.
AC, thanks for posting the excerpts from Tragedy and Hope, maybe it will open a few eyes.
------------------------------
BTW, an interesting book on the history of the Fed Reserve is The Creature From Jekyll Island.
There are a lot good articles and books on the CFR, Roundtable, and Trilateralists - all well researched by historians and political scientists. The leaders and active particants of such groups are not obscure academics, they are very much entrenched in our political systems and include the likes of Rockefeller, Brzezinski, Kissinger, Carter, Clinton, Cheney, presidential cabinet members, senators, etc.
The evidence is contrary to this notion. Indeed, govt powers that be have known about the probabilities surrounding a declining fossil fuel base for decades. You need to research the geopolitics of oil, there are many scholarly books on the subject. Also, check out Michael Ruppert's article on the Pentagon's plans for the end of the grid. He has unearthed some very telling documents written by the Army Core of Engineers for the DOD.
Just because the paradigm of what a reasonable solution should be looks much different from your view or my view as compared to the view of the power elites does not mean they are unaware of what is at stake or the consequences of their actions.
I personally go along with the perspective that people like Catherine Austin Fitts (former Asst Sec of Housing under Reagan) have regarding the strategy of the power elite. In the words of Fitts, they appear to be using the "tapeworm economy" strategy to hollow out anything of real value or substance and then abscond with the loot when TSHTF. It is a situation of keeping the economic house of cards propped up until they are satisfied with their plundering and then they will depart leaving rank and file Americans holding the bag.
There are too many signs that something along the lines of what I have described is already in the making. Consider the imponderable $8 Trillion debt plus trillions more in unfunded liabilities, the real possibility of a weakened or collapsed dollar, the enormous economic bubbles (housing, derivatives, etc.) representing tens of trillions of dollars, the decision in March by the Fed to stop releasing M3 data (can you say inflation and fiat money?), and on and on.
And for the icing on the cake, last week I read that the administration decided to fire half of the IRS staff of lawyers who pursue irregularities in the estate tax system. If TPTB can't get congress to do away with the estate tax then they will do the next best thing. Add to that the fact that the IRS has reported that upwards of $2 Trillion of personal assets has been moved offshore. I understand that Cheney has been divesting himself of his American-based assets and buying foreign bonds/stocks.
Our best defense is to have a thorough understanding of what's happening and then share this information with others.
Look at what they did with the estate tax addon to the minimum wage bill. It wasn't enough to get an exemption for rich people bigger than the wage boost for poor people, they had to go farther and specifically exempt anybody who got tips from the minimum wage boost. See those tip jars? If you get tips you wouldn't get minimum wages anymore because of that addon. Thirty dollars a month in tips is what it takes to get exempted from minimum wage.
So everybody in the US is going to have a tip jar on their desk. If you go into the DMV and don't leave a tip, what's going to happen to your driver's license extension? Think about it.
In California we had an election where the Republicans got into office with the promise that they were going to screw over the blacks and liberals. They prompty got rid of overtime. All the blue collar conservatives without union contracts promptly lost their overtime, which means that the boss no longer had to worry about scheduling enough people to work so that he had the job covered because he could just hold you back from going out the door whenever he wanted with no overtime penalty.
Then they had an insurance commissioner who went into exile in Hawaii after the Northridge earthquake because he so favored the insurance companies that he had to skip town to avoid getting sued.
Know any poor people who had earthquake insurance in California, with our housing prices?
Republican corruption is a self correcting problem.
A dialectical method is used to steadily herd Americans down one path or another. This is often in the form of a sort of 'good-cop, bad-cop' routine. The neocons get power on the promises of leaner, more efficient govt then once in office plunder at will. American swing voters get fed up and then rush into the waiting arms of neoliberals who pursue endeavors to expand ineffective programs. After awhile frustration leads the country back to a GOP majority. We are given false choices.
In modern times the term Republican has too much of a confused meaning because neoconservatives don't have traditionally conservative values such as fiscal responsibility, national sovereignty, and environmental protectionism. Neocons are RINOs and a more appropriate term would be global fascists. Mussolini properly noted that fascism is the merger of state and corporate interests.
IMO, grassroots activism is the most effective tool ordinary Americans have against the status quo.
BTW, I do not intend to bash Dem voters. I was a lifelong Dem centrist until a few years ago when I was lucky enough to escape the political polarization vortex. As a voracious reader I came to understand the history and political dynamics behind our current 'system' and that has given me a much better vantage point for understanding our govt's reaction to peak oil.
It appears the only way the SPR could help the West Coast is to load the petroleum goodies on ships then send it through the Panama Canal to CA, OR, WA. Might be cheaper and faster to outbid, then divert a series of OPEC spot-market tankers.
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The Strategic Petroleum Reserve is a U.S. Government complex of four sites created in deep underground salt caverns along the Texas and Louisiana Gulf Coast that hold emergency supplies of crude oil.
--------------
http://www.fe.doe.gov/programs/reserves/spr/spr-facts.html
My crude research so far seems to indicate that the price spikes and fuel unavailability? will initially affect the US west spiderweb of petroleum.
Too bad for the West Coast but the Elk Hills, CA Strategic Naval Petroleum Reserves of one billion barrels were sold off along time ago. Strategic Naval Reserves now consist of The Teapot Dome Naval Petroleum Reserve in Wyoming - a small stripper well oil field that produces about 438 barrels of crude oil and 1,400 gallons of natural gas liquids per day from 540 wells in nine geological formations, earning approximately $5 million per year in revenues. Oh Joy!
http://www.fe.doe.gov/programs/reserves/npr/index.html
Bob Shaw in Phx,AZ Are Humans Smarter than Yeast?
Does anyone else feel weird about that twinge of excitement they may get when realizing these things? Not excitement that's eager or giddy or wanting stuff to happen, but excitement that is fascinated to see how the international oil markets respond to this. As others are saying, it's an effective way to gauge how much spare capacity there actually is.
I read this this morning and got sick my to my stomach. I take public transportation to work, but still I just don't see how any of this is any good.
The Methane gas bubbling out of the sea floor in California though is really troubling. That's the sort of thing that is not gonna be easy to stop.
Would we even hear about such production losses from those countries?
(I ask this because the feeling I get from a lot of the comments/stories here is that SA in particular is a black hole; no information escapes from the Saudis.)
As for the shut down pipeline. Weeeeee!
The edge of the post-oil era is gently washing at our feet. As supply diminishes, every little (to be expected) hitch in production from hurricanes to pipeline failures to routine maintenance to kidnapped workers in Nigeria will become more and more magnified.
The big worry is what will the powers-that-be do. Will they inform the public about the likely future, or will they see if they can fly by the seat of their pants for a little while longer? At some point the genie will be out for everyone to see and then we see if panic sets in and the US government decides to put extend the empire or if it starts the powerdown.
My guess is, "LOOK OUT IRAN, HERE WE COME!!"
Thanks for responding. Please note I wrote "what if.." I'm not stating it as a fact. I don't know really, I agree with the incompetence and stupidity thing. However, the current US administration has deliberately lied the country into this war, which is a conspiracy in and of itself.
"The poor countries of the world will bear most of the burden. But the United States will be in serious difficulties. There is, I think, a strong danger of some ill-considered military intervention to try to secure oil." C.J.Campbell
December 2000
At http://www.geologie.tu-clausthal.de/Campbell/lecture.html
Consider China, which is rapidly modernizing and militarizing itself. In order to achieve this objective it needs oil and other fossile based fuels to ramp up to the level of the US in any timely scale. Sorry Hybrid/Ethanol tanks and jets prolly won't hack it.
Further consider that the Pentagon and several military analysts have been looking at China as the next emerging Super Power. The US took the better part of half a century to get itself into the sole Super Power status.
Now consider this, the US moves into Afganistan and Iraq, strategically placing itself around Iran, and perhaps just as importantly, on China's doorstep. Now look at the current attention on the Middle East and specifically Iran. There is a steady incremental process to moves towards an invasion or at the very least an attack of Iran.
Keep in mind that the goal is denial of oil to your opponents. Lets say the US is incapable of reliably pulling oil from Iraq and Eastward. Those sources of oil have been providing China the fuel they've been needing to militarize. Now you knock out Gas and Oil production from Iran or perhaps just leave the threat of looming military action on the table to use as a bargaining chip to keep the Chinese in place since they need that source pretty badly.
Conspiracy? Perhaps. But it could also be viewed as brilliant pre-emptive military planning to essentially chop the legs out from underneath the single strongest communist presence remaining and furthermore the largest threat to lone Super Power status of the US.
Winning in war can be just as much about denying resources as it is about acquiring them. The "Either I get it, or nobody gets it" mentality.
We have become what Britain was in 1914. China is, amazingly, becoming what America was in 1914. American goods and loans had to keep flowing across the Atlantic to keep Britain alive in a crisis. If not now, then soon, Chinese goods will be irreplaceable to hold down the American cost of living, thus allowing the bosses to keep wages down. The incredible blessing of China loaning us our money back is also vital. There is no second Saudi Arabia to replace the first, and there is no second China. India is not becoming the all-purpose teat that China is.
At best, our two countries have the power of mutually assured economic destruction. It's getting worse for the US over time. If America's master plan is to use nuclear blackmail to coerce China to continue using oil to manufacture the toys that keep America's consumer/voters sated and lend us back the profits while slashing the oil ordinary Chinese need to survive, we will be revealed as the greatest attempted mass murderers in history. I'd then give us about 5 years before our bluff is called and the world is destroyed.
I completely disagree. From an oil standpoint, Iraq has been at least a 50% success, and a very important 50% success. Of course we wanted that production to go our way(which has really happened). But more importantly, we couldn't let that production go the way of China and our other international competitors. So, better to have the oil stuck in the ground for now, then to let it end up fueling the rise of China or India. Same will go for Iran, we can't let that oil continue to fuel the growth of our competitors at our expense.
Not saying that I agree with such lunacy, but that is how the strategic thinkers at the Pentagon think..
Robert NW Ohio
The Pentagon couldn't allow that to happen. Just like they will do anything to either keep Iranian oil flowing to us or if they don't ship it to us, they will make that it stays in the ground. DENY YOUR ENEMY ENERGY. That is the mantra they are following. If we can't get it, neither will they...
Robert NW Ohio
I also find it curious that there isn't more development going on in Iraq's oilfields. If their reserves were actually as large as they claimed, shouldn't every oil company in the world be trying to get into Iraq? Why would they even bother with deep-sea drilling, or tar-sands, if there were hundreds of billions of barrels just sitting out in the middle of the Iraqi desert?
I suspect that what the US goverment found when they raided the offices of the Iraqi Oil Ministry was that there wasn't nearly as much oil left as they'd been led to believe. Perhaps so little that it wasn't worth the investment to try to significantly increase production.
Invading Iraq wasn't a "mistake," and the administration got exactly what they wanted -- a switch back to the petro-dollar from the petro-euro. In my view, that was their main objective, though certainly not the only one.
Once Saddam started selling his oil in euros, his fate was sealed. If the dollar is supplanted as the main currency for oil transactions, then its toast. The ironic thing is that it might happen anyway, abetted by the world's revulsion to the invasion/occupation and its horrific aftermath.
There were many reasons that the Iraq invasion took place. I agree that one of them was for pure intimidation, but don't discount the petro-dollar casus belli, which was a primary, if hidden factor.
Witness the threats of nuclear annihilation which took place earlier this year when Iran was supposed to have their oil bourse set up to trade in euros. Bushco knows that without the lever of having the dollar as the world's reserve currency, the US economy, and its ability to extend its influence around the world, is done for.
http://www.norwichbulletin.com/apps/pbcs.dll/article?AID=/20060803/OPINION01/608030306/1014
And that "Spanish" company is Repsol. In 2004 after their test drilling the story was that "The project was considered a "high geological risk" by Repsol, which says it has a 20% chance of actually finding oil in Cuba." Link to story. That was back in 2004 during there tests, funny how there haven't been any announcements since then.
Here in Florida the msm seems to like to trot out the Chinese company (usually nameless) that is drilling in Cuba. That company (Sinopec) signed an agreement that was a small part of a wide economic cooperation pact. Specifically, the agreement was to develop a newly discovered field of 100 million bbls. Yet, the msm seems to think that this means that China is stealing our oil. link
Hopefully, this sudden shortage might instead serve as a wake-up call for the unwashed American masses to jumpstart conservation, Powerdown and prevent any desire for the '3 Days of the Condor' scenario. These pipes in Alaska are 25 years old or more, aren't they? I am no engineer, but it does make sense to repair/replace this tubing before it makes an oily mess. If this takes a year or more: conservation might have a chance to get ingrained into the masses.
On the other hand, if this shortfall is quickly made up by outbidding other countries thereby depriving them of oil--they will resent this action on our part. If crude jumps $10/barrel: does that suddenly tip 30 poor Third World countries onto a relentless march to Olduvai Gorge? I really have no idea.
Bob Shaw in Phx,AZ Are Humans Smarter than Yeast?
Physically, this shortfall won't be made up by immediate outbidding - I would assume the oil takes a few weeks to get from the ground to the refinery.
Most likely any price jumps would be created by speculators and private enterprises, rather than National Governments.
I would suggest that any countries brought to the brink of the Olduvai Gorge by a $10 rise in oil were probably in the Olduvai to begin with - cheap oil just made a brief period of their history less Olduvai-ish.
So, while I don't disagree that we are stupid enough to go in, the only real cause is folly. I'd suggest everyone read the introduction to Barbara Tuchman's "The March of Folly," and then have a drink.
Well, how much does a potential increase of $10/barrel of crude translate into the retail cost/gal of gasoline? Does that mean a fifty cent increase/gal is likely in the next couple of weeks? The SPR is not in California as I recall, so will this sudden cutoff of Alaskan crude mostly affect the West Coast of the US? How bad could it get-- could CA cutoff the pipelines to AZ, NV? This is an interesting time!
Bob Shaw in Phx,AZ Are Humans Smarter than Yeast?
I want to thank you, and the rest, for all this great news. I might be able to get to sleep tonight. Might. ;o)
Things are on a downslope anyway, lots of "FOR SALE" signs in front of houses with "price lowered" added on.....
This price is not percieved as crippling. Czechs are buying more and more cars, and choosing larger ones too. They may not like to commute as far as the average American but they do like summer driving holidays to the Mediterranean (500 miles away).
My point is that American gas prices will have to rise by more than a few dollars before it has any noticeable affect on consumption, or on the American love affair with the automobile.
I believe gas is still heavily subsidized in CZ. Also, your weighting in of average wages to calculate this US $ 17.54 gas price is shady; after all it is the succesfull that by the cars and fill their tanks, not the laborers.
I do agree with your point, though.
I love the public transport in Prague; never seen it better.
By the way, South Moravia will be our post PO hide out, my wife being Czech.
Best from Holland,
Paulus
I think you are right. Although it may affect the rest of the economy as people spend a greater persentage on fuel to drive around all over the place. It is also felt acutely at the local and state government level. You probably do schooling more sanely over there in Czech Rebublic, because here many districts spend a significant portion of the school budget on fuel to tranport kids around. Already tight budgets are straining with the unplanned for increase in outlays. Also at the state level, road repair and maintenance is much more expensive. Americans don't like taxes so something has got to give.
I'm not sure what the tipping point will be, nor what it will actually represent in terms of events on the ground, but major distruptions in many peoples' lives will occur once gas reaches $4/gallon, in my view.
This Austin Chronicle article from April, 2005, terrifying when I first read it, is soon going to be a reality.
Don't forgot the good 'ol human-powered bike.
I expect the global price to increase because the shortfall will pressure the spot market. And gas prices for the main summer vacation driving season in August are likely to increase more than they might have otherwise; certainly 10% more here on the Oregon coast: $3.05->3.30. If we get some Katrinaritas, then $4 maybe? And war???
I wonder how much of the pipeline problems are related to the melting permafrost destabilizing the mounts thus stressing the great many welds?
According to what I found--all Alaskan crude is strictly shipped to West Coast ports since 2000:
---------------------
Since 1996, from 5% to 7% of Alaska North Slope oil has been exported, about half of it to South Korea and the rest to China and Japan. These exports ceased in 2000, and since then all Alaskan crude has gone to the US, mostly through Washington and California refineries.
------------------------
http://www.gravmag.com/oil3.html#ak
This is older info from 1999 [taken from the same website], but it shows that the West Coast has always received the majority of the oil:
------------------
During 1999, here's where Alaska
crude oil was sold:
Puget Sound: 419,521 barrels/day
San Francisco 123,870 barrels/day
Los Angeles 333,006 barrels/day
Hawaii 42,682 barrels/day
Exports 78,763 barrels/day
Source: Alaska Department of Revenue
-----------------
I am sure the much-admired TOD data freaks will post much more timely and detailed info on this soon.
Bob Shaw in Phx,AZ Are Humans Smarter than Yeast?
Yeah, I commented from the hip, had second thoughts about its correctness, did some quick research, and found my comment was incorrect regarding direct exports, but found that about 240KBD of refined products are exported from the several west coast ports that are adjacent to refineries to mostly Asian destinations.
I've noticed that every $10 increase in oil seems to add about 50 cents at the pump here in western Colorado. Diesel's at $3.38, gas is $3.15.
I see there's a new tropical wave forming out in the Atlanta ...
Thxs for responding. I have been googling around for some quick facts on where Prudhoe crude goes.
----------------------
Major ports in northern and southern California receive Alaska North Slope and foreign crude oil for processing in many of the state's 21 refineries.
Crude oil production in California averaged 731,150 barrels per day in 2004, a decline of 4.7 percent from 2003. Statewide oil production has declined to levels not seen since 1943. In 2005, the total receipts to refineries of roughly 674 million barrels came from in-state oil production (39.4%), combined with oil from Alaska (20.1%), and foreign sources (40.4%).
California is a major refining center for West Coast petroleum markets with combined crude oil distillation capacity totaling more than 1.9 million barrels per day, ranking the state third highest in the nation. California ranks 1st in the U.S. in gasoline consumption and 2nd in jet fuel consumption.
-----------------------
http://www.energy.ca.gov/oil/index.html
------------------
Just two Arab countries have supplied almost 50 percent of California's imported oil over the past five years, a dependence that leaves the state more vulnerable than the rest of the country to disruptions in the world oil markets.
While a complex network of pipelines link the U.S. Gulf Coast to the Midwest and the East Coast, California depends entirely on in-state crude or cargos of oil or refined products brought in from overseas -- from a limited number of suppliers.
This places a greater onus on other West Coast states who largely depend on California for their refining needs.
For example, only one pipeline brings in refined products like gasoline and jet fuel from Texas to Arizona, which relies on California refiners for roughly 60 percent of its petroleum products needs, said Rob Schlichting, a CEC spokesman.
"Since 1998, our refineries have not been able to supply all the needs of the states in the (West Coast) region," said Schlichting, adding that Nevada and Oregon also depend on California for nearly 100 percent and 35 percent of their fuel needs, respectively.
-------------------------
http://news.moneycentral.msn.com/provider/providerarticle.asp?feed=AP&Date=20060622&ID=58176 70
This should be enough to get discussion started, the much admired TOD data freaks will probably post detailed EIA info on PADD 5 later on.
Bob Shaw in Phx,AZ Are Humans Smarter than Yeast?
Latest storm brewing maybe
And apparently, Dubai is quietly nationalizing its fields as well.
Story here
==========It's all about population!
"$80 or bust!"
yep, that's the whole point.... if anyone has been following the discussion Darwinian and I have been been having over on the "Heinberg: Middle East at a Crossroads" thread....you can jump in for some of it here and here....then you will understand the references...
http://www.theoildrum.com/comments/2006/8/4/19747/71404/231#231
http://www.theoildrum.com/story/2006/8/4/19747/71404
Update postscript:
Well, well, well....it's happening again...
http://www.bloomberg.com/apps/news?pid=20602099&sid=aiUH45sTA2og&refer=energy
"OPEC oil output fell an average 250,000 barrels a day to 29.61 million barrels a day, according to the survey of oil companies, producers and analysts. June production was revised 60,000 barrels a day lower. OPEC's 11 members pumped 30.54 million barrels a day in October 2004, the highest since 1979.
``Saudi Arabia, Iran, Kuwait and Nigeria all posted minor declines in output,'' said Tim Evans, an energy analyst at Citigroup Global Markets Inc. in New York. ``It's unusual to see so many members' output move in the same direction.''
Despite Darwinian's assertion that it couldn't have happened, that "only an idiot would believe it" in the 1980's, IT LOOKS LIKE THEY ARE ARE ALL PEAKING AT THE SAME TIME AGAIN! :-)
Is this JUST GETTING TOO RICH OR NOT? Gee, I wonder how many "idiots" believe it this time?
....oh, they suddenly noticed the Alaska pipeline was rusty!! hee, hee, and had no warning before yesterday, despite constant daily inspection!!
give me a break....... (you know what I just noticed, by the way....despite all the predictions by the hysterics we are pushing to the edge of autumn and crude wouldn't go over $80 bucks, much less the assured $100 dollars a barrel.....and now some folks are by golly are going to SEE THAT IT DOES, WHATEVER IT TAKES!! :-O
do they see us as too stupid to see this?....just too freakin' rich....
Roger Conner known to you as ThatsItImout
Do you have actual experience with pipeline inspection?
The pipeline corrodes from the inside out, so why should they have discovered it was corroded?
I work for a company that recycles scrap metal. My own experience is that shit happens, and that a lot of it could have easily been prevented, but it keeps happening anyway. I imagine its he same in the oil industry.
Try reading this.
http://www.lewrockwell.com/north/north470.html
If I am not mistaken, there are a number of ways of detecting corrosion without having to actually lay eyes on the corrosion itself. One is an ultra-sound test that measures wall thickness. This is commonly used on steel vessels and storage tanks. I think there are also applicable X-ray methods.
Also, pipelines use these watermelon-shaped objects called 'pigs' that they can insert into the pipeline and pump them all the way down to the next pumping station. These are used for cleaning purposes or to form a boundary between two different products. I believe that some pigs are equipped with closed-circuit TV cameras used in inspect the inside of the pipe, but I am not 100% certain.
It is hard for me to believe that this corrosion problem was a sudden surprise that just sprang up out of the blue. Corrosion is usually a gradual process taking place over years, so they should have seen it coming. But when the goal is to maximize short-term profits, preventive maintenance often takes a back seat.
Yes, the corrosion was found by a routine inspection. And no, there was no conspiracy here. Shit happens!
Maybe this was just how long it's taken to get down the length of the pipeline, but with summer winding down, their window for repairs is getting thin, right?
I don't think 'The Stonecutters' are behind all this, either, but I have to wonder if it provides a handy excuse to stretch out field production, or cover for strained outputs..
As with the ANWR delays by those (us) Pesky Environmentalists.. I say 'Wheee!' like Cherenkov when production/distribution is disrupted, since I'd prefer that some of the proven reserves get put out of reach if possible, so they are available when we are really 'in a pinch'.. Also, The sooner we feel the pinch, the sooner more of us will decide to find more reliable energy sources..
I think we should end up using what we can of our remaining Petroleum to fuel the transition AWAY from it, though it carries the double-edge of continuing to put pollutants and CO2 into the air.. at least I'd prefer it be for taking steps forward, instead of continuing on our current 'viscuous cycle', and burning it as blind addicts.
Allow me to quote from the PBS documentary "The Alaskan Pipeline".
"The energy panic put enormous pressure on Alyeska to get the pipeline built quickly. But the pressure from their oil company owners was even greater. They had already spent billions at Prudhoe Bay, and they were losing 22 million dollars a day in revenue while the oil sat in the ground."
Shortcuts were taken, including faking X-rays on thousands of welds. It was, at the time, a major scandal.
http://www.pbs.org/wgbh/amex/pipeline/filmmore/pt.html
Cameras are used all the time for sewer and water lines. I would assume that they are used for oil lines also (haven't been involved in oil/gas line work though).
IMO, to the extent that there is an oil "conspiracy" it is a de facto conspiracy to persuade Americans to continue buying and financing large homes and autos.
I don't think that it is a coincidence that world and Saudi oil production are trending down, exactly as predicted by our mathematical and historical models.
You should issue a correction Roger. I never said it couldn't happen. I said only an idiot would believe all Gulf oil producers peaked at the same time in the early 80s. Or something to that effect. No one in their right mind thought OPEC was peaking in the early 80s. Everyone who could read a newspaper knew why OPEC production was down in the 80s and no one, except perhaps a few idiots, thought it was because OPEC was peaking.
But 2006 is an entirely different story. We all know that all OPEC nations are pumping flat out. Everyone knew that was not the case in the early 80s.
That is my case roger. I was very active in the oil industry in the early 80s. I lived and worked in Saudi Arabia, for ARAMCO. Do you remember those days Roger? If you do then you there was absolutely no question as to whether OPEC was peaking or not. We all knew why OPEC production was down. And if you did not then you damn well should have. So why don't you give it a rest.
Ron Patterson, the Darwinian
Darwinian,
First, I don't know in exactly what direction you would wish a correction, but whichever direction you choose, I am not in this discussion as a personal argument, so I will pretty much abide by.
"So why don't you give it a rest."
If you mean in some way break off this particular string, yes, sure, it is getting pushed down the board anyway, and again, I am not interested in the particular differences of viewpoint/opinion of the the persons involved.
If however, when you say "give it a rest" you mean the suspision that there is much more going on here than just geology, no, I am afraid I will not be able to give that particular line a rest. And by the way, it's everybody else who keeps using the word "conspiracy", not me, and one poster jumped on me for repeating the "idiots", which was not a term I first used, but simply quoted.
Again, for those who must be asking, WHAT'S YA' POINT?, it is a very simple one: There now seems to be, and the evidence keeps piling up, at least as much cranking up and down on production, planned and unplanned "accidents" and "maintainence" and switching about of production and playing in and out of storage tank farms, to muddy the water so that any production numbers are useless in predicting anything whatsoever.
What we now know is that what we don't know is greater than we thought before, and what we knew then was damm little. :-)
I have no where at no time refuted the idea of geological peak in any place on Earth you may notice. I would call it more a "Peak possible plus" theory.
The geological problem is surely present in many places we can gain access to information about. It is impossible to know anything about much of the worlds situation however. This cuts both ways. It could be good news in some places, and very bad news in some, and either way, will certainly come as a surprise to us with almost no warning. Be ready for any turn of events, from a complete collapse, to a return of the 1990's......DO NOT DISCOUNT ANY POSSIBILITY.
The numbers are just too fudged up.
Will I give my suspicious nature and musing up? Would you want me too, that's what got me to TOD in the first place!
And the reasons to be EXTREMELY suspicious are growing almost by the minute.
Roger Conner known to you as ThatsItImout
Smekhovo,
Your exactly correct. They are small changes in production.
But the use of the Alaska pipeline thing, and the tiny fractional drop in OPEC production (as likely seasonal as anything else, as we come down the stretch on summer, and heating oil has declined as percent of the world residential heating market anyway, yet another story that is almost NEVER reported) the tank farms should be full to the brim, with not much place to put the production at this time of year.....
But the whipping up of hysteria is beyond belief, both here and throughout the U.S. press!
I watched the CBS and ABC evening national news, and if I didn't know the facts, I would have been ready to race to the convenience store ON foot if I had too with Jerry cans to stash some! IT WAS AMONG THE MOST OUTRAGOUS REPORTING I have ever seen....sentences flowed, "get ready to get HIT again!" "Three dollars a gallon will seem like a BARGAIN", "The price has already began to move, as oil markets jump!" "You may have thought you dodged four dollar oil, but guess again!"
It was outragous beyond words, total conjecture, total attempt to whip the price up, whip the fear up......I seldom use this symbol, but :-(
I will say it again, there is something that is STINKING to high heaven about what is going right now.....a person could almost believe that the oil companies see the technology out there, and the fact that they have bled the world to the point that they are actually going to put it to work....and now feel they better leech and bleed this victim while they can, because they are going to get caught with collapsing sales and a lot of oil in the ground very soon.
Saw a Toyota salesmen the other day, asked if they had discussed in sales presentations or in company training the possibility of the upcoming Toyota Camry Plug Hybrid in two or three years.....he just grinned broadly....."how'd you hear about that?" :-)
Ohhhh, the future is going to be sooo fun! :-)
Roger Conner known to you as ThatsItImout
But for once a dose of fear is needed.
...."well, isn't that conveeeenient".....:-)
as my daddy used to say, the shiits starting to get so deep you need a scoop shovel.....
Roger Conner known to you as ThatsItImout
Some friends these guys turned out to be. ;-)
The shutting down of Prudhoe Bay especially does not bode well for Alaskans. Reforming the state's archaic oil production tax system (not to be confused with other taxes - property, etc.) has been an extremely, extremely contentious issue in the AK Legislature in the 2006 session (now in its second special session), rivaled in intensity only by the related gas pipeline contract discussions.
Given how heavily Alaska relies on revenues from oil and gas taxes for the functioning of the state government (not to mention the PFD checks Alaskans get every year), I wonder what kind of effect this will have on inflow of money to the government.
The conservative-heavy legislature spent like a drunken sailor in this session's budgets, all based on current and expected high revenues from high oil prices. Well, if you're temporarily not producing the oil, you're not going to get the expected revenue.
This news is a big "Uh Oh" all around.
Interesting concearns, I think a lot of people have yet to realize what this close down means.
This is just what we can expect to happen to provinces that rely on lots of infrastructure like long pipelines and off shore oil rigs. There won't be a long tail, it'll fall off a cliff when the infrastructure wears out or gets too expensive to operate/maintain. Where there are still oil wells in the US producing 10 barrels per day that just won't happen in the North Sea or Alaska.
If the pipeline is badly corroded such that a new pipeline would be needed then that's game over since there isn't enough oil left in the area to justify a new pipeline.
Isn't there only some 3 billion barrels or recoverable oil left there?
(Looks like a pro drilling in ANWR site)
According to this website, the minimum flow rate for the Trans Alaska Pipeline System (TAPS)is between 200,000 bpd and 400,000 bpd. It looks like they were moving under 1,000,000 bpd, before the shut down.
A lot depends on exactly how much production is shut-in. They may be very close to having problems keeping the pipeline full.
Don't know if TOD has covered it before, but one other maintenance issue that might become more pressing will be the slow thawing of the permafrost...
permafrost and climate change
permafrost pipeline interaction
Arctic pipeline obstacle: Warming
Pipeline Engineering
If the oil stops flowing in the winter the Alaska pipeline turns into the world's longest chapstick. I sure wish they'd found the corrosion back in May.
Also, what about weather conditions up there? I visited Dawson City in August 15 years ago and heard of snow about 70 miles north of it in mid August. As Prudhoe Bay is much further north, are they expecting freezing conditions in the next couple of weeks and will that hamper their repair work? Just because continental America is in the middle of summer, the Arctic coastline must be preparing for the end of autumn now. I presume oil workers do not do much outside work in real winter conditions. When would the workers be expected to stop work because of weather conditions? That could be a factor in how long it takes to repair the pipeline. That is assuming that they have the equipment and material on site and can get going as soon as the oil has been removed from the pipe. If they have to bring in the pipe sections, from where and how long would it take them to get the pipes on site? Could they even not have enough right specification pipe sections and wait to have more made?
My initial impression was the entire Prudhoe Bay complex but that may not be correct.
http://news.moneycentral.msn.com/provider/providerarticle.asp?feed=OBR&Date=20060807&ID=5925 245
Says the Lisburne Field portion is okay.
I don't figure any of this mornings headlines would prompt Joe Sixpack to buy after the open. Someone is betting that oil will come back online quickly though.
The Institutional Open Interest as a % of total shares moved from around %10 after the 1st quarter to 20% after the second quarter. I would love to know who is buying this stock this morning.
Marshall said tests Friday indicated that there were 16 anomalies in 12 areas in an oil transit line on the eastern side of Prudhoe Bay. Tests found losses in wall thickness of between 70 and 81 percent. Repair or replacement is required if there is over an 80 percent loss.
If that's true those lines aren't coming back online anytime soon.
Are there differences in pipeline thickness or succeptibility to corrosion in field feeder lines versus the main trunk line?
As of May! Has the pipeline been off line for that long? How come we did not see this reported in the production figures reported in the EIAs "This Week In Petroleum." This pub had US production reaching a high for this calandar year for week ending July 7th at 5.275 mb/d. The last report for week ending July 28th US production was down to 4.940 mb/d, a drop of 335 thousand barrels per day.
http://tonto.eia.doe.gov/oog/info/twip/twip_crude.html
There is something fishy about those numbers. If the EIA knew about this problem as early as July 28th, why are we just hearing about it now. And if the problem happened in May, why are we only hearing about it now? And why did the EIAs figures not show the drop beginning sometime in May? If the EIA knows the oil production figures for any country, they should know what US production was.
This brings up a good point on the world's oil infrastructure. Just how old is some of the equipment and pipelines out there? Is it regularly replaced on a timely basis; like restoring old cars? Or is the oil industry really driving along in an old, rusted jalopy? Ghawar is sixty, seventy years old--are they still using original pipelines, pumps, etc? Please ask your son who works in SA. What about Russia-- is their production barely functioning, or is it all modern and up-to-snuff? I recall reading somewhere that Iraq's infrastructure was decrepit even before the locals started blowing it up.
Bob Shaw in Phx,AZ Are Humans Smarter than Yeast?
Yes, perhaps you are right. At any rate US production was down 335,000 bp/d from its high week ending July 7th, to week ending July 28th. We knew of this drop last Wednesday when the EIA reported it. And the EIA knew about it at least by July 28th. Why was this nothing to alarm the market? Was this drop due to the problems in the BP pipeline? I think it is highley likely that it was.
In other words, we are still not getting the news in a timely manner.
So if the oil industry knows its economics and its geology, then their optimum strategy might be to have infrastructure to just scrap through the peak. Like when trucks just try to barely make it through the top of a hill and then accelerate down the slope.
BP's problems continue...
Why are natural gas prices falling as though the floor gave way?
$80/barrel?
Peak Oil as a spectator sport.
Although it's almost all certainly wrong, I do like the title. Raymond J. Learsy: The Price of Oil, The Maddening Silence of The Press.
Workers also found a small spill, estimated to be about 4 to 5 barrels. A barrel contains 42 gallons of crude oil. The spill has been contained and cleanup efforts are under way, BP said."
Pipe corrosion to cut Alaskan oil production
http://www.smh.com.au/news/national/tuckeys-fuel-solution-hydrogen/2006/08/07/1154802798683.html
"West Australian Liberal Wilson Tuckey today said the hydrogen solution was the way forward, as politicians debated the petrol price crisis.... Furthermore, the BMW company has already produced ordinary motor cars running on hydrogen," he said."
BTW- the 3-bus hydrogen bus trial he mentions is about to be canned by the State government.
Electricity (produced from some energy source) + water = hydrogen + oxygen
Hydrogen + oxygen (in a fuel cell) = electricity + water
Of course, the problem is that the electrictiy output is less than the electricity input.
So, why not take the original electricity input and use it to power electric trolley cars and light light rail, pursuant to Alanfrombigeasy's proposals?
Agreed. Except people still want private cars. Most hydrogen fuel cell cars are already hybrid - the hydrogen is just a range extender, potentially carbon-free (if produced from renewables).
I still want a Colnago, but still I can't afford it.
If you wait half a century for renewables to became nº1 energy source. Keep dreamin.
Why do you suggest such a long period?
Wind is 40% of new electrical generation planned for 2007.
OPEC output drops slightly
Uh-oh...
According to the Minerals Management Service (MMS), as of 11:30 September 14, Gulf of Mexico oil production was reduced by 843,725 barrels per day as a result of Hurricane Katrina, equivalent to 56.25 percent of daily Gulf of Mexico oil production (which had been 1.5 million barrels per day). The MMS also reported that 3.518 billion cubic feet per day of natural gas production was shut in, equivalent to 35.18 percent of daily Gulf of Mexico natural gas production (which had been 10 billion cubic feet per day).
This ain't no Katrina, but it certainly is on the par with a pretty significant hurricane. As most everyone will recall, gas prices went through the roof within days of Katrina.
I've been reading up on the Prudhoe Bay closing and something doesn't add up to me. Several of the stories suggest that the corrision is inside the pipeline. Now, I'm no oil expert, but I am an engineer by training, and the last time I checked, structures tended to rust from the outside in. Someone please correct me if I'm wrong; it's Monday morning and I've only had one cup of coffee. But if I'm right, how in the bloody blazes did that pipeline rust from the inside? How much water (fresh or salt) or they putting through with that oil? Does anybody have the answers to this?
It will be interesting to note the responses of the other oil-producing nations. If they don't offer to step up to the plate with 400kbpd, we'll know something is up with their supply. Of course, Dubya may just open the spigot on the SPR a bit more and erode our National Security even further.
I think this is really a warning as to how old our infrastructure is and how it cannot be run at 100% forever. Opec is trying to calm the market. My message to them is fill your own damn quotas first before making claims that they can step in for this 400,000 barrel loss. I think SPR is ready to be tapped as I read, that has capped the price. An interesting thing would be how much SPR would be tapped. As I understand BP 's field produces some pretty sweet stuff and the SPR is not exactly brimming with only West Texas Intermediate.
Optimist, no one said it was rust, it was corrosion. Corrosion could be either rust or electrolysis. Rust would definitely been on the outside and electrolysis would definitely have been on the inside. At any rate the corrosion was found by a "smart pig" which runs on the inside. I don't know what kind of technique the smart pig uses but it would probably detect corrosion on either side of the pipe. Because this article (URL below) says the pig found "corrosion-related wall thinning". But my guess is, that the corrosion was due to electrolysis. But that is just a guess.
http://www.tradingmarkets.com/tm.site/news/EUROPEAN%20MARKETS/332608/
Ture. My mistake.
Matt Simmons and others have been talking about possible corrosion problems with Saudi wells and pipelines because of massive salt water injection. Salt water in the oil lines will dramatically increase corrosion due to electrolysis. Also any other impurities in the oil will increase electrolysis. Look for Saudi Arabia to have serious pipeline and well pipe problems in the near future. In fact, it is highly probable that they are already suffering serious corrosion problems. We know that Iran and Iraq are suffering corrosion problems.
I have no idea how long the pipeline will be shutdown. But this is likely to be an ongoing problem now that the pipeline is getting very old.
Electrolysis works because of current flow between two different kinds of metal. It makes a battery. Metal flows with the current from the anode to the cathode. I know, that seems backwards but inside a battery that is the direction of current flow. At any rate, this accidental battery just eats away at the metal inside the pipeline.
But understand that I am no expert on pipeline corrosion and may be all wet here. This is just an educated guess at what is happening. I do know about electrolysis however. It has caused me a lot of misery.
If one of the wires is iron and the other is a less active metal you will see a small microcurrent flow thru the wires. The Fe atoms will give up electrons, oxidize to Fe++ ions, and the electrons will flow through the wires. At the other end the electrons will reduce H+ ions in the water to form hydrogen gas. The Fe ions will then combine with dissolved oxygen to make iron oxides.
What you will see is, over time, the iron wire will be eaten away and little bubbles will collect on the other wire.
In the pipe, any change in the local composition of the steel alloy can cause tiny electrochemical cells between more and less active sections of the pipe.
I strongly suspect that the corrosion that takes place inside of an oil pipeline is caused by the presence of sulfur compounds in the crude oil.
Though sulfur chemistry can get pretty complicated, the presence of even tiny amounts of water entrained in the oil, as well as the presence of tiny amounts of air, can cause all sorts of oxidation/reduction reactions involving the metallic iron of the pipe wall.
So, I'm not surprised that it takes place; what does surprise me is why this wasn't taken care in the course of routine inspection and maintance and why they had to wait till an actual leak developed. Maybe I'm being overly harsh on BP, but from what little I know so far it looks pretty sloppy to me.
However, it is my take that the pipeline has rusted through from the outside, or very near to it, and the anomalies detected by the "pig" (using NDI, probably non-destructive electromagnetic scanning to look for magnetic field variance, as occurs in and around areas of corrosion or debonding), are areas where the pipe casing has, or is about to, fail.
Electromagnetic NDI is a commonly used method for examining welds and bonds. We do the same here, except on welded pressure vessels, bottles, fuel lines, gas reservoirs, tanks, and the like.
Almost the entire exterior of the Trans-Alaskan pipeline is visibly rusty. Sacrificial galvanic protection (blocks of zinc) are attached at regular intervals, and have to be changed regularly as they degrade. Some surface rust is inconsequential and to be expected, however, on a nearly 30 year old pipeline it is inevitable that some rust deposits can (and do) go deeper.
So the corrosion is most certainly inside the pipe.
And from http://www.jobwerx.com/news/basf_biz-id=948264_654.html
Not sure if they are using HCl in Alaska, but it goes along with some of the known corrosion issues in oil production.
Kind of makes you wonder about the "The results were absolutely unexpected," quote from one of the BP guys. Maybe the inhibitor was not working as advertised.
Kevin
Just heard this on CNBC. They said all traders want to know how long this will last. They said they are getting lots of email asking this same question. The answer, according to CNBC: No one knows.... Well hell, how about that?
At any rate that is the question being asked by everyone. And BP must soon come up with an answer, or rather a guess.
Mel Brooks, anyone?
Perhaps the most significant effect would be if this disruption persuaded a senator or two to vote against opening up ANWR at this time. The Alaskan oil industry has been working very hard to improve their image as an environmentally consientious industry. The mental image of old leaky pipelines at Prudhoe Bay is not going to help.
Unfortunately there is a huge shortage of qualified oil field workers. Welders in the Alberta Tar sands are paid $85 an hour, plus living allowance, plus monthly R&R flights out. And they can't hire enough of them.
Then there is also the worldwide demand for steel, with pipe production already at capacity. Probably next spring before they can even procure significant quantities of replacement pipe. Which means a quick and temporary patch job, with a full repair (and another closure) later.
Plus, this ingnores any required reengineering due to changing permafrost conditions.
"And BP must soon come up with an answer, or rather a guess."
Let's be honest, BP doesn't "must soon" come up with shiit....
Q. Where does a polar Bear shiiit.....
A. You know the answer.....:-)
I ain't seen the bear that is the size of BP answer for much in the last few years....
Roger Conner known to you as ThatsItImout
hmmm, I am trying to figure out how many oil companies are chomping at the bit to come in and take the license away from BP on two depleted and decrepid oil fields that are due for massive expenditure to remain serviceable, and losing both quantity and quality....gotta' be a dream investment alright....,and with no replacement sucker, Britain and Alaska would really look forward to leaving the remaining resource in the ground, and losing the access to the energy as well as the taxes from it......
yeah, right....
Roger Conner known to you as ThatsItImout
ANCHORAGE, Alaska AP -- BP PLC says it will replace 73 percent of the pipeline from Prudhoe Bay oil field which could be closed for weeks or months. (APNEWSALERT) (2:33 PM 8/7/06)
Seventy three percent of a single section?
Or the whole 800 miles?!?
This picture is from about 5 years ago, when a drunk shot the pipeline.
[Editor's note by Super G, 11/26/07] Comment edited because of bad image link.
I know it's been mentioned above, but how many here truly believe the stated reason for the shut down? I guess I automatically question everything, but this smells particularly fishy to me.
What are some other plausible reasons for the shut down? For example, someone already mentioned they could be saving it for later extraction, thereby trying to delay peak?! There's always the 'market manipulation/greedy oil profiteers' explanantion? What if they hit peak and the major field(s) already collapsed and/or radically dropped output?
There's just something about this pipeline corrosion thing that doesn't sit well with me. Granted, I can belive that the pipeline is falling apart, but the suddeness and result (total shutdown) seem extrememely dramatic.
I do like the previous explananation that this was planned becuase they knew the $$ needed to fix it weren't justified based on the known ultimate recovery. As a business person, this makes sense to me. Anyway, thoughts are welcomed and encouraged.
But I agree, losing this much supply this quickly is pretty strange...
if they're trying to delay peak, then good for them...it's what a lot of countries will start doing re: the fungibility of oil if there's anything other than a soft landing.
I too am beginning to wonder if maybe they shut it down because they know repairs are too costly to be worthwile. That pipeline took years to build (I don't know how long, sorry) and they're going to replace 73% of it? In a declining oil field? To me it looks like that wouldn't be economical in the least.
link to their web site.
They've moved 15 billion barrels of oil, approx, in 28 years and there might be about ten years of oil left.
THIS IS A JOB FOR YERGIN MAN
Remember how when oil wells caught on fire, there was this one guy in the world (Red Bart? can't recall his name) who would be called in to save the day?
Well today is clearly the day for calling in our Prize champion: Yergin Man.
His powers include an ability to conjure up new supplies simply by thinking of undulating plateau's and by focusing his concentration on "the markets". Have no fear, Yergin Man is here.
Remember how when oil wells caught on fire, there was this one guy in the world (Red Bart? can't recall his name) who would be called in to save the day?
Red Adair!
http://www.cattlenetwork.com/content.asp?contentid=58242
When there's something corroding in yur neighborhood,
Who ya gonna call?
When there's spirits haunting your pipeline's mood,
Who ya gonna call?
Pipe busters!
Who ya gonna call?
Pipe busters!
Say it again
Pipe busters!
I ain't afraid of no sludge
I ain't afraid of the slime
The other day we defined here on TOD $38 as 1 'Yergi'. The price of oil is now a bit above 2 Yergi.
The Caribbean is running 3 degrees cool. The North Atlantic is running 5 degrees hot. If a hurricane heads towards the Gulf it's not going to get gigantic. If it heads further north it will probably veer and miss the US entirely, and it won't be hitting any oil platforms.
We should savor this while it lasts.
I recall the last shutdown I did on the Caltex refinery in Sydney: I had to pull a row of heat-exchangers out that I'd removed before and all the lifting points on the above platforms were so corroded I had to bring in hardwood sleepers to support the lifting gear. I asked the head site engineer when they'd replace the structural steel and he laughed and said, "This plant was built in 1912 and I don't management is interested in doing anything but keep it going till it collapses." Of course, with peak-oil now getting some attention, I'm not perplexed about the comment anymore... Imagine the cost of replacing a miles-long pipeline... The funniest thing I've read relating to Alaska was the speech by a BP CEO to the Alaskan governement officials about BP's continuing interest in Alaska and how gas was definitely a major interest for BP (how they're going to use it to melt the heavy oil after the sweet crude had gone. ha ha). The other funny bit was telling them that they were going to make a big effort to open up the "Liberty" field and all 150 million barrels there (the world currently needs 83 million a day! lol ha ha
I'm just wondering how many "Donner parties" will happen after the fall... mmmm yummy! Soylent Green without the greens...