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DrumBeat: February 6, 2007
Posted by Leanan on February 6, 2007 - 10:13am
Topic: Miscellaneous
The oil world seems to have learned how to get along with the prospect of war with Iran, which is to say that it is choosing to ignore it. The Bush surge in Iraq with the prospect of fresh and heavy fighting is old news. The news that Mexican production fell half a million barrels a day last year caused not a ripple. The shutdown of most of Nigeria’s refining capacity has evoked the equivalent of a mighty yawn. The fact that OPEC production fell last year, even before the production cuts announced in September began to take effect, evokes derision rather than worry. “OPEC just can’t get its act together.”The announcement in December by the Kuwaiti government that production had peaked and is now declining at the world’s second largest field, Burgan, passed without comment or even a blip in the price slide.
The fact that Iran on current trends is set to become an oil importer in six or seven years causes not the least anxiety. The world’s oil replacement ratio, that is to say the percentage of consumption that is replaced each year with new discovery, has fallen to 30% and keeps falling.
The truth of the matter is that the world is in the midst of an energy crisis, but neither the NYMEX nor the IPE seem to have noticed.
Spot natural gas prices hit record high in NY
Prices for next-day delivery on Transco in New York jumped as high as $60 per million British thermal units early Monday, well above the record high average of $47 per mmBtu set in early January 2004, according to Reuters data. But late deals were heard closer to $21, traders said.
Gas to prop up output in Daqing
China's biggest oilfield, facing depleting output, is increasingly relying on natural gas to maintain production levels.
Bush Budget: $168M to Begin SPR Capacity Expansion
U.S. President George W. Bush on Monday proposed to spend $168 million in his 2008 budget primarily for administrative costs relating to the expansion of the nation's Strategic Petroleum Reserve from its current capacity of 727 million barrels to 1.5 billion barrels by 2027.
Works forging ahead on Al-Qurayyah Seawater Project
With the project's completion, the plant will have a treatment capacity of 14 million bpd, making QSWP the world's largest seawater treatment plant intended for oil recovery, according to a report carried by Saudi Aramco web-site.The expanded plant will include nine treatment modules, sedimentation basins and head shipping pumps and the extension of an above-grade canal. The plant's refitting includes a whole new electrical system and the upgrade by Saudi Electric Co. of the 230 kv incoming power supply.
China: Crude oil reserves decline sharply last year
China was still the world's fifth-largest crude oil producer in 2006, but dropped to the 13th worldwide in terms of proven crude reserves from the 12th in 2005, according to statistics released by the United States-based Oil & Gas Journal, the world's most widely read petroleum industry publication.
Pakistan energy demand to reach 361MT of oil equivalent by ’30
Pakistan’s energy demand has been estimated to reach 361 million tonnes of oil equivalent (MTOE) by 2030 and this huge surge could pose a serious threat to the future development programmes, a senior government official told Daily Times.
ConocoPhillips Seeks Arbitration with CNOOC Over Oil Tax
U.S. oil major ConocoPhillips (COP) has asked for arbitration in a dispute with China National Offshore Oil Corp. over costs incurred due to Beijing's windfall tax on oil sales, according to people familiar with the situation.
OPEC Revival Looms Over Big Oil's '07 Production Outlook
As major oil companies work to boost production in 2007, they're experiencing fresh angst from an old rival: OPEC.
Bush Budget Axes Oil, Gas R&D Funding, Targets Two Tax Breaks
The Bush administration Monday proposed to ax two federally-funded oil and gas research programs and modify two separate tax breaks for the oil and gas industry in its 2008 budget.The administration's budget primarily focuses on funding for new renewable energy, biofuel and nuclear programs, and the proposals would, in a small measure, help offset the new spending priorities.
Blood of the Earth: Dilip Hiro on the Battle for the World’s Vanishing Oil Resources
I’ll give you a very quick figure. In the USA, there are 800 vehicles -- passenger cars, buses, minivans, etc., etc. -- for 1,000 American men, women and children. In India, there are eight vehicles for 1,000 Indians, men, women and children. Now, suppose India progresses economically, and you change that figure from 8 to 18 or 80, can you imagine how much oil will be required? And that is something which one has to face up to. And as I show, you know, there’s what you call, you know, oil, any mineral, you have a bell curve, and peak will reach in ten years time, and then you start to go down. And at that time, India and China, the demand will rise. So what will happen? The price of oil will go up to -- take a deep breath -- $200 a barrel.
Interior Reverses BLM Lease Sales in Utah
The Interior Department's Board of Land Appeals last week suspended the Bureau of Land Management's roughly 14,000 acres of oil and natural gas lease sales in central Utah on the grounds that BLM did not adequately identify sensitive archaeological sites before offering the leases.
Peru's Amazon oil deals denounced
Environmental and human rights group in Peru have denounced the government's campaign to auction off large swathes of the Amazon to oil and gas companies.
Putin sees Israel as a possible customer for Russian gas
During his visit Ben-Eliezer will also promote the "infrastructure corridor," in which Russia is expected to play a key role. The project involves laying 610 km of pipes on the seabed between Turkey and Israel, mainly to supply natural gas and oil. Supply of water and electricity is also under consideration.
Opec-style gas group ‘unlikely’
Qatar, which has the world’s third-largest natural gas reserves, has said a form of cartel between producers of the fuel is unlikely.
Russia, Iran, Qatar to Assess Need for Gas OPEC in March
Iranian Oil Minister Kazem Vaziri-Hamaneh said that Iran, Qatar, and Russia will assess the formation of a natural gas exporting group, similar to the Organization of Petroleum Exporting Countries (OPEC) on March 6.
Massive biofuel program to go ahead despite concerns
International criticism of Indonesia's massive biofuel development program will not affect the project, which is expected to turn the country into one of the biggest biofuel producers in the world, says an official.
Food industry calls for a more balanced biofuel policy
With the increasing use of some of their raw materials for the production of biofuels, the food industry is starting to call on the European Commission to take measures to ensure they do not face further price hikes for their supplies.
Saudi Aramco Signs Manifa Contract
Saudi Aramco has signed a contract with Belgium dredging contractor Jan De Nul to help develop the 900,000 barrel per day (bpd) Manifa offshore oil field.Scheduled for completion in 2009, Jan De Nul will carry out dredging works in the Arabian Gulf before building several drilling islands and a 41-km causeway that will provide Saudi Aramco with a direct link from the coast to shallow-water offshore man-made drilling islands.
China has no plans to radically change its reliance on coal and other dirty fuels despite already feeling the impacts of global warming, according to a leading Chinese meteorologist.In the first official Chinese response to a stark UN report issued last week on climate change, Qin Dahe said China lacked the technology and financial resources for a wholesale conversion to cleaner energy sources.
Grim global warming prognosis for Western U.S.
Now the scientists can make regional projections about "where people actually live."
Turkey prepares action plan on climate change
The Turkish government is preparing an action plan of measures to combat the fallout of global warming, focusing mainly on economising water.
Britain working toward international clean energy project
Britain wants to launch a major international clean energy project with other European countries, Japan and the United States in a drive to combat climate change, British Prime Minister Tony Blair said on Tuesday.Blair said the project could focus on carbon capture and storage -- where carbon dioxide produced from burning coal is buried under the ground or the seabed instead of being released into the atmosphere, contributing to global warming.
Oil, Chavez, and the Orinoco Belt
With the lightning speed that only a would-be dictator can muster, Hugo Chavez grabbed power in Venezuela last week. Greedily grabbing all the levers of authority, Chavez made the next move in his promise to deliver utopia to his people. And when all of the votes had been counted, Chavez promptly took his place in the string of history's other leaders who also boldly proclaimed, "I am the state."In the meantime, however, it is his country's position as the number-four supplier of imported oil to the United States that promises to deliver his socialist misery to our doors.
Bolivia Aims to Restructure Hydrocarbons Sector, Quell Unrest
Bolivia faces a growing rift between the east, which features La Paz and the seat of the government, and the country's hydrocarbons-producing west.
Mixing Oil and Water - Industry's quest may end in the sewer
This is the second in a two-part series examining the growing debate between industry and the province of Alberta over the use of water for the surging oilsands sector.(Part 1 is here.)
Electricity usage sets a record for winter
The operator of the power grid for the mid-Atlantic and parts of the Midwest said Monday that it reached an all-time record for winter electricity use amid frigid weather on the East Coast.Valley Forge, Pa.-based PJM Interconnection, which operates the power grid in 13 states and Washington, D.C., said demand Monday morning rose above 112,500 megawatts. The previous record for winter use, set in December 2005, was 110,414 megawatts.
The all-time record for summer use on the PJM grid, 144,644 megawatts, was set during a heat wave in August.
Alaska oil pipeline operator loses part of a pig
The operator of the Trans Alaska Pipeline System was on the lookout Monday for a piece of a cleaning device -- called a pig -- that mysteriously got dislodged somewhere inside the 800-mile oil pipeline in December.
Everybody in the United States could switch from cars to bicycles.The Chinese could close all their factories.
Europe could give up electricity and return to the age of the lantern.
But all those steps together would not come close to stopping global warming.
Declining energy sources huge problem
Our only hope is unrestricted domestic oil drilling accompanied by a massive construction of nuclear power plants, akin to the Manhattan Project, but this is unlikely to happen. The media and the left have painted oil production and nuclear power as detrimental.Forty percent of Americans lived on farms in 1900. Oil-dependent modern agriculture has reduced that number to 2 percent today. Our nation's history of reacting to crises, rather than preparing for them, will lead to millions starving in our not too distant future.
Pakistani firm to export sugarcane crushing mill to USA
The rapidly intensifying energy crisis that grips the world today has generated tremendous worldwide interest in renewable sources of energy. One of the major sources of renewable energy is the world’s cane processing & distillation industry which produces ethanol as a by-product or as its main product.
Dedicating all present U.S. corn and soybean production to biofuels would meet only 12% of our gasoline demand and 6% of diesel demand. Total U.S. cropland reaches 625,000 sq.mi. To replace U.S. oil consumption with biofuels we would need 1.4 million sq.mi. of corn for ethanol and 8.8 million sq. mi. of soybean for biodiesel. Biofuels are expected to turn Iowa and South Dakota into corn-importers by 2008.
Saudi cuts Q4 oil supplies to Asia, Iran exports more
Saudi Arabia cut oil exports to its three largest Asian customers by nearly 4% in the fourth quarter against the third, while Iranian shipments rose to near year-ago levels, calculations based on official data showed.
Saudi to boost fuel supply to US forces in Gulf
Saudi Arabia has steeply raised the amount of its jet fuel earmarked for the United States military, which is expanding its presence in the Gulf, Middle East trading sources said.
BP is cutting its production goals:
http://news.yahoo.com/s/nm/20070206/bs_nm/bp_results_dc_6
"BP forecast production in 2007 would fall to 3.8-3.9 million barrels of oil equivalent per day (boepd), from 3.93 million boepd in 2006. The 2006 result was down 2 percent on 2005.
Investors had expected BP to return to growth in 2007."
Also...
Production has fallen for 2 straight years. Production is expected to only grow slowly (I expect it to fall) for 3 more years before any hope of returning to stronger growth occurs and it will cost much more than previously anticipated. But the world is not at peak so party on dudes!
Declining production and increasing capital expeinditures. The future outlook for all of the major integrateds is a treadmill that is speeding up and getting steepr at the same time.
According to today´s earnings release the russian TNK-BP oil production is down sharply by 100.000 B/d from Q4 2005 to Q4 2006. (936.000 bd versus 837.000). Multiply that by two to get the whole company, not just the BP share. This represents a sizeable chunk of total russian production.
http://www.bp.com/liveassets/bp_internet/globalbp/STAGING/global_assets/...
Not exactly carrying over a discussion, but this late link from yesterday is fascinating - http://www.thestreet.com/pf/funds/fundmorning/10336832.html If you visit http://www.gmo.com/america and register, you can download a PDF of the newsletter by using the Site Map link, and then looking for Jeremy Grantham's Letters
The time period described also describes the ascent of the baby boom to the peak of American power, as they became the establishment.
I might throw out that the idea of American undergoing catabolic collapse since 1970 is an interesting one, as long as it is realized that a number of other places are not exhibiting American symptoms at this time. The broad discussion about collapse remains open, of course, but there is something which makes The U.S. fairly atypical at this point, at least in the eyes of many people who aren't American, or those Americans who have experience with other societies.
Thanks for the link.
This line cost me a little coffee.. good thing I don't wear white shirts.
"After my article appeared in the Boston Herald, I received a snotty letter denying there was any such thing as "an Iowa corn growers' racket." It was from the "chairman of the Iowa Corn Growers' Association.")
disclosure.. my wife's family consists of a lot of Iowa farmers, and they're great people.. but I still won't wear white shirts when reading about Farm-politics.
Bob Fiske
"...I received a snotty letter denying there was any such thing as "an Iowa corn growers' racket." It was from the "chairman of the Iowa Corn Growers' Association."
The chairman also had an oped piece in the Lincoln (NE) Journal Star a couple weeks back. He declared that there was no problem with corn supplies due to the ethanol industry ramping up.
This is something that I've wondered too. Is it coincidence that the peak of US petroleum output, the high-water mark in middle-class earnings, and the onset of America's status as a debtor nation all occurred within about 18 years? I suspect that they are related. That some sectors have continued to thrive doesn't say much except that some are better at grabbing the remaining crumbs than others are. Nothing new there.
I don't think it's a coincidence, either.
Many Americans think we became a world superpower for cultural or moral reasons. Democracy, freedom, Christianity, capitalism, our "can-do" spirit, etc. The truth, I fear, is baser than that. We became a world power because we were a huge country, filled with unexploited natural resources.
We have used up many of those natural resources. Peak oil USA was a turning point of sorts. That turbo-charged globalization - the movement of economic activity to places where energy was cheaper. And made it much harder for working class Americans to get good jobs.
Something that I think is under-appreciated. I've finally gotten around to reading Charles Mann's "1491" and it's an amazing (and heart-breaking) story: Europeans apparently walked almost unchallenged into a vast country from which the indigenous peoples had only recently been all but annihilated. There has been little to compare that with in recent history (except for Australia, of course).
The other thing that I think is under-appreciated is how much America's geographic isolation from the twentieth century wars in Europe, N Africa, Asia and the Pacific gave it a "leg up" in the years following WW II. I've had this discussion with many who have argued that American hegemony in the 20th century owed almost entirely to the strength of our culture and our institutions.
Now, we're in the position -- as Asebius put it the other day -- of having "eaten our lunch" and trying to figure out where we are going for our next meal.
This (vast resources of Western Hemisphere) is the first of the two 'unrepeatable events' that Wm Catton cites in 'OverShoot', the other being of course the development of fossil fuels, especially oil and gas.
...and I should add that it looks like we're going to have plenty of company.
Me neither.
Culturally what we're are 3 or 4 greatest accomplishment? I'd say:
1. defeating Hitler
2. reubilding Japan and Europe after WW II
3. the civil rights movement
4. putting a man on the moon
Not coincidentally, these all occurred between 1945 and 1970 right when per capita oil and per capita energy consumption enjoyed their best ever yearly increases.
the constitution and jazz music
Leanan,
I ran across this while doing a bit of research on another posters link to a guy named Pain in France who uses a methane digester for all his energy needs.
Anyway...I ran across this in one of my college text books. It does give you a bit of a chill down your spine. From the book: "SOILS; An introduction to soils and plant growth" by Donahue, Miller and Shickluna. A standard college horticuture textbook still in use today, revised of course, but soil science hasn't changed all that much.
Page 153, TABLE 7-3 "Costs and yeilds at two locations of seven vegtables grown using commercial fertilizers and pesticides(chemical garden) compared to similiar gardens grown according to recommendations for organic gardening (1972)"
SITE 1
Chemical garden
Cost, total $147
Cost chems & ferts $12
Cost, hauling organic fertilizers $0
TOTAL YIELD lb's 1,768
Organic garden
Cost, total $212
Cost chems & ferts $0
Cost, hauling
organic fertilizers $22
TOTAL YIELD lb's 384
SITE 2
Chemical garden
Cost, total $119
Cost chems & ferts $12
Cost, hauling organic fertilizers $0
TOTAL YIELD lb's 1,056
Organic garden
Cost, total $111
Cost chems & ferts $0
Cost, hauling
organic fertilizers $22
TOTAL YIELD lb's 150
Source; R.C. Lambe and J.G. Petty, " 'Chemical Garden' Out-Yeilds 'Organic' Garden," Agri-news newspaper, Virginia Polytechnic Institute and State University, 4, No 2(Feb 1973),1,3.
I won't debate if thier results are skewed by funding, and alot of knoledge has been gained in the 'Organic' realm since 72', but if these numbers are even relatively close...this isn't a pretty picture.
"I won't debate if thier results are skewed by funding, and alot of knoledge has been gained in the 'Organic' realm since 72', but if these numbers are even relatively close...this isn't a pretty picture."
Not even remotely close, and probably not close even in '72. It sounds like total bullshit propaganda. Sponsored by Monsanto and whoever.
Organic yields today are typically 80-100% of "chemical garden" (ugh!) yields. The thing to keep in mind is that the chemical garden produce is mostly water and cellulose, and the organic produce actually contains nutrition. I.e., poundage of yield is irrelevant. The point isn't pounds of stuff per acre... it's human nutrition per acre, sustainably.
Add to this the synergy you get by growing more than on thing in a field and whole new dimension for measuring yield will emerge. Corn was never grown alone, until Europeans applied their own agricultural knowledge (or lack of). In fact, maize wasn't even eaten or used the way we see today. Soaked in wood ash, the nutritional profile changes significantly. This is to say nothing of the multitudes of plants cultivated in ways the Europeans wouldn't even recognize as a food production system. Science seeks to isolate to understand. However, nature depends upon synergy.
many confuse hybrid sweetcorn (for kernels) with cornmeal varieties: http://en.wikipedia.org/wiki/Maize
I garden purely organically and from my 600 square foot back yard garden I get about 500 lbs of produce a year. From an urban lot surrounded by buildings and trees (ie only get partial sun) in the middle of Chicago.
I'd put my yields up against those of any conventional agriculture regardless of whatever magical chemicals and genetically modified seed they might use.
Most of the folks worrying about food shortages are probably those who don't know how to feed themselves.
SpeedEbikes horray for you, you're a member of the landowning class. From what I see around me, the vast majority of Americans are not of the landowning class and never will be.
The point I was trying to make is that fossil fuel based inputs (fertilizers, pesticides, etc) are unnecessary to produce adequate supplies of food. Perhaps your point is that our socio-economic system will prevent land from be appropriately utilized? That's a risk but it is not a problem without solutions.
A lot of what happened to the U.S. economy since about 1970 reflects a shift to a new monetary scheme. Love it or hate it, the way the world is would be vastly is different without pure fiat money. Many of the the excesses of the world economy could not exist it. Reading Churchill's words about his fear of not having enough gold to pay for the UK's involvement in WWII drove home this point with me. Even in a dire emergency everything had limits.
The seventies were an opportunity to learn that resources are finite, but unfortunately the packaging & lessons learned were wrong or at least premature. The oil crisis taught a lot of people that oil really was limitless, shortages are / were just politics. James Earl Carter in a sweater, taught a lot of people in retrospect that we weren't going to run out of oil and gas iin the very short term just because a politician told us so.
In the seventies, although the American oil frontier was closed there were others. Now? Well now we have even some very thoughful people with long memories that focus on the premature messages of the seventies. More easy pickings for CERA.
The message of the fable of the Boy that Cried Wolf was not that there are no wolves. For the record, I am an early peak believer simply because of the lack of new provinces and the age / state of development of existing fields. It bothers me that my opinion may just be another wolf siting. Damn, I wish I knew what the true oil situation was in the KSA.
reposted with recession bars below;
Proof of consumer peak & collapse:
Freddy, thanks for posting this. I'm going to show it to my boss. It looks like he's been shorting me by a few percentage points on my annual raise :)
Yeah right, and now it's my turn to say b-shiit. Anybody who seriously believes that disposable income went up between 1970 and 1980 is either (a) an idiotic or (b) so young as not to have to have lived through that helll.....
RC
Remember we are only one cubic mile from freedom
i bought my first house & 2 new firebirds in the 70's. i guess u were at the wrong place at the wrong time, eh.
Try putting yourself in someone else's shoes... ooops sorry I forgot, your kind has a genetic defect that prevents such complex perspectives from cropping up, nevermind.
moo
Well, the good news is this Freddy. If the 1970's were a great period, that peak oil whenever it comes will be the best thing that could happen to America....remember that the U.S. peaked at the front of the 1970's, and we had two major (MAJOR) energy crisis in that period, with oil prices going even higher inflation adjusted than they have been at anytime before or since (near the magic $100 a barrel inflation adjusted to todays dollar) and real gasoline shortages. Oh did we forget double digit unemployment, double digit inflation, double digit interest rates....what a time, gee it just ain't like the old days is it?
RC
Remember, we are only one cubic mile from freedom.
Sorry grasshopper, but u are confusing four very different events. Mostly u seem bodychecked by the 81-82 Severe Recession and the effects of Monetary Policy at that time extinquishing Inflation. Please look up your history down there. The mid 70's Recession was technical only.
Canada did not feel that '74 recession nor '71, nor your 2001 technical recession. That is not to say that certain sectors probabley got clobbered and those caught within seem to think it was huge. To them, i'm sure it was. But in the big picture, tech recessions are just a blip ...
Interesting speech, fairly conservative in his outlook.
-- -- -- -- -- -- -- -- --
This guy has an interesting comment about the article:
A few comments on is calculations. First, based on his numbers, he's assuming .4 Kilowatt hours per mile for the Prius. The estimates I've seen are closer to .25 Kwh/mile. Second, he's assuming the new Prius will get 100 mpg on gas. Now that may happen, but it seems very optimistic considering the current model only gets around 60 mpg. A more reasonable guess might be 80 mpg. If I substitute .25 Kwh/mile and 80 mpg into his calculations, I get a fuel savings of about $250 per year. Or about 5.1% return on the $5000. Though I'm not sure that calculating a return like that is useful, since you've sunk your principle into the price of the car. Like he said, it's a rapidly depreciating asset.
I think payoff period is a better measure. Though even with my figures, it would take 20 years to recoup the $5000. If they could reduce the price of the batteries to $4000 and if the price of gas is around $4/gal, the pay off period gets closer to 9 or 10 years. Assuming the battery will last that long of course. Since I tend to keep a vehicle at least 10 years, that's what I would consider a reasonable period of time.
And finally, if it only cost $6.50 per month to switch to wind power, then he should be doing that anyway. It's not an either/or situation.
Btw, the 100 mpg is the assumption for a plug in. That was used for the purpose of computing the gas costs once you have converted to a plug in. The analysis does not assume a straight hybrid can get 100 mpg, it assumes a plug in can average can get 100 mpg which is being claimed by the plug in advocates.
This is compared to the fuel costs at an average of 50mpg. Then, one has to add the assumed costs for electricity. I have seen figures of .4 kwhr per mile or 2.5 miles per kwhr. Perhaps you have differenct references. And again, the 8 cents per kwhr may be too conservative.
The purpose of the wind power calulation is just to illustrate that there is a better alternative use of one's $5,000. It makes sense to look at alternatives, when you are talking about spending or investing your money.
We also haven't considered the other costs of converting the prius to a plug-in.
People might argue, but look at what we are doing for the environment. While a valid consideration, one should consider that one could probably do more for the environment by taking that $5,000 and investing in wind or some other alternative.
I don't claim to understand how they calculate what to charge me for electricity (what the heck is a fuel adjustment?) but if I just divide my last bill amount by the number of Kwhs I used, I get about .11 per Kwh.
I forget where I origi