DrumBeat: February 15, 2007
Posted by Leanan on February 15, 2007 - 10:11am
Topic: Miscellaneous
Big Oil sees big risks as it places big bets: Even biofuels attract a following
Until recently, you wouldn’t expect to hear much about conservation or alternative energy sources in a roomful of oil executives. But those were hot topics at this week’s conference, “Strategies for a High Stakes World,” hosted by the consulting firm Cambridge Energy Research Associates. With energy supplies barely keeping up with the growth in the demand, even the optimists were quick with sobering reminders of scope of the task.“People lose sight of the timing and the scale of infrastructure involved,” said David O’Reilly, Chevron CEO. “It’s a massive undertaking.”
Venezuela bolsters oil security after threat
Venezuela’s defense minister on Thursday said the nation would reinforce security measures after a branch of al-Qaida called for attacks on suppliers of oil to the United States.
Bodman: Risks from oil nationalism "unacceptable"
U.S. Energy Secretary Sam Bodman on Wednesday gave a sobering view of tight energy supplies and reservoir access challenges around the world, and called on global leaders to act to remove the "unacceptable risk" to energy security.Without naming them outright, Bodman took to task leaders in countries that have seized on their plentiful crude oil supplies as a way to further their national agendas.
Exxon Chief Cautions Against Rapid Action to Cut Carbon Emissions
The chief executive of Exxon Mobil, Rex W. Tillerson, warned Tuesday that governments should not rush into policies that could damage the global economy in order to limit carbon emissions.
Oil Prices, Imported Goods Push Trade Gap to Record
The U.S. trade deficit climbed to a record high for the fifth straight year, with 2006 imports exceeding exports by $764 billion, the Commerce Department reported yesterday. The gap reflects higher oil prices, which increased the nation's import bill, and American consumers' rising appetite for foreign-made goods.
NY students imagine city plan after global warming

While the world's top scientists recently warned governments to take urgent action on global warming, a small group of Brooklyn students have designed their own plan for living with climate change.The students look ahead 50 years to how rising seas caused from global warming might flood the Brooklyn waterfront neighborhood of Dumbo, in a small exhibit called "Dumbo Under Water" on display at a Brooklyn gallery this month.
South Africa: Making sure it’s worth the candle
With peak oil a concern and electricity blackouts increasingly becoming a part of our daily lives, the question of energy security is high on the minds of many people. It is an issue that requires strategic thinking from government and demands a response that takes into account both the intended and unintended economic, social and environmental consequences. Decisions taken today will form the legacy of this government for generations.
Grease wrestling, the province of frat parties, late-night wishful thinking, and further unsavory intent, is getting a wholesome, "alt" spin in Ithaca this weekend. On Saturday, Ithaca Biodiesel is holding a fundraiser at The Haunt to help support the development of their organization and to let people know that vegetable oil can be used for cleaner gasoline and, for the day at least, wrestling.
The president's new budget is predictably bad for mass transit. Alas, the Democrats aren't all that much better on the issue.
Arcelor Mittal to Build Saudi Steel Mill
Aramco plans to spend US$50 billion (euro65 billion) over the next five years to build more refineries in Saudi Arabia and other parts of the world and boost the kingdom's refining capacity by as much as 60 percent over this period.
Brazil, Bolivia Reach Natural Gas Deal
President Luiz Inacio Lula da Silva and Bolivian President Evo Morales reached a deal late Wednesday on how much Brazil will pay for Bolivian natural gas, apparently resolving an issue that has deeply divided the neighboring nations for a year.
India: Greenbody asks government to increase tax on cars
Warning that the unchecked growth of cars are contributing heavily towards energy and environment insecurity, Centre for Science and Environment (CSE) Thursday said India must increase taxes on all cars.
Cease-fire line, battle line or pipeline? With the Russian presence in Georgia's breakaway regions, lines are blurred.
Feinstein Eyes Budget Process to Recoup Royalties
Sen. Dianne Feinstein (D-Calif.) wants to attach language to the Interior Departments's fiscal 2008 spending bill that would help the federal government recoup almost $10 billion in oil and natural gas lease royalties.
Deconstructing Dinner: Agri-Business Exposed I (Cargill Part I)
The Agri-Business Exposed Series on Deconstructing Dinner will explore the major agricultural companies whose names are rarely heard by the eating public. Part I and II of the series will take a look at agricultural giant Cargill.
Richard Bell: Stern Stern on Climate Change at Senate Hearing
The Cinderella Plant: Green energy from Africa
Africans used to think jatropha was a worthless bush. Now it may be an important new source of energy.
Running out of oil may not be the issue at all
All the talk of when the world will run out of oil could be rendered irrelevant because of geopolitical issues that block access to untapped reserves, the head of international exploration and production for Chevron Corp. said Wednesday.John Watson told energy executives and analysts that the so-called peak oil debate focuses on the level of resources below the ground. He joined the prevailing view of speakers at the Cambridge Energy Research Associates' annual conference in Houston that the planet won't run out of oil anytime soon despite opposing theories that a peak and subsequent drop-off in production is imminent or even ongoing.
"Every time we say we're about to be tapped out, we find new ways to squeeze more out of reservoirs," he said.
Oil Industry's Mega-Projects Face Looming Labor Shortage
Good project managers in the oil industry may be like rock stars, but they're becoming just as rare.As an aging generation of workers retires, industry experts say the resulting shortfall in skilled labor could lead to an increase in delays and problems on mega oil and gas projects.
Oil-Sands Producers Vulnerable to Cap, Rubin Says
Oil-sands projects are among the most vulnerable if Canada follows the lead of some U.S. states to reduce gas emissions linked to global warming, according to the Canadian Imperial Bank of Commerce.
No gas in GM's car of the future
It may be late to the game, but the maker of Hummer vehicles says it wants to become the global leader when it comes to green cars.And General Motors Corp. recognizes that means squaring off against the early leader and maker of the Prius hybrid vehicle, Toyota Motor Corp.
Demand grows, but data centers don't hog power
Data centers are sucking up more electricity as more people and organizations log on to the Internet. But there's been some disagreement over how power-hungry the servers running the nation's network are.
Hope for end of climate deadlock
Leading US politicians are meeting legislators from the EU, China, Japan and India to seek a breakthrough in the international climate deadlock.
Big Oil's Hot Air Show On Global Warming
The CEOs of Big Oil gathered in Houston this week to proclaim that they finally get global warming and want to be part of the solution. The problem, of course, is when there's so much money in black gold, it's sure hard to go green.
Cow Dung, Rotting Chickens Poised to Beat Oil, Natural Gas
First Reserve Corp., the biggest private equity firm in the energy industry, expects a fivefold gain from rotting chickens and cow dung.
Measuring the Uncertainty of Climate Change
Better models are rapidly defining the uncertainties ahead, says leading climate scientist Ronald Prinn.
UK wind industry joins energy elite
A snowy hill on the outskirts of Stirling in Scotland is the scene of a significant milestone of achievement for the UK wind industry when Secretary of State Alistair Darling switched on the turbine which pushed the UK into position as one of the top seven players in the global wind market.
Renewable energy to power Indonesian villages
Indonesia aims to have 2,000 energy self-sufficient villages powered by hydro, solar or bio-fuel resources by 2009, Energy and Mineral Resources Minister Purnomo Yusgiantoro said.
Germany Putting More Wind Into Energy
Germany is blowing more wind into energy with the setting up of new offshore facilities. Germany already has the world's largest installed capacity for wind energy.
Passenger jets get a radical green makeover
If passenger jets were a different shape, they would produce far less CO2. Danny Bradbury meets the high-fliers who are leading a green revolution at 35,000ft.
New Zealand: Biofuel target is only a beginning
Corn-based ethanol has fish, wildlife officials worried
Some are calling it a modern day gold rush, what with ethanol plants sprouting up like weeds across the Great Plains. The problem for conservationists and wildlife officials like Bogenschutz, more corn-based ethanol requires more corn production. And more corn production means far less wildlife habitat — habitat that produces a bounty of pheasants, ducks, songbirds and other wildlife, as well as decreases pollution into our waterways.
Belarus raises Russian oil transit fee more than 30%
Belarus will increase rates for the transit of Russian crude through its domestic pipeline network by more than 30% on average starting from February 15, the republican economics ministry said Thursday.
Brazil, Bolivia Reach Natural Gas Deal
President Luiz Inacio Lula da Silva and Bolivian President Evo Morales reached a deal late Wednesday on how much Brazil will pay for Bolivian natural gas, apparently resolving an issue that has deeply divided the neighboring nations for a year.
Saudi says no bar to nuclear cooperation with Russia
Saudi Arabia, the world's biggest oil exporter and a key U.S. ally, said on Wednesday the kingdom does not see any obstacle to cooperating with Russia on developing a nuclear energy program.



Saudi Arabia on Track for 12-14M B/D.
I really liked to read that. No speculations about 2030 or so. They announce to virtually double their output within less than 24 months. So we will see soon. Either way, if they'll be able to fulfill or not, the outcome will be significant.
I didn't post this one up top, because it's subscription-only, but maybe someone who has a subscription can give us details...
Aramco Adds More Projects to Upstream Push
Greenspan on oil
So in two to three years time Saudi will be claiming around 7 million barrels a day of spare capacity in the midst of falling global production and rising demand!
Note the two caveats: Beyond that it's a bit unclear & 'though the exact number is uncertain'
Rad: Interesting headline- then in the article, KSA claims a minimum capacity by the end of 2009 of 12 mbpd, while claiming a current capacity of 11.6. I guess this headline is better than "KSA says production capacity will not decline before the end of 2009 as new investments are planned".
I think it is a double bluff. They have admitted to an unattended 8% decline on existing fields
which supposedly has been held to 2% decline via advanced recovery/increased rigs.
The double bluff is making people think that they wouldn't dare lie in reporting such outrageously high future production rates.
in my opinion.
Marco.
Note that the EIA C+C report for 8.8 mbpd in November and the Saudi report for about 8.5 mbpd in February are both consistent with a net 8% decline rate per year since 9/05.
I have previously pointed out how odd it is that the "voluntary" cuts in production are--so far at least--consistently in the 8% per year range.
And they will try to string out the misinformation for as long as possible (punctuated by the odd chime in from the MSM in agreement).
I can see the FT headlines already:
"oil tumbles on Suadi oil projections"
Marco.
I'm as bearish on Saudi production/reserves as you. This is one big bear that everyone wants to stick their head in the sand about. Once the cat gets out of the bag that Ghawar is producing close to 3.5mbd AND that position is made official, then people will realise what the current scramble is about. I will say no more.
Marco.
Can anyone link to the production graph of KSA including the increases in drilling rigs(@3x). I think khebab did it 2-5 months ago I don't know for sure. It fits well with the current discussion above. The chart is worth a thousand words.
I don't know how to search and link or I would do it.
Thanks,
D
I dont think there is much point in looking for an increased pulse in flow (just yet).
The ramping up of rigs - which is impressive started in earnest in 2006. The effects will take some time.
Some will be for in-fill and field enhancement drilling, some will be for workovers of existing wells, some will be for exploration and appraisal, and then development of any (if any ) newly discovered fields.
Infill and field enhancement has a small lag, exp , appraisal and development is less certain, and governed by proximity to existing infrastructure and the amount of development drilling that follows.
Infill, enhancement and workovers help sustain the life of a field, but does not increase beyond peak production / peak flow. Look to the North Sea : it keeps us alive for longer, but does not add oil flows that then exceed the 1999 peak flow rate.
No. Only successfull exploration can do that.
The only contrarian argument would be that KSA has been sitting on secret supergiants which are now going to be developed in the next 1-5 years.
So, that is the question: Have KSA held the best back for last?
As always, the proof of the pudding is in the eating.
I'm bullish on KSA production. Just look at their historic production profile (BP Stats) which has been all over the map as they have increased and throttled back production for various political and economical reasons.
OTOH I tend to be bearish on Russia. After all, it is the Russia Bear, isn't it? I do have difficulty with the notion that they can maintain their current production flows much longer.
"I'm bullish on KSA production. Just look at their historic production profile"
I've seen the production profile and one thing always sticks in my mind. That there is a new flavour to the current production. Multilateral with water injection, 3x rig count than a few years ago. These relatively new techniques only need to be employed when pressures drop and push the production from bell shape to ramp and cliff shape. Not to mention their apparent inability to effect a change in global oil price via production quota where before they were able to easily. It's all gone so frantic.
So maybe they are sitting on untouched supergiants, but I am 99.9% sure I know why they are not: they would not go to all the trouble/cost of secondary recovery if they were.
All my opinion.
" ...So maybe they are sitting on untouched supergiants, but I am 99.9% sure I know why they are not: they would not go to all the trouble/cost of secondary recovery if they were."
I hope that you are wrong. If KSA and Russia and Mexico all entered declines within the same year or two... along with export declines we would indeed be in for interesting times.
Since so much of this is not knowable until after the fact, I wish that our present administration would start educating us on energy efficency... a little preventative medicine.
Just driving about 10% less a year would mean about a 1 mbp/d decrease in our petroleum use.
Not many years ago around 60% of the American public smoked. Then the prices started going up and the tobacco industry was forced to attach the now famous warnings that their product will kill you. Now about 20% of the public smokes.
Certainly energy efficiency could be "sold" the same way. We could put warnings on gas pumps like, "Using this product may result in your kid dying in Iraq" or "Using this product will require you to wear a personal floatation device and breathe through a snorkle."
Hi Byron,
"Not many years ago around 60% of the American public smoked. Then the prices started going up and the tobacco industry was forced to attach the now famous warnings that their product will kill you. Now about 20% of the public smokes."
I appreciate your thinking about education/action. Maybe along the lines of http://www.nhtsa.dot.gov/people/injury/alcohol/DesignatedDriver/, we could have "Friends don't let friends drive..."
IMO: there is the proof of the pudding.
Why go to rig-intense, injection and infrastructure intense activity, if they are sitting on highly geopressured virgin reservoirs requiring fewer wells to generate high flows with minimum effort ? - this was the story of KSA from the 50's and beyond.
In the history of oil, we have always taken the fastest, cheapest route to the resource (low hanging fruit first)
At the end of the day, we will all know soon enough
Texas alone has over 54,000 wells. KSA barely has 1,500. A 3x increase isn't much when you compare the two regions like that.
Hothgor, glad to have caught you (off topic your current post, sorry). I want to take you up on your dismissal of DU in yesterday's Drumbeat, and of New Account's response to you suggesting you actually looked at it.
I'll repeat his link:
http://en.wikipedia.org/wiki/Depleted_uranium
and add the most recent I know review of studies on the teratogenic effects:
http://www.ehjournal.net/content/4/1/17
I would like you to read them thoroughly before you say anything about DU again.
I agree with you that uranium outside one's body in low concentrations is virtually harmless. However, once particles are ingested (oral or respiritory) the situation is very different. There are both radioactive and toxic effects.
DU projectiles are designed to vapourise and burn the DU on impact. That widely disperses the DU in small particulates, ideal for distribution and ingestion.
I also agree that the evidence and studies are far from conclusive, but there is sufficient evidence already to strongly suggest adverse effects. How long should we wait for conclusive results - the half-life of U235 (the active bit of DU) is about the same as this planet to date?
I'll leave you with the last sentence of my second link above:
"Regarding the teratogenicity of parental prenatal exposure to DU aerosols, the evidence, albeit imperfect, indicates a high probability of substantial risk. Good science indicates that depleted uranium weapons should not be manufactured or exploded."
Source and link ?
That is VERY different from my understanding of the role of the designed role of DU munitions. And absent PROVING this point, much of the rest falls as well.
Alan
From the wikipedia article
and
also
A pyrophoric substance is a substance that ignites spontaneously, that is, its autoignition temperature is below room temperature. from wikipedia
It's fully explained in the links I posted.
Thanks Rethin.
And thanks for bringing this forward to Hothgar's attention again. I gave up when he linked genetic birth defects to poor pre-natal training.
The radioactivity of depleted uranium (half life of 3+ billion years for the depleted fraction) is not a significant concern. The ore that uranium miners deal with everyday for decades is as radioactive.
I have read a number of articles on mortality & health effects of uranium miners (smoking & uranium mining is VERY bad for your health, lung cancer risk increases by order of magnitude ! 1950s era uranium miners that do not smoke have lung cancer rates slightly less than 1/2 pack to 1 pack/day smokers).
Given the long term exposure with minimal precautions (1950s/1960s) to high concentrations of uranium by miners, I am not overly concerned about the direct risks from single exposure except in vary rare exceptional cases (i.e. DU shell enters house and does not remain intact but burns completely). OTOH, uranium miners of that era were all male, and not a good measure of teratogenicity. One study of wives & children of uranium miners showed no negative effects (US) but another Australian study showed that effects on the edge of statistical signficance (vague memory, 90% but 95% significance). Exposure to poorly controled tailings (which contain daughter radioactive products not present in DU) in Australia.
Since uranium (not depleted) and daughter products are present in many environments naturally, I am not concerned about diffuse, long term exposure. Lead, Colorado residents (town with highest background radiation in US, much from uranium & daughter products) have greater risks.
Alan
Hrothgar:
They did not need to drill 54000 wells to find the oil.
54000 wells will not find oil where there aint any.
Thank god you aint in exploration: your oil company would go bust
For what it's worth
As I posted yesterday, I have been out of town for a week now and must drive across town to borrow my brother in law's computer to post. So if this note on Saudi Arabia was posted Sunday when it was fresh then I do apologize for the re-post. But in Sunday's Parade Magazine, there was a list of "The World's 10 Worst Dictators." Here is #5:
As I said, I apologize if this has already been posted. But I would just wish to point out there are multiple reasons that Saudi Arabia would wish the world to believe that they are sitting on the world's largest reserves of oil when in fact that is a complete myth. Well, it's a myth unless about 70 billion barrels are the world's largest reserves.
Got to go now. Hope to check in again in a day or two.
Ron Patterson
Why is the USA denying KSA all the benefits of Democracy?
Good question. The citizens of Saudi Arabia must look with envy at their northern neighbor and wish that the United States of America would perform a similar service for for the Saudis.
David Mathews
http://www.geocities.com/dmathew1
KSA's previously announced plans were to increase production capacity to 12 mbpd in 2009 and 15 mbpd in 2012. What I gather from this latest statement is that they are on target to meet the first goal, but that they are losing confidence in their ability to reach the 2nd goal. Instead of increasing production capacity by 3 mbpd during 2009-2012, they are revising that expectation downward to 0-2 mbpd in that timeframe.
Their stated post 2012 plans are not to increase production. They have said that they will plateau from 2012 onward. That's the part of their prediction that it most questionable. It's quite reasonable (not to mention alarming) that they will peak in the 2009-2012 timeframe, but do they really expect to avoid production declines for decades afterward?
Now that they are on record as bringing in their peak timeframe from 2012 to 2009, we may expect some explicit statement on post peak decline rates. So far they have been avoiding public statements about it.
I read it similarly. It seems (to me) to be saying that KSA now envisions an upper limit of 14 mbpd on its productive capacity in the foreseeable future, and may be unable to commit to above 12 mbpd.
U really should check the archives before posting silly stuff like this. Several Aramco and KSA documents have been posted in the last few weeks that clearly show that the 12-mbd MSC was scheduled for completion in 2016 (Presentation, CSIS-2004 et al). These are plainly rehashed reannouncements of their accelerated schedule that we have discussed ad nauseum.
2016. Read it and weep kids.
I must 'yes, but'.
The only new thing I felt from that is the 14 mbpd upper ceiling that KSA now seem to be suggesting - and it seems to be a 12-14 mbpd ceiling - in the foreseeable (10 year?) future. That does have implications.
2016? If PO is as late as then I will weep with joy - provided we (humanity) start getting our act together soon!
Also please consider the source, Agric. Obaid is a KSA Security guy. Altho informed (except on the diff betw decline & depletion ... much like our own RP ... which only proves anyone can make mistakes), we just has a flurry of KSA and Aramco presentations that i posted that are crystal clear on a 12.5-mbd MSC while Obaid's persuasive and detailed presentation was in early November.
As TOD scrutineers, are we going with the engineers or with the story from a Security guy at a CSIS event?
I prefer the 12.5-mbd MSC and the 10-mbd production rate. Methinx the KSA budget is based on $43/barrel. There is no need to ramp up when a stable and surplus based economy is already assured.
I can understand the accelerated pace. Surplus world capacity had evaporated. The rising price was most certainly going to bring on a global recession and that would have prolonged the deficit budgets that KSA were mired in only a short time ago. A secondary reason would be the available ample capital funds that were fleeing from the stock market and residing temporarily in bonds and other financial instruments.
Hello TODers,
Does anyone think we can ramp up biosolar energy alternatives as fast as detritus energy sources decline? Or will a very difficult transition gap arise? Jay Hanson makes some very interesting points for consideration:
http://www.warsocialism.com/
Do my past postings for building large, contiguous biosolar habitats make any sense to help bridge this transition period? Does Cascadia, New Vermont Republic, and the Terminator leading the Calif. charge into Legal Secession seem like trends towards this direction?
I would be interested in your thoughts if you feel so inclined. I will be back later.
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
Hi Bob,
Skipping the diefoff debate and recognizing that everything I have to say is a guess, here goes:
1. Energy, staying ahead or equal to the curve - it isn't going to happen for a number of reasons. First, there are too many vested interests in maintaining the status quo. Second, there won't be the necessary funding without cutting other special interests, i.e., defense spending, crop subsidies, etc. Third, any change would require a concomitant change by the populace which hasn't shown much interest in changing :-). Lastly, it would require the overthrow of the growth paradigm.
2. Secession/Balkanizataion - the question is whether the US tends toward some form of "dictatorship" as it appears to be doing today. Given the unlikelyhood that the Feds will be at all proactive about the future, it seems possible to me that there will be a Balkanization centering upon regional interests. This is happening to a small extent today where groups of states are suing the Feds over various laws/Fed actions. It is possible that the US will return to its roots as a republic.
Conversely, again assuming there isn't absolute Federal control to stop it, the US could turn into a number of smaller countries a la Ecotopia. There are clear advantages and disadvantages were this to occur. But there are far too many to broach the subject on TOD.
Were the Feds serious about the future, a logical thing to do would be to establish model communities trying different approaches to acheiving a stable-state society. These would include not only energy but also governance and economics.
One thing that might help people look at living differently would be to view Colonial House and that appeared on PBS some time ago. Besides seeing how important interpersonal are, they also allow one to see what existing technologies are of real importance.
Todd; a Realist
Somehow Frontier House from PBS got dropped from my post. It's also a good view.
Hello Todd and Don in Colorado,
Thxs to both of you for responding. My following essay's full credit to Jay Hanson and his Thermo/Gene Collision concepts which I have poorly tried to explain in previous postings. Unfortunately, Jay can concisely say in a sentence which takes me a paragraph [TODers are stuck with me]. =)
I have mentioned Thermo-Gene many times before: I am thrilled that Jay has finally and rightfully taken on this Thermo/Gene descriptor as his own; I believe it truly honors him and deservedly so. I wish his Thermo/Gene essay could be taught to everyone until they understood its full ramifications. If so, couples would readily agree to have zero or just one offspring till long-run sustainabilty is achieved.
I think a big part of our problem is the pace of humanimal evolution in the humanimal ecosystem far exceeds the pace of the underlying natural ecosystem; a biosolar human can quickly escalate the detritus ladder towards a consumptive detritovore maximation. Of course, natural reproduction to extreme Malthusian deprivation can only further add to our Overshoot problems.
Examples abound around the globe, from immigrants who arrive in the US practically penniless, and through much hard work become millionaires or richer, unknowingly locking themselves into FF upper level status. There have even been recently arrived illegal immigrants who have won the lottery--instant escalation to near-premium detritovore status; from humanimal gnat or gerbil to almost elite topdog predatory wolfpack status, maybe foxes or coyotes.
Of course, all kinds of other humanimal fauna exist along the spectrum of the humanimal foodchain. Some of us are fungi, mosquitos, bunnies, goats, elk, badgers, mountain lions [Richard Rainwater?], etc, as we each do our best to find our humanimal ecosystem niche to economically prey on those around us, and escape the economic predation by those higher in the foodchain. Now mentally extrapolate this phenomenom by globalization and FF-spiderwebs.
Our tendency is towards detritus-MPP, not biosolar-MPP, although I warm-heartedly congratulate both you guys for your long striving to be local leaders in your biosolar-MPP efforts. This is the Peakoil Outreach direction we need to go: the creation of a biosolar-MPP humanimal ecosystem; a 150 million Megan Quinns across the US yearning to push 150 million wheelbarrows, or pedal 150 million bicycles. Plus whatever other biosolar tech we can sustainably develop.
The problem and 'promise'[developed later] of humanimal topdogs is their detritovore reach. A real wolfpack can only instantly effect the ecosystem locally by downing an elk; the spreading ripple