Soliciting Questions for the API Conference Call on Energy Issues

I will participate in another API conference call on energy issues on April 18th, and I would like to solicit questions from readers. The topic will be “Energy and the Environment”, but I would expect they will take any energy-related questions. The speaker will be API CEO Red Cavaney.

I wrote up my impressions of the previous conference call here. You can read the transcript from the first call here along with an audio recording at the API's Energy Tomorrow site.

If you get a chance, read the transcript or listen to the audio recording. This may prompt some questions. I will try to get as many answered as possible, and then I will write up the results. Don't miss this opportunity to have your questions/concerns documented and addressed. If you have a question, please list it. First come, first served.

The annual cost of drilling for North American natural gas has escalated from $4 billion/year to $40 billion/year in the last decade, yet production has dropped slightly. One "rule of thumb" is that the # of active rigs has to increase by 10% each and every year in order to keep NA NG production stable.

The drilling industry is showing signs of stress and limitations after the recent expansion. In how many years will we not be able to expand drilling by another compounded 10% and NA NG production will start to fall significantly ?

Best Hopes for Realistic Planning,

Alan

This year. I follow drillings stats pretty closely and we are not going to expand 10% this year.
Robert since you reading this.Have you seen this?
http://oakhavenpc.org/cultivating_algae.htm

Has this been evaluated on TOD or elsewhere?
This is the first thing I do not feel despondent about since becoming peak oil aware a few years back.
TIA,

There has been an extensive review of De Beers Fuels and Infiniti brand algea biofuel companies by a South African watchdog group.

http://biopact.com/2007/04/algae-biofuel-companys-claims.html

Tyan in Seattle

Thank you!

http://algae-thermodynamics.blogspot.com/index.html
goto 21st march 07 entry

Here is something I found for you!
The only company making these promises is apparently promising to break the laws of thermodynamics.

Dr. Krassen Dimitrov is amazing at using some hard core calculations about energy. He might be a great addition if he decided to contribute to TOD. Somebody should invite him. Take the time to look at his work on the De Beer;s algae claims.

Nice look at the actual numbers.

"You can never solve a problem on the level on which it was created."
Albert Einstein

In the same vein, how can tar sand deposits be a solution to anything if NG is required to process it.

The tar sands people are planning on putting in a facility to turn the processed output of the sands to gas, which will supply the heating nessisary for more extraction.

scuse me as i go look for a link.

Any of the following (unless they are FAQs).

What do you consider the best & worst estimates for:

- water needs (as in gallons or liters of water / barrel of oil produced)
- energy needs (as Joule of input / barrel of oil produced)
- environmental damage (as in ground displacement, topsoil removal, groundwater contamination risk or whatever factors come into play)

for North American (e.g. Alberta) oil sands projects?

What do you see as significant barriers to large scale production from these resources?

What are the most optimistic projections for practical maximum production (barrels of oil/day) in future using current known tech?

When do you foresee production from oil sands scaling up to significant numbers (i.e. what year/time span or price level)?

How different is energy from low entropy? They are clearly related, in that energy is required to maintain the order. A healthy environment embodies more energy than a depleted one (waste?). If our economy is measured by the energy it uses, then won't our attempts to increase that directly decrease environmental quality? If we look at a silo over there of fossil sources and another silo elsewhere of water quality, the connection will be obscured.

If we burned 10% of all fossil energy during GWB's first term and are on track to do the same during his second, then I'm not even sure there IS a sane question to ask about how our energy use will degrade the environment. This is a variant on the gray goo meets ultimate heat death of planet problem, isn't it?

Yeah, what about my 401K?

cfm in Gray, ME

SamuM, you will find answers to most of your questions in the Canadian National Energy Board document Canada's Oil Sands - Opportunities and Challenges to 2015: An Update, accessible from this page.

On a related natural gas question: The NPC (National Petroleum Council) report "Balanced Options" in 2003 said that the U.S. would face a natural gas shortfall and have to import LNG at a rapidly growing pace, even if we opened up all moratoria areas in the U.S. to natural gas drilling. This would include the Western Rockies and the OCS (Outer Continental Shelf) being opened for drilling.
(a) If we are really in such a dire position on natural gas need, what are the chances that these areas will be opened up for at least exploratory and then possibly production drilling? What do see the environmental issues to be and is it worth the risk?
(b) Is even discussing the issue of natural gas drilling in these areas politically acceptable, or is it "a third rail" that politicians won't touch, no matter what shape we aer in on natural gas supply
(c) Given the resistance to LNG handling facilities almost anywhere they are considered to be placed, what are the odds of building enough LNG handling and offloading facilities in time to provide needed natural gas imports?

Roger Conner Jr.
Remember, we are only one cubic mile from freedom

Do the members of the API have bugout plans and if so would they mind sharing them the peasants?

Do members of the API foresee catastrophic events, including the distinct possibility of the collapse of the global economy? In other words, do members have a sense of the severity of consequences of "peak oil", "peak natural gas (regionally)" and the current and projected use of coal, along with the decline of other resources - consequences for the "survival of human civilization"?

If so, do they feel empowered to act - to take a stance as a group? If so, what is that stance?

How do they, as individuals, deal with the implications of what looks to be on the immediate horizon?

Reformulate the question (if you chose). After the same intro on $4 to $40 billion; What price range of natural gas would be required in, say 5 years, to support 60% more rigs drilling for natural gas ? (Adjusting for increasing unit costs, labor shortages, etc.) 60% more rigs appear to be needed to support level NA natural gas production.

1.1^5 = 1.61

Best Hopes,

Alan

The transportation usage of petroleum is a significant CO2 source, particularly in the US. Up until now little has happened to limit this pollution, but it has to be expected that real targets and limits will be imposed in the short to medium term. How would the API go about ensuring delivery of real targets; such as:

- the EU CO2 emission ceiling of 130 grams per kilometre for all new cars by 2012, or

- 20% reduction in total transport CO2 emissions by 2020, or

- 50% reduction by 2060

and what mandatory CO2 limits do they believe should be placed on any future coal-to-oil conversion options?

Oh, and here's a non environment one.

A major topic of interest to the man (or woman) at the wheel is the price of gas. You said last time how this was majorly driven by the world oil prices, which we recognise is in turn driven both by sentiment and supply/demand mismatches.

What research has the API done to predict how the world markets in oil will react to differing levels of supply contraint - and thus how oil prices would be affected to deliver differing levels of demand destruction? How high does that price need to be to effect demand destruction in the US?

As an example, if demand needed to be reduced by 3Mbpd tomorrow, what level would the API expect the price of oil (and gas) to have to rise to to achieve that effect in today's market?

Great question...seconded.

Hello R-squared,

Who does Red Cavaney & the API believe is more credible: [T. Boone Pickens, Matt Simmons, and the Deffeyes Group on TOD] OR [Yergin, CERA & IHS]? If the first group is more credible--what does the API plan to do? If the second group is more credible to the API: will they encourage the IHS to release its proprietary database to the public, and promote full IOC & NOC audit transparency as suggested by Simmons?

Bob Shaw in Phx,Az Are Humans Smarter than Yeast?

Has he read the GAO report? What comments does he have on the various peak oil studies and dates cited in the report? Similar to above, are some more credible than others, or are they all equal (which would I suppose be another wa to concur that we have trmendous uncertainty). In the case of this much uncertainty, what is the right risk mitigation step to take ?

Yes, that's a good question, DP, I too would like to hear his response to the GAO report. In particular, what if the more pessimistic estimates come true, what will that mean for the industry and the country (and the world)? I think this report gives some "cover" to ask about PO without sounding like a crackpot.

It is likely that a GHG cap-and-trade system may be established in the US. It will take many years to ramp up renewable energy as a replacement for fossil fuels. How quickly can the GHG cap be reduced?
Many perceive that soon both oil and natural gas extraction will be falling faster than coal, shale, and tar sands can be increased. Does this make cap-and trade irrelavent?

Q1. How does the oil industry plan to deal with the reality of global warming?

Q2. Given the reality of global warming, why is the oil industry still focused on supply expansion?

Q3. Does the oil industry believe that no CO2 emission restrictions will happen in consuming countries that will limit oil consumption?

Q4. How would the oil industry cope with a 50% globally mandated cut in oil induced CO2 emissions over say ten years?

Thanks,

Solarhouse

Question: Given the tone of such links at the API website as the "Energy Tomorrow" link, does the API consider the "Peak Oil" theory as bogus?

http://www.energytomorrow.org/energy_issues/alternative_energy.html

Roger Conner Jr.
Remember, we are only one cubic mile from freedom

Question #1: If the US used fossil energy at the rate of Europe, how low will the imoport rate of fossil be ?

Question #2: How many mpg should the present US vechicle fleet go in order to reduce US fossil import rate to zero?

Question #3: How low will the US fossil energy import rate be, if all powerplants were state of the art in energy efficiency. 60% efficiency. combined electricity and district heating?

Question #4: If all US homes were of average European size = ½ of US average and with European state of the art construction: i.e. Passive house design, > 1 foot Insulation, triple glazed windows, ventilation with energy recovery and with average European aircondition = Zero. And annual total primary energy consumption for (heating, cooling,all electricity below 120 kWh/m2 How low would the US fossil energy import rate be?

Question #5 If #1,#2,#3,#4 were implemented fully, How much natural gas and oil could the US export every year.

Question #6 Can the API confirm, that energy efficiency actions in the world since 1980 each year saves more energy than the present annual oil production in the world?

Question #7 Which actions can the API recommend for making the fossil energies of the world last longer ?

kind regards/ And1

Question 8: how the hell are we going to finance that when gasoline is at $7.00, the dollar tanks, foreign investment dries up and interest rates go through the roof?

European state of the art construction: i.e. Passive house design,

Passive house design is not state of the art in Europe. Passive houses still are exceptions, unfortunately.

Is it true the CIA sees no oil alternative for the USA if CHINA demand grows?
Is ex-CIA chief Woolsey correct in his reccomendation to promote alternatives in China, in order to buy time for USA to shift to alternatives. [Read carefully each word in following paragraph.]

"Their top recommendation? To heavily invest U.S. tax dollars in renewable energy production in China, because they have a chance to build their burgeoning economy on renewables from the beginning, whereas we are trapped by our fossil-fueled infrastructure and they will only compete with us for those diminishing resources."

...a C-SPAN broadcast in 2005 of a hearing by the House Armed Services Committee on the proposed takeover of Unocal by China Oil. Woolsey testified before the committee on a panel that included prominent neo-con Frank Gaffney and Richard D'Amato of the U.S.-China Security Review Commission."
http://www.energyandcapital.com/articles/hybrid+-oil-electric/405

Brilliant observation! I hope Robert can work Woolsey's comment into his questions somehow. Woolsey's comment is extremely insightful.

Ghawar Is Dying
The greatest shortcoming of the human race is our inability to understand the exponential function. - Dr. Albert Bartlett

My, Mr. Woolsey must never have sent his people to China and looked around. They are already the second largest energy system in the world. There's no building "from the beginning".

Robert, I would ask what API feels is the long-term outlook for IOCs given their lack of access to resources and rising resource nationalism.

I have a good friend who worked for a metro city in the SF bay area for the last 25 years. He managed the whole vehicle fleet for the city, which included not just cars but all city vehicles: dump trucks, street sweepers, heavy equipment, etc.

Two years ago he went to a special meeting that was set up in CA for all important city/county/state functionaries that had major energy concerns and my friend was an attendee. They were not allowed to speak about the event, were essentially gagged, but he did tell me that Woolsey was the headline speaker (and helped create the event) and the sum of what he said was, "We are screwed." I left CA and ELP'ed a few months later.

Hi Cheryl,

I hope you enjoyed your trip, and if you missed the "April Fools" articles, be sure to take a look. The Editors outdid themselves.

re: "...gagged..." Really? I believe you...it's just I have a million questions about this. I wondered who called the meeting? How could they enforce a "gag"? And...does anybody have a conscience? Were his fellow attendees upset? Did they think about organizing (in any way) - or was everyone too scared? Did he believe he'd lose his job if he spoke out? Was this known to him before the event? Did anyone talk specifically about "peak oil"? Did your friend already know about it? (ie., how was the issue presented in the meeting?) etc.

Hi Aniya,

Good trip, but glad to be home since I HATE to fly.

They basically make you sign an agreement that you won't talk about anything you heard at the meeting or you are subject to serious prosecution (and losing your job). It's the same thing they did to cops, firemen, and air traffic controllers after 9/11. Because of this, he wouldn't say much of anything. I got the impression that the gig was sponsored by the feds. What few things he did say to me just confirmed my beliefs in peak oil, as in "we're screwed." He did toss in an aside that they will be uncapping all of those wells that were capped many years ago when they ceased to be productive enough to be economical based on the price of oil.

He was peak oil aware before he went to the meeting and we had discussed that on several occasions.

I suspect the focus of the meeting was how peak oil was going to affect government agencies, especially from the city to the state level, and what help, if any, they could expect from the feds. I also suspect they discussed timelines and the handling of civil unrest. Just guessing--those are the kinds of things that would be very important to these types of employees.

The things that still stick in my mind is the fact that this was TWO years ago and "we are screwed."

Ask them about their assessment of refinery utilization and future needs.

Also ask their opinion about filling and expanding the SPR.

Trying to keep with the theme of 'Energy and the Environment' -

A question along the lines -

Do you believe that Alberta tar sands production can be sustained and grown as predicted without utterly destroying the Alberta ecosystem, water table, and landscape?

Dear Mr Rapier,
I hope this letter finds all is well with you and yours. Thank you for allowing the participation of others.
?)If the value of energy can be determined by EROEI, What value does the Energy industry put on the environment? example: 1 billion, 100 billion, 1 trillion, 100 trillion, Priceless?
?)With the high percentage of the available fossilfuels being in the Sour,Heavy and tar variety or extremely hard to extract, ie ultra deepwater etc, most of these fuels are inordinately high in toxins and extremely destructive to the environment and extremely resource intensive to extract, at what point would the Industry decide these fuels cost to the Environment are to high? Is it Dollars or Environmental?
Thank You for your consideration.
The Fugue

LNG shipments were increasing.

Natural gas was close to a dollar per mcf (m = thousand) in some areas like Malaysia recently. Australia had on paper reserves enough to last about a hundred years at current levels of Australian consumption.

There is quite a lot of gas in the Mackenzie Delta, offshore Arctic Ocean, and Alaska. Russia has enormous supplies of natural gas, but will not develop LNG plants unless prices will stabilize at high enough levels. The cost of building an LNG cooling plant has tripled in recent years. Qatar had stopped issuing new LNG development licenses. U.S. natual gas storage levels are above the five year average after one of the coldest Februaries in a decade.

Suncor estimated that tarsands synthetic oil processing costs about a quarter of barrel of oil energy equivalent. They might be able to use diesel of gasify their coke if natural gas prices move higher than diesel prices. Cannot remember if the cost of processing was caloulated for in-situ or open pit mining projects. Supposidely Venezuela had potentially lower in-situ Orinoco tarsand operating costs, but stakeholders who invested in Venezuela risked great losses due to the seizure of private properties by the socialist government.

Regarding EROEI, would the API care to offer an industry wide graph of past, present and future oil EROEI?

Thanks

EXCELLENT !!

Having the API do EROEI would be a GREAT idea ! From memory, in 1913, 18% of the coal produced was used in producing coal. 1913 was Peak Coal for the UK.

Enhanced oil recovery often trades natural gas for oil. Not such a good trade any more.

The oil industry itself needs this data for internal strategic decisions IMHO. So API should do it. the oil industry shoudl focus on using less oil internally.

Promote more transit use by moving offices next to Urban Rail lines, limit parking for employees (and charge them) whilst giving out free transit passes is one way to save.

Best Hopes,

Alan

How much of Global Warming is due to the amount of energy which has been poured into the world, by the conversion of so much oil and coal to energy?

directly very little, and if that was the only effect it would have no long term impact as the extra heat would be radiated to spave, however the carbon dioxide in the atmosphere has set up a roughly 1 watt/m2 energy imbalance, which (at current consecrations, assuming no feedback to alter atmospheric gases, and sufficient time to achieve equilibrium) will result in about 1.2 degrees warming, even if we stopped burning all FF and forests today.

In reality the actual amount of thermal energy created by combustion is relatively trivial compared to the 1000w/m2 that the sun puts out. (the us receives 46,700 quads of energy from the sun each year)

http://physicsweb.org/articles/world/20/2/3/1
http://www.aip.org/history/climate/Radmath.htm

http://rredc.nrel.gov/tidbits.html

neither of those was the link i was looking for, there are better ones out there

Question: X Prize Foundation offered 10 million dollars for the first privately built spacecraft; they will offer another large sum to "inspire a new generation of production capable, super-efficient vehicles that exceed 100 mpg (or 100mpge)". How does API see this competition? Do they think cars capable of 100 mpg will be needed by the general public any time soon? What would their timeline be for ultra fuel efficient vehicles...2, 10, 20, 30, 50 years?

R2...feel free to change the wording.

How much of an ass-whooping should we give Big Oil for getting the world addicted to cheap oil and causing global warming?