Re: From Russia With Love

Note that this chart shows declining natural gas production. It does not show the much sharper drop in net gas exports, i.e., the Export Land Model.

In North America, we are looking at a similar situation regarding Canadian natural gas exports.

The article has a "nice" graph for US natural gas as well:

For more excellent coverage of Gazprom troubles, see also the Bloomberg piece that Whiskey and Gunpowder refers to:

Gazprom May Thwart Putin Drive for Russian Energy Dominance

The situation in Canada is similarly bleak. The National Energy Board is no better at forecasting than the EIA.

Canadian wells peak quickly and decline at an alarming rate. The NEB is suggesting we will have flat NG production with a small YoY increase from CTL.

Meanwhile, the MacKenzie pipeline is stalled, the government has put an end to the favorable tax structure the NG producers relied on, new NG is stranded in difficult terrain, costs are skyrocketing due to the tar sands, and drillers are idle this year.

My spouse is in Ft. McMurray this week on a federal government fact finding mission. She has met with oil industry executives, community groups, native groups, provincial and municipal leaders. Her focus is primarily on the municipal situation, which frankly, appears to be a disaster.

When she gets back I'll write up anything she shares with me.

Thus far, I've learned that the average income in Ft. McMurray is $81,000 and the poverty line is $71,000. Some days the local schools have to shut down due to the strong odors from the tar sands.

The most amazing thing to me about the tar sands play are the huge, virtually permanent, wastewater ponds, filled with contaminated oily wastewater. No one I know in the Texas oil patch would do that for two reasons: (1) It's irresponsible and (2) The regulatory authorities wouldn't let us do it anyway.

Good article by Byron King (2006 ASPO-USA) on the Tar Sands Play: http://www.energybulletin.net/22358.html

olol 25km^2 of tailing ponds!

John,

Could you email me at Stoneleigh2006(at)msn(dot)com please?

Thanks

I would like to draw your attention to a post of mine last April 28th.

High Speed or just 110 mph Rail between Calgary and Edmonton ?

There has been some talk (and the province has even bought spaces for stations) of true high speed rail between Calgary and Edmonton. Cost Can$12 billion.

Ed Tennyson (retired transit expert with a nearly epic resume) posted the following:

Since money is the problem, be rational about it, Calgary and Edmonton do not have Japan's population, You can not do what they did or what France did. No one can juatify $12 billion for this, Those opposed can prove it should die.

I am not opposed to good passenger train service between Calgary and Edmonton but it must fit the market.

You will need electric eMU cars with very comfortable appertances but no locomotives,. Cruising speed would be 110 miles per hour, Just double track the present railroad and upgrade the track quality, New Jersey eMU cars have cruised at 104 miles per hour for 30 years, Getting to 110 is no big deal but that is the limit for standard track and power bills Such cars cost only $ 400 per hour to operate and maintain and can average about 88 miles per hour so the cost per passenger-mile will be only 12 cents per-mile using a conservative load factor wth some empty seats on most trips. Albertans will probably pay 25 cents per mile for such service so there will be 13 cents per passenger-mile to amortize the capifal. We can't subsidize everything.

With two million annual passengers there might be $ 37 million a year to support the capital investment. That would support $ 400 million in bonds, It would save a lot of oil that could be sold to tne USA for a good price to help pay rhe rest.

E d T e n n y s o n

Using standard costs, I came up with less than US$500 million to build a second track (with extra sidings), the stations, barn, a fleet 40 EMUs and to electrify the line.

About 2 hours city center to city center, Add a few minutes for a stop in Red Deer. Phase II could be from Edmonton to Fort McMurray.

Just a real world example,

Best Hopes,

Alan

I know of an Alberta utility that would be willing to install and maintain the electrical infrastructure and sell "power at the wire". Perhaps Phase II, Edmonton to Ft. McMurray could be Phase I ?

My eMail address is Alan_Drake at Juno dott com.

Best Hopes for Electrified Transportation solutions,

Alan

Some sort of mass transit is needed. Highway 63 is bumper to bumper. The current plan is to double it. My spouse was very impressed with the mayor. Perhaps she will be willing to put you in touch with her and the two of you can take it from there.

Stoneleigh, give me a few days and the three of us can get together. I'll email next week.

Right now, I have to go pick her up at the airport. Spent the morning cleaning the house :)

Alan,
Regenerative braking with trains and hills? Does regererative braking already exist such as in MAX our light rail?

It is more or less standard on modern light rail lines. But I am not sure about MAX. Stops are the biggest source of regenerated power.

Portland Streetcar did not have it at first but they were talking about adding it during a tour I was on.

Best Hopes for Energy Efficiency,

Alan

Dave Cohen's keypost "Running With The Red Queen", on this site about 6 months ago, covered this issue very thoroughly.
The fast decline rate coupled with the drilling slowdown this year is why I expect gas prices will go through the roof if a hurricane hits the central/northwest quadrants of the Gulf of Mexico, and probably by next winter anyway. The Rigzone survey linked on this site a couple of days ago said that most oil companies were expecting the same-prices of between $10-$15 mmbtu over the next five years, contrasted with the current price of $8 mmbtu.

Looking at this NG graph it seems pretty obvious that is a big difference between the pre-1990 well production rates and today's well production rate...

But WHY are they different?

Does the mechanics of the well or pipeline connections just let the gas flow faster?

Are the deposits just that much smaller?

Or does the "Pre-1990" portion of the graph just contain so many years worth of wells all lumped together that the all the skinny little tails join together to make a more healthy looking long-term flow than from the 1 year sections?

Greg in MO

Are the deposits just that much smaller?

Yes, I think so. The lowest-hanging fruit is picked first.

The flow of a gas through rock is much different than the flow of a viscous fluid, with the consistency between motor oil (good) and cold syrup (not so good).

Hopes that helps,

Alan

Speaking of Russian gas....
I am puzzled that the issue of Russian gas to Europe has not been brought up in the context of the recent brouhaha about NATO putting missiles in Poland and Czech Republic. Why can't Putin simply tell these countries, "You get missiles, you get no gas."

He can but that means lost revenue for himself as well. It is far better for him that he "play the game" by trying to negotiate and after all that fails, when he finally does take action it can be seen as caused by the American position.

If the US & NATO are truly concerned about rogue mideast states launching missiles, then Putin's newly proposed location for an anti-missile shield makes perfect sense. So there is that angle for Putin as well - if a missile shield gets built and actually works, he may want his nation shielded too.

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

If the US & NATO are truly concerned about rogue mideast states launching missiles,...

Impossible. No one is worried about Iranian or N Korean missiles. It would be instant suicide for Iran even if she were so inclined, but there is zero evidence that she is. That N Korea even gets mentioned in a European military context shows how unreal the whole thing is.

I don't understand all the nuances of the games being played. But they are dangerous, maybe more so than during the old Cold War.

Note the qualifier "if"... I don't believe the US and NATO are thinking seriously about rogue state missiles as much as they are thinking about Russian missiles but they don't want to admit that.

Consider several facts. First, Russia had a working ABM system that ringed Moscow under the old ABM treaty. It was rather brute force but it probably would have worked. It used, as I recall, nuclear warheads to destroy incoming nuclear warheads. The amount of fallout from such an action at high altitude would have been nearly zero. Of course there would have been EMP, etc., but Russia probably figured it would be easier to replace electronics than completely rebuild a destroyed city. So Russia has prior experience with working ABM systems.

Next consider how you would react if you believed that the anti-missile system would not work. Your opponent would be blowing a huge wad of resources and capital on a useless white elephant so you would want to find ways to encourage that since resources spent on the white elephant project are resources that are not spent on projects that might truly threaten Russia. But Russia has not acted like that. Instead Russia, probably based on their prior ABM experience, sees this as a threat to them.

Now how could this threat manifest itself? If Europe felt that it's well-being was threatened by Russian activity in the energy market, NATO might declare such actions as hostile. Well, lo and behold, NATO has already done exactly that. And that might lead (not immediately but ultimately) to military confrontation with Russia.

Well the problem then is that Russia has all these missiles, don't they? So to make the possibility of a war against Russia winnable, you need your missile shield so that both your conventional forces and your nuclear forces can be used concurrently (or threaten to be used) against Russia.

This appears to me to be the general train of thought in the Bush administration and in western Europe regarding foreign policy towards Russia. I think it is wrong, bone-headed, and extremely dangerous but hey, I am not the guy in the White House so my opinion doesn't matter very much.

In fact, IF the US and NATO were worried about rogue Middle East missiles disrupting Europe's economy then it becomes almost a mandatory thing to include Russia behind the missile shield to ensure the safety of Europe's energy supplies, doesn't it?

So no, I don't believe the official line on this and yes, I agree they are playing some very dangerous game, probably something along the lines that I have outlined above. And this may be why Putin has responded as he has. Russia probably rightly now sees itself as a major factor in Europe's overall economy even if it has not been offered NATO membership. And thus, by that reasoning, it deserves the same shield if one is going to be built. And contrariwise, if a shield is built that excludes Russia then I must conclude that the shield is against Russia as well as any other named threat.

And strangely enough, even though I am an American, I agree with that position.

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

Putin has responded as he has because he understands that ABM systems are essentially offensive systems. They make it so that if you attack, targeting the other side’s retaliatory force, you are able to use the ABM system to handle the few missiles that survive.

The ABM system does not do you much good as a defensive system. If a major power attacked first, they could easily overwhelm your ABM system. If a rouge state attacked first, they would be much more likely to use a sneak attack so that you might not know against whom to retaliate. Like put it on a third country freighter and sail into New York harbor. The idea that such a country would initiate a direct missile attack from their territory against a US or allied target is not credible. But if Bush wanted to preserve the ability to attack Iran, having an ABM system would potentially help a lot.

Putin is right about the placement. In Central Europe, we are threatening him. In the Caucasus, we could only use it again countries in the Middle East. I think it is clear to Putin that that is why Bush will not go along with his idea but it is good for Putin to call Bush on it.

"ABM systems are essentially offensive systems. They make it so that if you attack, targeting the other side’s retaliatory force, you are able to use the ABM system to handle the few missiles that survive."

This works only if the other side doesn't have the same thing.

If they do, then an opponent's ABM system then the certainty of completing an attack to successfully remove the other side's retaliatory force is far diminished. Of course both sides have submarines too.

Let's come back to the big picture.

Russia is pursuing and building a new, modern strategic nuclear weapons system with improved capability---and now threatening Europe with it.

The U.S. hasn't done so since the (supposed?) end of the cold war.

Their existing Topol-M missiles are already better than any missile the US has, and the new missiles they are building will be better still.

Amazing that people can believe Putin's disingenuous crap.

Now, I believe that the US ABM is probably an enormous waste of money.

Unfortunately the new Russian missiles are likely to work very well.

Hundreds of half a megaton nukes are genocidal insanity whoever has them.

I think Russia itself is the prize, and has been for 150 years. At 17 million square kilometers, it is almost 12% of the world's land area. If you count the breakaway Central Asian republics, it was much more than that.

Before the invention of the railroad, Russia was too vast to be an imperial prize worth conquering, even if your armies could march halfway around the world, how would you bring that wealth back home? Want to ride a horse from Venice to Mongolia? Takes a special kind of people to do that.

We here all know that the Persian Gulf wars are about oil and natural gas, as well as the strategic position of the lands in question.

I think it is a mistake to think that the US Government is securing those lovely fossil fuels for the benefit of its people. It wants them for the political leverage it gives them in Europe, Japan, and China.

If I were making a documentary, I would start with a cold war map of the USSR, including Eastern Europe. Lots of red countries, with a bunch of blue countries (the "free world"). Then I would show the map after the collapse of the USSR: Eastern Europe becomes pink, then pale blue, then bits of it become dark blue. Parts of Central Asia become pink, then pale blue. I suppose you would technicaly color Afghanistan and Iraq dark blue, but they seem to be getting paler all the time. Egypt was probably pink years back, but is a pale blue. Moving the Ukraine from red to pink to pale blue is an enormous victory for the blue team.

Instead of red forces in Eastern Europe pointing at the blue countries, you have blue forces there pointing back at Russia. All without a thermonuclear war.

The Great Game.

Now there are (or are going to be) anti-missile-missiles in Eastern Europe. This gives two chances to shoot down a Russian missile. Once there (best), once again as it reaches the US (not as good).

Shooting down a handful of missiles is truely a useful defense against a North Korea, who can only manage to fire a handful. It is only an inconvience to a massively armed Russia.

Shooting down a substantial fraction of the Russian missile force is a different matter. You can expect to take out a large fraction of the Russian missile force with a first strike. Your anti-missile defenses only need to take out a majority of the missiles that survive.

We move from Mutually Assured Destruction to a "winnable" first strike capability.

They probably think they can dominate Russia once both sides realize the situation.

I don't think so. But hey, I'm not in the White House either.

This is also why I am convinced we will invade Iran, suicidal as it seems. Without it on the blue side, the encirclement is incomplete, and the US does not have the energy resources to hold Europe and Japan.

Putin: Missile shields 'could be in Turkey or Iraq'

“In this case, there will be no need to build a radar in the Czech Republic and deploy missile interceptors in Poland,” Putin said. “They could be deployed in the south – I’m speaking hypothetically since it’s necessary to conduct talks with relevant nations – possibly in US Nato allies, such as Turkey.”

“Or it could be Iraq – what they have waged the war for? There would be at least some benefit coming out of it,”