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59 comments on Peak Oil Booklet - Chapter 2: Is This a False Alarm?

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Will on July 17, 2007 - 1:41pm Permalink | Subthread | Comments top

Gail,

In several places you mention high costs. It might help your readers to understand the relevance of Jack 2, for example, if you could put a tentative dollar figure on developing that field. Maybe compare it to something onshore or in shallow water. Perhaps add some thoughts on insuring a deep water investment.

Whenever I talk to folks, they don't get the financials. They simply don't translate drilling 35,000 feet to $6/gallon gasoline.

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BKhere on July 17, 2007 - 1:59pm Permalink | Subthread | Parent | Comments top

Hi Gail,

For a more general audience or for those of us who try to keep up, but are not quite so inside the loop, would you briefly identify:

#2 - Alfa Bank - what/where is this?
#8 - Jack 2 - what/where is this?

Thanks!

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Gail the Actuary on July 17, 2007 - 2:47pm Permalink | Subthread | Parent | Comments top

Alfa Bank is Russian bank. According to this website,

Alfa-Bank has more than 200 branches in Russia and the CIS, and subsidiaries in Kazakhstan, the Netherlands, and the United States.

The Bank’s CIS branch network offers a full range of commercial and investment banking services to corporate and retail clients. Alfa-Bank’s wholly owned subsidiary in the Netherlands Amsterdam Trade Bank N. V. has a European banking license. It primarily serves clients in import/export finance.

I can add "a Russian bank" to clarify this, if this would be helpful.

Jack 2 is an oil field that was discussed on the front page of practically every newspaper in the United States in September 2006. A person got the impression that this field, or perhaps this field plus others like it, was going to save the world from its oil problems.

The Jack 2 oil field is located about 175 miles off the coast of Louisiana in the Gulf of Mexico, in water more than 5 miles deep. Since this is much deeper than other fields, the cost of exploration is extremely high. If a decision is made to go forward, special equipment that can handle the high pressure at these depths will need to be developed. Perhaps I can add something like this to the chapter, since I am certain there are other who are also not familiar with Jack 2.

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oilmanbob on July 17, 2007 - 3:07pm Permalink | Subthread | Parent | Comments top

Gail, the water is about 1 1/2 miles deep, while the total depth of the well is about 5 miles deep. Water that deep has about 10,000 pound per square inch pressure, and divers can't work in it-any subsea work has to be done by robotics or submarines. Its going to be a real technological feat to complete the wells.

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BKhere on July 17, 2007 - 3:27pm Permalink | Subthread | Parent | Comments top

Gail,

Your booklet is a great way to get the word out and preach beyond the "choir." For that reason, I do think these small points of reference are important. My background is media, not geology, still I have no recollection of the 2006 coverage of Jack 2. Oil simply wasn't on my radar last year.

Editing possibilities:

JACK 2
Jack 2, an exceedingly [or similar adjective] deep oil field off the Louisiana coast, represents...

Jack 2, a deep and difficult to reach oil field off the Louisiana coast, represents...

The Jack 2 field, with a well 5 miles below the surface of the Gulf of Mexico off the Louisiana coast, represents...

ALFA BANK
Russia's Alfa Bank is now warning that...

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Will on July 17, 2007 - 3:57pm Permalink | Subthread | Parent | Comments top

More to the point....

Jack 2, for which reliable production technology does not exist...

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Gail the Actuary on July 17, 2007 - 6:25pm Permalink | Subthread | Parent | Comments top

I changed the Alpha Bank reference the way you suggested.

I changed both the question and answer to the Jack 2 question (#8).

Let me know if you like this better.

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BKhere on July 17, 2007 - 10:30pm Permalink | Subthread | Parent | Comments top

Hi Gail,

Yes, that change to Jack 2 makes more sense to me. Will's suggestion - "Jack 2, for which reliable production technology does not exist..." - may be "more to the point" for some people, but I think the specificity that the Q&A now contains is more concrete for the general reader.

Another suggestion: Anytime you reference the past on a web site as you did in the second part of your question: "Newspaper articles last year seemed to say..." it's better to include the "when" -- "Newspaper articles in September 2006 seemed to say..." You can't guarantee when someone will read your brochure, thus "last year" doesn't provide a real-world time frame.

Most people writing on the web don't think to add dates to web sites or in PDF files. In the olden days of print media that annoying work was the job of editors and production staff. Moreover, each edition had a date in an obvious place (May 2007; Vol. 7, Issue 12) that could be referenced.

Given that PO discussion is ALL about time - what did they know and when did they know it and when will life as we know it all go to hell in a handbasket, I suggest being a nerd about dates whenever possible.

Many thanks for tolerating my picky comments.

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Gail the Actuary on July 17, 2007 - 11:38pm Permalink | Subthread | Parent | Comments top

Good point. I changed the reference to September 2006.

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oilmanbob on July 17, 2007 - 2:07pm Permalink | Subthread | Parent | Comments top

Those wells at Jack cost $100 million dollars just to drill, test and case (run pipe), and thats without production equipment and a pipeline. A 20,000 ft well onshore would cost about $4 million dollars, and the production equipment can be bought off the rack or used, and quite possibly is near a pipeline.

its a big difference, and Chevron has not elected to complete the Jack 2 well yet or drill any additional wells, although Devon is going to drill another appraisal well. That may change as oil goes north of $100/bbl.
Bob Ebersole

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R W Reactionary on July 18, 2007 - 12:47am Permalink | Subthread | Parent | Comments top

Gail, thanks. I think this is going to help a some of people who want to learn go from a state of ignorance [not a pejorative in this case] to reasonably well informed about the geological and technical challenges of the production side of peak oil.

To build on what Bob has written, my understanding is that although Jack 2 produced oil [or a reasonable facsimile thereof] during the test, oil was present at that depth only because of an anomolous temperature gradient. The bottom hole temperature was lower than one would normally expect at that depth. Deep wells are way out of my league, but the presence of exploration targets at extreme depth in general portends better prospects for natural gas than for oil.

OTOH, unless there is some other magic at work, gas in that location would never be produced at anything like $6 per thousand.

I suspect[as does Bob] that Jack 2 will be be developed if appraisal wells produce similar results, but cheap oil? Hardly.

Bob, I had not heard that Chevron was throwing in the towel [at least for now.] It makes you wonder what they were hoping to find. Could Jack 2 have actually been a flaming diappointment?

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