<How To Get A Pipeline Built The Oil Drum DrumBeat: August 30, 2007>

45 comments on TWIP (This Week in Petroleum) 8-29-2007

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spudw on August 29, 2007 - 8:56pm Permalink | Subthread | Parent | Comments top

Westexas has a post in todays drumbeat that say 2.4 days of supply in excess of MOL.

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paal myrtvedt on August 29, 2007 - 9:38pm Permalink | Subthread | Parent | Comments top

I often agree with WTs assumtions on things, but here ... no-no

Personally I don’t buy the idea that the”pipeline-content” is part of any statistics – no way. The transit oil is “the last oil” so to speak – and an added bonus to the post-oil tribes..

Of course the US has more than 1-2-3 days of backup supply – that is a no-brainer IMO.

On the contrary if the wrong guy farted in the Gulf – The US would have been empty in a week – because it takes at least a week for the smell to go by the jet stream, and as the strategic reserves are bound up in a small geo-spot, as I understand.. they will not yield much far and fast...

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Gilgamesh on August 29, 2007 - 10:32pm Permalink | Subthread | Parent | Comments top

Sorry for being away for a while, (visited cali, nevada/vegas, and some inbetween states from there to michigan)

I lurked earlier, and WT understands that the MOL (minimum operating level) is the amount of crude needed to transport within the pipelines.

A given pipeline has a minimum and maximum value for transportation, go too high and the pipe will be air or a medium which is does not occupy enough of the tube to actually be pumped at any efficient level by the current pumps installed on the lines. If we are only 5 days worth of oil above that MOL, and 20 days of MOL is needed for regular transport, then if supply falls below the 25 day MOL (this is all hypothetical) the pipe will simply STOP WORKING PROPERLY.

Then all the oil will have to be moved on river barges, rail, and trucks!

The pipes having a min and max flow rate need to be understood as such, you cannot simply say put 10 barrels a day to MN and 45 to NV, the mins are quite high, and dictated by the pumps/infrastructure in use.

cheers, someone correct me if i am wrong here.

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GreyZone on August 29, 2007 - 10:36pm Permalink | Subthread | Parent | Comments top

You are incorrect. The EIA itself has noted that the inventory numbers includes the MOL (Minimum Operating Level) which is what is in the pipelines. If that is the definition that the EIA uses for inventory then who are you to contradict them?

"The greatest shortcoming of the human race is our inability to understand the exponential function." -- Dr. Albert Bartlett
Into the Grey Zone

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paal myrtvedt on August 29, 2007 - 11:32pm Permalink | Subthread | Parent | Comments top

Ohh ,… thx GreyZone and jteehan .. and WT
… in this case I’m sorry for doubting these claims! BUT you didn’t actually provide me any usefull “direct” links for this …. Did you ?

Normally I prefer the idea of having trustworthy sources (knowledge) on my hand, before I argue something… this time “I only used my own logics”..

So what you actually are saying is that, according to EIA, the USA has only 1-3 days of overhead petroleum – I mean just in case of emergency? My man …

And the spite this, all you Americans feel all fine and your president sleeps well at night? How can Wall Street actually be working seemingly normally, with this in mind - ??

Parenthesis :
(I don’t get it; there must be more to these statistics)

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ckaupp on August 29, 2007 - 11:56pm Permalink | Subthread | Parent | Comments top

Our president always sleeps well, after all he is blessed with a total lack of consciousness and an empty conscience. And Wall Street is nowhere near normal. Central Banks have injected over $1 TRILLION in "liquidity" into the markets in the past 2 weeks to prop up the markets from our subprime mess (much more than our compromised press is actually reporting).

I wonder if any of us will be giving thanks at Thanksgiving when we can't afford a turkey because of the bail out of the banking establishment? But I'm sure our Presidente will have a great feast and sleep very well with all of the extra tryptophan.

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paal myrtvedt on August 30, 2007 - 12:38am Permalink | Subthread | Parent | Comments top

hehe yeah ckaupp - but you know what they say on Wall Street (?) - the fundamentals are all fine AND I reckon the US Oil Inventories are the pinnacle fundamental!

- and AFAIK the subprime-ramifications are not yet linked to any oil-issue so to speak - BUT as this posting is on oil-inventories, I'm having that in my puzzled mind here :-)

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artaxt on August 30, 2007 - 10:32am Permalink | Subthread | Parent | Comments top

Certainly not all Americans feel fine. I certainly don't. This crap makes my stomach churn. I have no idea how anybody can go about business as normal after even a cursory review of energy, agriculture, and climate statistics.

- Scott
"Try sour grapes; you might like them."

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GreyZone on August 30, 2007 - 11:49am Permalink | Subthread | Parent | Comments top

Cultural insanity. Historians (if there is any civilization left) will look back on this era with incredulity and wonder how so many people could ignore what was plainly staring them in the face.

The asinine notion that we can treat the combined problems facing humans today with just the "free market" (ha! what a damned lie THAT is!) to solve them is beyond comprehension. If we were actually at war, the "free market" would have long ago been damned and we would have reacted to that as a crisis. And that is where the world is now - facing a combined crisis as serious as any global war could be. The problems facing us are huge and need addressed as the emergencies which they are, not as "business as usual" opportunities for one group of apes to screw another group of apes.

"The greatest shortcoming of the human race is our inability to understand the exponential function." -- Dr. Albert Bartlett
Into the Grey Zone

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jteehan on August 29, 2007 - 11:10pm Permalink | Subthread | Parent | Comments top

I didn't find exactly what you were looking for, but the title of the EIA report is Crude Oil Stocks at Tank Farms and Pipelines.

http://tonto.eia.doe.gov/dnav/pet/pet_stoc_cu_s1_m.htm

Pipelines are indeed used in the calculation.

According to the NPC report, Lowest Operational Inventories are:

Crude 260-270M
Gasoline 185M
Distillates 85M

I didn't copy the report because it's 96 pages, but it's (officially anyway) everything you ever wanted to know about petroleum storage. (About page 53) http://www.npc.org/reports/R-I_121704.pdf

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CLZ09 on August 29, 2007 - 11:36pm Permalink | Subthread | Parent | Comments top

I have tended to be sceptical of comments by Matt Simmons and others that it will be shortages rather than high prices that will mark the crisis when it comes, but cutting inventories so close to the bone really makes it much more likely that it will indeed be shortages that finally gets people's attention.

Realisticaly, something needs to happen because here in LA, while people are bummed about the real estate quagmire, they are still happy driving the big SUV's the cash out refis bought. There just isn't any sense that $2.75 gasoline won't go on forever. Unless that price moves, or supplies run out, or people become unemployed, they will continue to feed the beast.

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Nate Hagens on August 30, 2007 - 12:46am Permalink | Subthread | Parent | Comments top

Great moniker!

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westexas on August 30, 2007 - 11:47am Permalink | Subthread | Parent | Comments top

As I noted yesterday, if we use the 185 mb number of the MOL for gasoline, we have less than one day of supply in excess of MOL. This means that, as noted above, there have to be spot shortages already occurring around the country.

In regard to crude oil, we have about 4.3 days of supply in excess of MOL, versus around 8-10 days that we used to carry in the Eighties to early Nineties. Presumably, the industry has gone to a Just In Time inventory situation, because of the SPR.

So, we don't have any short term crude oil supply problems, because of the SPR. However, the risk we run is that the SPR will die a "death of a thousand cuts," as we slowly drain it because of declining world crude oil exports.

As noted above, gasoline is a different situation, and I would expect to see reports of empty gas stations this weekend.

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speek on August 30, 2007 - 2:22pm Permalink | Subthread | Parent | Comments top

Is the gas-station business run communistically or by collusion? That would be the only way I could comprehend shortage resulting from such low levels of gasoline inventory. Were it a free market, I'd expect prices to run up to the point where the shortages reliably occurred in the poorest areas, and not "randomly".

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westexas on August 30, 2007 - 2:56pm Permalink | Subthread | Parent | Comments top

Actually, I suspect that we are looking at spot shortages because prices are too low, encouraging consumption. It's pure speculation on my part, but I wonder if major oil companies have been deliberately trying to keep prices at the pump down.

In any case, I'm not an expert on this issue, but it's really not that easy, for a number of reasons, to shift supplies around the country. We actually experienced some closed gasoline stations here in the Dallas area in the spring, when distributors moved gasoline out of the Dallas market to Chicago, but they had to do it with caravans of tanker trucks.

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musashi on August 30, 2007 - 5:41pm Permalink | Subthread | Parent | Comments top

If one reads George Ure then one would know that his people expect something to happen over the weekend.

Now reading your post what popped into my mind for no reason is "what if a statistically significant number of people traveling over the holiday couldn't find gas to get home?"
Or just some of them with the MSM playing Eveready Bunny?

Charlie Fox in capital letters, eh?

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45 comments on TWIP (This Week in Petroleum) 8-29-2007

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