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DrumBeat: January 20, 2008
Posted by Leanan on January 20, 2008 - 9:01am
Topic: Miscellaneous
Mexico closes main oil ports due to bad weather
MEXICO CITY, Jan 20 (Reuters) - Mexico closed all of its main oil exporting ports on Sunday due to bad weather, the transport ministry said on its Web site.The Gulf of Mexico ports of Dos Bocas, Cayo Arcas and Coatzacoalcos, which ship around 80 percent of Mexico's daily oil exports, were shut. The Pacific port of Salina Cruz was also closed.
Mexico is the world's No. 9 exporter of crude oil, shipping an average of 1.7 million barrels per day in 2007, and a top-three supplier to the United States.
Some say oil-gas bear some Katrina blame
Service canals dug to tap oil and natural gas dart everywhere through the black mangrove shrubs, bird rushes and golden marsh. From the air, they look like a Pac-Man maze superimposed on an estuarine landscape 10 times the size of Grand Canyon National Park.There are 10,000 miles of these oil canals. They fed America's thirst for energy, but helped bring its biggest delta to the brink of collapse. They also connect an overlooked set of dots in the Hurricane Katrina aftermath: The role that some say the oil industry played in the $135 billion disaster, the nation's costliest.
Nigeria’s resurgent oil diplomacy
Russia is not alone in seeing oil as a means to transform its global standing. Nowadays, the mantra of President Umar Yar’Adua, who took power in June 2007, following controversial elections, is to transform the country into one of the world’s 20 largest economies by 2020. Yar’Adua and his Peoples Democratic Party (PDP) are struggling to stamp their authority on an unwieldy and restive country of 140 million people, and the government views rapid growth as a means to achieving that aim.
Seeking Ways to Help the World’s Poorest
Participants are being sought for the second International Development Design Summit, which will be held next summer at the Massachusetts Institute of Technology. The first such workshop, which I wrote about last year, saw 40 students, engineers, farmers, professors and others from 18 countries hunker down in groups to devise simple, affordable ways to clean water, chill produce, generate electricity, and solve other problems facing the world’s poorest communities.The project is part of a broader movement to shift priorities of inventors and designers away from serving the needs of the world’s top 10 percent and toward those of the several billion people with scant income, scarce food and water, and slim prospects.
America's energy future and the reality of $100-per-barrel crude oil
America has the ability to postpone shortages of petroleum for years, by allowing drilling on restricted federal lands and in offshore federal and state waters that are now off-limits to drilling. This will allow a gradual inclusion of supplemental fuels without suffering another major oil shock as in 1973. The best prospective areas for finding new U.S. oil reserves are in: 1) Northern Alaska's Arctic National Wildlife Refuge, 2) the Pacific states' coastal waters, 3) waters presently restricted in the Gulf of Mexico, and 4) the Atlantic states' coastal waters.
Mississippi soon will be on the front lines of the nation's defense against a disruption of oil supplies that would cause an energy crisis.Congress last month approved a massive spending bill that contained $25 million to plan and purchase land for an underground facility that would hold 160 million barrels of oil in 16 salt caverns in Richton.
Protests over power leave four dead in Bihar
PATNA, India (Reuters) - At least four people were killed and dozens injured in overnight clashes between police and villagers protesting poor power supply in Bihar, one of India's poorest and most lawless states, police said on Saturday.Tensions over long periods of power outage in the Kahalgoan area boiled over on Friday when protesters turned violent, prompting police to use batons and open fire.
Gaza power plant begins shutting down
GAZA, Jan 20 (Reuters) - Gaza's main power plant began shutting down on Sunday due to a fuel shortage caused by Israel's closure of the Hamas-controlled territory's borders, a move taken in response to Palestinian rocket attacks.
Jamaica: Debate over ethanol heats up as food prices rise
Environmentalist John Maxwell is staunchly against Jamaica's endorsement of biofuel production, noting that it comes at too great a cost."We should be growing food and looking at solar and wind energy and forget all this craziness about biofuels. It is madness. You can't be growing gas while people are starving. It doesn't make any sense," he told the Sunday Observer.
Is this the end of cheap food?
Food prices are rising faster than they have at any time since the mid-1970s. The middle class in Britain has barely noticed, but here in one of the poorer corners of Scotland, people are feeling the pain.Everyone in the stripped-down warehouse of Lidl, where the posters promise, simply enough, '40 per cent cheaper!', had a story to tell. Shubnam Rasoul, 23, out shopping with her husband, Shahid, and their two small children, said: 'I never buy anything for myself any more. And I never buy anything that's full price - it's all in the sales.' Shahid, who works in a Leith butcher's shop, said that the price of their lamb is up 10 per cent since last month. 'We spend £200 a month now on groceries for the family,' he complained. Probably 25 per cent more on a year ago. It's frightening'.
The Construction Site Called Saudi Arabia
Amid a forest of cranes, towers and beams rising from the desert, more than 38,000 workers from China, India, Turkey and beyond have been toiling for two years in unforgiving conditions — often in temperatures exceeding 100 degrees — to complete one of the world’s largest petrochemical plants in record time.By the end of the year, this massive city of steel at the edge of the Red Sea will take its place as a cog of globalization: plastics produced here will be used to make televisions in Japan, cellphones in China and thousands of other products to be sold in the United States and Europe. Construction costs at the plant, which spreads over eight square miles, have doubled to $10 billion because of shortages in materials and labor. The amount of steel being used is 10 times the weight of the Eiffel Tower.
No need for OPEC to boost output at Feb meet - Qatar
ABU DHABI (Reuters) - Qatar's oil minister reiterated on Sunday that the oil market is well supplied and there is no need for OPEC to boost output at its February 1 meeting.In the past week, U.S. President George W. Bush and his Energy Secretary Sam Bodman have both urged the producer group to pump more oil to ease the impact of record prices on the world's largest economy.
LE ROY, Ill. - This expanse of central Illinois is flat as a pancake, with corn and soybean fields stretching to the horizon, interrupted only by a smattering of small towns.But it is also a 175-mile missing link in Enbridge's Alberta-to-Texas pipeline network to transport gooey, thick bitumen oil sands to Gulf Coast refineries.
'Digital' oil fields could increase Mideast production and reserves, says BP
The Middle East oil & gas producers could substantially boost production and reserves through investment in technologies designed to 'digitize' oil fields by converging drilling, exploration and digital control techniques with standardised communications systems.
Shuaiba refinery repairs may need a week
(MENAFN) An engineer at the Shuaiba oil field in Iraq announced that repairs on the refinery may take an entire week to complete, Iraq Directory reported.Repairs were needed after a fire broke out causing extensive damages to the refinery, the engineer further pointed out.
The oil producing countries, which have been accumulating mountains of cash in the last few years, are the real heroes and saviors of big financial houses. Two large financial institutions Citicorp and Merrill Lynch were saved by Arab oil countries and some rich Asian nations. Together Kuwait, Abu Dhabi, Singapore and South Korea contributed more than $21 billion to save the two banks from crumbling due to nearly $69 billion sub prime mortgage fiasco in the USA.
India: Oil industry expects fund for energy-efficient technologies
NEW DELHI: With international oil prices touching the $100 per barrel mark, oil firms are seeking duty rationalisation and budgetary support for switching over to energy-efficient technologies, a FICCI survey said.In its survey on 'Emerging oil price scenario and the Indian industry', the chamber said companies expect government to announce a 'new fund' in the forthcoming budget for providing subsidised loans to the industry for adoption of energy-efficient and non-oil technologies.
Contrary to the views of the majority of the commission, we do not believe Washington is capable of spending billions more of Americans' money wisely when it comes to transportation investments. Anyone who doubts that should review the more than 6,000 earmarks in the last transportation bill or visit the new Woodstock Museum in upstate New York.
West Africa: Food Prices Still Climbing, Crisis Feared
Food prices at markets across West Africa are already high for the time of year and are still rising, market analysts warn, suggesting aid agencies should prepare for a potentially serious hunger crisis later in the year as people across the impoverished region may not be unable to afford to buy enough to eat, despite food being available.
Slower boats to China as ship owners save fuel
BERLIN (Reuters) - Oil at more than $90 a barrel is concentrating minds in the shipping industry. Higher fuel costs and mounting pressure to curb emissions are leading modern merchant fleets to rediscover the ancient power of the sail.The world's first commercial ship powered partly by a giant kite sets off on a maiden voyage from Bremen to Venezuela on Tuesday, in an experiment which inventor Stephan Wrage hopes can wipe 20 percent, or $1,600, from the ship's daily fuel bill.
Why green power has left us all in the dark
Once we were offered an easy way to help save the planet: ask an electricity provider to supply you with power from renewable sources and you would reduce carbon emissions and so tackle climate change. But doing the right thing has turned out to be more complicated.There are growing concerns that 'green tariffs' reduce carbon emissions by far less than promised - a point accepted even by government. Supporters still argue they are worthwhile because they boost demand for renewable energy in future. But even that is now being questioned: demand is already massively outstripping supply, leading providers to turn away big customers.
Eco-conscious Sundance turns deeper shade of green
PARK CITY, Utah (Reuters) - When former Vice President Al Gore premiered documentary "An Inconvenient Truth" at the 2006 Sundance Film Festival, he inspired not only greater awareness of global warming, but the general greening of this top movie event.Two years later, almost everything at the key gathering for independent film backed by Robert Redford's Sundance Institute has gone eco-friendly, eco-conscious or just plain eco-crazy.
Japan to offer environmental technology to Africa, Asia: report
TOKYO (AFP) - Japan will provide technological support for developing countries in Africa and Asia to help them fight against climate change and infection diseases, a newspaper reported on Sunday.
There's a short interview with Shell's CEO, Jeroen van der Veer, in today's NYT.
Oil Demand, the Climate and the Energy Ladder
E. Swanson
Re: The Construction Site Called Saudi Arabia
What is odd about this article is that the only reference to net oil exports that I saw was a suggestion that Saudi Arabia would need oil exports more than ever to finance its construction boom and because of demographics (something like six to seven kids per family).
The following graph from our top five paper shows what would happen to Saudi net exports if their total liquids production had stayed flat at 11 mbpd (in reality, 2006 and 2007 production fell relative to 2005) and if their consumption increased at the 2005 to 2006 rate of increase (current data suggest that the rate of increase in consumption accelerated in 2007):
Net oil exports would be the difference between the flat line production curve and increasing consumption. The overall long term net export decline rate (2005 to 2030) would be about -10%year, starting out slowly and accelerating with time.
http://graphoilogy.blogspot.com/2008/01/quantitative-assessment-of-futur...
My September, 2007 estimate for 2007 Saudi net oil exports (I asssumed a fourth quarter increase in production):
http://www.theoildrum.com/node/2975
Declining Net Oil Exports Versus “Near Record High” Crude Oil Inventories: What is going on?
(9/14/07)
Hi Westexas,
What do you think will be a realistic world net exports decline rate, once they start to decline?
I am trying to work out what will happen to availability of gasoline and diesel in 'net importer' countries - how quickly it will approach zero.
I am assuming that some uses of a barrel of crude will take priority.
This means that things with high priority take more than their fair share of the declining resource.
ie.: unpolluted fresh water is the greatest need, agriculture next, then military, then hospitals and so on.
I also assume that because world population is growing exponentially so also will the energy (and oil) requirements for fresh water, irrigation, food, fertilizer etc.
The EIA showed a small overall net export decline in 2006, that I strongly suspect accelerated in 2007.
Note that our mathematical ELM showed that its post-peak net exports would only be 10% of post-peak production, with consumption equal to 50% of production at peak.
For the world, perhaps the best way to envision the situation is using an exported production to export ratio (EP/E). Our middle case is that the post-2005 top five net exports would only show cumulative net exports of about 100 Gb, with annual 2005 net exports of about 23 mbpd. In round numbers, the top five are about half of world net exports.
Let's assume the bottom half post-2005 cumulative net exports are on the order of 150 Gb. So, the total post-2005 net exports, based on this assumption and our middle case for the top five, would be about 250 Gb. At the 2005 rate of export, the remaining world net export capacity would be gone in about 15 years. Of course we don't produce or export at maximum capacity and then go to zero in one year, but it does give one a pretty good idea of the problems we are facing with post-2005 net export capacity.
(EP/E)? Is that like a Hubbert linearisation plot?
I am only looking ahead to about 2020, since that is the planning timescale the UK government is using to start to change things like 'new nuclear' and windmills.
Except that it is forward looking. It's analogous to the standard Reserve to Production Ratio.
Back to the ELM:
Production at peak: 2.0 mbpd
Consumption at peak: 1.0 mbpd
Remaining recoverable reserves at peak: 17 Gb
Remaining cumulative net exports at peak: 1.7 Gb
R/P = 17 Gb divided by 0.73Gb/year = 23 years
EP/E = 1.7 Gb divided by 0.365 Gb/year = 4.7 years
Because of declining net exports, ELM hit zero net exports in 9 years.
The top five (middle case) export numbes are as follows:
EP/E = 100 Gb divided 8.4 Gb/year = 12 years
Our middle case shows the top five approaching zero net exports in 26 years (from the 2005 peak).
So, as a mid-case would it be reasonable to expect total world net exports to be reduced by ~50% by 2020 (in 12 years) - that's ~5% a year decline rate (from 46 mbpd in 2005 to 23 mbpd in 2020.)
By 2020 I am expecting world population to be around 7.6 billion, up from 6.6 billion today, a 15% increase overall - not sure yet what percentage it will be for net importer countries.
Sounds reasonable, but a key point to keep in mind is that the year to year net export decline rate starts out slowly, and accelerates with time, but once the decline kicks in, the volumetric decline rate tends to be approximately linear, i.e., close to a fixed rate per year.
So, if the overall world net export decline really kicked in, in 2007, one might expect the decline to be on the order of 1.5 mbpd per year. The 2006 and 2007 data suggest that the top five are dropping at about one mbpd per year in 2006 and 2007.
The one problem (or maybe I should say refinement) with the ELM, is that the indigenous demand is driven by profits from the exported oil. As the amount of exported oil decreases, the consumption growth -and possibly consumption itself should be affected. Of course higher per unit price might delay this effect. Two more complicating obvious factors exist. If an oil exporting country is smart they won't subsidise local consumption, as local consumption decreases export revenues. Also if the oil exporters SWF does well that can become a major source of funds for domestic consumption.
Who really knows what the future will be?
I would like to know what it can't be - that eliminates some scenarios maybe.
My opinion is that any exporter would not be sensible to export more than is required to balance their imports - they need their oil to last as long as possible.
So, that does not necessarily mean growth of exports of crude oil will continue to be as the importers require for their BAU.
For all the reasons you have mentioned what the future will not include is exponentially increasing population. The peak is now. A very short plateau if there is a plateau at all.
The Saudis' strategy is eminently shrewd. Take away more of Big Oil's value stream, capture those extra tens of billions of dollars in chemicals, refining and plastics profit for itself, and thus extend and expand the life of its cash cow. Kuwait, Qatar and the UAE are doing the same in chemicals and refining. Russia and Kazakhstan are as well in terms of attempting to capture pieces of Europe's downstream power and refining sectors.
In the big picture, it fits into the thesis of Paul Kennedy's classic Rise and Fall of Great Powers: They are rising, we are falling.
Steve LeVine, author
The Oil and the Glory
http://www.oilandglory.com
I agree 100%.
Suadi's ARAMCO bought GE's plastics division a year ago to fit this goal of controlling the market of materials and products made from oil. Much of this internal consumption in the coming years will be for the production of things made from oil. Another industry thus lost by the US and handed over to an oil rich country.
I think Saudi Arabia's move to diversify into industries like plastics and fertilizer is not just a unilateral move on their part; the U.S. companies in these industries are looking to move their plants to where natural gas and oil are still relatively plentiful and cheap. North America is running low on natural gas; these industries can't get cheap gas here anymore. It's a lot cheaper to move the plant to where the gas is, than try to bring LNG here.
Big deal; they'll be lucky to last 10 years like this. A massively overgrown youthful population in the middle of a desert totally dependent on a depleting resource? I don't envy them their oil and I don't see how they expect to maintain this transitory state for long at all.
You may well be correct, I agree it will happen eventually, but will it be in the next 12 years (the planning outlook period for my government) - it is not clear how soon 'peak sapiens' could be, for food and water reasons. At the moment it is all down to guesses and opinions - the reason I am asking these questions is to try and see what 'can't-possibly-be' in a bit more detail - what is the best case?
I think, for a while at least, fresh water and agriculture will, if at all possible, get all the liquid fuels and chemicals they need - whereas aviation and long range tourism, as an example, will be at the bottom of the list of people to get adequate supplies of oil.
From the EIA statistics almost every 'net exporting' country is already showing the ELM effect, which is bad enough for 'net importers' (especially those that import close to 100% of their needs!), but then add in the fact that certain parts of the struggling economy will get more than their fair share ... hmmmmm!
I also think that some areas of the world can be self-sufficient in food for quite a while, just like some nations can be self-sufficient in fossil fuels for quite a while.
For all the things that are going to peak, we won't peak everywhere in the world simmultaneously - the trick will be to avoid as many as possible of the peaks coming to a place near you soon!
There are already several countries in the world who are post 'peak oil', watch and learn what the failure modes are - then maybe you will have a viable plan B when it happens to you?
Upthread you mention a guesstimate of 7.6 billion by 2020. So far as I can tell no government anywhere is making preparations to feed 7.6 billion mouths. There are no preparations to make.
I suppose theoretically it would be possible if we ate drastically less meat, if the weather always cooperated, if if if. Do you expect that will happen? Do you think it could happen? No one here knows the future, you just asked what possibilities could be eliminated and my guess is that further population growth is about the least likely event you might plan for.
Or, to extend your comment to a more general truth:
"no government anywhere is making preparations"
France may be going 15 kph in the right direction, when they should be doing 125 kph, but I think thye (and Switzerland) can be said to be making preparations.
On 1/1/06, President Chirac announced plans to electrify "every meter" of the French rail system and "burn not one drop of oil"when completed in 20 years.
In November of last year rent-a-bikes were brought to several mid-size cities. (First half hour free). And the numbers are increasing rapidly in Paris etc.
France has just started work on a new generation of nuclear reactors.
A second Phase of TGV building has been announced (a multi-decade effort) as the last leg of the first phase nears completion after almost 30 years.
France plans for 1,500 km of new Urban Rail (in the next decade ?)
Speeding up existing programs is a much easier, and faster, than starting from scratch.
Their plans may not be fast enough, but they have been working steadily on this for several decades (one could say since 1973) and have a lot already in operation.
Best Hopes for the Prepared,
Alan
Yes, France is doing all that.
France doesn't control the weather and France's agricultural output is both sporadic and very much at risk.
France has had it's neck out for years supporting small farmers and local production and it doesn't feed 7,6 billion. Southern France is drying out, the forests are burning and no matter how much one admires France there is just no direction they could take that addresses the problem.
Switzerland is in decline. Their environment is being trashed by GW. Tourism needs oil, tourism needs snow. Switzerland may survive in some form but it won't be pretty.
WT where and when are you talking in Scottsdale?
Geoff
It's a private gig sponsored by Casey Research:
http://www.caseyresearch.com/
You can contact them for details.
thx WT I will try and catch them on Monday. Love the work you and everyone puts together on this site.
I am active with ASEA (Arizona Solar Energy Association) out here in Phoenix and ff gets one session every year at our monthly talks.
Cheers
Hi Peaking in Phoenix
Please send me an email if you would like to help deploy solar powered mobility networks in Tucson. Solar collectors 3 km long and 2 meters wide to provide a Horizontal-Elevator through a retirement community and two shopping areas. bill.james@jpods.com
We would love to have participation from the ASEA. Bill
Wait a minute, wait a minute, doesn’t Saudi have one of the highest unemployment rates in the world?
And with 40 percent of the population under 15, it is going to get a lot worse. So why are they still importing massive amounts of foreign nationals to do their work?
Well I lived there for five years and I know the answer very well. Also I have a relative who has been there for the last 17 years and we talk about that exact problem often. Well, more correctly we laugh about the problem often. He, this relative, is part of the “Saudiazation” effort. That is the effort to transfer Aramco jobs from foreign nationals to Saudi citizens. Needles to say it is not going very well.
Why? Well last time I talked about that on this list I got slammed because of my “political incorrectness”. I will just say that their culture simply does not allow it and will never allow it until their culture changes dramatically. Culture simply does not change that dramatically, not in just a few years anyway. And in Saudi culture is everything.
Ron Patterson
Let me guess.... they pray too much.
Cryptex, I posed a question and then answered it, I thought ,very effectively.
The point is culture is a very charged subject. You can talk about culture all you wish as long as you talk about the positive things about a culture. But just mention a few very pernicious things about a particular culture and you will immediately be slammed as a racist or worse.
So Cryptex, if you did not like my answer, and I did give an answer, please tell me what you dislike about it rather than giving such a sarcastic reply as you did. After all, it is a very serious question and deserves to be treated as such.
By the way, where can a woman get lashed because she was a rape victim?
Ron Patterson
The details are little vague, but my recollection is that there was a notorious incident during the 1990/1991 Persian Gulf War in which a Kuwaiti princeling was partying in London and allegedly stated that he was having a good time while his American slaves took Kuwait back from Hussein.
Actually, to say that most Saudis don't choose to work doesn't have to be perceived as pernicious. It just is. Our culture is so much into the protestant ethic that we tend to perceive the situation in an extremely negative light. When the oil runs out, their culture may have to change somewhat unless they have had the foresight to make other arrangements.
I've been pondering just this issue through the morning today. We, as a society, are going to have to come up with some positive meme associated with working less. Men in our culture draw so much self worth from what they do for work that I think we're going to have huge troubles when whole sectors just vanished.
Are we a "semi retired society" ? Is there another way to say it?
This will only work if we're all in the same boat and we find positive, low energy activities to fill our time ... I'm thinking kids at the park with dad as I write that :-)
Full-retarded society on the verge of becoming semi-retired.
Yes it's insane how so many find self-worth and personality from what they do. It's as if they didn't exist without their jobs. Hollow shells.
Criticize it all you want, but its a fact here - those of us who go standing up define ourselves by our occupation. I've been doing a little experiment in this area over the last seven years or so. People say "What do you do?" and I dodge in various fashions, testing their reaction. Some times I'll deadpan "I'm a bank robber." Other times I'll talk about hobbies or other interests. When I was still married my status conscious state university business college assistant dean ex wife and I would be at functions and when people asked I'd say "Oh, I work for a little communications company." She'd invariably have to chime in about the fact that I'd provided the startup funding and that I was the architect for the operation.
Its all a question of focus. I'd like to see this wind to ammonia thing go here, producing a clutch of local jobs and perhaps even funding my extravagant lifestyle (hot showers in the morning!) so when I get that question now I say "I'm a wind energy developer", despite the fact that 100% of my income over the last decade has been network infrastructure and related activities.
Despite my tendency toward feminazi snark, I reallize that our infrastructure was the hard work of mostly male hands.
Work isn't bad, but the endless persuit of stuff and status can blind both men and women to other values.
I don't get why people seem to think that having less oil to work for us will lead to more leisure. Of course, self definition is a slippery thing, I'm clear a mother and a housewife, but I could say I'm a writer (I have been paid for that) or a watercolorist (I do that a lot) or a technical support person (I've done it and I'd like to do it again)
Even within paid jobs, husband says sometimes that he's a statistician and other times that he's an epidemologist. Both are aqccurate and less inflamatory than saying he's a Republican and an environmentalist (again both true)
Americans are, on the whole, not very 'street smart'. Consequently, Americans are not very good at getting up every morning, walking down the road, seeing an opportunity to make a buck and taking advantage of it. For too long many Americans have been accustomed to being employed at a 'job' that requires no thought outside the knowledge needed to perform their assigned tasks at 'their job'. Average Americans have left the hustling to an 'enterprenurial class' or 'business class'.
A wake up call is coming. Average Americans are going to find opportunities in trade, short term or 'odd' jobs, repair work, service work performed for those that still have something of value, and a zillion other niche areas. There is nothing like being cast upon ones own wits to bring life into very sharp focus. Who knows, maybe the guy that has been putting lug nuts on new cars for umpteen years will find being left to his own devices to hustle a living will make him feel 'alive' again.
In the early post-peak years the need for manual labor to build new non-oil infrastructure combined with the collapse of many other areas of the economy will drive a lot of people toward much harder work than whatever they are doing now.
Picture motor home designers, SUV design engineers, SUV salesmen, boat mechanics, lawyers, manicurists, social workers, and assorted other people working instead:
- in wind turbine factories,
- as wind turbine installers,
- as solar panel installers,
- as insulation installers,
- as bicycle repairmen,
- as scooter repairmen,
- as nuclear power plant welders,
- and other occupations in the non-fossil fuels energy industries.