Tropical Storm Edouard - Open Thread (Updated)
Posted by Nate Hagens on August 4, 2008 - 6:04pm
Topic: Supply/Production
Tags: edouard, hurricanes, shut-in production, tropical storm [list all tags]
Tropical storm Edouard continues westward towards Texas. While likley not even a 'cane, there is still uncertainty regarding impact. Though it never reached hurricane level in the Gulf, there is potential for refinery flooding but this is currently being offset by futures contract flooding...;-) Below the fold is the latest estimates on the storms potential impact on shut-in production and refineries.
Theoildrum.com's meteorologist friend, Chuck Watson, has an updated analysis:
"Although the raw models on our page are still showing peak shut ins fairly high, they aren't properly factoring in the fact that many platforms/rigs aren't shutting in since Edouard is fairly weak and they don't have time to get the crews off without a major and expensive push anyway. So I'm sticking with a peak impact of 30% or so short term, minimal damage to the offshore infrastructure.
Onshore is an interesting situation. We have added a list of refineries in the damage swath, along with estimated down times. The down times are currently all sitting at 2 days, since it is anticipated that there will be no significant damage, but some precautionary actions will interfere with production. A slight increase in intensity and this could get bad quick if the storm stays on track - lots of valuable, and, compared to the offshore stuff, very vulnerable infrastructure in the way. 70kts and no opportunity to build big waves won't hurt most modern rigs/platforms much, but 70kts and even a foot or two of water in a refinery is bad news.
"
Here is an updated link to an analysis on the storms track and likely oil and gas production impacts, including onshore refinery flooding.
Here is an image as Eduard made landfall this am, exactly on border of LA/TX:
Not sound callous, but I took long positions in Crude Oil & Natural Gas last week and this should cause a nice jump up. Just need to time it to get out before the news becomes "Edouard never reached hurricane speeds and the Gulf Coast suffered no damage."
I wonder if this will affect grain prices? Maybe corn (ethanol) but not wheat or soybeans?
And I hope that everyone in harm's way will be okay.
Dear Callous,
At the open of futures tonight, (as well as 2 hours later, now), oil is up 80 cents and gas up 12 cents. Not much movement yet, but we have been in a downtrend. And please explain why it would impact grain prices? (Dec corn down 10 cents to 575 in night session)
Yeah, that's what I'm betting on. From last week's COT, the commercials are now net long CL and NG. And both have been "walking the lower Bollinger Band" until last week. They look really oversold. So I'm thinking we may be at a short-term low and bounce a bit, and possibly more if hurricanes form in the Gulf and/or the tension rises in the ME.
The COT report in NG was an eye-opener. The last time we saw such a spike in the Specs going short was back in December, also after a come down in the price of NG. The Specs are the most short NG in a year. I suspect I know what happened. The new shale NG plays while creating lots of opportunity have also created new obligations for those who have bought the leases. There is chatter and some proof that a number of these NG companies, especially CHK, started hedging out the NG strip into those highs. One wonders that the Specs piled on to this trend as NG collapsed. However, it now looks like a very crowded short, because based on my brief reviews of the NG companies latest reports, a good deal of their hedging is done, for now. I am also of the view that we will not fill storage to last year's level by the typical 01 NOV marker, and I am predicting all time highs in demand for NG this Winter, providing its a normal winter temperature wise. I think Grid demand for electricity, and new demand from two years of switching from HO to NG heating systems will both show up this Winter in a very significant way. The scramble to flee expensive BTU's in heating oil for much cheaper BTU's in NG is on, here in the Northeast. Needless to say, any storm that hurt NG production for a week or two, now that we are in August, would give the NG market much more visibility on how much storage we'd have at the end of the season. In fact, it would make it much more clear, much earlier, that the Fill would come in lower than last year.
G
10:59 PM EST: SEP NYMEX WTIC up +1.10 to 126.20. SEP NYMEX NG +.09 to 9.48
AT 10 PM CDT...0300 UTC...THE TROPICAL STORM WATCH FROM WEST OF
INTRACOASTAL CITY TO PORT OCONNOR TEXAS IS REPLACED BY A HURRICANE
WATCH. A HURRICANE WATCH MEANS THAT HURRICANE CONDITIONS ARE
POSSIBLE WITHIN THE WATCH AREA...GENERALLY WITHIN 36 HOURS.
Nat gas down 7% today on news that 6-10 day forecast going to be much cooler than expected.
Oh, man! Wouldn't it be sweet if tensions rise in the MidEast, eh? Could we even hope for (dreaming I know) a war to start in there somewhere? How might we perhaps convince Pakistan and Iran to start a good dustup? Any ideas?
Not to sound too ignorant, but how do you buy crude and nat. gas positions? Are they futures, or can you buy some type of tracking index?
You can do both - futures (full or mini) or ETFs. Select the Category: Specialty - Natural Res.
Not to sound ancient, but I remember when going long
meant 8 or 10 years. Now going long means buying on
Friday and expecting to sell Monday after lunch.LOL
Of course back then,"honest" meant you wouldnt take a
bribe and today "honest" means that when you are paid off.....you stay bought.
I'm long too, but it looks like the markets and financial media are reacting in the [sadly, typical] moronically irrational fashion.
As of 09:30 Eastern, Bloomberg is reporting that "Oil Falls on Speculation Gulf of Mexico Storm Won't Damage U.S. Facilities". This 'explanation' is proffered even though there was clearly no 'storm premium' priced into CL yet, as the storm formed unexpectedly over the weekend while the markets were closed. Go figure.
Yeah, I know. Look at the COT for NG. The commercials are very net long while the large traders are very net short. The last time this happened NG shot up and doubled.
So, how is that working out for you?
That forecast track for Fast Eddie is a quick jab to the gut.
NHC discussion on Tropical Storm Edouard
http://www.wunderground.com/tropical/at200805.disc.html
My favorite local weatherman, Bob Breck, said his only concern was the slow forward movement. If it did not start moving faster than 3 to 4 mph , and with formation still taking place (no eyewall) Edouard could still change away from any model. Unlikely, but the models are not yet "high confidence".
Any development or faster forward movement would dramatically increase confidence.
Best Hopes for some rain,
Alan
Well...is this the first "stationary" storm in the Gulf? I woke up expecting Edouard to have moved off to West even just a bit and it hasn't it. How odd is that? What the heck would happen if we were faced with a stationary hurricane. Freaky stuff.
One of these years, we are going to see a "ringer" hurricane in the Gulf, one that starts along the Mexican coast and rings the entire Gulf coastline.
It has moved a bit west 88->90, actually early this morning it "scooted" out from under the convection. The convection built back over it though.
It's my understanding that even with good computer models, unexpected things can and do happen. Whatever the case may be I stocked up on water and charcoal.
Every time serious storms start to form it feels like we are forced to play russian roulette. Even if it doesn't seem that likely this time, the stakes are a bit too high for my liking. Maybe we should design rigs with a submersive ability...
We are playing Russian Roulette. It is absurd that our entire economy has been planned and $trillions spent to built it so it is subject to a single weather event that happens 4-12 times a summer.
Here is the import problem into the US Gulf refineries.
Of course, as Datamunger has noted, demand is down. However, my view is that Gulf Coast refineries have not been able to fully offset the rapid decline in imports from VenMex (Venezuela + Mexico). And of course, I view this decline as structural, not as a temporary problem.
I do think that it is unlikely that we will see gas lines this fall, because of the SPR. The problem of course will be using the SPR to offset a structural decline in world net oil exports--especially the proximal exporters only a few shipping days away from Gulf Coast refineries.
I am positive there will be gas lines this fall. The risks are stacked for a discontinuity and spot shortages at least as bad as last year seem very likely. There is greater safety than costs in preparing for them.
There are a bunch of known reason for a supply snap. As stress grows on the system, the number of unknown, unknowns grow. We can have failures as unexpected as a supply clerk not getting to work to ship a spare part.
Experience is not a foreteller of the future. The The Black Swan is a very good book on this and how to make decisions without being the turkey. Related is the experience of the turkey. For a thousand days, it wakes to the kindly care and feeding by humans. Reinforced day after day that experience builds until the unexpected event the day before Thanksgiving.
When the 1973 Oil Embargo hit, we imported 20% of our oil. Now we are at 70%. It feels like autumn.
You can frame and immortalize this turkey tale if you want:
http://www.cartoonbank.com/product_details.asp?mscssid=802EECL6TNBP9NS1G...
"I like it after the holidays, when the crowds are gone."
OK, lets play the WHAT IF game...
What if this had been a hurricane, even a mere category 3 one? With this track. And with these oil prices and stocks...
We aren't talking astronomical odds here that this would happen. I mean how many hurricanes track the gulf of mexico each season...
The consequences could be sudden and devastating: gasoline shortages -> rationing -> national guard on the streets protecting petrol stations -> looting and rioting...
I mean we pretend our civilization is the pinnacle of human intelligence and achievement - yet we persist in building these houses of straw...
The Collapse of Complex Societies - ones your problems are compounded - the straw that breaks the camel's back...
Agreed, things seem scarily close to falling apart.
We seem to be arranging things along the lines of Self-organized criticality. We've avoided major collapses for so long, and spread the risk so evenly across our systems, that we are running out of places to drop the next grain of sand.
It's difficult not to be paranoid in times like this; are they preparing for something in Italy already, with the deployment of soldiers?
"deployment of Soldiers" = a mere publicity stunt..
of course we do. those houses are the cheapest, and we need the money for the real important things, like an suv to tell the world our status, or a really big plazma tv to watch fox news
on a more serious note, i'm sure you can name a couple of compromises that you have made or still make, for the sake of a little extra cash / commodity. do you buy organic / local produced food? do you ride a bicycle to work? did you chose a better paying - longer commuting job? do you travel by plane? do you take a vacation someplace far away?
stop complaining about this, because the easier path is...well.... easier to choose. and because you're still human, wtshtf, you'll feel sorry about not participating in the raping of our planet while you had the chance :) i'm starting to think this way not because i'm evil or something, but because i'm taking into account the rest of the population.
every single god damn time i ride uphill back from work,i think about owning a car and how much easier it would be. and when there will be no cars, would i feel better because "hey, i rode my bike all along", or would i think "this was coming no matter what i did, why didn't i make my life easier when i had the chance?"
I have been the weakest of them all.
I do only what is in my short term best interest.
HOWEVER, when I have been in a "moral" cause which has a great leader I always end up being the one who sacrifices my all. The others seem never to have my stupidity of giving their all.
If we don't get a "good leader", but stay with this Democratic joke we have for leadership we are in serious trouble.
From ASPO meeting (previous post)
1067. Ireland’s Response to Peak Oil "--------"
Ireland is utterly dependent on imported fuel "------------"
1. Tap renewable energy, especially from wind and ocean, of which the country is well endowed;
2. Co-operate closely with the long-established Electricity Supply Board to secure a national solution;
3. Facilitate the sale of electricity from small scale producers of wind and other energy to the grid;
4. Install smart meters in every home to reduce wastage;
5. Provide tax incentives for improved commercial and household insulation and efficiency.
NOTE:
Not one, slap on the ass, not one, "real" problem fixer, not one, warning of pain, not one, "WE" have to act now.
I fear we will all keep our sheep on the Common until it is too late.
Graham
On a personal level, there always seems to be a balance to be struck between acting for the good of; mankind, the planet, your country, whatever; and externalising costs (see social trap) to improve your relative position in societal/genetic terms (and those of your family, friends and like minded people).
I think everyone externalises some costs that they should perhaps 'rightly' bear themselves, some people hide this process better than others, and some people externalise more costs.
In evolutionary terms, perhaps in the past it has been optimal to secretly externalise as many costs as you can get away with, whilst propagating as a social rule that people should seek to minimise this externalisation - for the greater good (similarly with lying and telling the truth).
Now we're facing a resource constrained future, this evolutionary logic doesn't work anymore. We actually need to follow our own advice! But can our rational conclusions change our programming, when - as in the prisoner's dilemma - we can never fully trust other people to do the same?
What we really need to counter our stupidity is a committee for central planning that could make all the right choices for us, oh, say, 50 years out or more so that we humans wouldn't be locked into this shortsighted living one day at a time. We could gather together all the really smart people and let them decide what is best, not for just Americans but the whole world. Get rid of this nonsense about personal freedom; it doesn't work.
Not sure whether to take that as tounge-in-cheek...
I am quite libertarian in my general perspective, but agree it's quite hard to see how problems with externalities will be solved without some kind of central control, unless by some miracle humanity can transcend our animal tendencies away from competition.
Those who tend to aquire power though, are those least likely to be good custodians of the general welfare. There's also the matter of deciding what our goals (and values) on the earth actually are - we'll never all agree on that.
Over all, I think I'd sooner risk that we don't all make it, than succumb to a global government and accept the curtailment of freedom that would probably entail.
What's the problem with "global government"? Oh, I get it, you're American and therefore so much smarter than everyone else in the world that you must be allowed to do whatever you please with whatever you can buy. Can't possibly survive in a world where your vote was only equal to everyone elses. Yeah I remember now.
Actually I'm British, not that it makes any difference - except for serving to illustrate your prejudice.
A benevolent dictator would be ok with me, but if our national governments are anything to go by - no thanks.
Well my vote is that I'm not interested in global government.
Some issues are my concerns as an individual, and solely mine to decide. Some issues concern me as a parent or family member, and are no outsider's business. Sometimes, I will impose myself upon my family members in ways they'd rather I didn't, sometimes they will do the same with me. We deal with this informally, with variable degrees of success.
Further up, I have some legitimate concerns as a citizen of this country and city, which other cities and countries aren't really concerned with. But there are certain things my fellow citizens can justly demand of me, and I of them. We deal with this with a democratic political system.
And finally, I have some legitimate concerns as a human citizen of planet earth. As do everyone else. How are these concerns met?
As it happens, We already have a "world government" for military matters (and any other matters when they feel like it) - it's called the UN security council, it's not even remotely democratic, and the US is on it. But for a large part, my legitimate international concerns (and far more so, the legitimate international concerns of poorer and less free people) aren't met.
The question isn't whether we should have a world government, because we will always have some form of it as long as nations interact. The question is whether it should be a dictatorship, a free-for-all grab what you can anarchy, or something more accountable to the world's people.
If you could, would you give your conscious brain total control over your body? If you did, you'd probably be dead in five minutes.
Wow. Good response!
Well I just happen to cycle to work, 18km - don't own a car - and enjoy every minute of it. I mean free travel plus exercise and fresh air. While my colleagues keep complaining about fuel costs and maintenance bills. And are driving to the gym after work and paying for it. I have to admit I don't put much effort in buying all organic/local even if I could. I'm too lazy and just pick them up if they happen to b available in my local store. Vacation abroad? I life in Finland! Why should I travel faraway when I still have so much to explore here...
congratulations on doing a lot more than others, but that's not the point.
there are 2 billion people in the so-called first world, and their "green" nerve it turned on by a very large margin. for some it means living in the woods and eating squirrels, but for the vast majority is meant buying a hybrid and maybe turining the light / AC off.
until doing the right thing has a substantial lower price compared to BAU, things will not be better, because people will always choose the short term rewarding system. 10 dollars in your pocket now versus maybe saving some polar bears in the future, that's the thinking goes
Good real time image loop of the storm currently on NWS New Orleans/Baton Rouge, LA RADAR