And oil rigs become more attractive . . . .

When the secretaries of Energy and Interior went up to Capitol Hill last week, they were asked about energy reliability particularly as it relates to keeping the power supplied to refineries. Senator Domenici began
I would think there should be some possibilities for us to prevent the shutdown of the oil and gas industry. The problem seems not to be physical impacts from the storms, but making sure there's still electricity to keep these facilities running."

 Earlier, Sen. Mary L. Landrieu (D-La.) asked the two secretaries if they knew of any changes that would be made in electricity transmission systems along the Gulf Coast as a result of the two storms.

 "I don't have specific recommendations," Bodman replied. "I'm assuming that when the transmission lines are reconstructed in western Louisiana, they will be built to higher codes."

 Landrieu wasn't satisfied. "This is a very integrated energy system. You can have the most sophisticated production platforms, pipeline systems, and refineries," she observed. "But if we haven't spent two minutes considering how we get electricity to them during and following an emergency, we can't expect them to continue functioning reliably."

 One thing that was apparent down there was that in cases where the power lines started to fall, the weight of one collapse brought down the rest, like a row of dominoes. There was one place we saw where the burn scar ran for probably two or three blocks.
There are two possible thoughts here, and the more obvious one of them is to bury the cables.  After all cables can be submerged, and in certain circumstances, such as in Connecticut
While underground technology is usually more expensive than overhead, we have determined that the costs between the two are comparable for this project as an all-overhead route would require the expansion of the right of way and the purchase of homes and businesses.
 Burying them not only protects them from the weather, but also protects the roads and vicinity from falling lines, and the destruction that they bring.  (Although talking to one of the water folk in NOLA his big hope was that they would reduce the size of the trees along the roads).

Alternatively, I suppose they could provide a more robust support system, with some mechanism for stopping the cascading collapse problem.  The problem with that is the saturation of the soil reduces the anchorage, and so they would probably need a more complex installation, of more cost and time to put in.

Which is a bit of a distraction from the secretarial visit, which has some insights.

ompanies are telling Interior's Minerals Management Service division that repairs to damaged facilities could take several more months to a year, she continued. "For example, we estimate, based on industry reports, that 30% of pipelines have not been leak-tested, and approximately 60% of underwater riser inspections have not been completed," Norton said.

 The storms demonstrated that domestic energy supply geographic diversification must remain a top priority, she maintained. Some committee members agreed, suggesting that a key step would be to move Outer Continental Shelf production beyond the central and western Gulf of Mexico.

 "We're hearing from states like Virginia, where there hasn't been production in the past, who are interested in possible development if more revenue is shared," Thomas said.

More details on the Virginia idea can be found at Rigzone. And of course, one must not forget the needs for revenue.
During the hearing, Landrieu said she was encouraged to hear that other coastal states beyond Texas, Louisiana, and Alabama might be interested in seeing oil and gas resources off their coasts developed.

 But she added that it isn't fair for such states to get large shares of federal revenues from new production without increasing royalty and revenue shares for states with current adjacent OCS production.

And to put this in context of the continuing state of the shut-ins in the GOMEX, the latest MMS report has
These evacuations are equivalent to 27.23% of 819 manned platforms and 4.48% of 134 rigs currently operating in the Gulf of Mexico (GOM).

Today's shut-in oil production is 1,015,859 BOPD. This shut-in oil production is equivalent to 67.72% of the daily oil production in the GOM, which is currently approximately 1.5 million BOPD.

Today's shut-in gas production is 5.427 BCFPD. This shut-in gas production is equivalent to 54.27% of the daily gas production in the GOM, which is currently approximately 10 BCFPD.

The cumulative shut-in oil production for the period 8/26/05-10/31/05 is 74,664,422 bbls, which is equivalent to 13.637% of the yearly production of oil in the GOM (approximately 547.5 million barrels).

The cumulative shut-in gas production 8/26/05-10/31/05 is 381.128 BCF, which is equivalent to 10.442 % of the yearly production of gas in the GOM (approximately 3.65 TCF).

In reply to questions about the need for more refining capacity, the response was that it would most likely come from expanding existing refineries, rather than permitting and building totally new ones.  And Marathon has announced that they will increase the size of one of theirs from 245,000 bd to 425,000 bd. Cost is $2.2 billion, and starting in 2007 it should be done by the end of 2009.
Shut-ins are still 68% oil and 54% gas? We're down 1/mbd oil? We're importing like crazy and we're drawing down the SPR? This is an energy policy? Domestic refinery capacity, as you note, will not get any larger for at least 4 years. Will anyone else fill in the large gaps between supply and demand in refined product we're about to see? No, who can?

Am I worried about Irving "Scooter" Libby? No. Am I worried about future refined oil shortfalls in the US? Yes. Do I need to worry about Natural Gas shortfalls? No, I don't. They are already here.

I don't mean to sound so "Apocalyptic" in the Christian end times sense about all this lately but I really don't see any "Good News". I really don't.
Hey :) Look at the bright side of life - your father and grandfather probably lived their lives without having much oil around... but if you ask them if they were happy with their lives they'd probably say yes, right? Maybe we'll soon start recalling the way they lived and this is not that bad when you think of it.
I'm just concerned that there won't be enough oil in 2009 (depending on who you believe of course) for that Marathon refinery to refine. In any event, they arn't going to make back that $2 billion investment. Although, with the situation being as it is, they might be doing the smart thing to appease people. And if I may venture into the slippery area of conspiracy... any expansions of refineries may simply get "delayed" "postponed" or in other ways have the costs assoc. with them reduced.
Perhaps they'll be making so much money off the products they do refine anyway, that they will indeed make their money back even if it costs them twice as much.  I guess they wouldn't have to utilize that new refining capacity to do it though.
Upgrades and expansions are what you do to process heavier and sourer crude. There's lots of that around compared to light crude. Remember, it's only the other refineries that process heavy, sour, crude that are competing with you for heavy, sour crude. The teakettle refineries might as well not exist as far as you are concerned.
And let us not forget that shut-in percentage is actually worse now than two weeks ago, when it bottomed out at 61.4% - I guess that they couldn't get info on some production, so just carried it as OK on the books (I remember MMS said they did that right after Katrina) until someone got the power back, turned on the computers, and was finally able to file a shut-in report.  

How much more production is "assumed to be OK" while not reporting?  Go take a look at the EIA chart (which now only updates twice weekly) - the gap between this year and last year (Ivan) is ~800Kbpd.

And, HO - what happened?  No techie talk this past weekend - sorely missed.

Sorry, but the day job had a bit of a problem (I had to edit the NOLA video) that took a bit more time than I had anticipated.  There may be the odd week missing between now and the end of the year, as academic pressures mount. (I am burning DVD's as I write - the joys of a multi-tasking computer)
No need to apologize - I'll just have to wait for my fix.

Keep up the good work.

One thing to keep in mind is that all these upgrades can take out refinery capacity in the short run. Most refineries are At least partially shut during expansion and some are completely shut. If we shut down down 3-5 million of capacity even with the hopes of increasing it to 6-10 million after a year or 2 we are gonna have a crisis right away.
A question ofr this board, according to EIA refinery capacity stands at 82.75 while crude supply stands at 84 ( until recently at least). Can we corroborate from this whether actual demand and supply numbers are correct?
Buried power lines are hella expensive, and if the only motivation for them is to avoid domino-style collapse in a storm, then I would suggest a much cheaper solution:  every mile or so along a transmission line, install a support that is much stronger than the typical power pole.  A support that will stand even if the lines on one or both sides of it have collapsed.  A support that will stop the domino effect.

This has been done throughout the upper midwest, where ice storms used to cause lines to collapse practically every winter.  Now when ice causes poles to collapse, they only lose a mile or so of transmission line, rather than the whole length of the thing.  Which still causes an outage, of course, but it's much quicker and cheaper to fix this way.  It doesn't take long for the super-poles to pay for themselves.

The trend over in Sweden is to get everything below about 20 kV underground to get better storm protection and lower long term maintainance costs. But there is a discussion on how quickly it should be done. Insulated overhead wires have been tried in large scale. Great when one or two trees falls but when a swath of forest falls it brings down the power poles. The code did not allow break away linkage for the power lines, this has been or is being changed. I guess the only overhead lines in about 10 years will be where the ground is rocky and 70-400 kV lines.
The real solution, the one used in the oil field offshore, is the correct one for this problem.

Utilize the refinery feedstock to run a sufficiently large generator. Every one of these plants utilize natural gas - many already generate their own power. As every single one of these plants has rail access, even coal could be used to power a local, refinery specific generator setup.

But when a plant is inundated with 10-20 feet of water, then there are other issues. Doesn't matter then if it is local power or not - repairs must be completed first.

Offshore platforms generate their own electricity from the natural gas available at the site - they do not rely on shore-based power. This includes those that send in neatly dewatered and partially refined streams of product. Thus this is already something that is common in the industry.

"Offshore platforms generate their own electricity from the natural gas available at the site - they do not rely on shore-based power."

They do this because they have no choice.  It's frickin' expensive.

If power outages at a refinery are frequent then there may come a break-even point where it becomes cost-effective to have onsite power generation.  But at that level a smart manager will begin to question whether the refinery should just be relocated.

You already have lots of peak power gas turbine powerplants. It is clearly a lot less expensive to move one of those powerplants to a refinery then to move a refinery since a refinery is an order of magnitude more complex and also larger.

You do not have to run the local powerplant 24/7, start it up when you expect the power feed to fail or after it has failed to start up the refinery withouth waiting for external power.

Are there even federal standards for transmission power line construction in relation to storm damage? Do the feds even have authority here?

I'd have thought this was Louisiana's problem at the state level to mandate those standards and then see that they are enforced.

"I don't have specific recommendations," Bodman replied. "I'm assuming that when the transmission lines are reconstructed in western Louisiana, they will be built to higher codes."

I think this can be properly paraphrased as "Duuuuuhhhh".

Aparently, the issue was one he had not considered before.