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I wish I didn't have to be the wet blanket
Posted by Heading Out on September 24, 2005 - 10:50pm
Topic: Demand/Consumption
And for this post I need to recognize David Williams who first pointed this out to us. South Texas and Western Louisiana have an immediate problem, and the rest of us have a relatively intermediate term problem. And it has to do with the immediate availability of gasoline. As Rita came close to shore, gas stations all over the Gulf Coast began to run out of gas. It was not really a long-term worry since the refineries were right there and could resupply. But now they are no longer on-stream. The folks that run them have followed instructions and are gone for about a week . It is going to take some time to do the safety checks and repairs needed to get the facilities back to order, and then gas can, to a limited degree, begin to flow again.
But we have lost the stock reserve that has been eaten up in matching the lost production from Katrina, and so now it will be more difficult to bring up the refineries. Not (and this is the good news) because of the sustained damage, (because the word running around is that this has been much less than anticipated) but because they are going to start running out of crude.
There were significant concerns about being able to repair the Katrina damage, since it was worse than that imposed by Ivan, last year. But to pretend, as some of the MSM are already doing, that we are home free for the rest of the year, is more than irresponsible. The fact that Georgia is closing schools for a couple of days to recognize the short term fuel problem is to minimize the concerns that should be going up as red flags all over the Eastern half of the country.
Right now the production from the Gulf is completely shut down. It is going to be that way for a while, as companies go back and bring the platforms back to life, and test the pipelines that will bring the oil to shore. Even with little damage the experience from Katrina suggests that this is going to take at least a month. In the interim the pipelines supplied by the Texas and Louisiana refineries may begin to see a supply problem. Luckily they are near the major storage of the SPR, though even that has a limit to the amount that can be easily made available. Remember also that we are in a world where the foundation ground is disappearing due to flooding and storm activity. The response of the MSM so far is still a "we dodged a bullet" but unfortunately we haven't taken our shirt off yet.
But then, on the other hand, maybe global warming will make this a really mild winter. If you live in somewhere such as Maine, perhaps you'd better start hoping that that will be the case,
Should be easily resolvable, but we've been living such a hand-to-mouth existence for gas that finding that small amount extra could be difficult without new conservation measures. So, in the short term prices might rise again, and there will be even more pressure from elected officials to haul the big oil guys in front of committees to show how responsive (or not) the administration is. Can the administration talk it out, or might they be forced into doing something? In other words, is the business-as-usual scenario about to change?
a gas leak and a spill
[QUOTE]A key natural gas installation in southern Louisiana known as Henry Hub, through which a third of the nation's natural gas flows and where spot gas prices are determined, was damaged by Rita, Louisiana Gov. Kathleen Blanco said.
"We understand there is a gas leak and ... a possible shearing of an oil storage tank," Blanco told CNN.
She gave no other details about the damage or its effects on gas delivery, but said the leak would have to be plugged.
"We're watching the situation very carefully," Blanco said.[/QUOTE]
http://today.reuters.com/news/newsArticleSearch.aspx?storyID=66903+25-Sep-2005+RTRS&srch=Henry+H ub
It interconnects with nine interstate and four intrastate pipelines: Acadian, Columbia Gulf, Gulf South Pipeline, Bridgeline, NGPL, Sea Robin, Southern, Texas Gas, Transco, Trunkline, Jefferson Island, and Sabine. The two compressor stations can compress 520,000 decatherm/d (6.3 GW) . The transportation capacity is 1.8 billion ft³/d (590 m³/s)."
Nymex Henry Hub
Henry Hub
and New York City Gate?
And why do they differ so much?
NYMEX HB = $12.32 and Henry Hub is $2 more. NYC Gate is $15.
Could someone explain those numbers?
If not, it's somewhat predictable that they won't.
Saturday shut-in stats:
http://www.mms.gov/ooc/press/2005/press0924.htm
These evacuations are equivalent to 79.73% of 819 manned platforms and 68.66% of 134 rigs currently operating in the Gulf of Mexico (GOM).
Today's shut-in oil production is 1,500,898 BOPD. This shut-in oil production is equivalent to 100% of the daily oil production in the GOM, which is currently approximately 1.5 million BOPD.
Today's shut-in gas production is 7.488 BCFPD. This shut-in gas production is equivalent to 74.88% of the daily gas production in the GOM, which is currently approximately 10 BCFPD.
The cumulative shut-in oil production for the period 8/26/05-9/24/05 is 31,781,559 bbls, which is equivalent to 5.805 % of the yearly production of oil in the GOM (approximately 547.5 million barrels).
The cumulative shut-in gas production 8/26/05-9/24/05 is 147.991 BCF, which is equivalent to 4.05% of the yearly production of gas in the GOM (approximately 3.65 TCF).
Publicly traded companies are very careful with how they release material information about their operations. The rules, strategy, and tactics of that are very mature. A publicly traded company can't hide materially significant bad news for too terribly long without taking some very significant risks. But timing the release is a tactically complex mess; particularly because being totally transparent can get you into trouble because it's likely to lead to a very inconsistent message stream. The market really really doesn't reward an inconsistent message coming out of a company.
http://www.worldenergysource.com/wemr/letterB_0905.cfm
However, this piece you posted seems optimistic and fails to mention that SA recently admitted that they will be unable to keep up with demand in 10 - 15 years.
So who knows?
Go to http://www.globalpublicmedia.com/transcripts/212 and check the last question and answer. The interviewer asked Simmons what Bush wants the American public to know about peak oil, and he says Bush told him "Matt, you continue to speak out, loudly and honestly, about how serious our energy problems are. You have no axe to grind and it really helps."
To me, this sounds like Bush and his advisors are well aware of the proximity of peak oil. (I'm amazed by how often the question is discussed about whether Bush or some large corporation or another "knows about peak oil". I think those entities would have to be phenomenally stupid not to know, and we should assume that they do know until we're presented with very strong evidence to the contrary.)
I suppose the cynics could say that Bush doesn't believe in peak oil, but he knows that having people like Simmons talking about it justifies higher prices which helps Bush's oil industry friends. Even as cynical as I get with American politics I'm not ready to make that assumption without solid evidence.
(And yes, I'm intentionally ignoring the possibility that Simmons is simply lying about what Bush has said to him.)
september 2000, cheney's PNAC complains the oil wars will be slow to get started without a "new pearl harbor" to rally support.
may 2001, cheney calls for 1300 to 1900 new electric plants, most probably nukes
june 2001, cheney's National Energy Policy Development (NEPD) Group emphasizes nuclear and hydrogen
september 11, 2001
September 2002, peak oil is probably the primary cause of the wars. PNAC's september 2000 document "rebuilding america's defenses", laid it out pretty clearly, and government policy seems to be following it pretty closely, which shouldnt surprise anyone, since this document was adopted as the official bunnypants administration's "National Security Strategy in september 2002, in some places, verbatim.
PNAC's plan seems to be: grab all the oil possible to (1) hinder china's development into a military rival to the usa, and (2) grab all the oil possible to sell at the highest possible prices to finance the transition to a hydrogen economy.
at 10 billion bucks a clatter, how much are 1900 new nuke plants gonna cost?
Just imagine what investing that money into wind/solar/wave/geothermal would do... What a waste.
HUX5 is off significantly - 1.89 down from 1.99 close Friday. A big %-wise move. Apparently someone believes they not only dodged a bullet but missed skinning their knees too.
Given the imperfect information available and low volume, I won't be too surprised to see prices all over the map today... these are the early indications only.
Crude Futures Fall in Rare Sunday Trading
have there been any real numbers yet? Or is this the markets sigh of relief that it missed houston?
Just goes to show how unpredictable the markets are.
But hey atleast its cheaper :)
In an earlier thread I asked whether refiners had to buy (at least some of) their crude through NYMEX contracts. I didn't hear from anyone on this - maybe a stupid question - but if so it could explain a bit. Downward pressure on price due to missing buyers as refiners aren't buying (first because they were too busy evacuating Houston, now because more refineries are offline).
In a somewhat similar manner, the mess that is causing gas stations to be out of fuel in TX could show up as a demand drop for fuels in the short term if deliveries aren't timely.
I, too, hate the constant spin in this country that talks about bullets being dodged just because we averted armagedeon.
To not demand this full disclosure is to be as complicit as Humvee drivers in failing to prepare for the crisis to come -
Daneshy's argument relies on drawing an analogy between the Saudi situation on the one hand, and Prudhoe Bay/Texas on the other. But IF the analogy indeed holds, this means that by the time the Saudis get to 3:1, they too will be in a status of decline roughly mirroring where Prudhoe is now relative to the 10mb/d they produce now. And once they get to 12:1, Saudi production will be a relatively insignificant trickle relative to what it is now - just like in Texas. Given that the Saudi water cut is inexorably moving from its present 60% or so to the 75% prevailing at Prudhoe Bay, Daneshy's data and analogy prove that the day is not far off where Saudi will have reached a point in its production history analogous to that of Prudhoe at present - i.e., in manifest decline.
This raises a key question: Does the analogy between the three cases above permit one to draw a general conclusion about a correlation between a specific water-cut ratio and the exact timing of production peak in that province? Perhaps study of the historic data coming from Texas and Prudhoe will reveal this magic number to be somewhere in the range of 60% and 75% water cut? If so, and if the general analogy that Daneshy is appealing to in his faulty argument holds, then maybe this can be the basis for predicting Saudi peaking, based on projecting current growth trends in ITS water-cut percentage.
http://www.state.ak.us/local/akpages/ADMIN/ogc/annual/2003/prudhoe-oil.pdf
It looks like for Prudhoe bay (scroll down quite a bit), rollover occurred when the water cut went through 50%, in 1992. No idea if this is readily generalized or not, as it certainly depends upon well type (vertical vs. horizontal vs. MRC), etc. However, the 50% number for the field "feels" intuitively correct, FWIW...
But where can I find out about natural gas? I, like many other, see the looming disaster that is the supply shortage of natural gas and am much more concerned about it rather than gasoline supply.
So, any idea where I find out where our NG comes from?
To put that in context with the current GOM outages, EnCana's total output is about 3/8'ths of the total 7.5BCF shut out at present.
NG is in short supply. Big on-land producers can not makeup for significant shortfalls from GOM production (whether the shortfall is a result of off-shore issues or from damaged on-shore processing facilities).
My impression is that pipeline network for gas is sufficiently interconnected and redundant that at this point we are all in the same market for gas. If New England needs it and is willing to pay more than Minnesota then prices will rise in Minnesota. I.e. that supply will move pretty quickly toward were ever the demand has the most willingness to pay.
Is this correct?
For oil it seems less clear, to me.
Here's a map I found
http://www.greatlakesgas.com/pipeline/pipe_map.htm
that is at least one company's map of canada/ minnesota/ wisc/ michigan nat-gas-pipeline. One of the offshoots is near me in rural duluth, mn. I assume the country is spider-webbed with pipelines like these. But whether we get canadian nat-gas or not in Minnesota, its all market priced, so I assume it will all go up at nearly same price, whereever you are.. or .. ?
PhilRelig: nice come-back comments on the UofHouston guy's critique of Simmons.
Knowledge/Etc. of Bush/Cheney: I'd rather not think about these two guys, but its hard not too, with their names pushed onto you day after day, and them being at the helm of U.S. ... I have no doubt that they (well, cheney) forsaw oil/gas/energy trouble coming, as he is on record of saying, and thus the iraq war,etc. as an attempted strategy to grab?stabilize???/get .. some oil. But whether these guys really know whats going on, or have a handle on things, i just really tend to doubt. (war doesnt seem to be going so well,etc) We all are often governed by rose-colored glasses / blinders / biases we have, and I am sure they are no differant. - Lorax73
your statement that you'd "rather not think about these two guys" disqualifies you from any serious discussion of how we got into the pickle we're in.
http://www.mercurynews.com/mld/mercurynews/news/politics/12733615.htm
The gasoline outlook could get worse after damage assessments at large refineries in nearby Beaumont, Texas, and Lake Charles, La., which suffered the strongest winds and worst flooding.
In a statement Saturday afternoon, Royal Dutch Shell said that its Motiva refinery in Port Arthur, with a capacity of 285,000 barrels a day, sustained damage to a cooling tower.
Valero Energy Corp. said that its Port Arthur refinery, with a capacity of 255,000 barrels a day, sustained "significant damage to two cooling towers and a flare stack." The company anticipated that "it will take two weeks to a month to implement the necessary repairs and restart the refinery."
ExxonMobil didn't provide damage assessments for its massive Beaumont refinery, which has a capacity of 348,000 barrels a day. Citgo and ConocoPhillips didn't immediately discuss damage to their Lake Charles refineries, which have capacities of 324,000 and 239,000 barrels a day, respectively. The French company Total didn't report on damage to its 233,000-barrel-a-day refinery in Port Arthur.