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European gas supplies and a more than gentle cough from Russia
Posted by Heading Out on April 25, 2006 - 1:16am
Russia plans to cut oil supplies to Europe, diverting shipments from "overfed" European markets to Asia, Semyon Vainshtok, president of pipeline monopoly Transneft, said in an interview published Monday."We have overfed Europe with oil. Every economics textbook says that surplus supply lowers prices," Vainshtok said in an interview published in Nezavisimaya Gazeta. "But we can't reduce supply -- all our exports are oriented toward Europe."
That will change with the construction of the Eastern Siberia-Pacific Ocean pipeline, which will feed energy-hungry Asian markets with up to 1.6 million barrels of oil per day, Vainshtok said.
"As soon as we turn to China, South Korea, Australia, Japan, it will immediately take away a portion of oil from our European colleagues," Vainshtok said.
And lest you think that this marks the end of the acquisitions that Gazprom plans, they are also now in talks that may end up giving them control of Dutch gas supply lines. In the meanwhile they have delayed a decision as to who will be their partner in the Shtokman field development, though planning to sign an agreement with German companies to develop Yuzhno-Russkoye which holds about 500 bcm, Germany's consumption for about 5 years.
This seems also to have caught the attention of the US Dept of State, with Secretary Rice urging Greece to keep Gazprom out of a pipeline deal between Greece and Turkey.
The US, a keen backer of Greek-Turkish co-operation, wants to see both countries reduce their reliance on Russian gas supplies. That is understood to mean excluding Gazprom from the new project, whether as a shareholder in the pipeline company or as a gas supplier.Unfortunately Gazprom is already a part of the action, and may be hard to dislodge. The new pipeline will also extend over to Italy, though given some of the problems they had with Gazprom last winter, I am not sure that is completely reassuring news.Ms Rice is likely to suggest that Greece and Turkey make a long-term deal to buy Azerbaijan gas supplied by an international consortium led by BP and Norway's Statoil, which is due to come onstream in 2007.
The €600m pipeline project, a joint venture between Depa and Botas, the Greek and Turkish state gas utilities, was originally launched as a means of supporting a political rapprochement between the formerly hostile neighbours rather than an alternative route for channelling gas to western Europe.
And while Jerome is confident that Russia has the control and the reserves to pull all this off, I note the story in the Herald Tribune which notes that the Chinese are nibbling at Russian supply and trying to draw Kazakhstan into their sphere of influence - a zone that might, in time also include Turkmenistan. Yet, as he notes, right now it may well be Gazprom that holds most of the cards, and thus can apply the pressure to get what it wants. And with production from the North Sea falling, the countries of Europe have to find alternate supplies for the long-term. But, with this size of a hint, perhaps it is time that they all started looking a bit harder.
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ok that's how I see uncle dick explaining it to a yong gwb at one of his dad's sociel mixers back in ninety two
sorry, the sun came back out in no. cal today just full of it right now
Should Britain go with the U.S., which seems to be in a death spiral, or with the emerging co-prosperity sphere of Russia and China?
But one thing I am pretty sure of - the Russians know what they have in the ground, and they will do with it whatever they feel like.
Nice to see the Russians leaving their socialist past behind, proving they understand that charging what the market will bear is only the first step in making sure a fool and their money is soon parted.
Do you ever think the reality of this situation will penetrate into the believers of the invisible hand of the free market? How long before their principles go away when they figure out what side of the market they are really on?
Time to watch the markets go to work, I guess, creative destruction and all. Lucky the Russians have finally joined in, isn't it?
As a side note - the Europeans are quite active in Northern Africa in terms of natural gas projects, but the Russians are a much bigger market in terms of exports - notice the relationship between Germany and Russia, to give you an idea who is likely to absorb at least some of Germany's exports if the American economy stumbles badlym (and these days, the Russians pay in real things, not merely promises written on Federal Reserve notes). The free hand of the market looks great when it is giving you things, but it looks very different when it is taking them away. Which may be an explanation of why so many people only agree with invisible hands stroking their bank accounts, but not strangling their future.
Of course, maybe the Russians are dusting off some of their old plans of how to dominate the West, ca. 1980, and haven't really become capitalists at all. Nah, that is too absurd - a former KGB officer is certainly the sort of person I would trust to defend democracy and free markets world wide. Wouldn't you? And for the thoughtful out there - do you think Germany has been investing major amounts of money in renewable energy merely out of the goodness of its heart, trying to make the world a better place? Germany is not really a believer in the invisible hand when it comes down to important things like preserving itself into the future.
Lots of ethanol trees up there, though.
I have posted this before:
The upcoming G8 Energy Security Conference in July, hosted by Putin, could be 'must see' TV as it seems increasingly likely that a hell of alot of shouting could break out over ever-depleting detritus. I suggest they could more productively use their time talking about ASPO's Energy Depletion Protocols, Global Warming, and Global Powerdown.
Bob Shaw in Phx,AZ Are Humans Smarter than Yeast?
http://www.telegraph.co.uk/opinion/main.jhtml;jsessionid=52XXZCZRKKJYBQFIQMFSFFWAVCBQ0IV0?xml=/opini on/2006/04/25/do2502.xml&sSheet=/portal/2006/04/25/ixportal.html
Also:
http://www.space.com/scienceastronomy/helium3_000630.html
Beam me up Scotty.
In its modern, refined form, capital serves only capital, it has no need of actual people.
The myth of capitalism as a liberating force for individual happiness and self-determination arose from that brief historical period when hired help, both as individuals and collectively, had considerable bargaining power.
Now, not even individual shareholders have any bargaining power to speak of. Governments have, on the whole, disempowered themselves in the economic sphere in recent decades, thereby renouncing any democratic accountability for businesses.
The last hope for humanity : ethical pension funds?
-G
As I noted yesterday when I posted a link to this story, IMO it sounds a lot like a bidding war between importers for remaining net export capacity.
Now, for the really, really bad news. Once more back to the Russian reserve question.
Question: which region has made more oil, the US Lower 48 or Russia? Answer: US Lower 48.
Let's assume that Alaska is to the Lower 48 as Russia's less explored regions are to the existing production in Russia.
On a crude + condesnate basis, Russia is currently producing about twice what the Lower 48 is. However, based on a HL analysis, the Lower 48 may actually have more recoverable reserves than Russia, at least insofar as existing production is concerned (excluding the less explored regions).
Khebab constructed predicted production profiles for both the Lower 48 and Russia using only production data through 1970 and 1984, respectively. Through 2004, cumulative Lower 48 production was 99% of what the HL model predicted and Russian production was 95% of what the HL model predicted. As Russia gets closer to the HL prediction, the rate of increase in production has been slowing dramatically.
I am predicting double digit decline rates ahead for Russia, or at least for existing Russian production. Note that the Russian Energy Minister has warned of the possibility of a "real collapse in oil production," if they don't launch an immediate exploration program, and also note that the IEA has started warning of possible production problems ahead for Russia.
Can regions shows huge production declines? Yes, just look at Cantarell (second largest producing field in the world), where the remaining oil column of 825' is thinning at a rate of about 300' per year.
IMO, any way you slice it, we are facing an immediate problem with world net export capacity. Just look at the recent US import data, which show that we are paying more money, for less imports.
The really interesting question (as in the Chinese sense, "May you live in interesting times"), is what happens when the exporters start questioning the wisdom of continuing to give us oil in exchange for dollars. One could make a case that the price of gold is not rising so much as the dollar is falling.
Once again, my recommendations: ELP. Economize; Localize; Produce. You do not want to be on the majority side of the US economy--the side that is dependent on discretionary income.
Kudos for your honesty and I agree with your assessment of commodity prices and the inverse relationship of the dollar. This latest rise in oil may be nothing more than the mere fact that it now takes more dollars to buy the same amount of oil that it did a few months ago. That could be verified by figuring the cost in euros over the last several months. How much has that fluctuated?
Today, I've seen oil prices inch up as the value of the US dollar has dropped and reverse that trend as the US dollar regained some value.
Who's the chicken and who's the egg here?
I don't know how to format here to insert an image, but here's a link to oil:gold chart for the last 3 years.
http://stockcharts.com/c-sc/sc?s=$WTIC:$GOLD&p=W&yr=3&mn=0&dy=0&id=t31084408462& amp;r=4249
As you can see from the chart, oil is rising even vs. gold.
Once the smoke clears and the mirrors break, there's going to be a hell of a fall.
I'm not sure if I dare use the word 'interesting' to describe your work - but, it is. The bit about oil producing nations suddenly developing an aversion for paper dollars in exchange for their oil and gas, is really interesting. I think China is going to be in a very advantageous position relative to the United States, precisely because because of it's enormous manufacturing base. China, compared to the US, has such a lot of 'stuff' to barter and exchange, for oil and gas, as it has grown to become the workshop of the world. I know this is a really big and complicated subject, but your piece just got me thinking.
Economise, localise, and produce.
This is the only long term solution.
Good work.
Let's take local food production: I was a very small scale, certified organic farmer at one time. I eventually shut down because it financially wasn't worth the effort unless I invested a lot more capital to expand. This was during a period when people had money. However, if we assume that people will have less disposable income in the future, I wouldn't have started my farm in the first place because they couldn't afford my crops.
My arguement is that it appears, and really I don't mean this as a slam against anyone, these kinds of things (ELP)are usually posited by people who aren't actually doing it/have done it.
If one accepts Hirsch's wedges, it is already too late to take meaningful action on a wide scale. I think what we are heading for are lifeboat communities scattered here and there.
Todd, could you provide some details about your small scale farm, such as your start up costs, what equipment you deemed necessary, etc? Your experience would be useful for those of us who wish to construct our own lifeboats. Thanks
I'm not sure my experience is indicative of costs, expenses, etc. that others might see but I'll do my best.
I live in the Coast Range Mountains of northern California at 3,060'. Our cliamte is more midwestern then CA. We just had 4-5" of snow two weeks ago. Our business plan was to provide organic food to our local, small marketing area as well as offering U-pick. The crops included apples, pears, peaches, persimons, plums and vegetables. I had a good idea of what crops to grow because I was on the board of the local food co-op.
Our intent, until the trees matured to give relable crops, was to focus upon two high value vegetables - tomatoes and strawberries - although we grew many others. Because people in my area do put in a few tomato plants, we had to aim for the earliest possible ripening dates. Therefore, we grew all our plants in a 1,000sf greenhouse and set out plants that were fully mature in order to beat the home growers. When moved out of the greenhouse, they were grown using approved hydroponic nutrients, that is, I fertigated them. We were high tech.
In the case of the strawberries, we grew everbearing day neutral plants in order to spread out the picking and not overload the local market as would have happened with June bearing plants. I also did research during this time growing them in vertical grow bags to make picking easier.
Now, to the bottom line. Our equipment consisted of a 1949 Ferguson wheel tractor and associated equipment and a Troy-Bilt tiller. The fertigation system used simple aspirator injectors. The real deal was the greenhouse.
In order to make more than day wages, we needed to expand not only the greehouse space but also begin to sell in other markets. I estimated we need an additional 3,000sf of greenhouse space, would have to install a produce cooler and make some sort of cooler for my pick-up since we would have driven up to 60 miles to more populated areas. These changes would have allowed us to hire pickers while we were on the road but I felt it didn't make economic sense.
I know this doesn't answer all your questions but it's a start.
I'd suggest taking a look at the Sustainable Agriculture and Education site (SARE). They used to have a free, downloadable book entitled The New American Farmer in their publications section.
http://www.sare.org
ANother site with sustaibale information is:
http://www.sarep.ucdavis.edu
How difficult is the maintance on the tractor, considering its over 50 years old? Considering its age it got be pretty mechanically basic, although I was concern finding replacement parts for these old tractors.
I've seen new small diesel tractors that have caught my eye. I like the idea of getting a diesel since I think aquiring diesel will be easier than gasoline (ie Coal to diesel).
>Therefore, we grew all our plants in a 1,000sf greenhouse and set out plants that were fully mature in order to beat the home growers.
I was thinking of including a greenhouse, but I suspect that unless its backed up with a heater, it probably will only provide three to four weeks of the growing season. I might consider a small, well insulated greenhouse, backed up with a wood stove to grow a few citrus trees and for an early seedling start for crops that need an extended growing season.
It will be interesting to see what happens to food prices this year with all the maddness of making ethanol.
I don't know whether you'll come back to this thread but in case you do...
Until society collapses, you'll be able to rebuild any old iron out there. Do a search for "old iron" and you'll find lots of links.
When I got rid of the Ferguson wheel tractor, I bought a John Deer 540 crawler (That's from 1954.). Parts? No problem. It's like the "very popular" JD MC3. Yea, I know it doesn't mean anything to you.
On new stuff; I have concerns. The old stuff is out there and you can usually find a piece of junk with what you need. Will this be true with newer equpiment? I don't know. As an aside, I was driving a '57 Jeep 4x4 PU with a '63 Ford 262 engine until I got my "new" '87 Mazada 4x4 in about 1989. I had no problems finding parts for the old farts but the Mazada has an orphan engine and it's a pain...and it only has 222k miles on it now.
All of this old stuff is really simple to repair and work on.
I'm going to have to post this so I can see your other questions.
Most people in the industry are going to either high tunnel or hoop houses. They can be heated with propane and cooled with pads and fans. They weren't popular when we were doing it plus we can get big snows that would collapse them since they have flimsy frames and poly coverings. Our biggest snow in the last 25 years was about 5'.
We used Tedlar coated fiberglass on our greenhouse. We had a rock floor plus a number of 55 gallon drums of water to store heat yet we always had problems keeping the temperature high enough in late winter/early spring...I just did a calculation and we had one that was about 300sf and one that was 1,500sf so we had closer to 1,800sf rather then the 1,000sf I mentioned in my initial post.
I would suggest buying the book Solviva by Anna Edey, 1998, ISBN 0-9662349-0-1. She had a greenhouse on Martha's Vineyard that was heated by the sun and animals.
Hope this helps.
Summary of food production start-up costs (from memory of my purchases, in decreasing order of cost):
There are lots of unsustaiable options such as drip tape, plastic row covers, et.al. But, if the intent is to live off of local prodcution, then these things have to be rejected out of hand. As do all the marvelous theories that claim you can grow all your food on 4,000sf which, in essence, robs nutrients from other areas to feed the planted area.
What is going to kill local production is lack of phosphorous. That is why I'm currently conducting work on ultra high carbon soils, specifically Terra Preta soils. But, this is beyond TOD - contact me if you are interested because there are too many links.
That doesn't mean it can't be done. Milton Maciel in Brazil often posts on the Energy Resources forum about orgainc sugar cane production. Here is just one of his posts:
http://groups.yahoo.com/group/energyresources/message/90368
I also forgot another site that might be of interest:
http://www.newfarm.org
So, I've tried to side step a lot of stuff so as to not clog TOD. BUT...I'm glad to have a continuing conversation off the forum.
Let me also offer a book that everyone should read, The Integral Urban House by the Farallones Institute, ISBN 0-87156-213-8. It's out of print but Powells.com had some the last time I checked. For some on-line flavor see:
http://www.motherearthnews.com/menarch/archive/issues/042/042-124-01.htm.
If the link doesn't work do a Google search.
What about using a pond or small lake as a water source (of course depending on the eviroment)? I was thinking this might be a better solution, especially the ground well water has a high salt content that would degrade the soil over time.
Another idea, is to use an underground watering system, to conserve water use. This would probably only apply to perennials or no-til farming and would be much more expensive.
>That doesn't mean it can't be done. Milton Maciel in Brazil often posts on the Energy Resources forum about orgainc sugar cane production.
I've read similar articles about innoculating legumes to enrich depleted soil. From what I read, using a good crop rotation that includes biodiverse legumes works well for nitrogen replacement. Although this does not solve problem of mineral depletion phosphate, potassium, molybdenum, etc, which will require some external input.
Thanks for the links. I've found several of the articles on newfarm.org very useful.
Surface water is highly regulated in many states. Here in Oregon, for example, you must apply to the state Water Resources Department for water rights to draw from any surface source (as well as any ground water source, for that matter). From my discussions with the local water master, I've learned that there are no surface water rights of significance to be allocated in the Willamette Valley. Your mileage may vary in other states.
I'll temper my reaction because of 1 thing. Bush's new chief-of-staff, Bolten, is looking for ways to dramatize that Bush feels your pain on high gas prices. So this may just be PR...
As an aside, it is therefore overstated for bears to point out that commercial stocks are around 25mm barrels higher than the five-year avg.
I guess he's counting on no hurricanes...
http://www.cnn.com/2006/POLITICS/04/25/bush.energy/
http://www2.spr.doe.gov/DIR/SilverStream/Pages/pgDailyInventoryReportViewDOE_new.html
Has anybody been tracking the ratios of sweet and sour to see if the only oil available to go back into the reserve is sour? It has been getting refilled at a pretty good clip, a couple of million barrels per day... Oh, I take that back, it's a couple of million barrels in a month.
Less than 1/10 of one percent of world production has been going back into the reserve. Or another way to look at it, with oil consumption growing at about 1 million bbl/day per year, the quantity of excess oil being put away for a rainy day (raining bunker busters that is) is erased by less than a month of world consumption growth.
We've talked/argued quite a bit about Sudan lately and the dire situation in Darfur. A civil war is taking place in Sudan, and ethnic strife is increasing in many countries/regions in that whole area. Recently a heavily armed rebel group invaded neighbouring Chad from Sudan. This may or may not have something to do with oil, and who controls it, my guess is, it does. I think Sudan produces about 500,000 barrels of oil a day, and Chad around 150,000 to 180,000. There is lot of speculation that both countries may contain substantially larger reserves.
China is investing heavily in Sudan and buys nearly all its oil. The French control the fledgling oil industry in Chad. There have also been reports of Chinese troops or 'advisors' being seen in Sudan. The French have about 1,000 soldiers in Chad and 6 mirage jets. Chad used to be part of the French Empire.
Anyway the 'invasion' by the rebels from Sudan was stopped by the French jets and the rumoured use of a handful of French ground troops to give the government forces some 'backbone.' The rebels pulled back across the border into Sudan. They will be back.
The interesting thing was what they left behind. Lots of expensive and brand new weapons, vehicles and uniforms, that wouldn't have disgraced any army. Where did all this stuff come from? After all the rebels have nothing but sand. The rumour is, so I heard, is that it all was paid for and delivered by the Chinese. Now, in the great scheme of things, this skermish in the desert, isn't that important: but it does open up some interesting perspectives for the future, no?
Your little account of the Sudan/Chad situation is really quite apropos to the subject at hand: countries jockeying for position in the face of tightening oil exports. It reminds me of the bitter rivalry between European colonial powers in Africa during the late 19th Century. I'm afraid we ain't seen nothing yet.
On the subject of where the rebels' arms came from, arms like oil is a pretty fungible commodity, particularly the low-end stuff like guns, mines, shoulder-fired missiles, etc. Somehow, people always seem to find the money to obtain arms. It has always amazed me how even the poorest, crappiest countries in the world are never lacking in two things: Mercedes S-Series limos for high-ranking government officials, and a squadron of late model jet fighters.
Supposedly, they have even offered Saudi Arabia nuclear weapons, though the Saudis refused (for fear of how Washington would react, not because they didn't want them).
I heard a rumour that Saudi Arabia actually had bought nuclear bombs, and had placed them in strategic points in its main oil producing regions as a kind of Doomsday weapon it the event of anyone invading the country.
I'm not sure how much credence one should give these rumours/stories, apart from their 'entertainment' value.
That woodstove will definitively be installed before winter!
Best from Holland
http://www.timesonline.co.uk/article/0,,13509-2150389,00.html
Notice three nations not mentioned
here.
The Three-Georgia,Armenia, and Iran.
From 020106
But more dramatically perhaps, Georgia has been forced to turn to Iran for help. For the first time in 30 years, it is again receiving Iranian gas.
Now why is Georgia going thru Azerbaijan
to get gas from Iran, while Rice assures
Greece and Turkey that they can get their
gas from the Azeris.
Curiouser and curiouser.
James
Turning Dirty Coal Into Clean Energy
http://www.npr.org/templates/story/story.php?storyId=5356683
http://www.msnbc.msn.com/id/12469582/
http://today.reuters.com/news/articlenews.aspx?type=politicsNews&storyid=2006-04-25T142043Z_01_W BT005206_RTRUKOC_0_US-BUSH-ENERGY-SPR.xml
http://money.cnn.com/2006/04/25/news/economy/bush_energy/index.htm
Jerome a Paris is correct - if the Democrats don't get on the ball and own this energy issue, the Republicans will jump on it. That one sentence will be good for a 1 percent jump in Dubya's approval rating. It sounds like these moves and this speech will cut the legs right out from under the likes of Schumer.
As more ethanol refineries come onstream and tax breaks for ethanol take hold, I expect to see at some point a substantial increase in the price of corn--maybe not too long before November elections;-)
The most recent declaration is from the OIL monopoly, and has nothing to do with gas.
I note the difference between the two - but there is nothing to say that one can't learn from the success of the other.