505 replies to this topic

[Mind]

How do you think a place like Quebec will fare in the 'slide' and 'cliff' phases?

I think Quebec has a lot of smart people that will figure out new energy solutions.

[Mind]

So, um, out of curiosity, what did the economist say?

The economist just had a puzzled look and kind-of nodded and mumbled. My feeling was that she didn't want to put the anchor down by saying...."what good would that do?", but then again maybe she thought congressional investigations would be just fine.

[Mind]

Purified uranium doesn't magically jump out of the ground in Africa or Australia, fly across the ocean and then assemble into atomic piles in the U.S. And all the Homer Simpsons who work at the nuclear power plant need gasoline to commute.

Fossil fuels are not needed to dig uranium out of the ground, nor to purify it, nor to move it across oceans. Nor does Homer need to drive to work. If he rode a bike he would be a lot thinner and healthier.

Fossil fuels just make the whole project a whole hell of a lot easier. In fact, considering all the human labor it would take, the resulting electrical power might not even be worth it.

[lightowl]

The Foresight Exchange Prediction Market has set up an exchange on the "Year of Peak Oil"

The Claim

This is a scaled claim that will pay (5*(the first year-2000)) between 2004 and 2020 in which oil production has declined by at least 3% from the previous year according to the BP Statistical Review of World Energy-and is followed by another year with a decline of at least 3%. If there is no such year, this claim pays 1.

Note: the last year for which the judge will consider production figures are those for 2020.

Direct links to BP Statistical Review of Oil production:
Website
Datafile

Edited by lightowl, 24 April 2005 - 06:54 PM.

[kevin]

Link: http://www.guardian....1464119,00.html

---

The end of oil is closer than you think

Oil production could peak next year, reports John Vidal. Just kiss your lifestyle goodbye

Thursday April 21, 2005
The Guardian

The one thing that international bankers don't want to hear is that the second Great Depression may be round the corner. But last week, a group of ultra-conservative Swiss financiers asked a retired English petroleum geologist living in Ireland to tell them about the beginning of the end of the oil age.
They called Colin Campbell, who helped to found the London-based Oil Depletion Analysis Centre because he is an industry man through and through, has no financial agenda and has spent most of a lifetime on the front line of oil exploration on three continents. He was chief geologist for Amoco, a vice-president of Fina, and has worked for BP, Texaco, Shell, ChevronTexaco and Exxon in a dozen different countries.

"Don't worry about oil running out; it won't for very many years," the Oxford PhD told the bankers in a message that he will repeat to businessmen, academics and investment analysts at a conference in Edinburgh next week. "The issue is the long downward slope that opens on the other side of peak production. Oil and gas dominate our lives, and their decline will change the world in radical and unpredictable ways," he says.
Campbell reckons global peak production of conventional oil - the kind associated with gushing oil wells - is approaching fast, perhaps even next year. His calculations are based on historical and present production data, published reserves and discoveries of companies and governments, estimates of reserves lodged with the US Securities and Exchange Commission, speeches by oil chiefs and a deep knowledge of how the industry works.

"About 944bn barrels of oil has so far been extracted, some 764bn remains extractable in known fields, or reserves, and a further 142bn of reserves are classed as 'yet-to-find', meaning what oil is expected to be discovered. If this is so, then the overall oil peak arrives next year," he says.

If he is correct, then global oil production can be expected to decline steadily at about 2-3% a year, the cost of everything from travel, heating, agriculture, trade, and anything made of plastic rises. And the scramble to control oil resources intensifies. As one US analyst said this week: "Just kiss your lifestyle goodbye."

But the Campbell analysis is way off the much more optimistic official figures. The US Geological Survey (USGS) states that reserves in 2000 (its latest figures) of recoverable oil were about three trillion barrels and that peak production will not come for about 30 years. The International Energy Agency (IEA) believes that oil will peak between "2013 and 2037" and Saudi Arabia, Kuwait, Iraq and Iran, four countries with much of the world's known reserves, report little if any depletion of reserves. Meanwhile, the oil companies - which do not make public estimates of their own "peak oil" - say there is no shortage of oil and gas for the long term. "The world holds enough proved reserves for 40 years of supply and at least 60 years of gas supply at current consumption rates," said BP this week.

Indeed, almost every year for 150 years, the oil industry has produced more than it did the year before, and predictions of oil running out or peaking have always been proved wrong. Today, the industry is producing about 83m barrels a day, with big new fields in Azerbaijan, Angola, Algeria, the deep waters of the Gulf of Mexico and elsewhere soon expected on stream.

But the business of estimating oil reserves is contentious and political. According to Campbell, companies seldom report their true findings for commercial reasons, and governments - which own 90% of the reserves - often lie. Most official figures, he says, are grossly unreliable: "Estimating reserves is a scientific business. There is a range of uncertainty but it is not impossible to get a good idea of what a field contains. Reporting [reserves], however, is a political act."

According to Campbell and other oil industry sources, the two most widely used estimates of world oil reserves, drawn up by the Oil and Gas Journal and the BP Statistical Review, both rely on reserve estimates provided to them by governments and industry and do not question their accuracy.

Companies, says Campbell, "under-report their new discoveries to comply with strict US stock exchange rules, but then revise them upwards over time", partly to boost their share prices with "good news" results. "I do not think that I ever told the truth about the size of a prospect. That was not the game we were in," he says. "As we were competing for funds with other subsidiaries around the world, we had to exaggerate."

Most serious of all, he and other oil depletion analysts and petroleum geologists, most of whom have been in the industry for years, accuse the US of using questionable statistical probability models to calculate global reserves and Opec countries of drastically revising upwards their reserves in the 1980s.

"The estimates for the Opec countries were systematically exaggerated in the late 1980s to win a greater slice of the allocation cake. Middle East official reserves jumped 43% in just three years despite no new major finds," he says.

The study of "peak oil" - the point at which half the total oil known to have existed in a field or a country has been consumed, beyond which extraction goes into irreversible decline - used to be back-of-the envelope guesswork. It was not taken seriously by business or governments, mainly because oil has always been cheap and plentiful.

In the wake of the Iraq war, the rapid economic rise of China, global warming and recent record oil prices, the debate has shifted from "if" there is a global peak to "when".

The US government knows that conventional oil is running out fast. According to a report on oil shales and unconventional oil supplies prepared by the US office of petroleum reserves last year, "world oil reserves are being depleted three times as fast as they are being discovered. Oil is being produced from past discoveries, but the re­serves are not being fully replaced. Remaining oil reserves of individual oil companies must continue to shrink. The disparity between increasing production and declining discoveries can only have one outcome: a practical supply limit will be reached and future supply to meet conventional oil demand will not be available."

It continues: "Although there is no agreement about the date that world oil production will peak, forecasts presented by USGS geologist Les Magoon, the Oil and Gas Journal, and others expect the peak will occur between 2003 and 2020. What is notable ... is that none extend beyond the year 2020, suggesting that the world may be facing shortfalls much sooner than expected."

According to Bill Powers, editor of the Canadian Energy Viewpoint investment journal, there is a growing belief among geologists who study world oil supply that production "is soon headed into an irreversible decline ... The US government does not want to admit the reality of the situation. Dr Campbell's thesis, and those of others like him, are becoming the mainstream."

In the absence of reliable official figures, geologists and analysts are turning to the grandfather of oil depletion analysis, M King Hubbert, a Shell geologist who in 1956 showed mathematically that exploitation of any oilfield follows a predictable "bell curve" trend, which is slow to take off, rises steeply, flattens and then descends again steeply. The biggest and easiest exploited oilfields were always found early in the history of exploration, while smaller ones were developed as production from the big fields declined. He accurately predicted that US domestic oil production would peak around 1970, 40 years after the period of peak discovery around 1930.

Many oil analysts now take the "Hubbert peak" model seriously, and the USGS, national and oil company figures with a large dose of salt. Similar patterns of peak discovery and production have been found throughout all the world's main oilfields. The first North Sea discovery was in 1969, discoveries peaked in 1973 and the UK passed its production peak in 1999. The British portion of the basin is now in serious decline and the Norwegian sector has levelled off.

Other analysts are also questioning afresh the oil companies' data. US Wall street energy group Herold last month compared the stated reserves of the world's leading oil companies with their quoted discoveries, and production levels. Herold predicts that the seven largest will all begin seeing production declines within four years. Deutsche Bank analysts report that global oil production will peak in 2014.

According to Chris Skrebowski, editor of Petroleum Review, a monthly magazine published by the Energy Institute in London, conventional oil reserves are now declining about 4-6% a year worldwide. He says 18 large oil-producing countries, including Britain, and 32 smaller ones, have declining production; and he expects Denmark, Malaysia, Brunei, China, Mexico and India all to reach their peak in the next few years.

"We should be worried. Time is short and we are not even at the point where we admit we have a problem," Skrebowski says. "Governments are always excessively optimistic. The problem is that the peak, which I think is 2008, is tomorrow in planning terms."

On the other hand, Equatorial Guinea, Sao Tome, Chad and Angola are are all expected to grow strongly.

What is agreed is that world oil demand is surging. The International Energy Agency, which collates national figures and predicts demand, says developing countries could push demand up 47% to 121m barrels a day by 2030, and that oil companies and oil-producing nations must spend about $100bn a year to develop new supplies to keep pace.

According to the IEA, demand rose faster in 2004 than in any year since 1976. China's oil consumption, which accounted for a third of extra global demand last year, grew 17% and is expected to double over 15 years to more than 10m barrels a day - half the US's present demand. India's consumption is expected to rise by nearly 30% in the next five years. If world demand continues to grow at 2% a year, then almost 160m barrels a day will need to be extracted in 2035, twice as much as today.

That, say most geologists is almost inconceivable. According to industry consultants IHS Energy, 90% of all known reserves are now in production, suggesting that few major discoveries remain to be made. Shell says its reserves fell last year because it only found enough oil to replace 15-25 % of what the company produced. BP told the US stock exchange that it replaced only 89% of its production in 2004.

Moreover, oil supply is increasingly limited to a few giant fields, with 10% of all production coming from just four fields and 80% from fields discovered before 1970. Even finding a field the size of Ghawar in Saudi Arabia, by far the world's largest and said to have another 125bn barrels, would only meet world demand for about 10 years.

"All the major discoveries were in the 1960s, since when they have been declining gradually over time, give or take the occasional spike and trough," says Campbell. "The whole world has now been seismically searched and picked over. Geological knowledge has improved enormously in the past 30 years and it is almost inconceivable now that major fields remain to be found."

He accepts there may be a big field or two left in Russia, and more in Africa, but these would have little bearing on world supplies. Unconventional deposits like tar sands and shale may only slow the production decline.

"The first half of the oil age now closes," says Campbell. "It lasted 150 years and saw the rapid expansion of industry, transport, trade, agriculture and financial capital, allowing the population to expand six-fold. The second half now dawns, and will be marked by the decline of oil and all that depends on it, including financial capital."

So did the Swiss bankers comprehend the seriousness of the situation when he talked to them? "There is no company on the stock exchange that doesn't make a tacit assumption about the availability of energy," says Campbell. "It is almost impossible for bankers to accept it. It is so out of their mindset."

Crude alternatives

"Unconventional" petroleum reserves, which are not included in some totals of reserves, include:

Heavy oils

These can be pumped just like conventional petroleum except that they are much thicker, more polluting, and require more extensive refining. They are found in more than 30 countries, but about 90% of estimated reserves are in the Orinoco "heavy oil belt" of Venezuela, which has an estimated 1.2 trillion barrels. About one third of the oil is potentially recoverable using current technology.

Tar sands

These are found in sedimentary rocks and must be dug out and crushed in giant opencast mines. But it takes five to 10 times the energy, area and water to mine, process and upgrade the tars that it does to process conventional oil. The Athabasca deposits in Alberta, Canada are the world's largest resource, with estimated reserves of 1.8 trillion barrels, of which about 280-300bn barrels may be recoverable. Production now accounts for about 20% of Canada's oil supply.

Oil shales

These are seen as the US government's energy stopgap. They exist in large quantities in ecologically sensitive parts of Colorado, Wyoming and Utah at varying depths, but the industrial process needed to extract the oil demands hot water, making it much more expensive and less energy-efficient than conventional oil. The mining operation is extremely damaging to the environment. Shell, Exxon, ChevronTexaco and other oil companies are investing billions of dollars in this expensive oil production method.

Talk about it: What do we do when the oil runs out?

[advancedatheist]

http://www.guardian....1470330,00.html

Analyst fears global oil crisis in three years

John Vidal, environment editor
Tuesday April 26, 2005
The Guardian

One of the world's leading energy analysts yesterday called for an independent assessment of global oil reserves because he believed that Middle Eastern countries may have far less than officially stated and that oil prices could double to more than $100 a barrel within three years, triggering economic collapse.

Matthew Simmons, an adviser to President George Bush and chairman of the Wall Street energy investment company Simmons, said that "peak oil" - when global oil production rises to its highest point before declining irreversibly - was rapidly approaching even as demand was increasing.

"This is a new era," Mr Simmons told a conference of oil industry analysts, government officials and academics in Edinburgh. "There is a big chance that Saudi Arabia actually peaked production in 1981. We have no reliable data. Our data collection system for oil is rubbish. I suspect that if we had, we would find that we are over-producing in most of our major fields and that we should be throttling back. We may have passed that point."

Mr Simmons told the meeting that it was inevitable that the price of oil would soar above $100 as supplies failed to meet demand. "Demand is pulling away from supply...and we have to ask whether we have the resources that we think we do. It could be catastrophic if we do not anticipate when peak oil comes."

[advancedatheist]

http://db.riskwaters...tml?page=217558

Expect oil at $150 in a decade, Soros colleague warns

London • 28 April 2005 • Jim Rogers, co-founder with George Soros of the Quantum Fund, has predicted oil will be at $150 within the next 10 years.

Speaking at the Hedge Funds World Global Opportunities 2005 conference, Rogers was negative on chances of the oil price being forced down in the near future.

"The question on oil will be how high the price goes and stays, because there may be vast amounts of oil in the world but no one has discovered a great oilfield in over 35 years.

"The Alaskan and Mexican fields are in decline, and while the North Sea has made the UK one of the great oil exporters in the last 20 years, within the decade the UK will be a net importer.

"In the 1960s we discovered North America, Mexico and the North Sea, and the world knew the oil would come to market. But the price of oil went up 10 times, because it could not get to market quickly enough.

"If you think the price of oil is going to $32 and staying there, let me know where the oil is coming from. I expect the price will be $100–$150 within the decade, and the bull run in commodities will come to an end when it reaches $110."

But, but, I thought the free market creates natural resources! Apparently Rogers has broken ranks with his corncucopian colleagues in the libertarian camp.

[advancedatheist]

http://www.businessw...d=apn_home_down

Small oil company touts discovery

MAY. 4 5:32 P.M. ET  A tiny oil company has snapped up leasing rights to a half-million acres in central Utah that it says could yield a billion barrels or more of oil.

Geologists are calling it a spectacular find -- the largest onshore discovery in at least 30 years, located in a region of complex geology long abandoned for exploration by major oil companies. It's turning out to contain high-quality oil already commanding a premium at refineries....

What nonsense. The world consumes a billion barrels of oil every eleven days. This field won't make any real difference.

"It's just very highly unlikely because the U.S. onshore has been picked clean, if you will," said Fadel Gheit, senior oil analyst at Oppenheimer & Co. in New York.

"That's like finding a wallet in the subway after all the cleaners went through it. It's possible, but very highly unlikely," he said.

[jaydfox]

What nonsense. The world consumes a billion barrels of oil every eleven days. This field won't make any real difference.

Well, it's in the U.S., so you know that not one drop will be exported. The world might go through that in 11 days, but the U.S. goes through that every seven weeks or so.

Actually, if we let it offset all our oil from Saudi Arabia (the Republican tactic, see my earlier post about the Alaskan oil Senate vote), it would last us three years or so.

[Lazarus Long]

Well, it's in the U.S., so you know that not one drop will be exported. The world might go through that in 11 days, but the U.S. goes through that every seven weeks or so.

Jay Oil Industries are multinationals and the assumption you are making that this oil will go to US only concerns is simply not supported by fact. The oil does now and always will go to the highest bidder under a first come first serve basis in a free market.

The only time this relationship is altered to the markets is when the product is controlled by cartels or government, as in our U.S. Strategic Petroleum Reserve used by Clinton to stabilize market pricing and oppose cartel manipulations.

History of Strategic Reserve

http://www.iht.com/a...ss/reserve.html

The developers of ANWR are not guaranteed to be US firms and the end users are not really either as this development is to feed global markets for profit not exclusively US markets and ANWR is not a part of the Strategic Oil Reserve just because it is on Federal Land. Especially if the development is controlled by private as opposed to public concerns.

DOE: Releasing Crude Oil From the

[jaydfox]

Hmm, I find it funny that the U.S. would export oil when it imports 60% of its oil, but nobody ever said that capitalism is 100% efficient...

[Lazarus Long]

Jay a lot of oil simply follows the laws of fluids and takes the easiest course downhill but you might be surprised to find that downhill from the Arctic isn't just through a *pipeline* to the US but also a sea route to Asia. The ultimate criteria for multinational corporations that rally control oil production and distribution is profit. If the Japanese and even the Chinese are willing to pay premium pricing (along with shipping costs) then they will sell to them before our domestic market.

It is also important to address an assumption that many are making with respect to nuclear energy. More nuclear doesn't equal less oil.

I think this is too comprehensive and important an article to go without notice and comment. I have often heard many people assert the kinds of fallacies this article helps to unravel. Please set aside politics for a moment and examine the physics and economics of the issues.

There is another good in today's NY Times that discusses the fact that there has not been a refinery built in the US in 29 years. I think it is worth posting them both but I will do so separately.

http://www.nytimes.c...s/09energy.html?

When It Comes to Replacing Oil Imports, Nuclear Is No Easy Option, Experts Say

By MATTHEW L. WALD
Published: May 9, 2005

WASHINGTON, May 8 - President Bush has proposed reducing oil imports by increasing the use of nuclear power, which he said in a recent speech was "one of the most promising sources of energy."

There is a problem, though: reactors make electricity, not oil. And oil does not make much electricity.

Nuclear reactors produce about 20 percent of the electricity used in the United States and about 8 percent of the total energy consumed. Oil accounts for 41 percent of energy consumption.

Could a few dozen more reactors, in addition to the 103 running now, cut into oil's share of the energy market?

"Indirectly, but very indirectly," said Lawrence J. Goldstein, president of the Petroleum Industry Research Foundation, a nonprofit group that studies the economics of oil. People who think nuclear power is a way to reduce oil imports are "confusing several issues," he said.

Peter A. Bradford, a former member of the Nuclear Regulatory Commission, added, "No one knowledgeable about energy policy would link nuclear power and gasoline prices."

In the puzzle of energy consumption and production, however, experts point to three intersections of oil and nuclear power that would offer opportunities to cut demand for oil, pushing down its price and strategic significance. But all are limited, clumsy, expensive or dependent on new technologies whose success is not guaranteed, the experts say.

The first option is to replace the oil used to make electricity with new nuclear reactors. But most of the oil in the electric sector has already been replaced, by coal.

According to the Energy Department, last year the electric utilities used about 207 million barrels of oil, or less than 600,000 barrels a day. (Total American consumption of oil is about 20.5 million barrels a day.)

Even the 600,000-barrel figure is higher than what nuclear reactors could replace, because some of that oil is used in generators that run only a few hundred hours a year. Reactors must run continuously, so they could not replace the oil-fired plants that are used only intermittently.

The electric system consumes another fuel that nuclear power could replace: natural gas. Last year, American utilities burned just under 5.4 trillion cubic feet of natural gas, out of total consumption of 22.3 trillion cubic feet.

"You can get a scenario where nuclear would free the gas to go to other things," replacing oil and gasoline, said Thomas Capps, the chairman of Dominion, one of several electric companies that have expressed interest in building new nuclear reactors. "You can run cars on natural gas," he said.

The technology for that is available, but not many people use it. According to the Natural Gas Vehicle Coalition, a lobbying group, about 130,000 such vehicles are on American roads today, out of more than 200 million. After decades of promoting natural gas, federal and state governments have made some headway in persuading commercial fleets to switch. But they have essentially given up on selling natural gas to ordinary consumers, who have been unwilling to convert their vehicles to use it.

There is also little economic incentive behind using natural gas. Mr. Goldstein noted that the current wholesale price of gas, about $7 per million B.T.U. (the standard unit by which gas is sold), is the equivalent of $42 per barrel for oil. But oil now sells for about $50 a barrel, which means the price difference is not enough to induce a switch.

Gas must also be pressurized for a car to hold enough to travel more than a few miles; pressurizing it and distributing it to service stations would add expense.

But there is another way that nuclear reactors could influence the oil supply, one that bypasses electricity completely. Nuclear engineers are working on designs and materials for a new class of reactors - which could be ready in about 20 years - whose main product would be heat.

The Idaho National Laboratory in Idaho Falls, which is owned by the Department of Energy, is working on ways to take very hot steam from a nuclear reactor, then run a small electric current through it to separate the water molecules into hydrogen and oxygen. If that can be done more cheaply than the current method of producing hydrogen, which uses natural gas, the hydrogen could be used at refineries to make components of gasoline.

Gasoline is made of molecules with a certain ratio of carbon to hydrogen. Part of each barrel of oil consists of molecules with too much carbon to be useful in gasoline; instead, those molecules are used only in low-value products like asphalt and tar.

The technology exists for refineries to break up those molecules and add hydrogen, until the hydrogen-carbon ratio is suitable for making gasoline or diesel.

David Lifschultz, chief executive of Genoil, a company that makes systems for using hydrogen at refineries, says the oil supply being exhausted first is light oil, which has many components that can be used in gasoline. Heavy oil, with components high in carbon, is far more abundant and often sells at a discount of $20 or $25 a barrel, he said.

Available technology could convert 16 million barrels a day of heavy oil, about a sixth of the world supply, into gasoline components, Mr. Lifschultz said, driving down the price of light oil.

J. Stephen Herring, a consulting engineer at the Idaho lab, explained two other ways for reactors to make motor fuel.

Canada has vast reserves of shale oil, now being converted to ingredients of motor fuel by using natural gas. The gas is used to heat the shale to make its oil flow more easily, and hydrogen, also obtained from the natural gas, is incorporated into the oil to make it suitable for use in gasoline. But a nuclear reactor could do those jobs, delivering both hydrogen and steam for cooking the oil out of the rock, Mr. Herring said.

Another strategy, he said, would be to break down coal, shale oil or other hydrogen fuels into a gas comprising hydrogen and carbon monoxide. At high pressure, these materials could form molecules suitable for making gasoline or diesel. A reactor could provide the energy required.

But using a reactor to make the ingredients of gasoline is many years away; the new reactors being considered by utilities are similar to the ones running now. The experts say that only after several of those have been built and have run for a few years is a private company likely to try something more adventurous.

Mr. Herring did not fault that strategy. "If I were responsible for spending the billion dollars," he said, "I'd be conservative, too."

*************

No New Refineries in 29 Years? There Might Well Be a Reason

[Lazarus Long]

Since the article on the economics of Oil Refinery building are also too important to ignore, no matter how frustratingly economically arcane and not as glamorously political as may be imagined by too many I amgoing to post the article referenced above as well.

BTW, you should note that the refinery request under sstudy here is the only only noe currently prposed in the US. It should also be noted that it is designed to only produce 150K barrels of oil a day and the US consumes 20.5 MILLION barrels of oil PER DAY now.

http://www.nytimes.c...artner=homepage

No New Refineries in 29 Years? There Might Well Be a Reason
By JAD MOUAWAD
Published: May 9, 2005

About 100 miles southwest of Phoenix, in a remote patch off Interstate 8, Glenn McGinnis is seeking to do something that has not been done for 29 years in the United States. He is trying to build an oil refinery.

Part of his job is to persuade local officials and residents to allow a 150,000-barrel-a-day refinery in their backyard - no small task. Another is to find investors ready to risk $2.5 billion in a volatile industry. So far, the effort has consumed six years and $30 million, with precious little to show for it.

Oil industry analysts and trade organizations like the American Petroleum Institute say they know of no one else doing the same thing.

Even so, Mr. McGinnis - an industry veteran who joined Arizona Clean Fuels last year as chief executive to give the project more heft against long odds - cleared a significant hurdle recently when Arizona awarded him a crucial emissions permit. Still ahead are countless rounds of negotiations with local, state and federal agencies to secure dozens more permits.

Meanwhile, the 1,400-acre site picked for the refinery, an old citrus grove near the Mexican border, remains empty, a sign of why the United States is now grappling with an acute shortage of plants that can refine the more than 20 million of barrels of crude oil that the country consumes every day.

The last refinery to be completed in the United States was in 1976, and Mr. McGinnis knows all too well that community and political opposition squashed earlier projects. His proposed refinery in Arizona has already been forced away from its original site near Phoenix, in 2003, after the state considered expanding the city's clean-air limits.

But times may be changing, said Mr. McGinnis, an oil business veteran of 33 years who has run refineries in the United States and Aruba.

"The moon and the stars have aligned for us," he said, speaking on his cellphone between discussing crude oil supplies with Mexico's state oil company. "We're halfway through, and we still have a lot of work."

Long considered the ugly duckling of the oil industry, the refining business is now in the spotlight as Americans complain about sticker shock at the gasoline pumps and higher energy prices over all.

President Bush has taken notice. Last month, Crown Prince Abdullah of Saudi Arabia, visiting the president at his Texas ranch on April 25, chided him with the message that his country could send more oil, but the United States would not have the ability to refine it. Soon afterward, Mr. Bush offered to provide closed military bases for new refineries.

Over the last quarter-century, the number of refineries in the United States dropped to 149, less than half the number in 1981. Because companies have upgraded and expanded their aging operations, refining capacity during that time period shrank only 10 percent from its peak of 18.6 million barrels a day. At the same time, gasoline consumption has risen by 45 percent.

But in the last two years, the refining business has experienced a revival of sorts, leading some refiners to predict they have entered an age of higher margins and better returns. Not everyone agrees, but for the first time in a long time the industry is more confident about itself. Even with better economics, however, it is still tough to build a refinery from scratch. Mr. McGinnis says he is not afraid of the challenge. He and his staff work in a small office in Phoenix, mostly consumed these days with securing permits and looking for financial backing.

The next step is to complete an environmental impact statement for the federal Bureau of Land Management. That will include an assessment of the refinery's impact on underground water sources and endangered species, as well as its effect on any Native American burial grounds.

After that, the project needs to get the site's zoning changed by Yuma County from agricultural to heavy industrial; Arizona's preservation office needs to be convinced that the refinery does not trample on any ancient historic site or trail; and finally, the project must apply for a presidential permit, which is issued by the State Department, to allow the crossing of a 200-mile pipeline into Mexico.

The business of turning crude oil into gasoline, jet fuel or heating oil has rarely been a lucrative proposition. It has dismal profit margins compared with its more glamorous cousin, exploration. It is highly cyclical and fairly unpredictable, because demand for gasoline swings sharply by season. And because of low oil prices over the past decades, refiners have been forced into cutthroat competition that has driven many of the smaller refiners out of business.

More refining capacity will almost certainly be needed. Gasoline demand is forecast to rise 39 percent by 2025, to 12.9 million barrels a day, up from today's 9.3 million barrels, according to a long-term outlook by the Energy Information Administration. By then, gasoline alone will account for nearly half the crude oil consumed in the United States.

By contrast, domestic refining capacity is expected to grow only by 0.8 percent from 2005 to 2007, slightly less than the 0.9 percent increase registered between 1998 and 2004, according to Jacques Rousseau, an oil analyst with the investment banker Friedman, Billings, Ramsey.

Jay Saunders, who follows oil companies for Deutsche Bank, said that the increase in refining margins would lead to increased capacity. "The industry is definitely going to overbuild," he said, "they have in the past and they will in the future."

Others caution that the industry should be wary of recreating a glut of capacity that would cause profit margins to sink again. "Refining has been a cyclical business for a long time," said Bill Hauschildt, the vice president for global refining with ChevronTexaco. "In the past few years, there's been much more discipline in the market for not overbuilding capacity."

Part of the issue, according to refiners, is that substantial investments were made over the last decade to lower carbon emissions and meet low-sulfur fuels regulations. The American Petroleum Institute estimates the industry invested $47 billion on such investments. More investments will be needed through 2007 to clean up gasoline and diesel.

"This is going to cost you money and the only thing you will get is cleaner air and less emissions - which are good - but no new capacity," said Edward H. Murphy, the industry group's general downstream sector manager.

"What refiners need are clear guidance on what's permissible and what is not if they want to expand," Mr. Murphy said. "So far, that has not been very clear."

To make up for the domestic shortfall, gasoline imports from Europe and South America have been rising in recent years. Gasoline imports now account for nearly 10 percent of domestic consumption and have exceeded a million barrels a day on average throughout April.

But even as the United States grows more reliant on foreign gasoline, it will face mounting competition from other buyers where demand is similarly growing, like China and India. "More competition means imports might become more expensive," said Joanne Shore, an analyst with the government's Energy Information Administration.

For Bob Slaughter, the president of the National Petrochemical and Refiners Association, the industry's main trade group, "The question now is to keep the growth in imports at a reasonable level." He expects additional capacity will come from expansion of existing projects and not from the construction of new refineries like the one in Arizona.

Even if all goes to plan and investors are found, Mr. McGinnis's envisioned refinery will not be ready before late 2009.

The prospect of a new employer, 3,000 construction jobs and 600 permanent posts has done a lot to outweigh concerns over the project, said John Nussbaumer, the mayor of Wellton, a city of 1,900 people about 20 miles from the refinery site.

"Of course I am concerned about the effects on the environment," he said. "Would I rather see it somewhere else? Yes.

Would I oppose it at this time? No.

It's been too long since a new refinery was built in the United States. Anything we can do to reduce our dependency on the Middle East is a good thing."

[advancedatheist]

I don't know what to make of this. But if it does happen, take several thousand dollars out of savings and buy as much nonperishable food as possible before the rationing begins. It also wouldn't hurt to stock up on shoes, clothes, prescription drugs and other goods that wear out or get consumed.

http://www.huffingto...-sau_1.html#480

May 09, 2005

HUFFINGTON POST EXCLUSIVE: EMBARGOED BOOK CLAIMS SAUDI OIL INFRASTRUCTURE RIGGED FOR CATASTROPHIC SELF-DESTRUCTION

According to a new book exclusively obtained by the Huffington Post, Saudi Arabia has crafted a plan to protect itself from a possible invasion or internal attack. It includes the use of a series of explosives, including radioactive “dirty bombs,” that would cripple Saudi Arabian oil production and distribution systems for decades.

Bestselling author Gerald Posner lays out this “doomsday scenario” in his forthcoming “Secrets of the Kingdom: The Inside Story of the Saudi-US Connection” (Random House).

According to the book, which will be released to the public on May 17, based on National Security Agency electronic intercepts, the Saudi Arabian government has in place a nationwide, self-destruction explosive system composed of conventional explosives and dirty bombs strategically placed at the Kingdom’s key oil ports, pipelines, pumping stations, storage tanks, offshore platforms, and backup facilities. If activated, the bombs would destroy the infrastructure of the world’s largest oil supplier, and leave the country a contaminated nuclear wasteland ensuring that the Kingdom’s oil would be unusable to anyone. The NSA file is dubbed internally Petro SE, for petroleum scorched earth.

Edited by advancedatheist, 09 May 2005 - 08:10 PM.

[Lazarus Long]

Funny that you should post this right now, I was just listening to Huffington relate this opinion and supporting info on the radio right before you posted it.

I see that omega point getting closer all the time, at least in terms of information distribution but sometimes i also fear that this will winnow the flow of information down to total absurdity. This time however I do think it is a combination of synchronicity and coincidence though.

However the possibility of it being a real threat is one that people need to consider more seriously as it just happens to be a real tactic used in the region and was shown to be effective to the Saud's after the first Gulf war.

I’ll Huff And Puff And Blow Your Blog Down

Listen

[advancedatheist]

This would also explain Charlton Heston's words at the end of Planet of the Apes:

"You maniacs! You blew it up! Damn you! Damn you all to hell!"

[advancedatheist]

Sounds almost like a confession of "Peak Oil" to me:

http://www.msnbc.msn.com/id/5612507/

Oil prices rise above $52 a barrel

Worries about OPEC output weighs on crude

The Associated Press
Updated: 3:41 p.m. ET May 10, 2005

VIENNA, Austria - Oil prices rose slightly on Tuesday on speculation that supplies will be tight late in the year, confounding brokers who believe prices should be falling given that crude inventories are steadily rising....

The fear in the market right now is that demand will outstrip supply next winter, as a major OPEC producer said the cartel may not be able to pump enough oil to meet needs for the remainder of 2005. Analysts said bottlenecks in refining capacity have also helped to underpin prices, along with strong demand in Asia.

Prices were given an upward nudge Tuesday after Qatar’s oil minister, Abdullah Hamad al-Attiyah, raised concerns over the Organization of Petroleum Exporting Countries’ capacity to deal with demand for the next Northern Hemisphere winter, when global consumption peaks.

“OPEC is at its highest production in history. I am concerned about that. If we reach the full capacity now, we will tighten in the fourth quarter,” Dow Jones Newswires quoted al-Attiyah as saying.

OPEC pumps around 40 percent of world oil and raised production to about 30 million barrels daily this year in an effort to boost stocks and steady prices ahead of summer. The increased production has some analysts concerned that OPEC is pumping at full tilt, with no spare capacity in the event of an unscheduled outage or a sudden rise in global demand.

[wraith]

We made a model of one of these for my 9th grade science fair. I say 'we' - my Dad had a lot to do with it. He just loved science fairs! I guess they didn't have them when he was growing up. The design consisted of a clear plastic funnel backed with foil on one side. On the inside of the funnel was a coffee can wrapped in copper wool and painted black, filled with water (as a heat storing measure).

[jaydfox]

HUFFINGTON POST EXCLUSIVE: EMBARGOED BOOK CLAIMS SAUDI OIL INFRASTRUCTURE RIGGED FOR CATASTROPHIC SELF-DESTRUCTION

According to a new book exclusively obtained by the Huffington Post, Saudi Arabia has crafted a plan to protect itself from a possible invasion or internal attack. It includes the use of a series of explosives, including radioactive “dirty bombs,” that would cripple Saudi Arabian oil production and distribution systems for decades.

Makes me think of Dr. Strangelove. I love that movie. And I don't even fully appreciate all its many levels, but I still love it.

[advancedatheist]

http://www.theglobea...Story/Business/

Supply: Are Saudi reserves drying up?

By HARIS ANWAR

Friday, May 20, 2005 Updated at 11:31 PM EDT

From Saturday's Globe and Mail

The penny dropped as Matthew Simmons, a Texas-based energy investment banker, sat listening to oil geologists from one of the world's most secretive of companies.

"Our oil challenges: aging fields, rising levels of water, and complex formations," said the Saudi Aramco geologists in a presentation in the Saudi oil city of Dhahran.

Aramco, which controls 98 per cent of Saudi Arabia's oil reserves, has had its doors shut to the outside world for more than 50 years, keeping energy experts guessing about how much oil the kingdom actually has, and how long its gigantic fields can feed oil-thirsty economies such as the United States.

But this revelation from Saudi Aramco's oil geologists in 2003 was enough for Mr. Simmons to spend the next two years trying to solve the mystery surrounding Saudi oil fields.

"This was like a basketball coach saying: I got the world-class athletes, but they are just really old; they are losing their eyesight, and they're starting to use walkers," says Mr. Simmons, the chairman of Simmons & Co., and former member of U.S. Vice-President Dick Cheney's energy task force.

Mr. Simmons is one of those "petro pessimists" whose research shows that the entire Saudi oil system is old and fraying; that its oil production will soon reach an apex, and that the ensuing decline will result in the world confronting an immense oil shortage.

He disputes Aramco's assessment of Saudi oil reserves and future production, pointing to the increasing reliance on pumped water to maintain production from its five big fields, which account for 90 per cent of the kingdom's oil output.

Saudi Arabia produces 9.5 million barrels a day, or more than one-ninth of this year's expected global daily demand of 84 million barrels. The Paris-based International Energy Agency, or IEA, which advises 26 industrialized countries on energy issues, estimates Saudi Arabia has 261.9 billion barrels of "geologically proven" reserves, which are enough for another 25 years to maintain its leading position in the oil market.

Over all, Saudi officials claim, the kingdom may contain up to one trillion barrels of ultimately recoverable oil. It's the only producer in the Organization of Petroleum Exporting Countries (OPEC) cartel that keeps a buffer of spare capacity to swing oil markets when warranted.

But the recent oil price surge, and Saudi Arabia's apparent failure to use its spare capacity, suggest the kingdom's position in the oil supply-and-demand equation is changing.

[advancedatheist]

I find it fascinating that the same report generates completely opposite analyses:

http://www.forbes.co...afx2092547.html

BP says global oil reserves more than enough to meet rising demand

06.14.2005, 11:53 AM

LONDON (AFX) - Oil giant BP PLC believes the world's hydrocarbon reserves are more than adequate to support increasing demand for oil and gas in the coming years.

High energy prices will not be a constraint to investments in the industry, which have risen to record levels over the past year as companies step up efforts to search for more resources in an attempt to boost production.

Based on BP's 2005 Statistical Review of World Energy, released today, the world's proved reserves reached 1.2 trln barrels at end-2004, 17 pct more than they were 10 years ago.

About 62 pct of these reserves, or 734 mln barrels, were found in the Middle East. Saudi Arabia alone holds around 263 mln barrels, or over a fifth of the total.

'Proved reserves of oil and gas remain more than adequate to meet the world's growing needs for the immediately foreseeable future,' Peter Davies, BP's chief economist, told reporters and analysts in a briefing today.

versus,

http://today.reuters...RESERVES-BP.xml

BP says global oil reserves growth stalled in 2004
Tue Jun 14, 2005 4:09 PM BST

By Tom Bergin, European Oil and Gas Correspondent

LONDON (Reuters) - Growth in the world's oil and gas reserves stalled last year, a report from oil giant BP (BP.L: Quote, Profile, Research) showed on Tuesday, bucking a trend that has historically seen new discoveries more than match production.

The BP Statistical Review of World Energy, compiled from official government figures, will reinforce concerns about the ability of global oil supplies to match surging consumption, which grew 3.4 percent in 2004.

The world had 1,188.6 billion barrels of oil reserves at the end of 2004, compared to 1,188.3 billion at the end of 2003, BP, the world's second largest oil firm by market capitalisation, said.

The 0.02 percent growth rate was the lowest since 1990 and compares with a 10-year average above 1.5 percent per annum.

Last year's almost imperceptible rise in oil reserves came despite high prices, which normally help by encouraging new exploration and by making previously uneconomic resources commercial.

[rahein]

What do you think of the oil shale in the Rocky Mts? It is estimated that there is 1 trillion barrals of oil locked up in it. They also think they have a safe way of getting to it other then grinding up the rock. It it enough to at least put of the looming oil crisis until the people of the world are more willing to accept we have a problem?

[advancedatheist]

What do you think of the oil shale in the Rocky Mts? It is estimated that there is 1 trillion barrals of oil locked up in it. They also think they have a safe way of getting to it other then grinding up the rock. It it enough to at least put of the looming oil crisis until the people of the world are more willing to accept we have a problem?

Glad you asked that. I make the following public offer to the first person who can prove to me that he filled up his tank with gasoline made from misnamed "oil shale" that he or she bought from a commercial filling station: I will pay you US$ 1,000. I feel confident I will never have to pay up because for complicated thermodynamic reasons we will never derive net energy from this resource.

[advancedatheist]

From BP's Statistical Review of World Energy 2005:

http://www.bp.com/li...uction_2005.pdf



High prices can't make new natural gas supplies magically appear after they have depleted.

[advancedatheist]

http://www.businessw...d=apn_home_down

Oil prices cause paving costs to rise

UN. 14 1:49 P.M. ET  Warning to motorists this summer: Rough road ahead.

From New England -- where the punishing winters leave roads rutted, cracked and riddled with potholes in the spring -- to the Deep South, repaving projects are being canceled or postponed because of the rising price of oil, which is used to make asphalt as well as diesel for dump trucks, steamrollers and other heavy equipment...

Oil prices have climbed to about $54 a barrel, up about 75 percent from two years ago.

The full effect across the country will not be known until Congress passes a major new transportation spending bill, probably by the end of the month. Then states will know how much federal funding they will be getting.

But the industry publication Engineering News Record reported in April that the 20-city national average price for asphalt, a crude oil derivative, is up almost 13 percent from a year earlier to about $189 a ton.

Oil prices affect the cost of paving in other ways, too. Terrill Temple, county engineer for three Mississippi counties, where some projects have been delayed, said that when 20-ton dump trucks that move materials to a job site get just 5 or 6 miles per gallon, "yes sir, it has a big impact."

Also, contractors are paying higher prices for the No. 2 heating oil used to heat the asphalt so it can be mixed with sand or stone...

Highway engineers said they are seeing cost increases for other materials as well, including concrete, steel and the sand, stone and other aggregates that get blended with asphalt. Those increases stem mainly from the high energy costs of producing the materials.

[Mind]

High prices can't make new natural gas supplies magically appear after they have depleted.

No, but high prices will make demand go down and force conservation upon the poeple.

[rahein]

Glad you asked that. I make the following public offer to the first person who can prove to me that he filled up his tank with gasoline made from misnamed "oil shale" that he or she bought from a commercial filling station: I will pay you US$ 1,000. I feel confident I will never have to pay up because for complicated thermodynamic reasons we will never derive net energy from this resource.

By the time we must use oil shale for gas you might be paying $1,000 a gallon for it.

[advancedatheist]

No, but high prices will make demand go down and force conservation upon the poeple.

When it comes to energy in general, "supply" = "wealth." When the supply system starts to falter, people who use fossil fuels everywhere will become poorer in real terms because in the modern economy, fossils fuels do the real work. I don't think the movement to abolish slavery accidentally coincided with the introduction of coal into the productive process; coal, unlike slaves, doesn't need discipline and surveillance, and it can't run away.

Ironically even Ayn Rand seems to have understood this, despite her explicit propaganda about "man's mind" as the source of wealth. Without the energy from Galt's motor or from fossil fuels, Galt and his friends in their Rocky Mountain hideout would have had to live like the Amish or the people in the reality TV series Frontier House, no matter how much gold they had piled up or how hard they worked with their muscles.

[advancedatheist]

This goes to show how the various components of the life-support system based on fossil fuels interact. Substituting one resource for another doesn't necessarily solve the original shortage. If oil continues to escalate in price, the alternate fuels will also become more expensive:

http://www.reuters.c...storyID=8843561

US power plants could run short of coal

Mon Jun 20, 2005 06:08 PM ET

By Steve James

NEW YORK (Reuters) - Some U.S. power stations could run out of coal if a long hot summer pushes up demand at plants with already low stockpiles, the chief executive of the No. 2 U.S. coal producer said on Monday.

"I don't think there'll be blackouts but I think there's a possibility in a hot summer that somebody could go very, very low on coal," Arch Coal Inc. (ACI.N: Quote, Profile, Research) Chief Executive Steven Leer told the Reuters Energy Summit. Arch fuels approximately 7 percent of the electricity generated in the United States.

Coal inventories at many power stations are historically low, he said, and rail disruptions have delayed shipments of coal at a time when demand is soaring from higher oil prices.