Oil Answers

An answer to what is going on with oil:

Our Finite World
Why “supply and demand” doesn’t work for oil
Posted on November 23, 2015
by Gail Tverberg
http://ourfiniteworld.com/2015/11/23/why-supply-and-demand-doesnt-work-for-oil/

... The traditional view of the impact of low oil prices seems to be, “It is just another cycle.” Or, “The cure for low prices is low prices.”

I am doubtful that either of these views is right. Falling prices have been a problem for a wide range of commodities since 2011 (Figure 2, above). The Wall Street Journal reported that as early as 2013, when oil prices were still above $100 per barrel, none of the world’s “super major” oil companies covered its dividends with cash flow.

Thus, if prices are to be sufficiently high that oil companies don’t need to keep going deeper into debt, a price of well over $100 per barrel is needed. We would need an oil price close to triple its current level. This would be a major challenge, especially if prices of other commodities also need to rise because production costs are higher than current prices...

Oil Questions

On the national news last night, a report on fuel said that the price of oil was still down because Saudi Arabia and others are flooding the markets with oil.

However, my recollection is that Saudi Arabia and others are holding production levels steady, not increasing them, which is what would happen if they were "flooding" the markets with oil.

Therefore, we are only left with:

(1) a radical decrease in demand, and/or

(2) a removal of some process which artificially held prices up for a long time, and/or

(3) Scrooge McDuck actually does run the world economic system.

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Fracking

Apparently Oklahoma is the earthquake capitol of the contiguous USA, and this is due to fracking.

When I first read about fracking, it was obvious that introjecting large amounts of fluids into the earth would be a problem, because the fluids would tend to decrease friction between adjacent stone particles. First one disturbs the ground, then one reduces the friction, and that seemed a bad idea.


I did not take any particular braininess to see that.
The principle is that of shaving every morning: water makes the razor move across the beard easier.
Water, not soap. Water accounts for most of the ease of shaving, and soap accounts for no more than 10% of total friction reduction.

If the chemicals which are in the fracking fluids also reduce the surface tension of the water, then the water is made "wetter". This is what laundry detergents do: reduce the cohesion of water molecules, allowing them to infiltrate the pores and interstices of the fabrics in the washing machine.

You can even hear it. Start filling the washing machine and listen to the sound of the water falling into it. Add the detergent. You should immediately be able to detect  a reduction in the harshness of the noise of the water falling. The water's surface tension is reduced, and the infalling water easily pushes the water present in the washing machine aside.

If this particular problem of fracking was not contained in every environmental assessment of potential fracking sites, then the personnel involved were either incompetent or liars or both.

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Starbuck's

Starbuck's is reported to be moving its bottled water business out of California due to the drought.

I am not a wild-eyed radical, but I have never bought bottled water, except for my parents if they wanted me to get them some, and I have rarely drank bottled water.
Years ago, I took one look at bottled water - and here I mean the small and individual plastic bottles of 12 ounce or so capacity  -  and immediately thought it to be a bad idea.

All that plastic made from fossil fuels struck me as bizarre.

I also never use the Keurig-style coffee / tea makers; same reason; plus the fact that I do not like the taste.

I think of all of that and the effects of climate change... and the Sargasso Sea of plastic in the middle of the Pacific Ocean... and this is why, dear reader, I started throwing popsicle sticks out of my automobile window. After all, they are wood. Why should I attempt to push garbage against the tide?

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Keystone?

Every time I read the news I read about how the new Congress is going to approve the Keystone XL pipeline.

Since the oil will be coming from Canada, maybe we should see what they say about falling oil prices and oilsands exports.

MaClean's
Is it time to panic in the oil sands?

If the current pricing trends continue, at least one of the proposed oil sands pipeline projects would no longer be needed

Andrew Leach
November 29, 2014
http://www.macleans.ca/economy/economicanalysis/is-it-time-to-panic-in-the-oil-sands/

...  if the current pricing trends continue, and appear to be longer-lived, expect to see a much lower long-term forecast for oil sands, not to mention light oil from the U.S. Bakken, the next time around. Such a change, as you can see in the figure below, could mean that at least one of the proposed pipeline projects would no longer be needed within the forecast horizon.

See the article for larger image.

Notice this was published at the end of November, 2014, and oil has fallen more since.

Essentially, production for export of Canada Oil (on left axis) may fall far short of what is in this old forecast by the Canadian Association of Petroleum Producers.

So, what's the Keystone gonna carry, Senator Mitch McConnell?

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The Trouble With Political Obsessions

 Alberta Oilsands

To paraphrase Scotty, in the film The Thing From Another World , produced by Howard Hawks and directed by Christian Nyby, "That's the Republicans for ya! Smart all the way to the top!"

Today's news:

First job for new Republican Senate is Keystone XL: McConnell
Reuters
20 hours ago
 http://news.yahoo.com/first-job-republican-senate-keystone-xl-mcconnell-203827076.html

WASHINGTON (Reuters) - The new Republican-controlled Senate's first act in January will be approval of the Keystone XL pipeline, Republican leader Mitch McConnell said on Tuesday.

McConnell told reporters that the bill would be based on a measure that failed in the Senate last month that was co-sponsored by North Dakota Republican John Hoeven and Louisiana Democrat Mary Landrieu.

"It'll be open for amendment," McConnell said. "I will hope that senators on both sides will offer energy-related amendments but there'll be no effort to try to micromanage the amendment process." ...

 And this is all fine. They did win the mid-term election.

However,
Canadian heavy oil drops below US$40 as new oilsands projects rev up

Robert Tuttle, Bloomberg News | December 15, 2014 | Last Updated: Dec 15 3:58 PM ET

... Canada’s oilsands producers will probably be the first to cut output amid falling prices, Greg Sharenow, executive vice president of Pacific Investment Management Co. said this month.
Canadian crude produced from oilsands is some of the world’s most expensive to produce as it must be dug or pumped from the ground, turned into lighter synthetic crude and then transported by pipeline or rail thousands of miles to refineries...

Who knows?

And the trouble with political obsessions is the simple fact that what is does not always agree with a political viewpoint.

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The Meaning Of "Independence"

Pretend you are the nominee in 2016, and answer question about US energy exports raised at a candidates' debate based on the following 2 sources of information:


(1) 
The Christian Science Monitor(November 2013)
http://www.csmonitor.com/Environment/Energy-Voices/2013/1107/Should-the-US-export-oil

Should The US Export Oil?

..."Exporting energy is good for the economy," wrote Blake Clayton, an adjunct fellow for energy at the Council on Foreign Relations, in a June policy memo. "Letting drillers reap extra profits from selling crude oil overseas, if the market dictates, would provide greater incentives for drilling, stimulating new supply. It would also encourage investment in oil and gas production in the United States rather than abroad."

[...]

 Supporting the free market and supporting open trade is a key priority for our industry as well as the President," API  (American Petroleum Institute) spokesman Reid Porter said in an e-mailed statement. "It creates efficiencies, creates jobs, and increases revenue to our government.  These points are often made as part of our public discourse in the context of API’s priority issues.”

(2)
SCITIZEN  (May 2012)
http://www.scitizen.com/future-energies/the-oil-industry-s-deceitful-promise-of-american-energy-independence_a-14-3746.html

 The Oil Industry's Deceitful Promise of American Energy Independence

 ... the industry wants us to hold two contradictory ideas in our heads. The first is, of course, the already debunked 100-year claim. The second is that we are going to vastly expand our use of natural gas: for more electricity generation (for cleaner air, of course!), for more natural gas-powered vehicles, and for more natural gas-based chemicals. 

The industry even wants us to believe that there will be enough left over to export to other countries. How the supposed 100-year supply--which is premised on the current rate of consumption--is going to last that long if the country continually grows that rate is simply glossed over. Add to that what any realistic analysis reveals, namely, that natural gas supplies will almost certainly turn out to be less than claimed, and it's easy to see why natural gas will never be the answer to American energy independence.6
We also have the truly bizarre claim that oil from deep shale formations in places such as North Dakota is going to provide the United States with enough production to reduce its imports to zero. The U.S. Energy Information Administration (EIA), however, puts the total technically recoverable resources of oil from deep shale formations at 24 billion barrels. This says nothing, of course, about whether such oil will be economically recoverable. And besides, 24 billion barrels constitutes only about 288 days of world supply or about 3 years of U.S. consumption. 

The rate of production of this type of oil, properly called tight oil, is expected to reach 1.3 mbpd by 2030. And, total U.S. oil production is expected to reach 6.7 mbpd by 2020 and begin to decline thereafter. Since U.S. consumption is projected to remain around 15 mbpd through 2030, the country will continue to import oil and oil products during this entire period...

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Keystone Pipeline, Aquifers, and Long-Term Consequences

Risk.
The risk of a spill, and the aftermath.
Governments come and go, but the residents live with the long-term aftermath of the accidents left by governmental policies, such as the nuclear facility in Hanford, Washington, which has been a potential problem since 1943.

Read about long-term consequences, on the ground and below the ground where an aquifer would be, in a ral-life situation:

AGU Blogosphere
Terra Central
http://blogs.agu.org/terracentral/2013/03/21/epa-to-enbridge-dredge-more-submerged-oil-from-the-kalamazoo-river/
21 March 2013
EPA to Enbridge: Dredge More Submerged Oil from the Kalamazoo River

Posted by John Freeland

The EPA has ordered additional dredging at three locations shown in red (Source: USEPA)

On July 25 2010, the 30-inch diameter Enbridge 6B pipeline ruptured near Marshall, Michigan. Roughly 1 million gallons of diluted bitumen (DilBit) from Canadian oil sands spilled into Talmadge Creek, a tributary to the Kalamazoo River. Nearly three years later, the cleanup continues.

Last week, the U.S. EPA issued a final Administrative Order requiring Enbridge, the owner of the pipeline, to conduct additional dredging to remove submerged oil from three portions of the Kalamazoo river and from sediment traps installed after the spill. EPA’s Cover letter and supporting documents are available here.

Rationale for Additional Dredging
Briefly, the EPA’s rationale for more dredging comes from data collected after extensive and ongoing monitoring of oil sheen and sludge. Analytical chemistry has identified the ruptured Enbridge 6B pipeline as the source...

Results of the poling identified three areas of submerged oil accumulation, as shown on the above map... The three areas are located in segments of the river with relatively low flow velocities, consistent with a hydrodynamic model of the river’s variable current along its length. Sampling over the past year has shown that the oil is not stationary, however, but is slowly moving downstream and into portions of Morrow Lake.

Weak Natural Attenuation and Net Environmental Benefit Analysis
An EPA bench study found that potential biodegradation of the oil in the Kalamazoo River, under optimum conditions, is only about 25 percent. Cold, dark benthic conditions make for slow decomposition. This undoubtedly played a major part in the decision to order additional dredging. Most cleanup operations inflict some kind of negative impact on the environment...

Concerns over DilBit
Tar Sands Pipelines Safety Risks, a 2011 joint report by the Natural Resources Defense Council, National Wildlife Federation, Sierra Club and the Pipeline Safety Trust, raises concerns over the chemical and physical properties of DilBit. The diluents added to reduce the viscosity of tar sand crude in pipelines contain benzene and polycyclic aromatic hydrocarbons. Benzene is a carcinogen and levels found in the air following the Enbridge 6B discharge prompted a voluntary evacuation of nearby homes.

(note: emphases mine; :benthic" = deep earth)
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Sancte Leibowitz, Ora Pro Nobis

In Al Jazeera:
http://www.aljazeera.com/programmes/specialseries/2013/04/201344105231487582.html
(a story on the oil cartels)

...The US and Putin‘s Russia would prop up despots, and exploit regional conflicts to maintain a grip on the oil fields of the Caucusus and the Caspian.
But they would not have counted on the rise of a new, strong and hungry China, with an almost limitless appetite for oil and energy. Today, the US, Russia and China contest the control of the former USSR’s fossil fuel reserves, and the supply routes. A three-handed match, with the world as spectators, between three ferocious beasts – The American eagle, the Russian bear, and the Chinese dragon.

This type of scenario emphasizes why it is so important that a certain level of civilization and technology be maintained, for if there were to occur a major war or major disruptions, economic or climate, and the level of civilization were to suffer a depression and loss of wealth, would the survivors be able to use the remaining fossil fuels.... which would be the most difficult to tap into?

We have no guarantees. By consuming irreplaceable resources, we deny any easy fix for future generations who find themselves in a temporary technology deflation, decline, or hiatus.

When plain song is heard in the cloisters of St. Leibowitz, fossil fuels will be too far away and difficult of access.
From the depletion of cheap fuels to warm us on wintry nights, O, Saint Leibowitz, deliver us!

(inspired by Arsen at Gulf Ghenes)
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Leviathan Socialism

Meaning the Fossil Fuel Industry... of which I own stock, I hasten to state. I own stock in a company whose turn it now is to have some billion dollar problems. As the schemes and ruses employed to wring more and more oil out of Mother Earth become more arcane and more complex, the inevitable accidents will become more and more expensive.

In fact, they will probably reach a point where we must treat them like Nuclear Energy and essentially let the taxpayers pay for disasters or otherwise bail them out, or we could cut them adrift and embrace some other source of energy.

However, in the meantime, in this happy, happy Indian Summer of Oil and other fossil fuels, we may as well get some background on Shell, the world's biggest oil company.

http://www.presseurop.eu/en/content/article/1701281-john-donovan-shell-s-nightmare
John Donovan, Shell's Nightmare

and his site:

http://royaldutchshellplc.com/

I think it will provide us with the required background for the decidedly science-fiction type of energy future we will be facing soon.

Now to the Socialism.
Socialism of Risk is the situation where the risk and the cost of the risky outcomes are borne by society at large, such as Bail-Out of Banks and Bail-Out of Nuclear Energy (Fukushima, e.g.)

In Bloomberg we read:

Shell’s Alaska Plan Doesn’t Eliminate Spill Risks, GAO Says 
By Katarzyna Klimasinska
Mar 30, 2012 4:00 PM ET

Royal Dutch Shell Plc (RDSA)’s plan for oil drilling off Alaska’s north coast fails to deal with some risks linked to operating in the remote region, the U.S. Government Accountability Office said...

Any clean-up would be paid by the taxpayers.
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Check In With Stuart Smith

Oil in the Gulf of Mexico:

http://www.stuarthsmith.com/aerial-dispersant-spraying-cant-hide-oil-slicks-near-deepwater-horizon-site

December 14, 2011

It’s a hauntingly familiar sight: Airplanes buzzing over the Gulf of Mexico spraying toxic dispersant in a flight path from Breton Sound bearing southeast to the Macondo Prospect, the epicenter of last year’s monster oil spill. Yet despite these regular Corexit sprayings, the oil slicks and sheen persist – visible from the air – in the waters surrounding the Deepwater Horizon site. According to On Wings of Care pilot Bonny Schumaker, who flew over the site on Dec. 9, the surface oil is fanning out “in lines and patches over an area of at least 50 square miles.”

Last month, aerial surveillance footage captured a fleet of huge oil-related vessels, some equipped with ROVs, working the waters above the Macondo Prospect. BP gave the bogus explanation that it’s conducting research on “natural seeps in the area” ....  It was a typical BP “non-denial denial” – acknowledging the problem but denying any blame – to blunt escalating public concern over fresh oil that’s been reported at the site since Aug. 19.

As I’ve mentioned here before, BP was required to conduct a survey of the seafloor prior to drilling in the Macondo Prospect. There is no record of any large natural seeps in the area that has ever been produced. Therefore, we can assume that any seeps that now exist must be tied to the BP disaster and the heavy-handed attempts to cap the gushing well, such as lowering a 70-ton dome over top of it. Those activities are likely to have caused cracks and fissures in the seafloor around the wellhead.

That sort of seafloor leakage cannot be capped, plugged or killed. It will continue until the Macondo Prospect essentially runs dry (see link below to my previous post). According to BP, the prospect was estimated to have contained 50 million barrels before last year’s disaster, which spewed approximately 5 million barrels into the Gulf. You do the math. It ain’t pretty.

So it goes...
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Peak Oil

Peak Oil has come and gone. The only thing left are more and more expensive ways of wringing oil from the earth, like fracking. When environmental costs are added in, it is a terribly expensive process. We are where Olaf Stapledon foresaw: frenetically spending more and more on fossil fuels and madly expending energy in a cycle which gives us less and less.

It is time for people to start getting off the Macabre Merry-Go-Round, and to find their own sanctuaries and shelters.
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Let's Drill In Alaska!

Jay Bookman writes in The Atlanta Journal-Constitution. http://www.ajc.com/blogs/content/shared-blogs/ajc/bookman/ ANWR and $4 gasoline By Jay Bookman Friday, May 23, 2008, 11:03 AM The Atlanta Journal-Constitution The prospect of $4 gasoline has no doubt convinced folks to stay a little closer to home over the holiday weekend, and it has also gotten people more than a little angry at politicians who let us get into this situation. So here’s a little data to help clarify things: For decades, the Republicans have rebuffed calls for greater energy conservation and fuel efficiency with one line of attack that they have repeated over and over in various forms: We don’t need to conserve, we need to drill in the Arctic National Wildlife Refuge… If only those silly environmentalists would let us drill in ANWR…. Why do those liberals love caribou more than humans…. Why do those greenies want us to stay dependent on foreign oil…. Yadayadayada. Well, now we know the truth. The federal Energy Information Agency, a branch of the Energy Department and part of the Bush administration, has released a study of the impact of opening ANWR on oil prices. The study can be found at the EIA’s website. Here’s what the EIA found: At peak production somewhere around 2030, oil from ANWR would reduce the price of oil — now about $135 a barrel — by a whoppingly huge 75 cents. That’s a decline of 0.55 percent, or barely two cents on a gallon of gasoline. And we’d probably never see even that tiny reduction, the EIA warned. “Assuming that world oil markets continue to work as they do today, the Organization of Petroleum Exporting Countries (OPEC) could neutralize any potential price impact of ANWR oil production by reducing its oil exports by an equal amount,” it concluded. Just thought you’d want to know….

Magic Wand

The President has stated that there is no magic wand which he might wave to force back the price of fuel. Unfortunately, he is mistaken. He seems to have forgotten that he himself established the existence of such a magic wand. When did this President abandon the ways of magical thinking? He used to think magically. What else could you call his actions: talking to some sort of deity about launching a war, looking into the souls of Russians? Pure magic. The old magical wand he used to believe in was: Invade a Middle Eastern country and oil will be cheap! The War will pay for itself and supply will be assured for the future.