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Hurricane Rita coverage from The Oil Drum
The Oil Drum
Several recent entries with in-depth analysis and coverage of Hurrican Rita. The Oil Drum did a great job covering Katrina and they look set to do an even better job on Rita. They've pulled together all the maps, industry sources and scenario's anyone could wish for; lets hope its a storm in a teacup.
On Low Quality Hydrocarbons (Part I)
Stuart Staniford, The Oil Drum
As most of us here know, the planet offers extremely large amounts of low quality hydrocarbons (LQHCs) that could, in principle, be converted to synthetic crude to displace conventional oil as it depletes. The major sources are tar sands (especially in Alberta), oil shale (especially in Colorado), and extra-heavy oil which will not flow readily (especially in the Orinoco region of Venezuela). Then there is also the possibility of converting coal to liquid hydrocarbons via the Fischer-Tropsch process.
Many peak-oil sceptics believe these resources will save our high-acceleration gasoline-powered lifestyle. In this two part series, I'll look at some models of how such a transition might occur.
...Although all of these resources differ in exactly how they are obtained, they are similar in that they are much more expensive to extract - requiring lots of capital, energy input, etc, to produce a useful output. One measure of this is the EROEI - the energy return on energy invested - how much energy you have to put in to to extract and make usable a resource versus how much you get out. In the early years of conventional oil, EROEI was often over 50. These days it's probably in the low teens (10-12). EROEI on LQHCs tends to be around 3.
However, the total amount of these resources is at least as big as the world's endowment of conventional oil, perhaps significantly bigger depending on eventual recovery rates. Canada has nearly 2 trillion barrels of tar in the tar sands, though only 300GB are currently viewed as recoverable, Venezuela has 1.4 trillion barrels of extra heavy oil, though recovery rates are unlikely to ever exceed 20%. Colorado has entire mountains of oil shale. The governor of Montana has argued that Montana has enough coal to provide the US with all the syncrude it needs for 40 years.
(21 September 2005)
Dear mainstream media, why aren't you covering energy issues in depth like this? NY Times? LA Times? Business Week? It's amazing what a group of volunteers running a website on a shoestring can do. -BA
For Oil Companies, Less Is More
Bill Farren-Price, International Herald Tribune via Rigzone
High prices are changing the economics of marginal oil developments; but oil companies are not betting the prices will last.
With benchmark prices topping $70 a barrel on Aug. 30, and contracts for future delivery holding above $60, the companies are looking again at projects demanding expensive technology and secondary recovery techniques, and at unconventional reserves in
Canada and Venezuela. Investment in Canadian oil sands and shale projects topped $6 billion in 2004, while production of extra-heavy crude from Venezuela's Orinoco belt has risen 20 percent in two years. But, while some analysts say high prices are here to stay, and most industry observers expect them to hold at least into 2006, most major oil companies are still basing their long-term plans on an assumption that supply and demand will eventually return prices to historic average levels, said Yasser Elguindi, an industry specialist and senior managing director of Medley Global Advisors, based in New York.
"Oil companies still are not sure that a paradigm shift has occurred in the oil market and are still conservatively pricing a $20 to $30 long-term oil price," Elguindi said in a telephone interview last week.
(20 September 2005)
Before the oil runs out: How US can cope when gas prices surge
John Dillin, Christian Science Monitor
Right now, prices are falling as the summer driving season ends and Gulf Coast refineries return to service. Yet the long-term outlook appears shaky. That's because the future price of oil, which hinges on everything from OPEC policies to Chinese energy demands, could easily keep going up.
But there are at least four areas where oil-importing nations can dampen the effects of a rise in oil prices. The United States has fallen short in anticipating all four, energy experts say. For example:
• Refining capacity...
• Government policy. Back in the 1970s energy crisis, which included an OPEC oil embargo, Congress got tough with actions that included creation of the Strategic Petroleum Reserve, minimum gas-mileage requirements for cars and trucks (CAFE standards), and "double nickel" (55 mile-per-hour) speed limits.
By comparison, this Congress and president took less decisive measures. They have subsidized alternative energy and passed an energy bill this year. The White House has proposed raising CAFE standards slightly. But it was too little and too late to head off the price spike. Both branches of the federal government could become more active if prices keep moving up.
• Auto efficiency...
• Energy planners. Both government and private officials didn't foresee the current oil squeeze. So they didn't promote policies to encourage construction of new refineries, foster training of more oil-field experts, and reverse a recent decline in the fuel mileage of America's auto and truck fleet.
An oil industry specialist, speaking on background, notes that during the 1980s, when activity in US oil fields went into sharp decline, as many as 1 million people, many with valuable knowledge, were let go by the oil industry. Even now, Americans seeking advanced degrees in skills valuable to the industry are few and far between.
With specialists again in demand in US oil fields, some major companies are having trouble getting geologists and petroleum engineers.
The most crucial factor affecting gas prices, of course, is the price of oil. And OPEC, the Organization of Petroleum Exporting Countries, is doing little to meet rising demand...
(21 September 2005)
A good article marred by the assumptions that 1) there are no alternatives to automobiles 2) this energy crisis is only a small bump in the road. -BA
A push to build new US refineries
Mark Clayton, Christian Science Monitor
Hurricane damage highlights fall in capacity and boosts gas prices.
It took one of the nation's worst natural disasters to do it. But momentum is growing to build new refineries in the United States after a 29-year hiatus.
By shutting down 20 percent of the country's oil- refining capacity in a single day - and boosting prices nationwide by more than 45 cents a gallon on average in a week - hurricane Katrina has exposed just how stretched the nation's refineries are. Now industry and Congress are looking at how to boost capacity.
(21 September 2005)
Virgin's Richard Branson, Oil Tycoon?
Confounded by today's prices, the billionaire [and airline owner] explains why he's trying to get into exploration and refining
Billionaire entrepreneur Sir Richard Branson isn't the type to sit on his tropical island in the Caribbean and merely fume about lethargic politicians. He's the maverick founder of Britain's Virgin Group, an empire of 200 companies in industries as diverse as air and rail travel, mobile phones, finance, insurance, beverages, hotel, Internet, and modeling ventures, spanning 30 countries.
He has spent the past week lobbying the Canadian government ... pushing his solution to high oil prices because, he says, the politicians won't. His answer: build a $2 billion oil refinery and take Virgin into the field of oil exploration.
Branson spoke with BusinessWeek Senior Writer Diane Brady about his plans for Virgin Oil. Edited excerpts of their recent conversation follow
(20 September 2005)