Thursday, August 24, 2006

Bubble? No!

It isn't a Bubble, it is a pustule. Feel free to try for one upmanship.

13 comments:

HARM said...

Yuk, dude! Funny, but grossss.

Marinite said...

Flatulence from the ass of the fat Lady America soaking in her hot tub.

Rob Dawg said...

Marinite,

And most certainly the tune emanating from the bursting foam will be the immortal lyrics of Mr. Don Ho; "Tiny Bubbles."

Anonymous said...

Can I pop it?

-Jack

TJ & The Bear said...

Gross!

OT, Robert... Love your work, but still can't quite understand your position on 'peak oil'.

The issue isn't how much we have left, just how quickly it can be purveyed to the end-user in useful form. Tar sands, shale, offshore deep drilling... sure, there's enough oil to keep us all running for another century (or more). Only problem is that we can't get it out fast enough.

Same problem with any viable alternatives to gas & oil -- the production, refinement and distribution systems simply aren't in place.

Rob Dawg said...

TJ&B,
Thanks for the nice compliments. I'll try to exp;ain my position onthe peakenese.

Peak Oil is a fundamentally fatally flawed theory. It is additionally flawed in several other ways but those don't matter once you understand the fatal flaw. How much $5/bbl oil is left? Almost none; maybe some Saudi old fields or corners of Trxas that were overlooked. How muc $20 oil? Some, even some in Pennsylvania. How much $70 oil? So much we don't have the capacity to store it, refine it or use it all. $100 oil? Infinite, yes infinite. At $100 so many alternatives compete that oil at $100 is reduced to legacy applications, lubricants, plastics, chemicals and such. Energy is fungible and the rate of exchange is not BTUs but money. Were electricity 30 cents per kWh half the homes in California would go solar positive. That alone would cut US oil/natgas consumption but 2-3% as well as free up generating capacity. Multiply for the rest of the Sunshine Belt and do the math.

TJ & The Bear said...

Robert,

Greetings again from the Hollywood Hills!

Your "fatal flaw" addresses the cost element of extraction, but not the time element.

Again, "Peak Oil" isn't about supply, it's about production. We've reached the point where new $100/bbl production can't be ramped up fast enough to make up for the decline rates of the old $20/bbl oil. Doesn't matter a whit how much oil is in the ground and where; we simply don't have the equipment and people to get at it.

Alternatives? Again, assuming you have a ready supply, how quickly can you set up a national distribution system?

BTW, I fully expect technology to solve the problem... eventually. Should be interesting (e.g., $200/bbl) in the meantime.

Rob Dawg said...

Alright, then $150 oil and we will be swimming in it again. Youdon't understand the fatal flaw and it is clearly my fault. Peak Oil depends upon an absolute supply limited constraint. I'll mention another fatal flaw. Cantrell II has more recoverable oil found just this march than Peak Oil predicts would have been available worldwide ever. Oh, and the US "peak?" We've extracted more oil from the ground in the contigious 48 since 1975 than was known to exist in 1975 and have MORE absolute reserves than we did then. Peak Oil is a children's fairy tale. Hasn't worked for 149 years, Iknow where to place the next bet.

TJ & The Bear said...

Peak Oil depends upon an absolute supply limited constraint.

Oversimplifying a bit, are we not? Peak Oil is dependent upon both the absolute supply and the progressive difficulty inherent in full exploitation. IOW, the big stuff is easily found and tapped; everything else is smaller, harder to get to and produces at lower rates, thereby leading to a peak wherein increases from new production cannot keep up with declines in old production.

Cantrell II has more recoverable oil found just this march than Peak Oil predicts would have been available worldwide ever.

Aug. 2 (Bloomberg) -- Petroleos Mexicanos, Mexico's state- owned oil monopoly, said production at its Cantarell oil field, the world's second-largest by volume, will decline 8 percent in 2006, dropping faster than its December estimate of a 6 percent.

Cantarell will produce 1.86 million barrels of crude a day in 2006, Vinicio Suro, deputy director of planning and evaluation for Pemex's production and exploration unit, said in a conference call with analysts. Pemex in December said the field, which accounted for 57 percent of Mexican crude output in the first half of this year, would produce 1.9 million barrels per day in 2006 compared with 2.03 million barrels a day in 2005.

``The slides that they're starting to see out of Cantarell must have a lot of people stressed at Pemex,'' said John Padilla, director of IPD Latin America, an energy consulting firm with offices in Mexico City, Caracas and New York.

Pemex, the world's third-largest oil company by crude production, hasn't spent enough to develop deep-water deposits or the fractured oil pockets onshore that could eventually replace production at Cantarell because the state-run company doesn't plan much beyond the presidents' six-year term, Padilla said. Pemex accounts for about 40 percent of government revenue.

With efforts to stem Cantarell's decline and to boost output at peripheral fields, daily production at the company may decline to less than 2.8 million barrels by 2010 and 2.5 million barrels by 2012, Padilla said.


We've extracted more oil from the ground in the contigious 48 since 1975 than was known to exist in 1975 and have MORE absolute reserves than we did then.

Crude oil production peaked in the 48 states at 9.4 million barrels per day in 1970. As production fell in the 48 states, Alaska's production came on line and helped supply U.S. needs. Alaskan production peaked at 2.0 million barrels per day in 1988; in 2005, production stood at 43 percent of the peak level. [DOE, Energy Information Agency's Annual Energy Review, Energy Perspectives: 1949-2005.]

Again, I believe this is only a problem for the next decade or so, but it could get exciting in the interim.

Anonymous said...

Since the topic seems to have moved from bubbles to oil, I would be interested in getting youir take on the Kinder Morgan buyout.

Lex

Rob Dawg said...

Anon 9:58,

Infrastructure has been sadly neglected wherever Wallstreet interests intrude. Witness BP in Alaska.

If the taking private is truly taking private then it is a good thing as infrastructure won't take a backseat. Of course they decided in June so they might have overestimated the value based on natgas prices. Don't ask me too much, I tried to get an $80oil contact filled recently. It was a quick turn play but I would have been wiped out immediately I can be really stupid even if I sound like I know what I'm talking about.

Rob Dawg said...

RC: Peak Oil depends upon an absolute supply limited constraint.

TJ&B: Oversimplifying a bit, are we not? Peak Oil is dependent upon both the absolute supply and the progressive difficulty inherent in full exploitation.

I challenge you to support that with peak oil documentation. They say there is just so much oil and after peak oil it just plain old gets too hard to get more REGARDLESS OF PRICE. My emphasis.

The peakense also suffer from luddism. They don't acknowledge the influence of technology in growing recoverable reserves.

This is real simple, how much oil can you buy for $20/bbl? None. How much do you want delivered to your door tomorrow for $90/bbl? Infinite. Yes, you offer $90 and every single drop of world production is yours.

TJ & The Bear said...

Ahhh, but therein lie's the rub... "infinite" and "every single drop of world production" are two entirely different things.

Sure, we can debate semantics and the perceptions of "peak oil" forever. However, my specific interest lies in (a) the very real possibility that the world's overall production capacity may be peaking, (b) that world demand for oil is quickly overtaking its production capacity -- peak or no peak. Should such circumstances come to pass, the impact on society could be interesting to say the least.

Even the Saudi's are worried

Oil demand could outpace Saudi production capacity
By JIM KRANE
THE ASSOCIATED PRESS

DAMMAM, Saudi Arabia — The world's only oil superpower boosted output last month, starting a pair of projects that are part of a massive $55 billion endeavor to keep pace with the world's ever-intensifying thirst for oil.

But demand for the world's premiere source of energy is rising so fast — by around 2 million barrels per day each year — that even Saudi Arabia's vast resources will be unable to cope without drastic help, oil executives and analysts say.

Remarkably, even Saudis, who control over a quarter of the world's known oil, are calling for relief from relentless consumption.

"The current out-of-control demand is not good for us," Ghazi Al-Rawi, head of private equity at Gulf One Investment Bank, said in a recent interview. "When you have this kind of demand, you're forced to supply beyond the optimal rate. That's not a positive thing."

Most urgently needed is energy conservation, especially in the United States, which now burns up a quarter of the oil sold to the world, said Saddad al-Husseini, the former head of production at state-owned Saudi Aramco.

Also critical is the development of fuels from oil-rich sands or natural gas that can act as substitutes for oil. Other producing countries — especially OPEC's No. 2 and 3 leaders Iran and Iraq — could ease the crunch by boosting exports to handle a greater share of the surging demand in China and India, Saudi experts said.

"We need some help," said Nawaf Obaid, a Saudi petroleum adviser with close ties to the government.

If such help doesn't materialize and Saudi Arabia maxes its output — cranking out perhaps 35 percent more oil than it does today — the kingdom's proven reserves might only sustain those gushing flows for a couple of decades before starting to dwindle, al-Husseini said.

"Can (global consumers) afford to keep increasing demand by almost 2 million barrels a day each year? Is it Saudi Arabia's role to meet that demand?" asked al-Husseini, who retired in 2004 after working 32 years in the kingdom's oil sector. "You're leading yourself to having to find an alternative source of energy very quickly."

Few analysts believe oil worldwide is actually running out. But experts differ on whether the current soaring oil demand will outstrip the current supplies, and how quickly.

Many blame today's tight market on 20 years of low oil prices that stifled investment in new wells, refining and exports.

Keeping prices high is the best way to meet demand over the next decade or two, said Leonardo Maugeri, an executive with the Italian energy company ENI. High prices give investors incentive to spend the billions needed to boost oil production and develop alternate fuels, Maugeri wrote in the current issue of Foreign Affairs.

But Maugeri also wrote that it takes six to eight years for oil from a new well to reach consumers. Developing oil sands or natural gas-based diesel fuel is even slower and more expensive.

Saudis worry that consumer demand could overwhelm the slow progress in bringing new energies to market. "If this continues, you'll have demand outstripping supply over the next five years by a wide margin," said Obaid.