[jeromie]

Late last year the IEA forecast difficult middle distillate supply problems through 2013. There is greater and greater demand for middle distillates building internationally each year. For every two gallons of middle distillate from crude oil there will be three gallons of gasolines and naptha. The reason cited by the IEA for the shortage will be shut in's of sour crude wells due to price discounts. Going the other way would be the huge availability of sour crudes from on site processing of heavy ( sour) crudes into light crudes for use by most extant refineries . These are processes similar to that of Ivanhoe Energy. The other source of middle distillate , at least in the US, will be the huge availability of Syncrude after completion of the Alberta- Superior pipeline under construction and a number of upgraders also under construction. Both of these aspects will not come on line until around 2013. Saudi Arabia is going all out to have their reserves of sour crudes ready as well.

In the meantime, there could well be a global shortage of diesel and heating fuels and a gas glut in North America if major portions of Syncrude production middle distillates wind up exported.

[Frank]

Thank you for your replies. I have to re-read them when in a more studious frame of mind. This is fascinating.

[jeromie]

What I posted is highly general. For example, middle distillate is convertible to gasoline by added refining. This refining also creates finished product like Jet Fuel from middle distillates. So, to some very marginal extent gasoline supply can be forced up to accommodate gas guzzler consumption increases during periods of heavy gasoline demand. Naturally, diesel and jet fuel stocks go down. On top of all this is the huge seasonal shift. Home heating oil production for storage in warmer periods and gasolines for storage in colder periods.

But, the main 321 limit holds in terms of results from cracking crude oil into it's components based on volatility. After that, there are the marginal abilities to custom re-refine base product. This is quite limited though. On average, the shifting can be plus and minus around 10 % of base refining before cost gets in the way.

Again highly general.

My interest is from the money side of oil. To understand the money side one must have an integrated understanding of the technical side.

[Frank]

$this->bbcode_second_pass_quote('jeromie', 'S')uch a development would eviscerate the Petrodollar recycling system and that process eliminate foreign financing of US Treasury deficits. US imports of crude from the Persian Gulf are critical to financing the Treasury at any level since the advent of Reagan.

[jeromie]

From now on if conventional oil has peaked, cheap recoverable oil will continuously decline for the next century. The very definition of conventional oil as crude oil produced by primary and secondary means that as tertiary recovery replaces secondary production conventional oil phases out. The replacement tertiary recovery, depending on oil basin characteristics , will stabilize production for very long periods . naturally at much lower levels of production. This would be oil pools with product above 20 degree API characteristics. The replacement Tertiary recoveries requires a higher price to cover the investment. Confining myself to North American Tertiary Enhanced Oil Recovery the viable price will be around $60 bbl based on the financial statements of the companies specializing in EOR. Fadel Gheit , the oil specialist at Oppenheimer testified to that fact before Congress in June 2008. My own holdings for 2007 all had revenues per boe in the mid fifty dollar range. On average, these companies had low cost conventional oil mixes in their production of around one third. That is why they made a ton of cash flow in 2007.


There is an essential point to all this. You cannot reduce gasoline permanently without reducing fuel oil and diesel at the same time. In the US, gasoline reduction is unilaterally only possible to the extent that personal discretionary use diesel is also reduced. After that, diesel would need to be imported to make up the shortage. That imported diesel simply off loads the gasoline elsewhere because it is produced automatically to produce the imported diesel and heating oil.

No conservation of any great amount is possible without an energy plan at the state level that substitutes gas for oil. In short, direct production of GTL or CTL products to substitute for diesel and heating oil. Here is the ticket to ending oil imports from outside North America.


The bottleneck in refining will always be the essential fraction products for maintaining your national survival. Fortunately, gas can now be formulated into any direct product. The same will nearly be true of Syncrude. That is, these sources can produce middle distillate characterisic products with little or no gasoline attached as a by product. Of course, using naptha and high octane gasoline blends could turn even gas distillate into gasolines. Processes like Chevron- Sasol or Shell can now turn gas or coal into gasoline. These processes are well proven and China has bought a number of licenses and will be bulding a lot more CTL production, in particular. North America has the pure luxury of huge resources for both processes.

Then add in the recent better understandings of Residual Oil Zones in the US, in particular, and our tertiary recovery potential might well get to a cumulative production of 60 % of original oil in place. That means the US could wind up with an added proven reserve of around 200 bn bbl plus present proven reserves of 20 bn bbl. Interestingly, this added oil would by fortuitous circumstance be relatively low on investment. It sure looks like the old 80 % of the benefit can be bought for 20 % of the investment might be true in the US. That is an added 160 bn bbl for a couple hundred billion. The low cost of remaining conventional oil should easily generate the cash flow to cover investment needed.

Then there is all that gas and coal.

[Frank]

I guess the message is that we shouldn't focus exclusively on reducing gasoline consumption. That's consistent with current policy I think. Thanks for your thoughts.

The real game-changer will be if/when someone develops an on-board converter to strip H2 from gasoline-like blends to run a fuel cell. I know it's being worked on but don't know anything about current status.

I'll keep my rebuttal to the letter-to-the-editor guy pretty simple I think.

[jeromie]

The problem with the hydrogen fuel cell stripping idea is that the gasoline would need to be refined as it always has been . The gasoline would simply be forced into another on board manufacturing step to provide hydrogen for the fuel cell. If, for example, the fuel cell efficiency cut gasoline needs 50 % we would be faced with going over to unconventional gas or coal to provide needed middle distillates for essential transportation like trucks, locomotives, agricultural needs and the kind of ignored industrial needs for middle distillates.

Why not just use GTL product in the car and let it go at that? There would be some wicked fuel savings in a hybrid that uses very high quality GTL like that produced by Syntroleum for Air Force tests on their best planes. The result was very successful. On top of that the Syntroleum process is carried out on site with portable equipment using an atmospheric based Fischer Tropsch process. Thus, small pockets of stranded gas otherwise flared are converted to very high grade distillate and goes directly into a tank or tank barge. My point is that the distillate should easily be tailored for use in a hybrid.

We lack long term energy policy. We must decide which we we go and stick to it because the investment is exceedingly long term.
There must be a very wide approach taken. Probably impossible, I suppose.

I have been studying ways to get at a balanced long term energy policy for a long time. Just to see if I can figure out a political methodology that brings the policy together.

There are ways, for example to really cut rail and over the road distillate needs . That would mean rail electrification east of the Missouri anyway and the use of very advanced steam locomotives or GTL locomotives for land bridge and unit train type traffic. The over the road truck would be forced onto the rails with the use of Road Railer type devices. Essentially, trucks complete the local delivery. There could be a book just about this aspect. Similarly, passenger rail traffic shares the same rails with computerized dispatching and reversion to dual track and third track passing systems. The catch is that passenger speeds are limited to 150 mph to avoid incurring total grade separation costs. There is the capital killer. Just to show a little depth here.

A very fascinating subject.

[Frank]

Any solution that involves combustion in an ICE is limited by Carnot. GTL in a hybrid would be wonderful: I believe in continuous improvement and this would be a logical step. Electrification almost automatically means a several-times improvement in efficiency and should be part of any comprehensive energy policy. I agree, we still aren't thinking strategically enough.

The middle-distillate problem is interesting. I believe it could be solved technically but I'm not confident we could manage the politics.

[jeromie]

I keep being amazed at what is going on in middle distillate, heavy oil and tar sands research. Literally, on site scale GTL technology produced distillate that was highly effective and a directly usable fuel for the most advanced engines employed by the USAF. The USAF was interested in the concept for the obvious advantage of being freed from long range supply of fuel for combat planes. Literally, they can get fuel directly from the nearest gas field. The plant and transport are portable and can be rapidly deployed.

The politics will go away right quick when shortages develop and people get rationed fuel and power. My main interest here is the logistics of state survival in an energy crunch. That starts with the energy sources in areas under state control starting with home turf.

Look up the Ivanhoe Energy website and go to their technical section. They have a methodology that upgrades very heavy oils to light crude within the price differential of the two types of crude. A by product is steam for use in Steam Assisted Gravity Drainage techniques and the Vapor Extraction methodology. ( SAGD) ( Vapex) Very Heavy Crudes will simply be converted to light oil thus making the crude generally refinable.

If you look at the CERA numbers that were put out, these kinds of advances and Tertiary Recovery will probably make them practical on a gross total basis at some point. That is, around 25 % of recoverable crude oils of all types including future discovery have been produced.
Then too, there is unconventional gas. The kicker here is that according to the DOE, no estimates about crude oil include the effects of Residual Oil Zones and technologies like State of the Art CO2 and Game Changer CO2. That is hundreds of billions of barrels of crude. I simply look at it as an error offset of the CERA general numbers they put out. For all I know now, both could be correct.

So, I keep plugging at what the real facts are about North American fossil energies first.

[Tanada]

So background, back in 2010 I moved to a small rural town as a long term adaptation strategy. Last night there was a meeting at the town hall where an issue I had not thought about came up.

This small rural town has had two filling stations for as long as anyone remembers, both sell gasoline and one sells Diesel fuel while the other sells Kerosene for things like portable heaters. The local gentleman who owns one of the stations is retiring and at this point it seems nobody is interested in buying his filling station and keeping it in business. For decades the town has had a charge account with that station because a number of the town vehicles use Diesel fuel and this was the only place to fill up without drive 5-10 miles to the next closest filling stations in surrounding towns. The controversy arises that the owners of the other filling station are prominent in the community owning the filling station, a butcher shop, a convenience store and a small grocery store. The town council would prefer not to open a charge account with this group of businesses as there are already accusations of favoritism thrown around. However the conundrum arises, where will the town buy its diesel fuel. It isn't just the maintenance vehicles for the street department, it is also the entire fleet of fire department vehicles which run on Diesel.

I think the best solution would be for the town to install an above ground diesel tank along side the Fire Department building and let out a contract to an area fuel delivery service. A lot of local farms have their own tanks for fuel so they can stock up on tax free fuel instead of having to pay road taxes for farm equipment. For the village they would still have to pay road taxes, but it just seems obvious to me that having a diesel tank under lock and key at the fire department would take care of the issues pretty easily. However I am not certain the personalities and concerns of the council members and mayor will be willing to adopt such a simple common sense approach. The fire department are volunteers and I don't doubt someone would be accused of abusing the diesel supply for personal use if this approach was taken.

This is an issue that had not occurred to me before in the realm of future issues in a small town. This isn't a case of peak oil eliminating a supply, it is just small town economics at work in the face of large chain filling stations in nearby but not local locations making it uneconomic for this town to support two filling stations with the burden of a mortgage on the one that is being closed if it were to stay open.

[mousepad]

$this->bbcode_second_pass_quote('Tanada', '
')I think the best solution would be for the town to install an above ground diesel tank along side the Fire Department building

[Pops]

$this->bbcode_second_pass_quote('Tanada', 'T')he controversy arises that the owners of the other filling station are prominent in the community owning the filling station, a butcher shop, a convenience store and a small grocery store.

[Outcast_Searcher]

$this->bbcode_second_pass_quote('Tanada', '
')I think the best solution would be for the town to install an above ground diesel tank along side the Fire Department building and let out a contract to an area fuel delivery service. A lot of local farms have their own tanks for fuel so they can stock up on tax free fuel instead of having to pay road taxes for farm equipment. For the village they would still have to pay road taxes, but it just seems obvious to me that having a diesel tank under lock and key at the fire department would take care of the issues pretty easily.

...

This is an issue that had not occurred to me before in the realm of future issues in a small town. This isn't a case of peak oil eliminating a supply, it is just small town economics at work in the face of large chain filling stations in nearby but not local locations making it uneconomic for this town to support two filling stations with the burden of a mortgage on the one that is being closed if it were to stay open.

[Outcast_Searcher]

$this->bbcode_second_pass_quote('Pops', '')$this->bbcode_second_pass_quote('Tanada', 'T')he controversy arises that the owners of the other filling station are prominent in the community owning the filling station, a butcher shop, a convenience store and a small grocery store.

[Tanada]

$this->bbcode_second_pass_quote('Outcast_Searcher', '')$this->bbcode_second_pass_quote('Pops', '')$this->bbcode_second_pass_quote('Tanada', 'T')he controversy arises that the owners of the other filling station are prominent in the community owning the filling station, a butcher shop, a convenience store and a small grocery store.

[evilgenius]

$this->bbcode_second_pass_quote('jeromie', 'F')rom now on if conventional oil has peaked, cheap recoverable oil will continuously decline for the next century. The very definition of conventional oil as crude oil produced by primary and secondary means that as tertiary recovery replaces secondary production conventional oil phases out. The replacement tertiary recovery, depending on oil basin characteristics , will stabilize production for very long periods . naturally at much lower levels of production. This would be oil pools with product above 20 degree API characteristics. The replacement Tertiary recoveries requires a higher price to cover the investment. Confining myself to North American Tertiary Enhanced Oil Recovery the viable price will be around $60 bbl based on the financial statements of the companies specializing in EOR. Fadel Gheit , the oil specialist at Oppenheimer testified to that fact before Congress in June 2008. My own holdings for 2007 all had revenues per boe in the mid fifty dollar range. On average, these companies had low cost conventional oil mixes in their production of around one third. That is why they made a ton of cash flow in 2007.


There is an essential point to all this. You cannot reduce gasoline permanently without reducing fuel oil and diesel at the same time. In the US, gasoline reduction is unilaterally only possible to the extent that personal discretionary use diesel is also reduced. After that, diesel would need to be imported to make up the shortage. That imported diesel simply off loads the gasoline elsewhere because it is produced automatically to produce the imported diesel and heating oil.

No conservation of any great amount is possible without an energy plan at the state level that substitutes gas for oil. In short, direct production of GTL or CTL products to substitute for diesel and heating oil. Here is the ticket to ending oil imports from outside North America.


The bottleneck in refining will always be the essential fraction products for maintaining your national survival. Fortunately, gas can now be formulated into any direct product. The same will nearly be true of Syncrude. That is, these sources can produce middle distillate characterisic products with little or no gasoline attached as a by product. Of course, using naptha and high octane gasoline blends could turn even gas distillate into gasolines. Processes like Chevron- Sasol or Shell can now turn gas or coal into gasoline. These processes are well proven and China has bought a number of licenses and will be bulding a lot more CTL production, in particular. North America has the pure luxury of huge resources for both processes.

Then add in the recent better understandings of Residual Oil Zones in the US, in particular, and our tertiary recovery potential might well get to a cumulative production of 60 % of original oil in place. That means the US could wind up with an added proven reserve of around 200 bn bbl plus present proven reserves of 20 bn bbl. Interestingly, this added oil would by fortuitous circumstance be relatively low on investment. It sure looks like the old 80 % of the benefit can be bought for 20 % of the investment might be true in the US. That is an added 160 bn bbl for a couple hundred billion. The low cost of remaining conventional oil should easily generate the cash flow to cover investment needed.

Then there is all that gas and coal.

[Subjectivist]

Older army maintenance manuals gave directions for oil changes. The instructions included pouring the old engine oil into any convenient diesel motor vehicle and then topping the tank up with standard diesel fuel. If you search YouTube you can find several videos of people mixing old motor oil into diesel fuel as a fuel extender and calling it Black Diesel.

[Outcast_Searcher]

$this->bbcode_second_pass_quote('Subjectivist', 'O')lder army maintenance manuals gave directions for oil changes. The instructions included pouring the old engine oil into any convenient diesel motor vehicle and then topping the tank up with standard diesel fuel. If you search YouTube you can find several videos of people mixing old motor oil into diesel fuel as a fuel extender and calling it Black Diesel.

[Outcast_Searcher]

$this->bbcode_second_pass_quote('Tanada', '
')I do think jealousy is a large part of the resentment. The fact is when I moved here back in 2010 the family owned the local butcher shop and were doing well for themselves. Then a couple years later they bought a closed convenience store and reopened it and that was actually seen as a good thing as it was in competition with the local grocery store/subway/gas station on the main intersection through town where the two heaviest traffic roads cross. Then about five years ago someone built a Dollar General just outside the village limits and started undercutting the local grocery store prices and the owners decided to call it quits. When they did the prominent family rode to the rescue and bought the grocery store/subway/gas station and lowered prices to be competitive on the products the Dollar General carries like milk and cleaning supplies, soda and beer. The lower prices made just about everyone happy for a while, but now that the other filling station which is also the only real auto shop for repairs in town is going to close we will be at the mercy of having a single fuel supplier and nobody expects that to be a good thing.

The really odd thing to me who is still seen as something of an outsider even after living here 11 years is that the family buying up all these distressed businesses has been in this town for generations. Most of the people living here grew up with them, went to school with them or their kids and many are at least tangentially related to them. The fact that they have managed to prosper when many other local businesses have failed seems to generate more resentment because they are local folks. I honestly expected the out of towners who built the Dollar General franchise outlet to get a lot of heat locally but the exact opposite seems to have happened.

Unlike many of the folks around here I grew up in a small town where everyone knew who was what level in the social hierarchy. The thing is once you or your family was pigeonholed into a level of social status you were expected to stay right there. Women who married into a higher strata were considered gold diggers even if they went away to university and came back with a degree that tentatively placed them at an equal status to the family they married in to. Men who wanted to "marry up" in level had to be significantly prominent socially by being a school sport hero, or coming back to town as an MD/DDS/DO or other upper level job like being a district attorney through the court system. Generally speaking factory or farm laborers were beneath the social upper crust women's notice for long term relationships or marriage.

Huh I just realized the practical issues I brought up earlier have morphed into a sociology study I think I said enough to make myself unpopular if any of my neighbors ever joins this place and figures out who I am so I will shut up now ROFL!