[OilmanChoke]

Well, you certainly have your judgements. I like efficiency. I think it a natural law... one that systems tend towards over time. I am confounded that you would want to limit energy use. That is a bias, it seems to me.

Can you elucidate further on the tax breaks and exemptions the oil business gets? I hear that all the time, yet my accountant can seem to find the damn things. Perhaps you can educate me and him. Given that I pay a severance tax off the top, along with ad valorem taxes along the way BEFORE I get to income taxes, I feel that I pay a disproportionate amount. But I could be wrong. Reading ExxonMobil's annual report, (in fact, any of the big companies annual reports) show that they pay more in taxes and excise fees than they make in profits. Perhaps that is the problem? The governments are they biggest stakeholders in oil and gas?

I have met Matt Simmons several times, and find him an enjoyable and thought provoking speaker and writer. Similarly, I find Scott Tinker, of the Bureau of Economic Geology and President of the American Asscoiation of Petroleum Geologists equally provoking. Thanks for the links.

Given that the industry pays so much in taxes that are peculiar to the oil and gas business (preferential taxes), what further costs or penalties should the industry pay for? How would you calculate these cost allocations and would you allocate severance and ad valorem taxes against it? Since governments are the largest fiduciary beneficiaries of oil and gas production, what part of the cost is borne by them?

[Twilight]

About lagging economic effects - we filled the financial hole with credit and the energy hole by coal substitution. These are large enough factors to tide us over for years. However, since there is a limit to how many oil-fired power plants can be demolished and there is a limit to how much risk/pain creditors can handle before they choke off the line, this reserve of 'resilience' will not last forever. The problem with credit is well-known to anyone who has picked up a copy of the FT lately, but demand destruction is particularly interesting because is not going to remain confined to sectors where easy substitution is possible. Yesterday it was power plants, tomorrow it will be airlines. Then personal motoring. Agriculture, chemicals and lubricants will be pretty low down the list, some future generation can worry about that, but there do come points where supply constraints go from creating opportunities, to being a zero sum game, to eating the system.

[skyemoor]

$this->bbcode_second_pass_quote('OilmanChoke', 'I') am confounded that you would want to limit energy use. That is a bias, it seems to me.

[TonyPrep]

$this->bbcode_second_pass_quote('OilmanChoke', 'I') am confounded that you would want to limit energy use. That is a bias, it seems to me.

[OilmanChoke]

Ahhh. Spoken like a true statist! Of course, in order to first see things as you do, I need first to accept Climate Change as being largely driven by anthropogenic greenhouse gasses, that some wacky meaningless word... "sustainability"... will mean anything in 50 or 100 years, and that resource availability are as described by folks that have one agenda or another and disconnected to the reality of resource availability.

My point in all of this is that it seems you have decided that hydrocarbons are a declining resource, energy should not be abundant, and that work by clever folks to promulgate either one should be stifled for reasons that are based more upon your value system than science or capacity alone.

If it is going away anyway, why regulate it so heavily? Why not promote drilling all over the world as much as possible so we don't need to have a meaningless debate about whether it is going away or not? In the end, like I said, it is about cost. I am certain that other energies will achieve attractive cost efficiencies on their own over time. Betting on human ingenuity is the one sure best bet historically. Betting on regulations to "solve" problems we cannot even agree we are having is nearly a sure bet the other way.

[Nicholai]

Oilmanchoke, you have made 4 posts so far, I would be weary of patronizing or repugnant responses (not that I mean this in a mean-spirited way, simply a word of caution)

$this->bbcode_second_pass_quote('', 'B')etting on human ingenuity is the one sure best bet historically'

[skyemoor]

$this->bbcode_second_pass_quote('OilmanChoke', 'S')poken like a true statist!

[OilmanChoke]

Wow. Such verve! The thing that is most interesting to me here is that while I derive a goodly amount of my income generating energy (not just oil and gas), I certainly am aware and interested in alternatives, because, after all, it is my business. If I offend some of you, it is because you don't like seeing YOUR faith attacked. I am not an energy bigot. I am fully aware of the state of the science on climate change.

Given that we are just understanding non traditional reservoirs, and that a tremendous amount of research is going into how to exploit clathrates, I suspect that we will see great amounts of energy to benefit us all from hydrocarbons in the future. Lots of smart people working on these problems, just like there are lots of smart people working on solar/wind/algae etc. My brother is a Silicon Valley guy with significant investments in alt energies. Lots of brain power at work there. Lots of bets on the table. Most won't work. Some will. Deciding right now which one will work is an uninformed position. Your statement that breakthroughs in hydrocarbon extraction technologies and new understandings on how reseroirs operate is somehow "wish-based" is not a well informed position. The 1980's saw a huge run up in drilling because of bad tax policies and high commodity prices, NOT technology usage or new understandings on reservoirs. I will put together the statistics to show that this industry is getting better at drilling and producing hydrocarbons. You might also want to normalize the oil production with the gas production charts and have a BTU production chart, which is more telling anyway.

I DON'T think that hydrocarbons will be as dominant a player in the future as in the past, because the demand is going up dramatically wordlwide as China and India have decided to up there standard of living.

As such, resource allocations shift, and they do so naturally. You might ask yourself why this is so challenging to your worldview?

Is this going to be one of those forums where I check to make sure I didn't type too fast and misspell something? Or use improper grammar? Or end a sentence in a preposition? Or else I will look stupid? Trust me, tt doesn't take spelling to make me look stupid. Just ask my wife. I apologize for saying that the word sustainability is "wacky". Sustainability, or the concept thereof, must truly be important to cause such offense. In any case, have a happy New Years.

By the way, here is the first part of a poll of climate scientists from 1996 and rerun in 2004.

http://openchoke.blogs.com/

[dinopello]

Actually, being concerned about sustainability is a little wacky when you think about it. Why should anyone be concerned about what things are like after you die ? It would almost seem more natural to want to burn this sucka down before leaving. I often wonder why I care, especially since I don't have kids and I'm not really religious.

[Nicholai]

Repugnant conservatives...despite their faith, they will never go down with the ship...or at least not willingly

I didn't correct your spelling because I'm priggish, you're just kind of a dick so I thought I would hassle you

China increased its energy demand by 20% in 2005.

The top 3 elephant fields in the world (with EROEI ratios of 1:30) are now in decline (at rates of up to 15% per year)

Most major development is now taking place within P2 and P3 deposits which have EROEI ratios of between 1:10 and 1:3 (more expensive to produce)

Supply bottlenecks will cause greater ethanol investment in poorer regions, driving the cost of staple food crops to ever increasing highs (more unstable regions due to starvation, higher fuel costs etc.)

These P2 and P3 deposits will require massive amounts of energy for production (12 bathtubs of water each second for the Athabasca tar sands) and will entail much greater cost (both in terms of overall investment, environmental costs, political ramifications for such projects etc.) Ask any Albertan if they would like to see the size of Fort MacMurry doubled or tripled (to allow for 5mbd) and you would certainly get a No, this poses major political ramifications

We are seeing an increase in global hydrocarbon demand beyond anything we have seen in all human history, and yet the amount of projects needed to outweigh both the rate of decline in our old and highly profitable conventional fields plus the enormous pace of demand growth are forcing us into unchartered and highly unstable ground.

With more storms, more droughts, more instability in food prices and commodities prices, hyper growth in our population and a depletion in our most profitable and productive oilfields I can guarantee that this will not go as smooth as some may want it.

And, seriously, if you haven't accepted global warming, I would recommend you clean out whatever sits between those ears of yours.

[skyemoor]

$this->bbcode_second_pass_quote('OilmanChoke', 'T')he thing that is most interesting to me here is that while I derive a goodly amount of my income generating energy (not just oil and gas), I certainly am aware and interested in alternatives, because, after all, it is my business. If I offend some of you, it is because you don't like seeing YOUR faith attacked.

[vfr]

$this->bbcode_second_pass_quote('Lighthouse', 'w')hy would anyone want peakoil to happen? Just think at all the hardship which will come when we reach the peak.

Unfortunately its not important what we want.

I't will happen regardless if we want it or not ...

[OilmanChoke]

The most interesting breakthroughs are in rock physics and better quantifying and inducing fracturing. 3-D seismic technology was good for what it was, but in the end, it was an efficiency tool that allowed us to better exploit old fields and to scrape up the small reservoirs that were "aliased" in 2-D seismology.

Oil and gas reservoirs were thought to be trapped in structural traps and stratigraphic traps. Seismology provided us with a great tool to exploit structural traps. The mid-size to small strat traps are still left to be found. If that was all there was, I would say you are dead on correct. Simmons' authoritive guesses at the super major reservoirs looks correct, and replacing this production won't be easy. It certainly won't be done with lifting costs of $0.50 per barrel like these big boys.

However, your discourse on the oil sands is right on... yes, it isn't profitable until you have steady $30 per barrel of oil or better. Massively more expensive than $0.50 per barrel crude found 100 years ago, but still much less than the alternative.

The Non-Traditional reserves we are finding, of which the Bakken Shale is one, the Wolfberry play in West Texas another, the Barnett Shale in North Texas, all the Anadarko basin,, the Woodford Shale, and on and on are proving to be massive resources, and the ones named, rapidly turning into reserves, because they are really economic at $30 per barrel as well. The key technology for all of these is induced fracturing. Our old methods were just as likely to damage the reservoir than to help open them. These resources are trillions of barrels in size.

So, the energy does not reach your panacea of non-pollutive, but what does? The answer is "nothing". Everything is impactful and everything has non-rationalized costs on one level or another.

As you saw on the blog, it said it was Part 1. Don't you think it disingenuous to say I cherry picked? There was a lot of interesting things said in those surveys, don't you think? Of course, if a survey was "turned down by Science", then how was it illigitimate?

Again, really surprised and fascinated by the amount of invective on this board towards my comments. Seems a bit.... closed minded. Dang, I apologized for calling Sustainability wacky already. I can't wait to hear your thoughts on the other part of this equation... human population growth and your proposed solutions for that.

[JohnDenver]

$this->bbcode_second_pass_quote('vfr', 's')ynthetic fertilizers, ammonia?

They are totally dependent on natural gas.

Our population boom was fueled by synthetic fertilizers made from natural; gas. Once the gas dries up so does the fertilizer and a shortage of fertilizer equals a shortage of food.

[Oil-Finder]

$this->bbcode_second_pass_quote('TheDude', '
')Bit of a gamble, then. Much as skyemoor said.

No denying the Bakken is profitable. We're just figuring it into the global picture - how much it can really mitigate things. 50kbpd doesn't really stand up too much next to those megaprojects. You'd need 10 Elm Coulees to even register much, and even with their longevity if we're going to maintain supply for the country those wells need to be drilled soon. It's like a microcosm of the US, where we're the third largest producer in the world - with over half a million wells, orders of magnitude more than the rest. That'll take a while to drill all those holes.

[JohnDenver]

$this->bbcode_second_pass_quote('OilmanChoke', 'A')gain, really surprised and fascinated by the amount of invective on this board towards my comments.

[Oil-Finder]

$this->bbcode_second_pass_quote('OilmanChoke', '
')First: This topic "DO You Want It To Occur" is exactly the right question. Why would you WANT this to occur unless you are bigoted against hydrocarbons?

[Oil-Finder]

$this->bbcode_second_pass_quote('skyemoor', '')$this->bbcode_second_pass_quote('Oil-Finder', '')$this->bbcode_second_pass_quote('skyemoor', '
')
2. The author/authors state "The methods used by Price to determine the amount of hydrocarbons generated by the Bakken are different from the traditional petroleum geochemical practices and are under dispute."

[JohnDenver]

$this->bbcode_second_pass_quote('Nicholai', 'T')he top 3 elephant fields in the world (with EROEI ratios of 1:30) are now in decline (at rates of up to 15% per year)

[TheDude]

Re: fertilizers: Pimentel's study of 2005 concluded that organic farming sans fertilizers can be just as productive as industrial ag.

JD, you are correct that China uses 60% or 65% (I've seen that higher number too) coal for fertilizer. It's just that NG is more efficient, as the table underneath the graph you posted shows (illustrating usage in West Europe)

West Europe Natural Gas Heavy Oil Coal

Energy consumption 1.0 1.3 1.7

OilmanChoke - your blog mentioned a 95% success rate for wells in the Bakken. Is drilling really that sure fire, and how does it compare to those other unconventional plays you listed?

Re: Clathrates, I've heard them dismissed as uneconomical - it'd be easier to just open up pockets of stranded gas and build LNG terminals. Bit like cellulosic ethanol or fusion - looks very promising but who knows if it'll pan out. My other bugaboo with methane hydrates is that they're a prime culprit in the greatest mass extinctions in Earth's history. Make a killing, sure, but you're not going to wipe out 95% of life on the planet! Call me a nutty statist.

GW might trigger them in the end anyway. I am in favor of worldwide sanctions on power plant/vehicle emissions - why this should be contrary to the need to make a buck I'm not sure...

Found a very interesting piece on corporate efficiency makeovers, like the switch away from CHFCs; in each case the studies (both government, academic, private) overstated the costs of conversion, sometimes by a great deal. It was done by a guy currently on the staff of Lewis and Clark College, didn't bookmark it but will try to fish it out.