[Maddog78]

1) Up to a certain point. Depends a lot on the individual fields characteristics. You cannot re-inject at a rate that may damage the pipe or formation.

2) Yes, but that is not the point. It costs billions to build an LNG facility to turn the gas into a liquid..
Do you build that in the desert to service a few wells? No. You build it at a port and then pipe the gas to the plant, liquify it and then send it on ships to the customer.
This happened in Yemen for example. They (Total and partners) have finally built an LNG plant on the south coast but prior to it being built for the past few decades the gas was just partially re-injected and flared. It took a lot of years to secure contracts with an end customer, agreements with the producing country and again with all the partners.
When you are talking a multi-billion dollar project nothing happens too quickly.
The same thing happens offshore, Gas is re-injected to a certain point and then flared. The same economics apply. Nigeria for example flares a lot of gas. Discussions have been made about an LNG plant but I'm not sure how far along they are. It will likely take several more years for it all to be worked out. In the meantime the oil has to flow.

The dollars involved for projects in the oil and gas business are really quite mind boggling. For example I laugh when our paper makes a big announcement about a 100 million dollar high rise being built in town. Front page news.
Expletive deleted. my company is relatively small and we spend that in my region alone in less than 2 months.
XOM spends that in a week.

[Tanada]

$this->bbcode_second_pass_quote('Maddog78', '1')) Up to a certain point. Depends a lot on the individual fields characteristics. You cannot re-inject at a rate that may damage the pipe or formation. --snip--
For example I laugh when our paper makes a big announcement about a 100 million dollar high rise being built in town. Front page news.
Expletive deleted. my company is relatively small and we spend that in my region alone in less than 2 months.
XOM spends that in a week.

[Maddog78]

I would imagine it would not be cheap.
I don't know enough about the details to give a good answer though.
Not my area of expertise.

[dorlomin]

$this->bbcode_second_pass_quote('Tanada', '
')
You make me wonder how much would it costs to beef up the cryogenic plant on an LNG tanker to the point that it could pull up to an offshore platform and take the gas, process it to cryo state and keep doing so until it was full? That would solve both the wasteful flaring and the expensive fixed location cryo-plant problems at the same time.

[mcgowanjm]

$this->bbcode_second_pass_quote('dorlomin', '')$this->bbcode_second_pass_quote('Tanada', 'Y')ou make me wonder how much would it costs to beef up the cryogenic plant on an LNG tanker to the point that it could pull up to an offshore platform and take the gas, process it to cryo state and keep doing so until it was full? That would solve both the wasteful flaring and the expensive fixed location cryo-plant problems at the same time.

[bratticus]

$this->bbcode_second_pass_quote('mcgowanjm', '
')Too bad Dubai didn't invest in these 'trains' and instead decided
to build the largest Potemkin Village the World will ever see.

[bratticus]

$this->bbcode_second_pass_quote('Maddog78', '[')url]http://www.rigzone.com/news/article.asp?hpf=1&a_id=82998[/url]

Looks like Mexico will slow down on pissing away a bunch of their n. gas. This has always struck me as such a waste.
It happens in other countries too. If they don't have the infrastructure to handle it for various reasons, it just gets flared so they can produce the oil. Not every country can use it or afford a pipeline and LNG plant.

[Maddog78]

The Mexican's are finally realising they need help and fast.

http://www.rigzone.com/news/article.asp ... a_id=90450


$this->bbcode_second_pass_quote('', 'M')exican Energy Minister Georgina Kessel said Wednesday that state oil monopoly Petroleos Mexicanos needs the help of international oil companies, like the ones attending the International Energy Forum here, in order to reverse the decline in its crude output.

"The fields that we are approaching now in Mexico are much more difficult to access," she said at a news conference during a break in the forum's private meetings.

"What this means is that we require, in one way or another, the collaboration of other companies on an international level precisely in order to recuperate our levels of production," Kessel said.

She noted that crude output by Pemex, as the firm is known, peaked in 2004 at more than 3.3 million barrels per day on average, and is currently at about 2.6 million per day.

The "easy oil," as she has called it, is running out in part because of the decline of the supergiant Cantarell field in the Campeche Sound after decades of high production.

The fall in crude output "makes it necessary for us to incorporate better operating capacity at Petroleos Mexicanos, and we also need new technology," Kessel said.

[TheAntiDoomer]

^and the US will be glad to help, in exchange for guarenteed barrels heading to the US!

[Maddog78]

To clarify:


US companies

[bratticus]

$this->bbcode_second_pass_quote('', '[')b]Mexico's Pemex sues US companies for buying smuggled fuel
By Mica Rosenberg, Editing by Simon Webb / Reuters / May 31, 2011

Mexico's state-run oil company Pemex is suing eleven U.S. companies for buying up to $300 million of fuel stolen by drug gangs and smuggled across the U.S.-Mexico border, court documents showed.

Pemex's exploration and production (PEP) unit filed the suit on Sunday in a U.S. district court in Texas claiming some of the companies conspired with Mexican criminals to forge documents and smuggle the hijacked natural gas condensates.

"The defendants have participated and profited -- knowingly or unwittingly -- in the trafficking of stolen condensate in the United States and have thereby encouraged and facilitated the Mexican organized crime groups that stole the condensate," the complaint said.

Included on the list of alleged offenders are U.S. end users of the liquid fuel that can be easily refined into high-value oil products, including Plains All American Pipeline LP , SemGroup's SemCrude subsidiary and Western Refining . ...

[pedalling_faster]

a surge in stolen oil incidents is one of the "canaries" of Peak Oil.

but i don't know how often this has happened in the past.

[timmac]

Why doesn't the Mexico's state-owned oil company sue the Mexican goverment as well, its a proven fact that the Mexican military and police are involved in drug trafficking and would not rule them out as black market oil traffickers as well.

Its always America's fault..

[bratticus]

$this->bbcode_second_pass_quote('timmac', 'W')hy doesn't the Mexico's state-owned oil company sue the Mexican goverment [sic] as well

[C8]

Analysis of Pemex/world oil theft trends

Recently, Pemex reported a large increase in oil theft that is a continuation of world trends, I will present some articles from various news sources- my analysis will be in italics

(Reuters) - Crude oil theft at Mexico's state oil monopoly, Pemex, amounts to as much as 10,000 barrels per day (bpd) and has been rising by nearly a third annually, a top official with the company said on Thursday.

Large increases in theft usually indicate that an illegal network is becoming normalized and strongly suggests widespread connections are developing that characterize organized crime syndicates taking control of a trade

"It's between 5,000 and 10,000 barrels per day," Carlos Morales, head of Pemex's exploration and production arm, said on the sidelines of an oil conference in the resort city of Cancun. "The thefts target gasoline, diesel and crude ... they vary all the time but without a doubt they have a major impact on the (Pemex) budget.

The variability of time suggest further organization as a centralized crime group will make sure it keeps authorities off balance since only it knows when it robbed last

Each year fuel theft in Mexico has increased 30 percent," he added.

This indicates that more sophisticated distribution systems are being put in place to move the product to customers and that they can handle the higher volume- again, an indication of centralized crime syndicates investing in infrastructure

Criminals have targeted oil pipelines around the country and Pemex says that company workers are often complicit.

How will oil be safeguarded in an era of pricey oil and low worker wages? We are seeing a pattern develop similar to US prohibition in the 1920’s where cops were on the take everywhere

Mexico is currently producing just over 2.5 million bpd, well down from a peak of 3.4 million bpd in 2004.
The Mexican government is this year planning to launch a major reform of Pemex to boost private investment in the company. Pemex funds about one-third of the federal budget.

Private investment may equal private security forces and gang wars over oil theft control routes as illegal supply is cut back

source
http://www.reuters.com/article/2013/06/ ... GL20130606

Also from the black market website Havocscope
http://www.havocscope.com/tag/oil-theft/

Mexican State Oil Company Pemex discovered 1,744 illegal siphons of its oil pipelines in 2012, a 23.2 percent increase from the 1,416 illegal siphons in 2011.

This is a lot of siphons- pipelines are very vulnerable things and this may really raise the cost of delivering oil significantly someday.

England
HM Revenue and Customs in the United Kingdom discovered 388 occasions where criminals were selling illegal fuel to motorists. The number of incidents discovered during the 2012-2013 time period was 48 percent higher than the 262 detections in 2009-2010. Northern Ireland had 128 detections of illegal fuel sites, with 260 sites being in the rest of the UK.

Brits get in on the action- no doubt some syndicates will engage in world trade- note the huge increase in crime here- 48%. One would think security in England would be better, this is concerning.

Nigeria
Security officials in Nigeria reported that they destroyed 748 illegal refineries in the region in the first four months of 2013. During 2009 to 2012, Shell estimates that 85 percent oil spills in Nigeria was due to theft and attempted theft

Oil theft equals more spills, more environmental damage, more water contamination- and...less oil

Phillipines
According to the Chairman and CEO of Petron, an estimated 36 million barrels of oil was smuggled into the Philipines in 2012. Oil industry officials also estimate that up to one-third of the oil sold on the market has been smuggled

Is Asia going to be the big crack addict for stolen oil?

Concluding thoughts:
1. Theft is increasing at very fast rates around the world- it seems to be led by organized syndicates that have the ability to bribe enforcers and policy makers and move large volumes. Small time thefts are probably also occurring.

2. As oil becomes more expensive, theft will raise the price even higher due to the costs of lost oil and security measures- this could make oil more valuable and incite more theft- leading to an out of control price spiral. A very valuable product (oil), carried by pipes, trucks, trains, and boats- in a world of very poor people- is a recipe for breakdown. Peak oil may be hastened by this process as constant theft leads to more spills

3. In some parts of the world today we are already at a Mad Max scenario

[Tanada]

One of the major disadvantages of Pipelines vs other forms of oil trasnport is they have very long sections that are not easily patrolled or even monitored. I remember reports from a few years ago about a gang who drilled a hole into the Nigerian crude pipeline and put in a household size tap so they could draw off 5 gallon jerry cans at a time without making a mess. Apparently Nigerian crude is close enough to Diesel it will run in an engine designed to burn regular diesel fuel.

[C8]

From: http://www.pipeline101.com/overview/energy-pl.html

Here are the truly staggering numbers (bold mine):

$this->bbcode_second_pass_quote('', 'T')here are two general types of energy pipelines – oil pipelines and natural gas pipelines. Within each group are subsets that serve very specific portions of the energy marketplace.

Within the oil pipeline network there are both crude oil lines and refined product lines.

Crude oil is also subdivided in to 'Gathering Lines' and 'Trunk Lines.'

First, gathering lines are very small pipelines usually from 2 to 8 inches in diameter in the areas of the country in which crude oil is found deep within the earth. It is estimated that there are between 30,000 to 40,000 miles of these small gathering lines located primarily in Texas, Oklahoma, Louisiana, and Wyoming with small systems in a number of other oil producing states. These small lines gather the oil from many wells, both onshore and offshore, and connect to larger trunk lines measuring from 8 to 24 inches in diameter.

Trunk lines include a few very large lines, such as the Trans Alaska Pipeline System, which is 48 inches in diameter. The larger cross-country crude oil transmission pipelines bring crude oil from producing areas to refineries. There are approximately 55,000 miles of crude oil trunk lines in the U.S.

The next group of oil pipelines are those carrying refined petroleum products – gasoline, jet fuel, home heating oil and diesel fuel.

These refined product pipelines vary in size from relatively small 8 to 12 inch diameter lines up to 42 inches in diameter. Refined products pipelines are found in almost every state in the U.S, with the exception of some New England states. The total mileage nationwide of refined products pipelines is approximately 95,000 miles. These pipelines deliver petroleum products to large fuel terminals with storage tanks to be loaded into tanker trucks. Trucks cover the last few miles to make local deliveries to gas stations and homes. Major industries, airports and electrical power generation plants are supplied directly by pipeline.

Natural gas is found in many of the same areas of the country as crude oil and is collected through small gathering systems and moved to gas processing plants, where impurities are removed.

There are about 20,000 miles of natural gas gathering lines. The gathering lines move natural gas to large cross-country transmission pipelines. Including both onshore and offshore lines there are approximately 278,000 miles of natural gas transmission lines.

Natural gas, unlike oil, is delivered directly to homes and businesses through local distribution lines. Large distribution lines, called mains, move the gas close to cities. These main lines, along with the much smaller lines to homes and businesses, deliver natural under streets in almost every city and town and account for the vast majority of pipeline mileage in the U.S. – 1.8 million miles.

[ROCKMAN]

And it also happens in the US but I’ve never seen an estimate of the magnitude. We actually have an unofficial name for it: “Hot oil”. Which actually has a double meaning in the oil patch: we do “hot oil” treatments to help unplug production equipment. We use vehicles that are called “hot oil trucks”.

The oil is usually stolen from the oil tanks on location and not from pipelines. And just like your car oil has a title to it. Any company legally buying oil has the verify the title. So just like stolen cars there are folks who buy stolen oil. Last I heard they get about 60% of the market value.

Typical set up which often includes a company field hand: A well or group of wells may fill a 500 bbl oil tank in X days Before a pick up is made someone pulls several bbls of the tank. Well production tends to be erratic so variation under 1% from load to load are not uncommon. A few bbls per load may not sound like much but over a year it could add up to several hundreds to thousands of bbls. So 100 bbls X $90 X 60% = $5,400. So 1,000 bbls is $50,000+/yr TAX FREE.

Many years ago I busted a couple of hands by using one of those motion detecting game cameras. One cut a deal and the other went to the state pen for 2.5 years.

[C8]

Mods- how is it possible that I started this thread, wrote the title and wrote the lead article but now it is attributed to someone else and the lead article (with my analysis- which was the main point anyway) is bumped down?