[Plantagenet]

$this->bbcode_second_pass_quote('Alaska_geo', 't')urbidites

[Synapsid]

Plantagenet,

A gentle reminder, courtesy of Alaska geo:

Caelus does not have a flow test in hand. Start there, please.

[Plantagenet]

$this->bbcode_second_pass_quote('Synapsid', 'P')lantagenet...
Caelus does not have a flow test in hand. Start there, please.

[rockdoc123]

$this->bbcode_second_pass_quote('', 'P')atience, my friend. A-Geo's disdain for turbidite reservoirs may be misguided. I've already pointed out that turbidite reservoirs can indeed be successfully produced. Indeed, there are literally dozens of giant oil fields that have been successfully developed in turbidite sequences.

[Alaska_geo]

$this->bbcode_second_pass_quote('Plantagenet', ' ')A-Geo's disdain for turbidite reservoirs may be misguided.

[Plantagenet]

The Caelus CEO expressed his concerns about getting the money owed to his company under Alaska's oil exploration tax credit plan and expressed optimism about the potential of Smith Bay in a talk given in Fairbanks

caelus-energy-ceo-gives-oil-tax-presentation

The fact that the CEO of Caelus is giving talks about the tax system in Alaska and its relationship to the company's Smith Bay work supports my view that these tax credits were a factor in the announcement of the Smith Bay discovery at this time, before the flow testing was done. I believe this announcement was brought forward to help Caelus make its case for the $200 million it is owed by the state of Alaska.

Caelus Energy Alaska CEO Jim Musselman...at Alaska Support Industry Alliance’s Fairbanks update ....made the case for Alaska’s oil tax credit system.

“... it worries me because I don’t know where we’re going in the state.”

Caelus this week announced its exploration in the Smith Bay oilfield on the North Slope, northwest of Prudhoe Bay, struck a world-class find that could provide some 200,000 barrels a day into the trans-Alaska Pipeline System. For comparison, Prudhoe Bay was estimated to contain about 10 billion barrels when it was first discovered, though further work put it at well more than 20 billion barrels.

The news sparked headlines worldwide and plenty of excitement in Alaska, where those 200,000 barrels would help bolster throughput in TAPS as well as the state’s oil-dependent budget.

“We think this is going to be very valuable to the state of Alaska,” he told the audience. “What it really represents the most is jobs, it’s going to be hundreds and hundreds of jobs. ... This is going to make the North Slope like it was in the early ’80s.”

...Musselman said the biggest challenge to bringing the field online will be the state’s shifting oil tax policies. He argued the Legislature’s most recent efforts have harmed smaller explorers and producers while largely protecting the large companies.

“Something could yet go wrong down the road, but most of the things I worry about are fiscal,” he said. “We need certainty from the state how we’re to be treated. ... We would like to get that locked down for the long term.”

Amid budget pressures, Gov. Bill Walker has vetoed funding for some of the oil tax credits, essentially delaying their payment. Musselman said that veto has slowed progress on the field.

And even though the hundreds of millions in tax credits owed to the company by the state are dwarfed by the roughly $10 billion cost to develop the site, Musselman said it affects the company’s ability to find investors.

“If you don’t have a legitimate tax regime and you don’t have a stable tax regime, it’s going to be terribly, terribly difficult to bring that amount of money in,” he said.

Musselman said .... Caelus is different from the major, legacy producers.

“(Without stability in the oil tax system) the state is going to be stuck with the legacy producers forever, who’re basically harvesting their reserves,” he said. “They’re not doing what we’re doing. When’s the last time any of them has drilled a significant exploration well?”

Again, my point here is that the announcement of the Smith Bay discovery by Caelus at this time has two main targets

(1) Caelus wants the state of Alaska to get its act together on oil taxes and it wants the $200 million the state owes it. This announcement helps Caelus put pressure on the state. The CEO says right out loud that if Alaska wants this development, then it had better pay the back taxes. You can't be much clearer then that.

(2) Caelus needs outside backers to develop Smith Bay and the Caelus announcement is meant to get the talks on outside investment started In this talk the CEO puts a number on the price of developing this field---he puts it at 10 BILLION dollars. That would bring another construction boom in Alaska for sure.

Cheers!


The Caelus CEO in Fairbanks making his pitch for State tax rebates of $200 million and outside investment of $10 billion (!) in the Smith Bay project. WOW! Is Alaska going to get another giant oil pipeline project?????!!!! That would make the economy sizzle again. WOW WOW WOW!!

[Plantagenet]

$this->bbcode_second_pass_quote('Alaska_geo', 't')his whole discussion of the Caelus play is getting rather tiresome and repetitive. I think I will have no further comment, unless/until some additional data emerges.

[Hawkcreek]

They have been working on plans to keep oil flowing down the pipeline for years.
This is part of a study that looked at that:
https://www.nrdc.org/sites/default/files/ene_11092001a.pdf
"Conclusion
In contrast to the “sky is falling claims” by certain groups and individuals, the
TAPS is not in danger of being shut down in the immediate future without opening up
new areas to drilling or a reduction to Alaska’s production tax as long as modest
investments are made to reduce the minimum throughput on the pipeline. Minimum
throughput can be reduced by making a moderate investment in the pipeline which
would pay substantial dividends to the pipeline owners as well as the State of Alaska.
Indeed, our analysis shows that the TAPS owners would lose money by not making
such investments. This is because, without reducing the TAPS minimum throughput,
billions of barrels of oil would be stranded on the North Slope. "

Another 5 or 6 hundred million investment in heaters, pigging locations, solvent injection, etc, will probably let it get down to 150 K barrels a day pretty easy. Like most everything else in the oil business, money is the most important thing, not the difficulty of the process.
Just depends on how much they can afford to spend to get another 2 billion barrels out of the ground.

[Hawkcreek]

$this->bbcode_second_pass_quote('pstarr', 'H')awk, that's from the Natural Resources Defense Council. Interesting an environmental rather than oil-industry group downplays such a threat? Enviro groups are driven by concerns for global warming. But its an issue we can afford to ignore practically forever, as long as we have cheap energy to huddle and cuddle. Peak oil is scary

The article written in 2011 and mentions Alyeska has also having problems implementing its strategic reconfiguration project. To replace four of the original pumps with electric pumps, with a 2005 completion. Never happened. Electricity hardly exists along the 1,500 miles pipeline. What would the heaters run on? Precious oil.

[Hawkcreek]

No, the capacity was actually reduced due to eliminating the pumping capabilities of the pump stations. They went from 11 pumping stations to just 4 (PS9, PS4, PS3, and PS1). The others are still there, but only serve for leak detection, maintenance repair stations, and surge stations. The old turbine driven pumps don't exist any more, and it would take probably another billion dollar new investment to be able to pump more than a million barrels a day now.

[Hawkcreek]

It really was an interesting job. I probably have more miles on the haul road than most full time truckers.

[Hawkcreek]

When they did that project production had already fallen to below one million barrels a day, so they didn't give up any future cash. They were admitting that they would never make as much production or as much money as they had in the past, and the billion dollar investment would end up saving money on reduction of staff and maintenance at the pumping stations, and allow them to pump at lower volumes for years in the future.
They were correct, even though a lot of people in Alaska seem to have hopes of production increasing again. Most of them don't even know that the pipeline can never transport more than a million barrels of oil per day again. Unless they spend a lot more money to upgrade it again.
Oh Lord, please give me one more oil boom, and I promise I won't piss this one away.

[Subjectivist]

$this->bbcode_second_pass_quote('Hawkcreek', 'W')hen they did that project production had already fallen to below one million barrels a day, so they didn't give up any future cash. They were admitting that they would never make as much production or as much money as they had in the past, and the billion dollar investment would end up saving money on reduction of staff and maintenance at the pumping stations, and allow them to pump at lower volumes for years in the future.
They were correct, even though a lot of people in Alaska seem to have hopes of production increasing again. Most of them don't even know that the pipeline can never transport more than a million barrels of oil per day again. Unless they spend a lot more money to upgrade it again.
Oh Lord, please give me one more oil boom, and I promise I won't piss this one away.

[Hawkcreek]

$this->bbcode_second_pass_quote('Subjectivist', '
')It seems to me they made a mistake building the pipe so large to start with, what they ended up doing was pumping at peak capacity right at the worst oil slump in decades. If they had sized the pipe at say 1.5 or even 1 MM/bbl/d max capacity they would still have been pumping at that rate or close to it in 2005 when pricestook off. They would also have had the ability to keep flow going down to say 200,000/bbl/d without modifications if they had used the smaller pipe. IMO once again the short term profit margin caused them to miss out on the long term potential gains.

[rockdoc123]

$this->bbcode_second_pass_quote('', ' ')If they had sized the pipe at say 1.5 or even 1 MM/bbl/d max capacity they would still have been pumping at that rate or close to it in 2005 when pricestook off. They would also have had the ability to keep flow going down to say 200,000/bbl/d without modifications if they had used the smaller pipe. IMO once again the short term profit margin caused them to miss out on the long term potential gains.