[smiley]

I've been pondering on this for a while now. Everywhere I look I see these immense high rates. Refineries operating at 96% of capacity. Oil fields pumping close to 100%. Tanker utilisation at 90+%. Rig utilisation above 90%.

$66 oil is providing a lot of incentive to deliver as much as fast as possible. Flat earth economists use this as an argument to argue that the oil production will rise due to high prices. But I'm more concerned about the negative effects.

I don't work well under stress. A bit of stress is healthy, but too much for too long and I start loosing my concentration, I become careless and start making mistakes. Now we have this industry which is under a tremendous amount of stress. I'm certain the temptation will be great to skip some of those safety protocols, to cut a few corners here and there, to delay some maintenance etc.

And I think we're seeing that now: Refinery blow-ups (even one refinery blowing up twice this year), a drilling platform which almost went to the seabed in the Gulf, another which went sky-high in India, two tanker collisions in the past week etc.

Every accident raises the oil price a bit more and thus increases the stress on the industry. A snapped link transfers its strain to the next weakest link. I'm wondering whether this could cause some kind of tombola of accidents across the globe, perhaps cutting a few percent of world production. Post-peak could then literary start with a boom.

It would be fitting though, to have the moment of the peak defined by human psychology and not geology.

[leal]

$this->bbcode_second_pass_quote('smiley', '
')Every accident raises the oil price a bit more and thus increases the stress on the industry. A snapped link transfers its strain to the next weakest link. I'm wondering whether this could cause some kind of tombola of accidents across the globe, perhaps cutting a few percent of world production. Post-peak could then literary start with a boom.

[whiteknight]

$this->bbcode_second_pass_quote('leal', 'A')ccident? Why not terrorist attack?

[Shiraz]

Mmm. A lot is made of modern production techniques, and also the power of free market capitalism, with regard to their ability to sacrifice current production in exchange for higher depletion rates later on.

Far less is said of effects like the one you have raised here, which have the effect of sacrificing a greater peak production for more future production.

To be perfectly clear, what I'm saying is that if production does decrease due to stress induced interuption, this does leave more oil to be extracted during the down slope.

Systemic stress is not the only effect which should have such consequences. Others include geopolitical tension, infrastructure constraints, and hoarding.

In any case, I think it is a strong argument that "breakdown frequency" should be a good "leading indicator" for peak oil, in the same way as declining spare capacity might be, for example.

[gg3]

Interesting point Smiley, about the propagation of stress-related breakdowns through a system. I think you're right.

I also agree that deliberate factors e.g. terrorism, could initiate or amplify such a sequence of events. And that this is a sign of peaking.

[pup55]

I am around big industrial operations all the time, and I agree with you completely, Smiley.

Part of it is just engineering: These big reactors are hot all the time, and the're made out of metal, which melts, or refractory, which will break down over time, and there is nothing you can do about it except shut it down periodically and rebuild it. If you don't, they will shut themselves down.

The other part is human nature: Typically in these big continuous operations, the "front end" is the sexy part, and all of the ambitious engineers want to work on the area where the reaction or distillation is taking place, and also, that is where all of the money is spent. But, some 50-cent sprocket falls off of a packaging unit at the back end because nobody is paying attention to it and the whole thing comes to a screeching halt.

One need look no farther than the space shuttle for an example of this. All this mission control stuff, pilot selection process, astronomers, redundant systems etc. etc. and the whole operation is brought down because nobody knows anything about insulating foam.

[EnergySpin]

$this->bbcode_second_pass_quote('smiley', 'I')'ve been pondering on this for a while now. Everywhere I look I see these immense high rates. Refineries operating at 96% of capacity. Oil fields pumping close to 100%. Tanker utilisation at 90+%. Rig utilisation above 90%.

$66 oil is providing a lot of incentive to deliver as much as fast as possible. Flat earth economists use this as an argument to argue that the oil production will rise due to high prices. But I'm more concerned about the negative effects.

I don't work well under stress. A bit of stress is healthy, but too much for too long and I start loosing my concentration, I become careless and start making mistakes. Now we have this industry which is under a tremendous amount of stress. I'm certain the temptation will be great to skip some of those safety protocols, to cut a few corners here and there, to delay some maintenance etc.

And I think we're seeing that now: Refinery blow-ups (even one refinery blowing up twice this year), a drilling platform which almost went to the seabed in the Gulf, another which went sky-high in India, two tanker collisions in the past week etc.

Every accident raises the oil price a bit more and thus increases the stress on the industry. A snapped link transfers its strain to the next weakest link. I'm wondering whether this could cause some kind of tombola of accidents across the globe, perhaps cutting a few percent of world production. Post-peak could then literary start with a boom.

It would be fitting though, to have the moment of the peak defined by human psychology and not geology.

[Chaparral]

I've been noticing this as well. The thought occurred to me that these "refinery accidents" could serve quite a few purposes.

They could create a gas shortage without reducing the flow of oil out of the ground. This gas shortage would hit the American Fordasaurus driver the hardest while minimizing effects elsewhere. It almost seems like a little bit of surgical demand destruction.

Then again, maybe I've just been reading a little too much Mike Rup pert and it's messing with my mind

[Frontierenergy1]

Stress on the system? I am on a rig as I type this. I don't have a lot time to thoughtlfully expound on these messages as I'm up to my eyeballs in alligators most of the time. The rig count is at about 1300 right now and they have ran out of people that have even seen a drilling rig before much less worked on one. To the point that they can now justify bringing in hands from China. I have been on this well for 5 weeks straight now and "maybe" I'll get relief next week. I may just get in my truck and drive off anyway.

The rigs that are out here are junk, mostly made 30 years ago during the last boom with almost everything either broke, worn out or can't be replaced because there "ain't none".

True the majors spend the big bucks on projects like Thunder Horse, but the independents have not been able to re-invest in the industry. Rig rates have been so low until recently that it barely covered the fuel and payroll. It is going to cost big bucks just to get the rig fleet in "fair" condition. You bet there is stress on the system.

[PenultimateManStanding]

$this->bbcode_second_pass_quote('Frontierenergy1', ' ')they have ran out of people that have even seen a drilling rig before much less worked on one. To the point that they can now justify bringing in hands from China. I have been on this well for 5 weeks straight now and "maybe" I'll get relief next week. I may just get in my truck and drive off anyway.

[Frontierenergy1]

Welll I guess you did OK by following his advice. You were fortunate enough to live in an area where you could make a choice. Back when he told you that there were probably over 4000 rigs running . Now we are maxed out at 1400.

Was that Johnston/ Macco you worked for? I worked for Macco for a short time before I had a wireline operator pull the rope socket out of the lubricator assembly. I should have ran like hell- but I just stood there watching gas spew out of a 7000 psi well head like an idiot.

My friend all industries will be dying if we don't get a handle on this problem.

[Frontierenergy1]

PenultimateManStanding:

I told a kid two months ago to forget about this business, so I guess I'm that old man for somebody else. Stupid #$%! did'nt listen to me though.

[PenultimateManStanding]

$this->bbcode_second_pass_quote('Frontierenergy1', ' ')
Was that Johnston/ Macco you worked for? .

[pea-jay]

Here is another way of re-framing the same question:

Are we breaking down more than usual due to high rates of utilization or is the lack of spare capacity just making any little breakdown a big deal.

Hurricanes have always hit oil producing regions.
Oil rigs have always caught fire
Refineries have always had accidents
Oil countries have always been unstable.

Could it be the lack of spare capacity that is focusing on the breakdown issue?

[pup55]

$this->bbcode_second_pass_quote('', 'h')igh rates of utilization

[Ancien_Opus]

Don't overlook the chemistry in refining.

Heavy oil has more sulfur and more metal to form corrisive by-products during the refining phase. Corrosion leads to more frequent break downs. Managers are up against the wall with all this just-in-time supply side stuff that they're not planning for the expected failures. The lack of experience in refining is playing out as well so just plain old mistakes are occurring. A refinery can be a very dangerous place to work.

Looking at reports from the oil drum we're getting less and less sweet crude so expect cost to go up accordingly.

Regards,

[smiley]

$this->bbcode_second_pass_quote('', 'H')eavy oil has more sulfur and more metal to form corrisive by-products during the refining phase. Corrosion leads to more frequent break downs.

[MacG]

$this->bbcode_second_pass_quote('pup55', 'T')he current generation of weak industrial managers who don't know squat about operations want to minimize planned maintenance shutdowns so as to maximize short-run output to make their bottom line look good.

Then there is a lot of whining when they have some catastrophe with a fatality or two and they get the downtime the hard way.

Nowadays these guys are only in their jobs for 18 months anyway before the next promotion or whatever, so there is no consideration whatsoever about the long term effects of this on the overall operation.