by Pops » Thu 08 Oct 2009, 14:08:36
$this->bbcode_second_pass_quote('shortonsense', 'A')s long as demand can shrink, or be destroyed, faster than declining supply, the price will trend down REGARDLESS of how that EROEI equation works.
Sure, I can see that.
All thats left is waiting to see who's demand is destroyed.
The legitimate object of government, is to do for a community of people, whatever they need to have done, but can not do, at all, or can not, so well do, for themselves -- in their separate, and individual capacities.
-- Abraham Lincoln, Fragment on Government (July 1, 1854)
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by jbrovont » Thu 08 Oct 2009, 14:58:50
1) Lamp oil *is* a fuel.
2) EROEI has everything to do with energy density when talking about Oil. That's why light sweet is more sought after than sour crude.
3) ROI is dictated by EROEI because our economy is based on energy.
4) If you don't think that the economy of the world runs on energy, then what do you think it runs on?
$this->bbcode_second_pass_quote('shortonsense', '')$this->bbcode_second_pass_quote('jbrovont', 'T')he only reason oil ever came into use as a fuel to begin with, is that obtaining it has a high EROEI.
For starters, oil wasn't first sought out for fuel, but for lighting. By the time it was used for fuel, there were more battery operated cars on the road than gasoline powered ones. However, the decreasing real price of gasoline is basically what overpowered the CORRECT choice for transport, if the world was really concerned about EROEI, which of course it wasn't. The world was concerned about price. Gasoline won.
Does it have an excellent energy density? It certainly does. Does EROEI have anything to do with its basic chemical properties? Of course not.
$this->bbcode_second_pass_quote('jbrovont', '
') If oil didn't yeaild more energy than it took to get it, it would never have been used as a fuel.
More baloney. Oil didn't start as a fuel, no one cared about EROEI when lighting their homes with kerosene either. It pushed aside the electrification of transport because of cost, not EROEI.
$this->bbcode_second_pass_quote('jbrovont', '
')There's a very simple explanation as to why EROEI hasn't been largely used in the oil industry to determine the viability of operations: in business, you call it ROI.
ROI is not EROEI. Never has been, never will be. Maddog has verified this point already. Why do you insist on something which the industry professionals have already scoffed out of the room?
$this->bbcode_second_pass_quote('jbrovont', '
')Money = work = energy.
by Quinny » Thu 08 Oct 2009, 15:27:44
Why should they, because it's the right thing to do to maximise the benefit derived from resources. Full lifecycle analysis should also be insisste dupon to ensure that environmental degradation and cost of cleanup are taken into account.
Step over the line? I am saying it that stupid decisions were made because of people who shared what I understand to be your beliefs.
If you are simply saying that the industry doesn't consider EROEI but is wrong not to so, I apologise, I have some sympathy with that position - they certainly don't consider it enough! If however you are saying they are correct to just consider LSD or dollars you are IMO simply wrong. I've never actually worked in an Energy company, but when I was offered graduate jobs with Oil companies in the early 80's, we discussed energy accounting and life cycle costing at my interview. It was a term senior management were very interested in
(at that stage however they were still considering converting oil to food, directly that is). I would be very surprised if EROEI was not factored into strategy decisions - as you say Btu's are constant, currency is not.
I think jbrovont is correct in saying that it is in a way factored in because of costs, but the problem with using this approach is that market fluctuations completely screw up ROI because of price changes. The reflection of EROEI in costs is not tight enough because of markets which react to many other factors. This is IMO why we will see command economies coming to power all over the world over the next few years. You may feel this is supporting your porition, but I am saying it's wrong, you seem quite happy for hundreds of years of energy supply to be locke up in flooded pits!!
Maybe someone could come up with a financial instrument to help level things out if prices screw up the ROI. Maybe they could then work out a system so these instruments coud be packaged in some way to eliminate risk altogether.
$this->bbcode_second_pass_quote('shortonsense', '')$this->bbcode_second_pass_quote('Quinny', 'T')hey may not consider EROEI, but they should!
A completely reasonable statement. Why should they? Does the analysis of EROEI in any particular oil and gas extraction environment EVER have more to do with energy than it does with cost, price, profit or IRR?
$this->bbcode_second_pass_quote('Quinny', '
')Highly productive pit's were closed back in the 70's which will probably never open again, because their was no consideration to EROEI!
See how easy it is to step across the line? They weren't closed because of EROEI, nor was EROEI part of the decision to close them in any way. They stop making money...you shut the project down. I'll bet not a single consideration was given to the amount of BTU's being expended to run the pit...but I'm POSITIVE that the cost of the fuel to run the machinery was in that calculation.
by Tanada » Thu 08 Oct 2009, 17:50:26
$this->bbcode_second_pass_quote('jbrovont', '1')) Lamp oil *is* a fuel.
2) EROEI has everything to do with energy density when talking about Oil. That's why light sweet is more sought after than sour crude.
3) ROI is dictated by EROEI because our economy is based on energy.
4) If you don't think that the economy of the world runs on energy, then what do you think it runs on?
I I agree with 1 and 4 completely and 3 conditionally, but #2 is in error. Heavy sweet crude has a greater energy content than light sweet, and it is also easier to use for Diesel fuel production. Diesel fuel not only has a higher energy content than gasoline, engines designed for compression ignition in general have a higher efficiency than spark ignition engines. This gives heavy sweet a triple whammy advantage over light sweet for everything except gasoline production and only the USA obstinately demands Gasoline engines for most passenger vehicles.
$this->bbcode_second_pass_quote('Alfred Tennyson', 'W')e are not now that strength which in old days
Moved earth and heaven, that which we are, we are;
One equal temper of heroic hearts,
Made weak by time and fate, but strong in will
To strive, to seek, to find, and not to yield.
by shortonsense » Thu 08 Oct 2009, 19:03:33
$this->bbcode_second_pass_quote('Tanada', '')$this->bbcode_second_pass_quote('jbrovont', '1')) Lamp oil *is* a fuel.
2) EROEI has everything to do with energy density when talking about Oil. That's why light sweet is more sought after than sour crude.
3) ROI is dictated by EROEI because our economy is based on energy.
4) If you don't think that the economy of the world runs on energy, then what do you think it runs on?
I I agree with 1 and 4 completely and 3 conditionally, but #2 is in error.
I think you are dead on about why #2 is wrong. Except you didn't mention refining costs being higher with the heavier crudes, which means again, its about cost, not about the energy in the feedstock.
But on #3, out of curiosity, how do YOU make the jump from an energy metric like EROEI into ROI/IRR? Have you seen someone calculating IRR using energy metrics as input rather than cost? Maddog has claimed it doesn't enter his world anywhere, do you suspect it somewhere else? Ship buiding? Highway construction? Surely there is an industry which calculates BTU's input versus BTU's output and then decides to go ahead with the project on that basis? If they do, what does that conversion look like, and do you have any examples?
by shortonsense » Thu 08 Oct 2009, 19:19:39
$this->bbcode_second_pass_quote('Pops', '')$this->bbcode_second_pass_quote('shortonsense', 'A')s long as demand can shrink, or be destroyed, faster than declining supply, the price will trend down REGARDLESS of how that EROEI equation works.
Sure, I can see that.
All thats left is waiting to see who's demand is destroyed.
Easy. Whoever is irritated by the incremental change in price the most. The F150 owner who first buys a Accord. And then buys a Prius. And then collects a scooter. And then gets a Volt. Or rides a bike or bus. The time required to go from A to Z mostly determined by the irritation over variable fuel costs.
Economics in action, one decision at a time, multiplied by hundreds of millions of people.
Worked like a charm during the most recent peak oil, right?
by Tanada » Thu 08 Oct 2009, 19:40:56
$this->bbcode_second_pass_quote('shortonsense', '')$this->bbcode_second_pass_quote('Tanada', '')$this->bbcode_second_pass_quote('jbrovont', '1')) Lamp oil *is* a fuel.
2) EROEI has everything to do with energy density when talking about Oil. That's why light sweet is more sought after than sour crude.
3) ROI is dictated by EROEI because our economy is based on energy.
4) If you don't think that the economy of the world runs on energy, then what do you think it runs on?
I I agree with 1 and 4 completely and 3 conditionally, but #2 is in error.
I think you are dead on about why #2 is wrong. Except you didn't mention refining costs being higher with the heavier crudes, which means again, its about cost, not about the energy in the feedstock.
But on #3, out of curiosity, how do YOU make the jump from an energy metric like EROEI into ROI/IRR? Have you seen someone calculating IRR using energy metrics as input rather than cost? Maddog has claimed it doesn't enter his world anywhere, do you suspect it somewhere else? Ship buiding? Highway construction? Surely there is an industry which calculates BTU's input versus BTU's output and then decides to go ahead with the project on that basis? If they do, what does that conversion look like, and do you have any examples?
Nothing nearly that complicated is involved, I merely agree that ROI is very much influenced by the price of energy inputs and the lower the EROEI in the system as a whole the lower the ROI will be due to Energy COSTS being higher. It is axiomatic to many members on PO.com that EROEI is the be all and end all of Peaking discussions, however I do not see it as being necessarily the case. Most everyone on here will agree that Petroleum became the primary energy source because of energy density and low cost. Starting any day you choose any large corporation or government could build an Ammonia production plant which would consume electricity and water and air and produce NH3. Said NH3 in a slightly modified gasoline engine will operate similarly to any other gaseous substitute fuel. Produce the electricity consumed in the process by anything other than fossil fuel; be it sunlight, geothermal, wind, wave, tidal, fission, or Hydroelectric power, and your system can now operate completely independent of energy from fossil fuels. How do you measure the EROEI in the described system? The best you can do is say how much electricity is consumed and how much energy is gotten out by combustion of the ammonia. No matter what answer you come up with however you are converting a type of power source, electricity, that is inconvenient to use for transportation, into an energy storage medium i.e. Ammonia, that can be used in existing vehicles with minor modification. If you want to avoid Ammonia you can use the same type of process with a bit less efficiency to produce Methane, Ethane, Propane, Butane and so on and so forth. Yes you lose a lot of your original energy in the conversion process, but if the end result is a mobile energy storage medium with an energy density that far exceeds that of batteries who cares? Certainly it will not be as cheap or convenient as pumping Petroleum out of the ground and refining it, but it is eminently do-able with some sweat equity and intelligent rational action. Best of all IMO is the fact that doing so with any or all of the electricity sources I named is CARBON NEUTRAL!
by mcgowanjm » Thu 08 Oct 2009, 19:52:35
$this->bbcode_second_pass_quote('shortonsense', '')$this->bbcode_second_pass_quote('jbrovont', 'T')he only reason oil ever came into use as a fuel to begin with, is that obtaining it has a high EROEI.
For starters, oil wasn't first sought out for fuel, but for lighting. By the time it was used for fuel, there were more battery operated cars on the road than gasoline powered ones. However, the decreasing real price of gasoline is basically what overpowered the CORRECT choice for transport, if the world was really concerned about EROEI, which of course it wasn't. The world was concerned about price. Gasoline won.
Does it have an excellent energy density? It certainly does. Does EROEI have anything to do with its basic chemical properties? Of course not.
$this->bbcode_second_pass_quote('jbrovont', '
') If oil didn't yeaild more energy than it took to get it, it would never have been used as a fuel.
More baloney. Oil didn't start as a fuel, no one cared about EROEI when lighting their homes with kerosene either. It pushed aside the electrification of transport because of cost, not EROEI.
$this->bbcode_second_pass_quote('jbrovont', '
')There's a very simple explanation as to why EROEI hasn't been largely used in the oil industry to determine the viability of operations: in business, you call it ROI.
ROI is not EROEI. Never has been, never will be. Maddog has verified this point already. Why do you insist on something which the industry professionals have already scoffed out of the room?
$this->bbcode_second_pass_quote('jbrovont', '
')Money = work = energy.
by Tanada » Thu 08 Oct 2009, 20:11:43
$this->bbcode_second_pass_quote('mcgowanjm', '')$this->bbcode_second_pass_quote('', 'S')aid NH3 in a slightly modified gasoline engine will operate similarly to any other gaseous substitute fuel. Produce the electricity consumed in the process by anything other than fossil fuel; be it sunlight, geothermal, wind, wave, tidal, fission, or Hydroelectric power, and your system can now operate completely independent of energy from fossil fuels.
Again. Where is this NH3. Where is this electricity. Hydro
is all done.
And on the electricty, the infrastructure to carry it.
As the human population grows btw.
Resilience v Growth is a whole other EROEI that you don't address.
You build the Ammonia plant next to your electricity supply source and avoid the transmission infrastructure and the line losses that go along with it.
Hydro is only "all done" because we decided fish are more important than Hydroelectric power. If we changed our mind once there is no reason we can't, or won't, change it again in the other direction.
I also named "sunlight, geothermal, wind, wave, tidal, fission" in addition to hydroelectric as non fossil fueled electricity sources. Are you next going to claim that every one of those is "all done" as well?
I am not a huge fan of either growing the population or the economy per se, I am much more inclined towards sustainable survival at a good level of civilization. Biofuels will not provide the energy resource we need, but you might note I didn't have them in my list either.
If you think Resilience v Growth is critically important why don't you define what you mean by those terms and explain why we should consider it vitally important?
$this->bbcode_second_pass_quote('Alfred Tennyson', 'W')e are not now that strength which in old days
Moved earth and heaven, that which we are, we are;
One equal temper of heroic hearts,
Made weak by time and fate, but strong in will
To strive, to seek, to find, and not to yield.
by mcgowanjm » Thu 08 Oct 2009, 20:22:40
$this->bbcode_second_pass_quote('Tanada', '')$this->bbcode_second_pass_quote('mcgowanjm', '')$this->bbcode_second_pass_quote('', 'S')aid NH3 in a slightly modified gasoline engine will operate similarly to any other gaseous substitute fuel. Produce the electricity consumed in the process by anything other than fossil fuel; be it sunlight, geothermal, wind, wave, tidal, fission, or Hydroelectric power, and your system can now operate completely independent of energy from fossil fuels.
Again. Where is this NH3. Where is this electricity. Hydro
is all done.
And on the electricty, the infrastructure to carry it.
As the human population grows btw.
Resilience v Growth is a whole other EROEI that you don't address.
You build the Ammonia plant next to your electricity supply source and avoid the transmission infrastructure and the line losses that go along with it.
Hydro is only "all done" because we decided fish are more important than Hydroelectric power. If we changed our mind once there is no reason we can't, or won't, change it again in the other direction.
I also named "sunlight, geothermal, wind, wave, tidal, fission" in addition to hydroelectric as non fossil fueled electricity sources. Are you next going to claim that every one of those is "all done" as well?
I am not a huge fan of either growing the population or the economy per se, I am much more inclined towards sustainable survival at a good level of civilization. Biofuels will not provide the energy resource we need, but you might note I didn't have them in my list either.
If you think Resilience v Growth is critically important why don't you define what you mean by those terms and explain why we should consider it vitally important?
I really can't believe this. This is the USA PO site.
I mean we've gone thru all of this in the past 5 years and still
the above:
If we wanted to do we could. That's what we've got here.
Nothing on why we've decided not to do ANY of the above.
Meanwhile back at the ranch:
Pemex has spent more than $3.4 billion so far on Chicontepec, whose large reserves promised to lift Mexico's oil output from near 20-year lows, but production has lagged its targets.
Juan Carlos Zepeda, head of the National Hydrocarbons Commission, told an industry event the field needs a new and exhaustive development plan to improve drilling techniques and boost output, dailies Reforma and El Universal reported.
He said the commission is talking to Pemex about the issue.
Neither Pemex nor Zepeda were immediately available to comment on the media reports, Reuters said.
Who cares? Cantarell is going to a 150 000 BPD. And Chicontepec was the supposed backup. Maybe Mexico
is ready to do your ideas. They don't have anything else.
Or maybe Mexico will just collapse because they don't
realize the validity of your suggestions.
by jbrovont » Thu 08 Oct 2009, 20:35:07
Afaik, light sweet is sought after because (as sos points out) it's cheaper (easier) to refine aka "less energy intensive."
What do you think makes heavy crudes more expensive to refine?
$this->bbcode_second_pass_quote('shortonsense', '')$this->bbcode_second_pass_quote('Tanada', '')$this->bbcode_second_pass_quote('jbrovont', '1')) Lamp oil *is* a fuel.
2) EROEI has everything to do with energy density when talking about Oil. That's why light sweet is more sought after than sour crude.
3) ROI is dictated by EROEI because our economy is based on energy.
4) If you don't think that the economy of the world runs on energy, then what do you think it runs on?
I I agree with 1 and 4 completely and 3 conditionally, but #2 is in error.
I think you are dead on about why #2 is wrong. Except you didn't mention refining costs being higher with the heavier crudes, which means again, its about cost, not about the energy in the feedstock.
But on #3, out of curiosity, how do YOU make the jump from an energy metric like EROEI into ROI/IRR? Have you seen someone calculating IRR using energy metrics as input rather than cost? Maddog has claimed it doesn't enter his world anywhere, do you suspect it somewhere else? Ship buiding? Highway construction? Surely there is an industry which calculates BTU's input versus BTU's output and then decides to go ahead with the project on that basis? If they do, what does that conversion look like, and do you have any examples?
by shortonsense » Thu 08 Oct 2009, 20:53:39
$this->bbcode_second_pass_quote('Tanada', '')$this->bbcode_second_pass_quote('shortonsense', '
')But on #3, out of curiosity, how do YOU make the jump from an energy metric like EROEI into ROI/IRR? Have you seen someone calculating IRR using energy metrics as input rather than cost? Maddog has claimed it doesn't enter his world anywhere, do you suspect it somewhere else? Ship buiding? Highway construction? Surely there is an industry which calculates BTU's input versus BTU's output and then decides to go ahead with the project on that basis? If they do, what does that conversion look like, and do you have any examples?
Nothing nearly that complicated is involved, I merely agree that ROI is very much influenced by the price of energy inputs and the lower the EROEI in the system as a whole the lower the ROI will be due to Energy COSTS being higher.
Lower EROEI is not guaranteed to equal higher energy costs. Certainly hasn't worked that way with crude...do you have an example from another commodity which did follow this profile?
$this->bbcode_second_pass_quote('Tanada', '
') It is axiomatic to many members on PO.com that EROEI is the be all and end all of Peaking discussions, however I do not see it as being necessarily the case.
I quite agree. EROEI not being the only axiom they have incorporated into the mythology of peak.
$this->bbcode_second_pass_quote('Tanada', '
')Best of all IMO is the fact that doing so with any or all of the electricity sources I named is CARBON NEUTRAL!
