Posted on 04/29/2007 7:56:19 PM PDT by Kitten Festival
Forcing Big Oil to give up control of Venezuela's most promising oil fields this week will be relatively easy for President Hugo Chavez, but he will face a more delicate challenge in getting the world's top oil companies to stay and keep investing.
If Chavez can persuade companies to stick around despite tougher terms, Venezuela will be on track to develop the planet's largest known oil deposit, possibly to surpass Saudi Arabia as the nation with the most reserves.
If he scares them away, the Orinoco River region could end up starved of the investment and know-how needed to transform its vast tar deposits into marketable crude oil.
(Excerpt) Read more at forbes.com ...
It would be a worthwhile investment.
Chavez does that you will Find How Tightly knit the Oil industry is....and he will learn the importance of Maintenance which he will be lacking expertise. most Oil field around the world are Manned mainly by Foreigners...that are US friendly.
Lets hope this communist dictator halfwit suffers from the big companies pulling out or cutting way back on him. They have much clout over this whack-job. Get out the popcorn.
We have no dependence on foreign oil. We buy oil because it is the most cost effective form of transportable energy. We buy oil overseas because of the price. That is not a dependence.
For example, I shop at Walmart because of the prices. I don't have a dependence on Walmart even though 75% of my grocery shopping is done there. I could go somewhere else that is more expensive. I choose not to.
I chose my particular cell phone plane because it was the cheapest. I am not dependent on Cingular. I chose the most cost effective solution.
I buy my books at Amazon.com because of the price. Over 90% of the books I buy I buy at Amazon. I am not dependent on them, I could switch to another more expensive provider.
Are you going somewhere with this? Just kidding, I concur with your post! We do what we do because it is the cheapest solution!
“Maintenance”
The magic word. I have some engineering background and people just underestimate the ability of a handful of maintenance guys to pull a few fuses and cripple a major industry. You just buy yourself a cot to sleep on and then every once in a while put one fuse in and take another out and you are in fat city. I suspect Hugo is about to find out what crappy maintenance does.
Oil supplies are tight and refineries are operating at 98% capacity. Either we buy foreign oil or we go without lights and toilets. Most people do not favor the sheryl crow solution so they continue to buy oil to power every aspect of their lives. You are saying people can go without oil? If you are, then many can walk 30 miles to work. Dream on, won’t happen.
Offshore drilling and nukes are the best solutions for diversifying the energy supply and reducing dependence on foreign oil.
Intriguing. So you think this could fall apart fast? Your background sounds very interesting.
You don’t think the private sector can advance fuel technology as they have advanced most every other commercial technology?
We could, after a ramp up of a few years, get all of our oil from the US and Canada. It's just that it would cost a fortune.
Geez Louise,so many people here down on Hugo Chavez. Joe Kennedy Jr. thinks he’s a GREAT guy,so why the diffrerence in opinion ???
We’ll have alternatives to foreign oil about five minutes after something cheaper than foreign oil is invented. Or deregulated.
“Intriguing. So you think this could fall apart fast? “
It could. You just don’t know how many critical sleeper maintenance guys the oil companies are leaving behind. If you are a maintenance guy getting paid the same (or less) under Hugo it’s pretty easy to neglect a pump here or there, especially if a company guy throws you a few bucks. “Oh that bearing is special order from the U.S., it will take two weeks.”
Management and engineering will split quickly because Hugo will be sucking out the money that would go to bonuses. If the companies that stay in a nationalized environment don’t have high profits, they have no incentive to pay good wages. And Hugo needs the maintenance fund capital to support his little tin army. So, given there was already turmoil and a drop in production the last couple of years, there’s nothing to keep the oil flowing.
“Your background sounds very interesting.”
Just don’t try my life at home kids :)
Hugo has a lot of assets over here that could be seized to compensate those he steals from.
Which brings about a good off topic point: We have choices on where to spend our money. If we don’t like Citgo, we can go to Texaco or Chevron. If we don’t like our insurance company, we can go to another. If we don't like one grocery store, or laundry, etc., we can find others. But if the government runs something (like healthcare) and we don’t like it, where can we go?
The thing is, Chavez has already re-negotiated his contracts with the international oil companies several times. Each time they have gritted their teeth and accepted it.
This is not the first time. Its just the latest time.
At the beginning the oil companies were offered rather favorable terms because it was heavy oil, and the technology was uncertain. Since then, as the plants and pipelines have been built, he has managed to force through a better cut for Venezuela by pointing out that the uncertainties had been eliminated. He several times has threatened to “nationalize” their share, publicly, and then has privately assured the oil companies that they were safe, please continue to invest. And squeezed a better percentage out of them each time.
And if the uncertainties went the other way Chavez would have renegotiated in favor of the oil companies?
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Refinery Problems
Here is a partial list of outages from Energy Assurance Daily that are supporting gasoline prices. You will notice a common thread in the list. Most involve catalytic cracking units (CCU) or fluid catalytic crackers (FFC). Crackers are where most of the gasoline components are first made. Crackers break down or crack large heavy molecules into smaller ones used in gasoline and diesel blends. Without a cracker most gasoline production is lost.
Outages
April 25 Cat Cracker Shut at ExxonMobil’s 348,500 b/d Beaumont Refinery in Texas Gasoline and Distillate Production Loss Estimated at 325,000 b/d (3 days)
April 24 Malfunction Shuts CCU at Sinclair’s 70,300 b/d Tulsa Refinery in Oklahoma (7 days)
April 24 BP’s 420,000 b/d Whiting Refining in Indiana to run at 50 percent of capacity until repairs and turnaround work is Completed (8 weeks)
April 23 Malfunction Shuts FFC Unit at Valero’s 250,000 b/d St. Charles Refinery in Louisiana Gasoline Production Cut by 71 Percent (10-14 days)
April 21 Loss of Steam Shuts CCU at BP’s 160,000 b/d Toledo Refinery in Ohio
April 21 Power Outage Shuts Several Units at Valero’s 170,000 b/d McKee Refinery in Texas
April 20 SRU Problem at ConocoPhillips’ 216,000 B/d Sweeny Refinery in Texas is slowing several units
April 20 Citgo restarts 120,000 b/d crude unit at its Lake Charles Refinery in Louisiana
Source: ENERGY ASSURANCE DAILY
Let's take a look at one of these refineries to get an idea of the impact on the weekly statistics. With only half of the 420,000 b/d Whiting refinery down there is 210,000 b/d of crude oil that is not being refined. Since about half of the crude that is refined ends up as gasoline that means 105,000 b/d of gasoline will not be produced. That is close to 750,000 barrels per week. If everything else stayed the same the weekly statistics would be changed in the following ways: refinery utilization would be 1.2% lower (210,000 b/d divided by capacity of 17.5 million b/d). Crude oil stocks would be 1.4 million barrels higher (210,000 b/d times 7 days). Gasoline stocks as already noted would be almost 750,000 barrels lower. Other products would also have lower inventories.
Not mentioned in the list above is the BP Texas City refinery. It has almost 200,000 b/d of capacity still off line since the fall of 2005. It would double the numbers we have from the Whiting refinery. We could go on but you get the point. Refinery utilization should be well over 90% at this time of year but this week it dropped from 90.4 to 87.8. As you will see in the details below we not only have low refinery production we also have exceptionally low gasoline stocks and it may be into the driving season before they approach normal levels. That means it could be sometime in June or even later before the margins between gasoline and crude return to normal levels.
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Also, it's product supply, principally motor gasoline, not crude supply, that is somewhat tight at the moment.
;^)
They'll remove anything that A) can be removed and B) works properly.
Rotsa ruck, Hugito.
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