5 Myths About Breaking Our Foreign Oil Habit

The Washington Post ^ | January 13, 2008 | Robert Bryce

[BigBobber]

Thanks. If you haven't read the book The Bottomless Well by Huber and Mills, I highly recommend it. Clearest explanation of the world energy situation I have ever seen.

[mamelukesabre]

The last point, point number 5, seems incorrect to me.

[kabar]

I do not comprehend ignoring many of our resources while funding those that fund Islamic hatred of us.

I don't view the Saudis as enemies, but as allies. We "ignore" our resources for two reasons: (1) We lack the political will to exploit them and (2) many of these resources are more expensive to obtain than the cheaper sources already available. Frankly, I am not that concerned as long as the marketplace is allowed to make the decision on how best to obtain the energy we need. If the government gets involved in making those decisions, you can bet they will be the wrong ones. Ethanol is a prime example of what should not be done. Save us from the unintended consequences.

[thackney]

(1) We lack the political will to exploit them

Greatly agree.

(2) many of these resources are more expensive to obtain than the cheaper sources already available.

I disagree on that point. As proof why that is not the case I look to the Alberta Oil Sands. Some of the most expensive oil to produce in commercial operation in the world. The industry is investing over $150 billion there in new facilities and expansions.

Inventory of Major Alberta Projects
http://www.alberta-canada.com/statpub/albertaConstructionProjects/mpindex.cfm
Scroll down, select "Oilsands" and click "Submit"

as long as the marketplace is allowed to make the decision on how best to obtain the energy we need.

If our government opened many of our resources to exploration and production and not just for oil/gas, I would not have a problem either. But instead we get very promising resources removed from the marketplace and targeted subsidies of uneconomic processes like much of the ethanol and wind.

[kabar]

Glad to see that Canada is thinking ahead. Of course, they have a vested interest in doing so since oil is one of their biggest exports. Obviously, they see demand rising and want to be ready for it. $150 billion is not a lot of money considering the price of oil and the demand. Two offshore drilling rigs cost $1.5 billion. And the Saudis pump 8 million bbls a day. Even at $90 a bbl that is $720 million a day in sales.

[thackney]

$150 billion is not a lot of money considering the price of oil

Can you name a single area in the world of comparable size getting more?

Two offshore drilling rigs cost $1.5 billion.

Continue that comparison. There are 59 offshore oil rigs working in the US. If your price is correct, that is 340% more being invested in the Alberta oil sands than all US operating offshore drill rigs in operation. Or more than 2/3's the rest of the world's offshore drill rigs being invested in one area.

http://www.bakerhughes.com/investor/rig/excel/US_Rig_Report_011808.xls

http://www.bakerhughes.com/investor/rig/excel/International_Rig_Count_December_2007.xls

The industry is greatly willing to invest in places that give reliable access to resources. This is a huge amount and it is because of the willingness of Canada government to work with the industry. Canada as well is investing in large infrastructure expansions to support the growing business and residence expansion in the same area due to job growth.

[thackney]

Let me give you another demonstration of the size of that investment. Back almost 2 years ago when they were only anticipating $100 billion in investment, the anticipated worker shortfall was estimated to be 350,000 for the area.

Oil sands take over center stage
http://www.petroleumnews.com/pnads/265124051.shtml
Conference Board of Canada bets on C$105B in upstream, upgrader spending over 10 years; by 2008 annual spending at C$15 billion; worker shortfall could hit 350,000 by 2025

[kabar]

There are 59 offshore oil rigs working in the US. If your price is correct, that is 340% more being invested in the Alberta oil sands than all US operating offshore drill rigs in operation. Or more than 2/3's the rest of the world's offshore drill rigs being invested in one area.

LOL. Those are just for the rigs, not the drillling and infrastructure needed to move the product. The oil industry involves huge capital costs. The Alberta oil sands project investment is over an extended period of time up thru 2015 and much of the money has yet to be committed. The Alaska pipeline alone cost $8 billion to construct and that was 30 years ago so in today's dollars the costs are much higher.

Can you name a single area in the world of comparable size getting more?

There is no doubt that the Ghawar field in Saudi Arabia has had much more money invested in it than Alberta's oilsand project. If you want to look at some big numbers, check out what the Saudis are doing.

[thackney]

There is no doubt that the Ghawar field in Saudi Arabia has had much more money invested in it than Alberta's oilsand project.

$150 Billion in a decade? I would say there is considerable doubt.

If you want to look at some big numbers, check out what the Saudis are doing.

That link describes plans to spend a total of $29 billion. Why is that supposed to be more impressive than $150 billion? It is less than 20% of the Alberta projects.

[goldfinch]

Bump for later.

[mountainlyons]

Rockymountian News said it would be $30 a barrel for Exon. Shell said $40. It is doable

If it is doable, what is stopping it? What kind of capital investment is required and how long will it take?

They are also slowed and blocked by the Envirowackos and congress.

[kabar]

You don’t seem to get it. The amount of money spent on those projects is new money. Do you have any comprehension what it takes to develop such a field. I lived in Saudi Arabia for five years and have seen those fields and other major projects. Believe it or not, $150 billion in the oil industry is not a lot of money.

[thackney]

You don’t seem to get it.

I have to say the same to you.

The amount of money spent on those projects is new money.

How is that different than the Alberta expansions?

Do you have any comprehension what it takes to develop such a field.

Yes.

I lived in Saudi Arabia for five years and have seen those fields and other major projects.

Congratulations. I lived and worked on the Southern edge of the Rub'al-Kali before working on Offshore projects and Arctic Oilfields. Now I am back in Texas doing refinery expansions and upgrades.

Believe it or not, $150 billion in the oil industry is not a lot of money.

Not.

$150 billion is huge amount of money being invested in expanding a 4 decade old area. This isn't some fields just getting started. The Alberta oil sands already produce more petroleum than the rest of Western Canada.

http://www.insightinfo.com/index.cfm?ci_id=25058&la_id=1

I am just simply amazed that you consider an amount equal to the entire world-wide annual exploration and capital investments of ExxonMobil, Shell, BP, Gazprom, Rosneft, Lukoil, Chevron, Petrobras and Total (for all areas of their business) not a lot of money.

http://exxonmobil.com/Corporate/Files/Corporate/fo_2006.pdf
http://www.shell.com/static/investor-en/downloads/publications/2007/2006_annual_review.pdf
http://www.bp.com/liveassets/bp_internet/annual_review/annual_review_2006/STAGING/local_assets/downloads_pdfs/a/ara_2006_annual_review.pdf

http://www.gazprom.ru/documents/Report_Eng.pdf
http://www.rosneft.com/attach/0/27/50/a_report_2006_eng.pdf
http://www.lukoil.com/materials/doc/Annual_Report_2006/AR_2006_ENG.pdf
http://media.corporate-ir.net/media_files/irol/13/130102/reports/cvx_annual_2006.pdf
http://www2.petrobras.com.br/ri/ing/ConhecaPetrobras/RelatorioAnual/pdf/Relatorio_Anual_2006_Ing.pdf
http://www.total.com/static/en/medias/topic1647/Total_2006_total_in_2006.pdf

This is not a big area, this is a lot of money for a relative small increase in production. It clearly demonstrates that oil companies are not only willing to invest in relatively cheap production areas. We would get much more investment in the US if we would only open more of our resources for exploration and production. And your comparisons to the largest oil producer in the world only investing a fraction of that amount confirms it.

[timer]

How much heat-money do you pump out of your windows, skimpily insulated walls/ceilings/floors every winter? What would it be if you had a 2 foot thick layer of high density urethane foam insulation all around your 1500 sf house?

[xjcsa]

How much heat-money do you pump out of your windows, skimpily insulated walls/ceilings/floors every winter? What would it be if you had a 2 foot thick layer of high density urethane foam insulation all around your 1500 sf house?

Hey, I try to pump out as much heat as I can; it's COLD out there!

[timer]

It’s your money you’re pumping out there, to heat up the cold night air. The sun does a perfectly good job of heating the air, even in the winter. With a R 168 layer of super duper urethane “quilt”(24” thick @ R7/”)around your 30’x50’x8’ high ceilings, 3 br house, your body heat(w/o windows, infiltration)@ 1250 BTUH would be enough to keep the interior @ 72 deg F w/outside 32 deg F.

Although the retail price of that much insulation would be very high, it’s a permanent plus to your abode : warmer in the winter w/no heating bills, cooler in the summer w/no AC bills. Also, it takes 3 KW back at the coal fired power plant to deliver 1 KW to your electrical panel(thermodynamic and system losses). Insulation is still your best energy buy.