A World Affloat on an Ocean of Oil

usadaily.com ^ | 06/15/2008 | Alan Caruba

[theBuckwheat]

See PDF presentation by the Office of the Secretary of Defense on the Clean Fuels Initiative. Contains maps of US hydrocarbon resources.

http://www1.eere.energy.gov/femp/energy_expo/2005/pdfs/t_s4c.pdf

[American in Israel]

darn, left edit trash at the end
sorry

[American in Israel]

Thanks for the link

[DaveTesla]

Politically Contrived Gasoline Shortage
The Independent Institute ^ | Spring 2008 | CRAIG S. MARXSEN

Posted on 06/07/2008 12:08:06 PM PDT by DaveTesla

Politically Contrived
Gasoline Shortage

CRAIG S. MARXSEN
The 1972 book The Limits to Growth (Meadows et al. 1972) sensationalized
the theory that natural-resource depletion and rising pollution would soon
bring catastrophe. The authors theorized that, among other problems, running
out of basic resources such as petroleum would cause a collapse of industrial and
agricultural production as well as a resulting loss of a large part of the world’s human
population. An “energy crisis” immediately following the book’s publication enhanced
its credibility and brought it a great deal of public attention, although the
energy crisis later proved to have been only a temporary anomaly caused largely by
price controls. Recent, substantial increases in gasoline prices may revitalize the catastrophists’
conviction that imminent fossil-resource exhaustion demands prompt substitution
of renewable fuel sources, such as ethanol. Convinced that because fossil
fuels apparently are nearly exhausted as a practical energy source and we can abandon
them almost costlessly, opponents of fossil fuels advocate drastic reduction of their use
to prevent a ruinous crisis of carbon dioxide pollution. Yet the alleged crisis requires
a near-zero discount rate to raise the prorated present value of damage, per gallon of
gasoline combusted, far above the relatively modest figure obtained by use of a market
interest rate for discounting purposes.
A more serious potential economic crisis caused by rising motor-fuel prices, in
contrast, does not spring from pollution or resource exhaustion, but from the catastrophists’
mistaken belief in what has become their almost self-fulfilling prophecy
(see Marxsen 2003). Through the political system, they have promoted regulatory

actions that are discouraging the investment that would otherwise have prevented
today’s worsening refining bottleneck. Obstruction of investments in gasoline refineries,
achieved by regulatory interventions, is probably a more significant threat to the
affordability of gasoline than any approaching exhaustion of gasoline’s fossil sources.
Reestablishment of refiners’ reasonable property rights and adoption of strict liability
as the major instrument for controlling carbon dioxide and refinery pollution might
end what otherwise may become an ever-worsening, regulatory-induced “energy
crisis.”
The Price Mechanism
Robert Solow responded promptly to The Limits to Growth. He explained that the
price mechanism would induce substitution of alternative sources as oil became
scarcer (1973, 44–47). Production methods that rely on relatively more abundant
natural resources eventually will substitute for dwindling supplies of oil that had
previously been cheap and easy to exploit (Solow 1974, 3–5). Now, more than thirty
years later, specific forms of such substitution have become more visible to those
looking ahead toward practical alternatives.
Although crude oil still appears to be relatively abundant and supplies most of
the world’s material from which gasoline is refined, other fossil sources of gasoline
seem to offer commercially viable alternatives. These sources include methane (or
natural gas), coal, bitumen obtained from tar sands or oil shale, and crude petroleum’s
“bottom of the barrel” components, such as asphalt. Let us ignore nonfossil feedstocks,
such as corn and turkey guts, because they escape political opposition from
opponents of fossil fuels and, in any event, have potential to make only a small
contribution to present rates of gasoline consumption. Because available stocks of
petroleum, methane, coal, tar sands, and oil shale are sufficient for centuries to come,
however, the possibility of sustaining supplies of ordinary gasoline for motor fuel at
reasonable prices appears virtually assured, regardless of nonfossil sources, if the political
system will permit. Conversely, a complete transition to nonfossil sources at this
time would doubtlessly result in much higher gasoline prices.
Fossil-Energy Sufficiency
A great deal of fossil-fuel material remains buried in accessible places. In the U.S.
Department of Energy’s International Energy Outlook 2006, world energy use is
projected to rise from 421 quadrillion Btus, or “quads,” in 2003 to 722 quads in
2030 (2006b, 1). Paul Holtberg, director of the Demand and Integration Division of
the U. S. Department of Energy, and Robert Hirsch, a senior energy program advisor
at Science Applications International Corporation, estimate that 13,400 quads of
conventional crude oil and 14,000 quads of conventional natural gas remain exploitable.
At least another 15,000 quads are available from unconventional sources of
crude oil, such as tar sands and oil shale. In the lower forty-eight states of the United
States, geopressured brine and gas hydrates may offer as much as 335,000 quads,
according to Holtberg and Hirsch (2003). Bob Williams (2003a), former executive
editor of the Oil and Gas Journal, reports a global methane hydrate endowment more
than 190 times the amount in the United States. Worldwide coal resources exceed
135,000 quads, according to Holtberg and Hirsch. At the 2003 rate of global energy
use, and not counting the geopressured brine and methane hydrate endowment
outside the lower forty-eight states, such fossil-fuel reserves would apparently last
more than 1,200 years, and they would last more than 700 years at the projected 2030
rate of consumption. Moreover, Holtberg and Hirsch’s estimates seem to be conservative
ones. David L. Greene, Janet L. Hopson, and Jia Li estimate in a report
prepared for the U.S. Department of Energy by Oak Ridge National Laboratory that
the world’s remaining supply of exploitable oil (including that from shale and tar
sands) is about 106,572.2 quads, with about 32,885.6 quads recoverable under
technologies and prices expected to prevail before 2050 (2003, 9). Thus, fossil hydrocarbons
for making gasoline and other liquid fuels will almost certainly be adequate
for centuries to come. The real obstacle is the world’s political systems.
Obstructing Refining
Government interventions have constrained the petroleum-refining industry for decades.
A 2004 U.S. Department of Energy National Petroleum Council report documents
a variety of impediments to expansion of refining capacity. Not a single new-site
refinery has been built in the United States since the mid-1970s (Shackouls 2004,
I-19). From 1981 to 2002, the average return on equity for petroleum companies was
11.3 percent, and the S&P 500 average was 12.2 percent (I-14). The return on capital
employed in refining and marketing was only 5.3 percent, compared with a return on
capital of 7.7 percent for the industry as a whole (I-14). The low returns reportedly
derive from significant regulatory-driven investments that yield no return, combined
with the highly competitive nature of the business (I-16). Building a new refinery
involves a huge investment and is therefore subject to tremendous losses from any
delays. Environmental regulation—including New Source Review enforcement and
National Ambient Air Quality Standards—and uncertainties generated by waivers,
exceptions, and amendments to regulations create strong disincentives for investment
in new refineries (I-6). Ben Lieberman (2006), a senior policy analyst at the Heritage
Foundation, contends that as much as 25 percent of total capital outlays in the
refining sector are devoted to environmental regulatory compliance. Ever-changing
specifications for reformulated gasoline and low-sulfur diesel frustrate refiners’ efforts
to achieve maximum volumetric efficiency during peak demand periods and further
reduce the return on an investment in a new refinery (Shackouls 2004, I-18). The
government’s obstructions of the use of carbon fuels somewhat resembles its more
visible prevention of the expansion of nuclear power in spite of engineering advances
that have almost totally eliminated the more significant nuclear-safety issues that once
seemed relevant.
The potential for regulatory harassment may make refiners with less-thanextraordinary
prospective profits unwilling to remain in business in coming years. In
a 2002 report, Jerry Hill, principal environmental engineer at Bechtel’s Houston
office, illustrates what had then become a strategy emphasized by the Environmental
Protection Agency (EPA). The EPA’s Office of Enforcement and Compliance Assurance
had increased its focus on petroleum refineries, and inspection teams made a
number of detailed audits, each spending many days searching for violations of federal
and state pollution regulations. These armies of fault-finding inspectors compiled and
submitted to the U.S. Justice Department and filed in district federal courts long lists
of alleged violations of pollution laws. At the top of Hill’s list of violations was failure
to obtain construction permits, failure to install the best available control technology,
and flaring gas that contained sulfur. Other violations included insufficient labeling of
containers and inadequate record keeping. Hill describes the prompt and costly defeat
of a refiner who decided to go to trial. Thirty-six refineries in nineteen states settled
these actions for the most part with negotiated consent decrees that involved millions
of dollars for remedial expenditures and additional millions for payment of fines. The
consent decrees typically remained in force for years. Hill notes that such actions
against refiners “have made them subject to additional standards and regulatory supervision
without the typical rule-making process.” He describes settlements as “giving
the EPA joint dominion with several owners in the daily operation of a number
of refineries” (2002, 76). Affected refineries account for about one-third of U.S.
capacity. Fines ranging up to $10 million went to the U.S. government, with a
sizeable portion going to the regulatory agency involved. Hill’s report is not a polemic
to sway public opinion, but only a descriptive article in the trade journal Hydrocarbon
Processing. To an industry outsider, however, the account raises suspicion of an abuse
of regulatory authority for the purpose of obtaining, by extortion, nearly unqualified
pledges of compliance with bureaucrats’ dictates that are unbounded by statutory
limitations.
Al Gore’s near victory in the 2000 presidential election suggests that opponents
of fossil fuels continue to gain political traction. When subsequently asked what he
would have done differently had he won the election, Gore told George Stephanopoulos,
“I would have urged the Congress and done my best to lead the country
to take on this climate crisis, become independent of carbon-based fossil fuels as
quickly as we can, to shift toward conservation, efficiency and renewable energy”
(Stephanopoulos 2006). With this expressed ambition, Gore presumably represents a
powerful segment of the voting public that political candidates of both major parties
seem increasingly willing to placate. This tendency suggests an increasingly effective
influence of the voters lying between the median and the extreme, individuals for
whom, as John Brätland observes, “environmental enjoyment may be impossible as
long as the petroleum industry continues to exist” (2004, 530).

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

Read The Rest Here.. http://www.independent.org/publications/tir/article.asp?issueID=53&articleID=678
(PDF)

One has to wonder..
Does Gore and his crowd sit around in the evening and toast their glasses of Chablis while laughing hysterically at us?


Truth is we have more energy, particularly hydrocarbon fuels than we know what to do with.

Arresting man's development and controlling the population (serfs) is what this really about.

From The Article:
http://www.thestar.com/sciencetech/article/415215
(A must read as gas to liquid processes can use these reserves with a short time to market)

http://www.freerepublic.com/focus/f-news/2027596/posts

Read The Rest Here.. http://www.independent.org/publications/tir/article.asp?issueID=53&articleID=678
(PDF)

[Night Hides Not]

As my friend, Seldon B. Graham, a veteran petroleum engineer and oil industry attorney, and a graduate of West Point says of oil, says “If it is worth dying for in the Near East, it is worth drilling for in the United States.”

Applying Logic 101, anyone against our troops in Iraq should also be for drilling in the US. "No Blood for Oil?" Here's there chance to prove it.

[alloysteel]

And oil is not the only resource we have. We have coal, IN ABUNDANCE, to make America self-sufficient in energy for centuries to come. What happened to coal-to-liquid-fuel technology? We know it is there, we only lack the will to put it into practice. There is a process, called reformulation, that can change natural gas (mostly methane) into longer-chain alkanes, hexane, heptane, octane, nonane, dodecane, hexadecane and that gold standard for automobile engines, iso-octane.

And we have LOTS of natural gas. Major by-product of working oil wells, as a matter of fact. Not only that, there are underground deposits that consist of practically nothing BUT natural gas under extremely high pressure, in fact, the problem here is to keep it from coming out TOO fast. Natural gas in the process of becoming entrapped in sedimentary layers is simply lying on the ocean floor, where the temperature hovers around 38º F (about 4ºC.), contained in a water-methane matrix called Methane Hydrate, a totally stable substance that will remain that so long as the temperature does not rise above about 41º F. This substance resembles ice, and is rather amorphous. Simply scoop this substance up off the ocean floor, where it lies pretty immobile, deposit it in a containment vessel, and allow it to warm. The methane and water dissociate, releasing the methane (which has some 164 times the volume of the Methane Hydrate from which it came), and let the gaseous methane come to a surface ship, where it is cooled and compresed back into liquified natural gas, LNG, which then may be transported to ports all over the world. It is estimated that the quantity of all the Methane Hydrate in the ocean floor is a couple of HUNDRED times as much energy as is contained in all the known coal, crude oil and natural gas reservoirs everywhere on earth. More importantly, this Methane Hydrate is continuously forming, as organic materials that have sunk to great depths decompose into constituent molecules, methane being one of the simplest and most stable. These molecules of methane, under the constant steady pressure and unchanging temperature of 38º F. in the ocean depths, are physically forced into the Methane Hydrate conformation.

Note that this is not a chemical reaction. It is merely the most stable conformation that water and methane form at that temperature.

Natural gas wells are formed when deposits of this Methane Hydrate are buried in silt, which solidifies into sedimentary rock over time. As the Methane Hydrate is removed from the cooling effect of the water in which it was once beneath, by the gradual warming of the earth’s crust by residual heat radiating out from the molten center, the Methane Hydrate gasifies under tremendous pressure, resulting in the natural gas wells found at various depths beneath the ocean.

Is it beastly stuff to handle? Well, mmm, yeah. Nothing that is tougher, say, than anchoring a drilling platform at sea, and tapping into the ocean floor three miles below to a depth of seven miles or so, to capture trapped petroleum and natural gas there. In fact, in the process of hitting these deep wells, the operator often has to go through a layer of varying depth of this Methane Hydrate, just to hit the substrate below.

The Japanese are really interested in researching this substance, you might look up what kind of progress they have made already in recovering Methane Hydrate. They are very nearly at the commercial industrial level already.

The world is going to depend on carbon-based fuels for a long, long time. After all, the product of combustion of carbon is carbon dioxide, a very vital link in the life process of every living thing on Planet Earth.

Carbon dioxide is plant food. It is not, by definition, any more of a “pollutant” than water or oxygen.

No matter what the ruling of any politically motivated legislature or court may claim.

[DaveTesla]

Apr 16, 2008 04:25 PM
THE CANADIAN PRESS

A remote drilling rig high in the Mackenzie Delta has become the site of a breakthrough that could one day revolutionize the world's energy supply.

For the first time, Canadian and Japanese researchers have managed to efficiently produce a constant stream of natural gas from ice-like gas hydrates that, worldwide, dwarf all known fossil fuel deposits combined.

“We were able to sustain flow,” said Scott Dallimore, the Geological Survey of Canada researcher in charge of the remote Mallik drilling program. “It worked.”

For a decade now, Dallimore and scientists from a half-dozen other countries have been returning to a site on Richards Island on the very northwestern tip of the Northwest Territories to study methane gas hydrates.

A hydrate is created when a molecule of gas – in this case, methane or natural gas – is trapped by high pressures and low temperatures inside a cage of water molecules. The result is almost – but not quite – ice. It's more like a dry, white slush suffusing the sand and gravel 1,000 metres beneath the Mallik rig.

Heat or unsqueeze the hydrate and gas is released. Hold a core sample to your ear and it hisses.

More significant is the fact that gas hydrates concentrate 164 times the energy of the same amount of natural gas.



http://www.thestar.com/sciencetech/article/415215
(A must read as gas to liquid processes can use these reserves with a short time to market)

http://www.freerepublic.com/focus/f-news/2027596/posts

[Balding_Eagle]

For years I’ve made the assertion that the world is awash in oil.

It’s good to see it in a headline!

[G Larry]

Lie to be challenged:
1. We can’t drill our way out of this....

In fact, we CAN drill our way out of this. Why do you keep repeating that unfounded nonsense?

2. The oil companies have an obligation to invest in alternative energy.

No they don’t, they have an obligation to provide the best return on investment for the shareholder. Which is also why your simpleminded suggestion regarding “windfall profits tax” won’t produce more energy or help the consumer.
The costs will be passed on to the consumer and there will be less supply. Both of which will only serve to make things worse.

3. We must regulate speculation in oil prices.

That is not possible, and your simpleminded populism doesn’t help anything, except to appeal to the ignorant.

[DaveTesla]

See how easy the time to market is.
Fischer-Tropsch process
http://en.wikipedia.org/wiki/Fischer-Tropsch_process

Gas-to-Liquids
Transforming Natural Gas Into Super-Clean Fuels
http://www.chevron.com/deliveringenergy/gastoliquids/

Shell Oil
What is GTL?
http://realenergy.shell.us/?lang=en_US&page=homeFlash#

[FormerACLUmember]

The democrat party and its mainstream media are our sworn enemies, totally destroying the US. Beginning with, but not limited to, the annihilation of proper energy production in America.

I cannot understand why Obama, Reid, and Pelosi are in any position of power. Are we insane?

[pallis]

If we don’t drill our way out of this, we aren’t going to get out of this. The reason speculators are blowing up the oil bubble is because Congress and environmental terrorists have prevented us from utilizing the one natural, economic tool that prevents this sort of thing, new development, like ANWR, our coastal waters and shale. We can make all the oil we want at half the price a barrel of oil is going for now, and still turn huge profits for oil companies and speculators. If we don’t do it, the terrorists, including the environmentalists, the speculators and government win. We lose.

[DaveTesla]

We know the “Peak Oil” situation is bs.
It is the same Marxist plan that Carter played in the 70’s.

The question is how to educate the masses to demand that Washington not go along with it?

There is plenty of oil. Enough to last hundreds of years at the least.
Possibly a thousand.

[SAJ]

Typical goobermint. Have you noticed that EIA have been high-balling crude/product usage figs for some time -- that almost ALL of their after-the-fact numbers revisions have been downward for at least the past year? (Details available at WTRG Economics.)

These bastards REALLY are in the tank for the enviroturds.

[ChildOfThe60s]

I'm almost afraid to read beyond this opening fallacy.

It's not fallacy, it's fact. All of the oil this article speaks of is truly out there. And it doesn't even being to address shale oil.

Our energy problems are political in nature, not resource or technology.

[RightWhale]

Forever. We will never run out of oil.

[ChildOfThe60s]

Oops. being=begin

Spell check has its weaknesses.

[SAJ]

Speculation cannot drive the oil prices up longer than a month. At the end of the month, all the contracts come due, you either sell your speculation contract for a profit, or buy the oil.

That, sir or madam, is barking moonbat nonsense. If I want to spec crude permanently, nothing could be easier. When the front-month contract is about to expire (actually 2-3 weeks in front of that date), I sell it back and buy the same or more crude futures in a month further out. Simple as pie.

Where do I find the buyer(s) for the crude I want to sell? NYMEX, of course. Have you checked the volume in NYMEX crude recently? Yah, didn't think so -- there is not only no shortage of buyers (volume in crude futures today is triple what it was five years ago), there is actually a slight shortage of (willing) sellers, because numerous producers have simply stopped hedging their production.

(Guys, dontcha just love these loons? Shee-eesh.)

[668 - Neighbor of the Beast]

It’s a fallacy. He is connecting the price of untapped oil with that of “its current price.” (”Considering how much untapped oil is known to exist...one would think that its current price was some kind of anomaly and it is.”)

Moreover, he refers to “untapped oil” and “its current price,” when in fact he is NOT talking about the current price of untapped oil.

[668 - Neighbor of the Beast]

Refer to my post 39. The writer should avoid opening with fallacious banalities, one loses a lot of readers that way.