The Oil Drum: Europe

To steal a phrase “It is the best of times, it is the worst of times,” although the rest of the opening to A Tale of Two Cities (“It was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair,”) may also be appropriate. It is also interesting, and will become more so as the new Administration seeks to find a way forward out of the compounding problems that now face it. The WSJ has noted the statements by President-elect Obama earlier:

On the campaign trail, Mr. Obama argued that spending $150 billion over the next decade to boost energy efficiency would help create five million jobs. The jobs would include insulation installers, to make houses more energy-efficient, wind-turbine builders, to displace coal-fired electricity, and construction workers, to build greener buildings and upgrade the electrical grid.

It goes on to note that if renewable energy is only brought on-line to displace conventional coal power, then the net job losses from existing industries may well offset the gains in wind power. That topic brought a discussion in comments a couple of days ago. It is, however, perhaps worth pursuing in a little more detail.

In my personal battle to delay Peak Natural Gas, I have gutted a bedroom in my 1920's vintage Seattle house and am adding insulation and new windows. During restoration of an older house, one hopes to find treasures left behind by the years -- such as an old bottle of scotch or something. No such luck so far on something of that nature, but I have found some interesting items including a remarkably well preserved bat skeleton.

Yesterday, however, I was pulling up fir flooring when I found that it had been underlain with pages from the local newspaper from 1920. The editorial section had a piece on Alaskan oil that was rather interesting, so I thought I would share this look into America's oil past.

When the weather in the mid-West gets hot and humid, as it does at this time of year, it is pleasant to have the chance to head up to Maine, (along I might note with two solid streams of traffic from Boston all the way North). Thus it was that I could get up, this morning, and pick fresh raspberries for breakfast from the bush outside the window. Raspberries are, like cherries, one of the transient crops that one savors each year when they are in season and then waits until they appear on the bush again next year.

In this way they are a food resource when they grow, but if we don’t put additional work into their condition, they cannot be considered as a reserve for the longer haul. Unless that is, we are willing to make the time and money investment, by canning them, or making them into jam, they don’t count much toward the family food reserve (and note that I have, in the past, helped make raspberry jam).

The difference between a reserve and a resource is a relatively important distinction that often gets overlooked in the debate about our energy future. Some sources of energy are fairly easy to describe and to understand. Place a wind turbine in an area with a recognized wind pattern, or a solar collector array in the American South-West, and we can run tabulated data through simple calculations to understand the value of the returning energy on the initial investment. It is however, the amount of heavy oil that can be justified as a reserve volume that drives today’s post, and with very heavy oil we have to go the other way - in other words turn the consistency from something closer to jam back into something closer to juice.

I have given a lot of thought to the issue of opening up new areas for drilling in the Outer Continental Shelf (OCS) and in the Arctic National Wildlife Refuge (ANWR). My position has always been to leave that oil in place for a very rainy day. I wanted to see major conservation efforts in place before we considered tapping that oil. Opening those areas when oil was $20 a barrel would have meant that much of it would have been used frivolously.

Now that oil is over $100 - and in my opinion will be much higher in 5 or 10 years (T. Boone Pickens predicts $300/bbl in 10 years) - we will have tightened our belts a good deal by the time any of this oil could actually reach the market. Therefore, I think now is the time for Congressional hearings on opening up these areas. Let's have an open debate on the issue. However, if these areas are opened for drilling, I have a compromise that should be very attractive to those in opposition.

Prudhoe Bay may take months to come online.

BP expects to replace 73% of Prudhoe pipelines now.

Here's the first Prudhoe Bay thread.

I had intended to write a short piece tonight about the life of an oilfield, but will put that back a little to draw attention to a just posted story in the New York Times.

Because of severe corrosion in one of the pipelines, BP is temporarily closing the production from the Prudhoe Bay oilfield, and, in the process, cutting off some 400,000 barrels of oil a day, some 8% of US production. The NYT story suggests that this might raise prices by as much as $10 a barrel.

ANCHORAGE, Alaska - In a sudden blow to the nation's oil supply, half the production on Alaska's North Slope was being shut down Sunday after BP Exploration Alaska, Inc. discovered severe corrosion in a Prudhoe Bay oil transit line.

BP officials said they didn't know how long the Prudhoe Bay field would be off line. "I don't even know how long it's going to take to shut it down," said Tom Williams, BP's senior tax and royalty counsel.

Once the field is shut down, in a process expected to take days, BP said oil production will be reduced by 400,000 barrels a day. That's close to 8 percent of U.S. oil production as of May 2006 or about 2.6 percent of U.S. supply including imports, according to data from the U.S. Energy Information Administration.

MSNBC, Yahoo, Reuters.

and then let's not forget:

OPEC production down in July 0.8%.

Tomorrow will be an interesting day. More under the fold.

UPDATE: From Rigzone

The Department of Energy Monday said it would consider offering refiners oil from the nation's emergency oil stockpile to address supply concerns in Alaska resulting from BP's shutdown of Alaska's Prudhoe Bay field.

Just over a week ago I posted the changing picture of the American gasoline stocks.  Here is the latest version thereof, and the picture has changed in direction.
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If one  further looks at the numbers that the EIA site provides. There is a slight discrepancy between the tabulated data and that plotted, and it took me a minute to realize that the curves are showing the rolling four-week averaged data, rather than the actual weekly for the imported gasoline data (and presumably also for the rest).  This is of significance since such an average, in this case with the changing situation, initially masks the fact that the imports for the past three weeks have gone from 0.938 to 1.207 to 1.423 mbd.  One may assume (at least I am) that about 500,000 bd of this is coming from the 20 mbd of gasoline that was put up by the IEA partners in response to our request following Katrina.  If this is the level of support that can be anticipated, then it will last some 40 odd days before that source is gone.