28 September 2005

Wednesday musings

The little engine that could

Opinion -- We’ve learned a lot about evacuating cities in recent days, much of it deeply troubling. But if the failures of New Orleans and the gridlock of Houston show anything, it's that we urgently need a third way out of cities, something other than flying or driving. Fortunately, there is such a way: passenger rail. If local and federal authorities had worked with Amtrak to make better use of its trains in New Orleans, thousands could have been evacuated before the worst of Katrina hit. And if Houston had gone ahead with earlier proposals to develop high-speed rail links, the same might have been true there. If the federal government needed another reason to support the development of modern, high-speed passenger rail, then here it is. Not only can it reduce congestion, save energy and strengthen regional economies, in times of emergency it could be a critical third way out.
(New York Times 050928)

So true. We're practically the only continent without a comprehensive passenger rail system, leaving us even more dependent on our car society.

Rita cuts swath through drill rigs

Hurricane Rita has caused more damage to oil rigs than any other storm in history and will force companies to delay drilling for oil in the US and as far away as the Middle East, initial damage assessments show. ODS-Petrodata, which provides market intelligence to the offshore oil and natural gas industry, said it expected a shortage of rigs in the US Gulf this year. "Based on what we have right now, it appears that drilling contractors and rig owners took a big hit from Rita," said Tom Marsh of ODS-Petrodata. "The path Katrina took was through the mature areas of the US Gulf where there are mainly oil [production] platforms. Rita came to the west where there is a lot of [exploratory] rig activity." The US Coast Guard said nine semisubmersible rigs had broken free from their moorings and were adrift. This damage could not have come at a worse time for oil companies and consumers. US crude futures yesterday fell US37 cents to $65.45 a barrel in midday trading in New York as refineries that were evacuated before the onset of Rita returned to operation.

Rigs were in short supply before hurricanes Katrina and Rita blew through the US Gulf in late August and September. High oil prices and the desperate search for new oil supplies needed to meet rampant demand from the US and China have made rigs difficult to find and expensive to hire. Rigs cost $90-million to $550M to construct, depending on how sophisticated the structure and how deep the water in which it will drill. A rig ordered today is unlikely to be ready before 2008 or 2009, analysts said. As a sign of just how precious rigs are becoming to the market, Anadarko this week set a record by committing to a rig six years in advance; commitments in the past were made months ahead of time rather than years. Initial reports from companies are ominous. Global Santa Fe reported it could not find two of its rigs. Rowan reported four rigs damaged, with two having moved, one losing its "legs" and the fourth presumed sunk. Noble has four rigs adrift, with two run aground - one into a ChevronTexaco platform.
(National Post 050928)

The logistics behind extraction equipment is enormous. Blows the mind.

'Plenty of oil available,' Saudi energy chief says

Saudi Arabia's oil minister and the president of ExxonMobil said world petroleum reserves will last for decades, seeking to ease concern about supplies and near-record prices. Saudi Arabia, the world's largest oil producer, will "soon" almost double its proven reserve base, said Oil Minister Ali al-Naimi. That will add 200 billion barrels to the current estimate of 264B, he said. ExxonMobil president Rex Tillerson said the world may still have more than three trillion barrels from conventional oilfields, oilsands deposits and other sources. "There will be plenty of oil available to meet future demand," al-Naimi said Tuesday in Johannesburg at the World Petroleum Congress. Prices are high now because "the petroleum industry faces infrastructure constraints and bottlenecks that are causing market volatility and restricting its ability to bring oil from the ground to the consumer." Crude oil prices have soared during the past two years and reached a record of US$70.85 a barrel last month in New York after hurricane Katrina shut off US Gulf of Mexico supplies and flooded refineries. Gasoline pump prices in the US rose to a record above $3 a gallon, levels similar to those of 1981, after adjusting for inflation. The Saudi oil minister called for a global effort among producers and consumers to find a way to increase investment to make gasoline and meet world demand, equal to more than 29B barrels a year. No new refineries have been built in the US in about three decades, and the last new plant constructed in Europe was in 1989. More investment is needed in refineries, pipelines and other infrastructure to meet rising demand, al-Naimi said.

The Congress comes during a month when consuming countries released emergency oil and fuel stockpiles under an International Energy Agency accord for only the second time in 30 years. The IEA is considering further sales of emergency oil after selling three-quarters of the amount they offered to the market, executive director Claude Mandil said. The countries as of Monday had sold 45 million out of the 60M barrels of oil offered, he said. "IEA will make releases only if there is no other solution," Mandil said. The Organization of Petroleum Exporting Countries offered all its remaining spare production capacity to buyers, if needed. "What we are seeing is not a function of the world running out of oil," said Barclays Capital analyst Kevin Norrish. "What we are seeing is the legacy of a very long period where investment has been far too low. The problem is getting the oil out of the ground and delivering it to consumers." Saudi Arabia is the only OPEC member able to compensate for supply cuts and is aiming to raise production capacity by 14% to 12.5 million barrels a day in five years. Saudi Arabia has a plan to raise capacity to 15M barrels a day whenever that much is needed, al-Naimi said. For now, the Saudi oil minister said there are "no takers" of additional oil supply.
(Calgary Herald, National Post 050928)

If there is in fact 3 trillion bbls in reserve, that's three times what some of the Peak Oil theorists are saying. If that's the case, maybe we really don't have anything to worry about in the short term. In the long term, we're still screwed at some point when the polar icecaps melt, though.

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