Category Archives: Off Shore Resources

Fire Ice–Biggest Source Of Natural Gas On The Planet


The US Geological Survey (USGS) cited estimates of the methane (CH4) trapped in global methane hydrate (aka methane clathrate, Fire Ice, etc.) deposits are 3600 times more than the 2016 US consumption of natural gas. The 2016 US   consumption of natural gas (natural gas is mostly methane), according to Donn Dears, was 27.5×10^12 cubic feet.

The estimate of trapped gas in the deposits ranges from 10^17 to 5×10^18 cubic feet*.  Those are estimates and further those estimates probably include some amount of methane hydrate that will never be economical to produce. Even so, oil reserves that were supposed to have peaked many years ago, keep growing because of new technology. eg. Fracking.  So, who knows?

*(For the non-engineer or scientist that might not know how much that is, it can be restated as 1 followed by 17 zeros to 5 followed by 18 zeros cubic feet of natural gas.)

Where are the hydrate deposits found?

Methane hydrate deposits are found (or predicted) to be associated with continental margins and onshore permafrost areas. The chart below global areas where deposits are to be found.


First, let’s discuss where the methane originates. Methane is largely produced by micro-organisms that act on the plankton that has accumulated deep in the ocean floor sediments.  In the upper layers of the sediment where the temperature and pressure are suitable, the rising CH4 bubbles are captured in very cold water and the hydrate is formed. While methane produced biogenically is considered the most widespread source, there is another source.  Thermogenic methane is produced where high pressures and high temperatures cook organic matter.

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Dependance On Petroleum?—More Than Just Use As A Fuel


How much do you depend on petroleum-based products?   A few of the non-fuel uses are previewed in the following video:

 


<p><a href=”https://vimeo.com/31586887″>Hydrocarbon Man</a> from <a href=”https://vimeo.com/user8463025″>Robert E. Bailey</a> on <a href=”https://vimeo.com”>Vimeo</a&gt;.</p>

 

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Mr President, You Owe American An Apology.


Rebloging a posting from Oilpro.com titled “Mr. President, you owe America an apology. We did drill our way to $2 gas.”  

The President has done about everything imaginable to make the price we pay for energy skyrocket. He has prevented drilling for oil on Federal lands but he obama-rising-gas-prices-cartoon-four-more-yearscould not do anything about State and private land. It is disgraceful that the media lets him get away with his retrospective claims that the lower prices were his doing. He even claimed he had approved oil being pipelined from Canada.

Anyway, Marita Noon tells of the misinformation that the President feeds to low information crowd.

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‘’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’

MY PRESIDENT YOU OWE AMERICAN AN APOLOGY. WE DID DRILL OUR WAY TO $2.00 GAS.

“We can’t just drill our way to lower gas prices,” President Obama told an audience four years ago at the University of Miami. Like this year, it was an election year and Obama was running for re-election. Later in his speech, he added: “anybody who tells you that we can drill our way out of this problem doesn’t know what they’re talking about, or just isn’t telling you the truth.” He scoffed at the Republicans for believing that drilling would result in $2 gasoline—remember this was when prices at the pump, in many places, spiked to more than $4 a gallon: “You can bet that since it is an election year, they’re already dusting off their three-point plans for $2 gas. I’ll save you the suspense: Step one is drill, step two is drill, step three is drill.”

Well, Mr. President, you owe America, and the Republicans, an apology. Your snarky comments were wrong. The Republican’s supposed three-point plan, which you mocked, was correct.

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New Oil And Gas Find In The Mediterranean.


A large field (named Zohr) containing up to 30 trillion cubic feet of natural gas has been discovered off the coast of Egypt. The Italian oil group Eni, owner of rig_3424204bthis field, says it is almost 5000 feet below the water surface and covers an area of about 40 square miles. Eni proposes that it be piped into Egypt for use.

The Telegraph.co.uk posting titled ‘Supergiant’ gas field discovered in Mediterranean” says:

“Egypt consumed 1.7 trillion cubic feet of natural gas last year, according to BP’s most recent Statistical Review of World Energy. At the same rate of consumption, the Zohr discovery could supply the country for almost two decades.

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“Drill Baby Drill”.   Does The President Think We Don’t Remember What He Said?


oil-fuel-of-the-pastPresident Obama has made it nearly impossible to access off-shore and Federal Lands for oil and natural gas development. See here and here. He campaigned in 2012 (He always is campaigning— he is much better at that than governing) saying that “Drill Baby Drill” was an empty slogan which would have no effect on crude oil prices. See the following Fox News report:

Back when gas topped $4 a gallon, Republicans chanted “drill, baby, drill” at rallies across the country — arguing more domestic drilling would increase supplies, reduce dependence on foreign oil and boost the U.S. economy.

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Will The OPEC Cartel Break Up?


Because the OPEC cartel provides about 40% of the world’s crude oil, it has been able to control the crude oil price.  Its members meet and set the amount of crude they will produce for sale opposite the forecast world demand.  They can reduce or increase production to raise or lower prices. Other major crude producers outside of OPEC have been able to sell all their crude oil but acting independently are unable to displace OPEC’s role as the selling price arbiter.   As you would expect, OPEC wants the price to be high but recognizes that if they set it too high, demand will drop and competitors will be encouraged to prospect for more crude.   Within OPEC, the members have their own issues that make setting the production levels and thus the price, not easy.  However, Saudi Arabia, currently the world’s largest producer of  crude oil,  is said to be the primary voice in this process.  When the OPEC members meet, as they did on May 31st, to set the production level/price, one big factor was how much of their government’s budget is derived from the oil revenues.  And what is the price of crude oil that makes that budget whole? The graph below, from the American Interest’s posting “OPEC Sweats: How Low Can Oil Prices Go?illustrates the price needed to balance their government’s budget:

2013_fiscal_breakeven_point-e1370293236725

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Why Has The Price Of Gasoline Gone Up.


The US Department of Energy’s Energy Information Agency (EIA) says that the recent rise in gasoline prices was due in part to an increase in the cost of crude oil and the “crack price spread”. The average U.S. retail price for regular motor gasoline is up about 45 cents per gallon since the start of 2013, reaching $3.75 per gallon on February 18.  Crack price spread is defined as: “Crack spreads are differences between wholesale petroleum product prices and crude oil prices. These spreads are often used to estimate refining margins. Crack spreads are a simple measure based on one or two products produced in a refinery (usually gasoline and distillate fuel). They do not take into consideration all refinery product revenues and exclude refining costs other than the cost of crude oil.”

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Electric Cars and Battery Systems are a Bust


Despite President Obama’s boast that HE was going to bring about the era of the electric car, it isn’t happening.  Yes, he did what he could.  He hoped that by not allowing the use of the most of our Federal lands, he could short the supply of crude oil and thus drive the price of gasoline up to a point where people would have to buy electric cars. It did not work because he could not stop the States and Private owners from developing their lands.  It is now routine to see new supplies of natural gas and crude oil being brought on-line.  He tried to do it by massive infusion of tax payer’s money into electric vehicle and battery production.  But the cars being produced just aren‘t cutting it with the buying public.  The prices are too high. Limited vehicle range coupled with long recharge times are not helping win them over either.  A lot of the EV problems can be attributed to their batteries which are too big and heavy, cost too much and have questionable reliability.

Toyota sees the writing on the wall and has announced that it is getting out of the EV business for now.  They will continue to produce and sell their popular Pris hybrid.

EV sales versus Obama’s goal   

The President’s said that he wanted 1 million EVs and hybrids on the road by 2015.  The Department of Energy released their analysis in 2011 that said 1 million was achievable.  However, sales of the hybrid Volt are a little over 20,000 since introduction in late 2010.  Sales of the EV Nissan Leaf are even smaller. See here ( https://cbdakota.wordpress.com/2012/09/11/president-obamas-pants-on-fire-acceptance-speech/)for additional discussion of 1 million cars goal from President Obama’s acceptance speech at the Democrat Convention.  Analysts from all over are saying it is time to back off this goal.

Hysteria from the Environmentalists

The documentary “Who killed the Electric Car?” was winning awards for its”brilliant detective work” demonstrating how the”evil” corporations did the 1990ty’s EVs in.  The awards were meted out by the same folks that still think the widely discredited “An Inconvenient Truth” is gospel.  It is going to be much tougher to invent a story for this round of EVs and hybrids, when the truth is that the consumers really don’t want these vehicles.  Sure, a small group wants them and they are the ones that go to the Sundance Film Festival.  They can buy a $110,000 Tesla and can afford to not make practical choices for their transportation.

Let’s see now, GM has put up $1.2 billion developing the Volt.  The Feds give a tax rebate of $7,500 to the buyer of a Volt—and they are talking about upping that figure. The dealers have been discounting the Volt to get them off their lots.  This year the factory producing the Volt has twice stopped production when the unsold inventory reached 85 days. And depending on how one does the calculation, GM loses about $50,000 on each Volt sold according to Reuters.

A new factory is being built in Tennessee to manufacture Nissan Leafs.  Nissan got a $1.5 billion low interest rate loan from the Feds for the construction. Nissan says the factory can produce 150,000 Leafs each year.  Sales of the Leaf through August this year are 4,228.  One has to wonder if Nissan Management isn’t concerned that they overbuilt this factory or perhaps even built it at all. 

And the battery maker story is even worse, in my opinion.  A123 got loans of $250 million from the Feds.  A123 was facing bankruptcy when the Wanxiang Group, one of China’s biggest auto suppliers purchased 80% ownership in the company.   Ener1 got $118 million in pledges from the Feds and another $80 million in State and local pledges.  It was declaring bankruptcy when Boris Zingarevich, a Russian businessman with ties to former Russian President Dmitry Medvedev, bought them out. A123 and Ener1 are suppliers to our military as well as to the EV and hybrid manufacturers. The battery technology developed (paid for by us taxpayers) is now in the hands of the Russians and the Chinese. 

So, large amounts of money have been spent developing EVs and hybrids.  GM and probably Nissan are losing substantial amounts of money every day as they continue to produce the Volt and the Leaf.  The gasoline price is much higher than it was in the 90tys when that generation of EVs failed.  It will be very hard to generate a believable story line for a new documentary on what” killed the electric car” this time  unless they say  the customers did not want them.  Obviously that was the reason back in the 90tys, too.

Will there ever be a time for EVs?  Probably.   But it is not now.

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Strike Two For Cuba And Gulf Of Mexico Oil


The latest deep-water drilling operation off the West Coast of Cuba has been called off. The exploratory well by PC Gulf, a subsidiary of Malaysia’ Petronas and Gazpomneft of Russia, has been declared not commercially viable.  In May, Repsol’s said their drilling in this field was a failure.

Cuba, as noted in the previous report about this potential oil field, badly needs the money that they hope to obtain from this drilling.  They are also worried about the fate of Hugo Chavez of Venezuela, as he has been supplying Cuba with below market priced crude.  If he dies or is deposed, it could be a real problem for Cuba.

Some estimates of the crude in the field being explored are as high as 9 billion barrels. The field is in ultra deepwater.  Ultra deepwater is defined as where the seafloor at the drilling site is 5000 ft (1524 m) or more below the sea surface. The PC Gulf well was drilled to 15,300 feet below the seafloor.  The lease cost for a platform to accomplish the drilling is about $500,000 per day according to a report by the Associated Press.  There is only one such unit now available for the Cuban drilling and it will be used by the next company to try their luck—-the Venezuelan state oil company PDVSA.

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East Africa Natural Gas –Mozambique and Tanzania


The US Geological Survey estimates the area from East Africa’s coastal region and stretching out off-shore to the Seychelles holds 441 trillion cubic feet of natural gas which said to be twice as much as Saudi Arabia’s holdings.

The recent gas discoveries in Mozambique are adding up quickly.  Al Arabiya News quotes Duncan Clarke, CEO of the oil consulting company Global Pacific:

 “Houston-based Anadarko in June announced new finds in northern Mozambique which brought its estimated recoverable resources to up to 60 trillion cubic feet. 

The company has proposed $15 billion in investments to set up LNG facilities. Mozambique’s GDP last year was $12 billion. 


Thailand’s PTT Exploration and Production in May announced a $1.9-billion deal to buy Cove Energy, whose 8.5-percent stake in the Mozambican fields is currently up for sale. 

Two weeks earlier Italy’s ENI, the other large operator in the country’s Rovuma basin, said recent discoveries boosted its recoverable resources up to 52 trillion cubic feet. 
”

Tim Dodson, vice president for exploration at Norway’s Statoil on the company website said that Statoil and Britain’s BG together have discovered around 16 trillion cubic feet in Tanzania.

There are issues for the development of these fields including availability of infrastructure (sea and air ports, roads, housing, etc), lack of skilled work forces, and up-dated petroleum legislation.  There is another concern according to Silas Olang, East African coordinator from resources watchdog Revenue Watch Institute,  “Corruption is a big challenge.”

We are hearing more of plans to build of new facilities to liquefy natural gas and ports to store and ship the LNG around the world.  Will the price of gas get so low due to availability of their own indigenous sources that the markets for this gas from East Africa might take years to develop?  If the Europeans continue to resist fracking, that part of the world might be a market for East African LNG.  Russia is certainly going to make for stiff competition for the European market as they have pipelines delivering gas to Europe right now.

To read more click here.

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