Oil

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Spidey
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Re: Oil

Post by Spidey »

I wonder if the relative strength of crude oil prices during these times of economic turmoil may be an indication that we are closer to a peak oil scenario than some may believe. Despite many oil company's shares falling as low or lower than their 2008-2009 crisis levels and the current massive economic uncertainty, oil is less than 2 bucks shy of $100 per barrel. Quite astonishing. Makes you wonder where oil would be if we entered a growth phase.
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Re: Oil

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‘Secret’ Environment Canada study warns of oil sands’ impact on habitat
Postmedia News Dec 22, 2011

By Mike De Souza

"OTTAWA — Contamination of a major western Canadian river basin from oil sands operations is a “high-profile concern” for downstream communities and wildlife, says a newly-released “secret” presentation prepared last spring by Environment Canada that highlighted numerous warnings about the industry’s growing footprint on land, air, water and the climate...it warned that Alberta and other parts of Western Canada are facing a steep economic and ecological price tag for failing to crack down on the industry’s collateral damage. “Contamination of the Athabasca River is a high-profile concern,” said the presentation, marked secret, but released to Postmedia News through access to information legislation."

http://business.financialpost.com/2011/ ... n-habitat/

Full report here,

http://www.scribd.com/doc/76259666/Oilsands-Pollution
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Re: Oil

Post by Dennis »

Geez, maybe Environment Canada's budget should be cut to show them what happens when they diss the Alberta Oil Barons. Oh, yea, it was cut.......
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Re: Oil

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Tight oil
Tight oil, a catch-all for oil trapped in shale, carbonate or sand formations recoverable with the type of drilling methods that revolutionized the natural-gas side of the business, is reviving the oil sector on a scale that only a couple of years ago would have been unthinkable.

“It turns out there are a lot of big piles of oil in North America,” said Denver-based John Schopp, vice-president for the North Rockies and new ventures at Encana Corp., one of the companies in a hurry to turn it into new revenue.
Meanwhile, some are worried. Saudi Arabia frets it could mean the end of its dominance over world oil markets. For the oil sands industry, it could present new competition. While it may not yield the same volumes, tight oil’s costs are lower, it tends to be located near markets, and because it’s lighter it gets a better price.

For the climate change movement, it throws a wrench into strategies, such as targeting oil sands pipelines, to expedite the sunset of fossil fuels to pave the way for renewable energy.

It also challenges peak oil theories that were so prevalent in the past decade and that contributed to rising oil prices.

“We can almost declare this the end of the Hubbert’s curve,” said Michal Moore, a professor of energy economics at the University of Calgary’s school of public policy.
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ghariton
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Re: Oil

Post by ghariton »

Maybe that's why XL Keystone is in danger of never getting built. Maybe, if it is delayed long enough, other sources of cheaper oil, let alone other cheap energy such as natural gas, will come on-stream and make oil sands oil uneconomical.

Peak oil may become trough oil.

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Shakespeare
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Re: Oil

Post by Shakespeare »

XL likely will be, but oil sands expansion will IMO be less than currently predicted.
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tidal
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Re: Oil

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Unless we are completely wrong about carbon's impact on the atmosphere and oceans - and by "completely wrong", I am talking the equivalent of planes and satellites suddenly falling out of the sky, because it would imply that we are wrong about very fundamental things that undergird all of our current scientific understanding - most of the EXISTING fossil fuel reserves are going to be left in the ground.

There is a HUGE disconnect between what we are nominally stating our goals are for climate, and what we are expecting to realize in terms of extracting and burning fossil fuels.

Current reported proven fossil fuels reserves represent approximately 2795 gigatonnes of CO2. That does not include "probable" and "possible" reserves, and it does not include ANY additions to those those reserves from exploration and development of shale oil, new deep offshore, new oil sands, etc.

The Copenhagen Accord 2009 formalized the objective of limiting the temperature increase to 2°C above pre-industrial. Virtually all nations have signed up to this, and - under the Cancun Agreement 2010 - captured their national commitments for reductions. Granted, these commitments are insufficient to achieve the 2°C goal, but nonetheless, that's the objective.

Contrast the remaining 2795 GtCO2 to what would be required to stay below 2°C. To "to reduce the chance of exceeding 2°C warming to 20%, the global carbon budget for 2000-2050 is 886 GtCO2. Minus emissions from the first decade of this century, this leaves a budget of 565 GtCO2 for the remaining 40 years to 2050*." Even if you back that off to a probablility of 50% of exceeding 2°C warming, you still end up with a remaining budget of about 1450 GtCO2.

So, we already have way, way more fossil fuels proven reserves than we can afford to burn and still have a decent chance of limiting temperature change to 2°C.

So, something has to give. Yes, it could be that we just keep on burning through everything we currently have and add to over the coming decades. That kind of "business-as-usual" emissions profile is projected to lead to a roughly 4°C realized global average increase, sometime between 2060 - 2090. Increases over land would be more than that average, in the Arctic the expected change would be in the neighbourhood of 12°C. I am going to leave aside the discussion of impacts, just say that where the science says we would be headed.

So, that is one way that this disconnect could resolve itself. Or, maybe a giant sky daddy will make the whole 2°C go away by magic and a centuries worth of science all turns out to be bogus. But one way or another, it will get resolved.

My bet is that most of the reserves will get left in the ground. The owners of the existing reserves will be in a mad scramble to both (a) avoid any limits on their extraction and (b) get theirs out before their competitors do. But in the end, only a fraction will get out. Odds are better for a larger proportion of the proven oil and gas reserves to be burnt.

In any event, something has to give here. Either we sail into terra incognita, or we leave the carbon in the ground, or it's all a bad dream. But if you really think that we are going to be extracting all the oil shale and the oil sands and the shale gas and the deep offshore deposits and from the Arctic and and and... then you have to make some sort of assumptions that I think are highly dubious.

* By the way, that "budget to 2050" also means that post 2050, net carbon emissions are about zero. Forever.
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Re: Oil

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Tidal, as you know fossil fuels will not be going away in my lifetime or that of my children. I believe there will be significant reductions in their use, thereby eliminating growth, but they will probably, at best, be capped at about today's levels. The world is simply not going to respond despite good intentions.

Regarding George's and Shake's posts, I would agree that oil sands growth will not be as planned or predicted, but the pipelines will still be full of crude exports, including increasing volumes of light, tight oil.
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ghariton
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Re: Oil

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tidal wrote:My bet is that most of the reserves will get left in the ground.
That would require international cooperation and coordination with enforcement "teeth". Otherwise we are in the classic free rider problem, it seems to me.

Given the current fractious nature of our politicians -- who can't even agree long enough to pass a budget or create a sovereign bailout fund -- what mechanisms do you see that could be developed in time?
The owners of the existing reserves will be in a mad scramble to both (a) avoid any limits on their extraction and (b) get theirs out before their competitors do.
I think that we are already seeing the beginnings of that. A glut -- whether caused by demand or supply factors -- is already beginning to develop.

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Re: Oil

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ghariton wrote:I think that we are already seeing the beginnings of that. A glut -- whether caused by demand or supply factors -- is already beginning to develop
And oil at $100, what's up with that? NG just went below $3. Sure wish I had a propane car.

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tidal
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Re: Oil

Post by tidal »

@ AltaRed - Well, that could be one way it plays out. If it does, then the physics and chemistry of the planet will respond accordingly. No getting around that consequence. Personally, I find it hard to believe that people now under 40 will willingly let that scenario just happen. We'll probably respond too late, but I think we will respond.

In any event, somewhere in those various disconsonant numbers above - e.g. 2795 GtCO2 proven versus 546 GtCO2 "budget" - lies one of the biggest dilemmas in the market. They can't both be right and they lead to vastly different futures and valuations. Wave it away if one must, but it doesn't just go poof.
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Re: Oil

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Oil prices are set by global traders, and thus speculative based on a variety of factors. I worked for a multi-national oil company and our oil price forecasting for investment purposes was no better than that of a commodities trader.
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Re: Oil

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Oil at $100 seems to be self-limiting. That's our carbon tax. :wink:

As for the GT CO2 "budget", it will be broken, because behavior won't change until things get disastrous, and then it will be too late with further catastrophic change built in.

The only alternative possibility is a technological discontinuity, which is basically unforecastable.
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tidal
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Re: Oil

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ghariton wrote:That would require international cooperation and coordination with enforcement "teeth". Otherwise we are in the classic free rider problem, it seems to me.

Given the current fractious nature of our politicians -- who can't even agree long enough to pass a budget or create a sovereign bailout fund -- what mechanisms do you see that could be developed in time?
"In time" would be something that would see emissions actually falling by 2015, or preferably yesterday. So I think the chances of this happening as remote. And the international cooperation and coordination would have to be at a level and a persistence that we have never achieved. The thing that does give me hope is that budgets and sovereign bailouts are just arguments amongst the naked apes. Physics and chemistry are far less forgiving of our "fractious nature", a lesson that we will learn the hard way. They have the potential to, um, clarify things for us...
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tidal
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Re: Oil

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Shakespeare wrote:Oil at $100 seems to be self-limiting. That's our carbon tax. :wink:

As for the GT CO2 "budget", it will be broken, because behavior won't change until things get disastrous, and then it will be too late with further catastrophic change built in.

The only alternative possibility is a technological discontinuity, which is basically unforecastable.
If we ever are in a situation where global temperatures are rising by ~ 4C this century, the actual physical/societal ability to extract and process fossil fuels will be at risk. One way or another, I don't see the amount of existing reserves ever being fully exploited.

Which has some pretty big long-term implications for owners of those assets.
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Re: Oil

Post by Shakespeare »

Canadians with low risk tolerance have indirect oil exposure via the C$, which may be sufficient.
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tidal
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Re: Oil

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AltaRed wrote:Tidal, as you know fossil fuels will not be going away in my lifetime or that of my children. I believe there will be significant reductions in their use, thereby eliminating growth, but they will probably, at best, be capped at about today's levels. The world is simply not going to respond despite good intentions.
By the way, I will just note that it seems implicit in your comment that you are applying a mental model of a "flow" to what is in fact a "stock" problem.

CO2 accumulates in the atmosphere. On human civilizational time-scales, it is for all intents and purposes permanent. It is the accumulated amount that drives both radiative forcing and ocean acidification.

If you forsee fossil fuel emissions at any long-run net level above zero - let alone "capped at about today's levels" - then then atmospheric and marine carbon concentrations will just go up, up, up.

Understanding Public Complacency About Climate Change: Adults’ mental models of climate change violate conservation of matter. Climatic Change, 2007.
...We report experiments with highly educated adults—graduate students at MIT—showing widespread misunderstanding of the fundamental stock and flow relationships, including mass balance principles, that lead to long response delays... These beliefs—analogous to arguing a bathtub filled faster than it drains will never overflow—support wait-and-see policies but violate conservation of matter. Low public support for mitigation policies may be based more on misconceptions of climate dynamics than high discount rates or uncertainty about the risks of harmful climate change... Pattern matching is widespread. Worse, a large majority violate fundamental physical constraints including conservation of mass. Most believe atmospheric greenhouse gas concentrations can be stabilized even as emissions into the atmosphere continuously exceed removal of GHGs from it... These beliefs favor wait-and-see policies, but violate basic laws of physics...
One can "hope" that the impacts will be small, but one cannot expect that there will not be a significant rise in atmospheric or marine carbon if business-as-usual emissions continue.
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Re: Oil

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From that article,
Most believe atmospheric greenhouse gas concentrations can be stabilized even as emissions into the atmosphere continuously exceed removal of GHGs from it.

What really happens for equilibrium is that the rate of removal will increase as concentrations increase. The same is true of temperature and heat, eventually it will be removed faster than it is added and the temperature will stabilize. Even in the bathtub example the increased pressure could cause equilibrium and stabilize the water level.

The only question is will earth be habitable at that time.

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tidal
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Re: Oil

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newguy wrote:From that article, Most believe atmospheric greenhouse gas concentrations can be stabilized even as emissions into the atmosphere continuously exceed removal of GHGs from it.

What really happens for equilibrium is that the rate of removal will increase as concentrations increase. The same is true of temperature and heat, eventually it will be removed faster than it is added and the temperature will stabilize. Even in the bathtub example the increased pressure could cause equilibrium and stabilize the water level.
The two main processes that remove carbon from the atmosphere are geologic (rock weathering) and reaching an equilibrium with the oceans. The carbon in the oceans gets removed over geologic time scales as well. So, no, the rate of removal will not increase to any meaningful extent as concentrations increase due to fossil fuel emissions. In fact, the concern is that the sinks will saturate and be net additional emitters of carbon - from the oceans and the land. So far we are getting a break on the sinks. But not enough that the concentrations in the atmosphere aren't continuing to grow. (The so-called "airborne fraction" - the amount of our emissions that accumulates in the atmosphere as a percentage of those emissions - has stayed remarkably constant for as long as we have decent measurements for it. So, thus far, the ability of the sinks to "absorb" carbon has grown along with emissions, but not so much that it is reaching some sort of equilibrium.)

As far as the planet reaching a radiative balance via temperature increases, yes that will eventually equilibriate. That's what global warming is.
Last edited by tidal on 30 Dec 2011 14:28, edited 1 time in total.
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Re: Oil

Post by Shakespeare »

The only question is will earth be habitable at that time.
Oh, I'm sure it will be habitable - by more than enough people to support a stable population genetically.

But that may be a few hundred million....
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Re: Oil

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14 months ago, ghariton wrote:More peak oil concerns:
Brazil has cemented its status as the world’s most promising source of new oil with an estimate that its barely explored Libra field could produce as much as 15 billion barrels of crude.

The ultra-deepwater oil deposit is the latest in a string of finds that have in the past three years catapulted Brazil into a position of global prominence as its reserves rapidly increase.
Oh, the horror:
George F. Will wrote:In 2011, for the first time in 62 years, America was a net exporter of petroleum products. For the foreseeable future, a spectre is haunting progressivism, the spectre of abundance. Because progressivism exists to justify a few people bossing around most people, and because progressives believe that only government’s energy should flow unimpeded, they crave energy scarcities as an excuse for rationing — by them — that produces ever-more-minute government supervision of Americans’ behaviour.

Imagine what a horror 2011 was for progressives as Americans began to comprehend their stunning abundance of fossil fuels — beyond their two centuries’ supply of coal. Progressives responded with attempts to impede development of the vast proven reserves of natural gas and oil in the U.S. and Canada. They bent the willowy Obama to delay approval of the Keystone XL pipeline to carry oil from Canadian oil sands; they raised environmental objections to new techniques for extracting gas and “tight” oil from shale formations.
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Re: Oil

Post by kcowan »

"Tight" oil versus "loose" oil? Who would have thought! :rofl:
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Re: Oil

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In 2011, for the first time in 62 years, America was a net exporter of petroleum products.
A typical example of selective wording that misleads readers. So the USA is a net exporter of petroluem products which means refined fuels such as diesel and gasoline, lubricating oils, and petro-chemical products such as plastics. That is a good thing since they are value added manufacturing processes that add jobs and helps the trade deficit, but could also be bad if that is a result of an economic slowdown.
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Re: Oil

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AltaRed wrote:
In 2011, for the first time in 62 years, America was a net exporter of petroleum products.
A typical example of selective wording that misleads readers. So the USA is a net exporter of petroluem products which means refined fuels such as diesel and gasoline, lubricating oils, and petro-chemical products such as plastics. That is a good thing since they are value added manufacturing processes that add jobs and helps the trade deficit, but could also be bad if that is a result of an economic slowdown.
That's the explanation from analysts I read in several reports, but it was too far down for the average reader and broadcast news editor. I think this was misrepresented as good news
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Re: Oil

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AltaRed wrote:That is a good thing since they are value added manufacturing processes that add jobs and helps the trade deficit, but could also be bad if that is a result of an economic slowdown.
I forget where I just read this but people are driving less, especially young men. There has been a large drop in the percent of 16 and 18 year olds with licences. They blame facebook.

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found
http://www.businessinsider.com/teenager ... -to-2012-1
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