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Gustav May Hit Gulf Platforms Harder Than Katrina
Jim Polson, Bloomberg
Hurricane Gustav threatens to hurt U.S. oil and natural-gas production and refining more severely than hurricanes Katrina and Rita did three years ago.
Gustav, downgraded to a Category 3 storm by the National Hurricane Center in Miami today, may strengthen to Category 4 later today and will make landfall as a “major” hurricane. The storm shut three-quarters of oil output in the region and refineries operated by Valero Energy Corp., ConocoPhillips, Marathon Oil Corp. and Exxon Mobil Corp.
“This storm will prove to be a worst-case scenario for the production region,” Jim Rouiller, senior energy meteorologist for Planalytics.com, said yesterday in an e-mailed message. “This storm will be more dangerous than Katrina.”
(31 August 2008)
Hurricane Gustav Could Send Stocks, Futures on a Wild Ride When U.S. Markets Reopen Tuesday
Energy Tech Stocks
Markets gyrate wildly when there’s a lack of information. Just look at the sharp ups and downs of financial stocks in the wake of continuing uncertainty following the mortgage meltdown.
So get ready for what could be a wild ride when U.S. markets reopen on Tuesday, as traders and investors struggle to learn the extent of Hurricane Gustav’s damage to Gulf of Mexico energy infrastructure, a process that generally takes affected oil and gas companies several days to complete.
The initial headlines should be scary. Expect to hear and read that pump prices may top $5 a gallon and that oil refineries could be offline for weeks or even months. In July EnergyTechStocks.com published its own speculative story. (See If a Hurricane Strikes (Part 1 of 2) Experts Say Oil Could Spike to $200, Natural Gas to $16 Mcf, and Stay Elevated for Year or More)
But as the web site The Oil Drum noted over the weekend in its coverage of the potential consequences of Gustav, “Let’s hope this is all a waste of time and that this is not the human tragedy it appears to be.”
(1 September 2008)
TOD on Hurricane Gustav
The Oil Drum
Hurricane Gustav, Energy Infrastructure and Updated Damage Models — Thread #4
Hurricane Gustav is now a (weak)Category 3. Noon models have reduced the damage forecast; however, this can change if it weakens further or re-intensifies or has different landfall track and speed, etc. (KAC should send us an update after the NHC 5pm ET.
Updates today from Chuck Watson at KAC/UCF:
Here’s the noon update. Given the weaker forecast at landfall, things are not looking as dire. Bad, but not catastrophic. Still showing a near direct hit on the LOOP, but damage has come down, to weeks rather than months. CAUTION: Just because the storm is weakening, and therefore less forecast damage to the GoM infrastructure, doesn’t mean this storm can’t kill you. Stay safe, stay gone!
… We are not hurricane experts at theoildrum.com. Neither are we experts on damage forecasts to oil and gas infrastructure from weather events (though thankfully we do have an expert that helps us). What we try to do, and have been doing for over 3 years, is articulate the fragility and urgency of our nations, and our worlds, energy situation. As Hurricane Gustav moves nearer, and professional meteorologists and energy analysts gauge the impact it may have on our energy infrastructure, feel free to browse our archives of hundreds of empirically based analyses and perspectives on the myriad energy issues that form the backdrop not only for this hurricane, but for any exogenous event that disrupts the increasingly uneasy balance between energy supply and demand in our modern interconnected world.
There are many resources under the fold (by clicking “there’s more” in this post), including details of the latest oil/infra damage estimates from Chuck Watson at KAC/UCF as well as lot of other resources including rig maps, models, google earth maps, and a lot more in the comments.
(31 August 2008)
Mexico’s Cantarell Field loses production at a rate equal to 30% of Shell’s Perdido project, in just one month!
Martin Payne, Peak Opportunities
PEMEX recently announced that Cantarell Field produced just 1,010,000 barrels of oil per day in July, versus 1,050,000 barrels per day in June. That’s a drop of 40,000 barrels per day, in just one month. Now, an oilfield’s production does fluctuate month-to-month, but to put this into perspective, a loss of 40,000 barrels per day is equal to 30% of the estimated peak production rate from Shell’s Perdido project, which is being constructed in 8000′ of water near the international boundary with Mexico!
The Perdido project (http://www.shell.com/home/content/aboutshell/our_strategy/major_projects_2/perdido/perdido_13032008.html) is a multi-billion dollar, multi-year project using state-of-the-art technology. Yet the world’s second largest oilfield is capable of dropping 30% of the ultimate, maximum rate of this project – in just one month!
What will we do when Mexico, the 5th (was 4th) largest exporter of oil to the U.S., has no more oil for us? Good question. Unfortunately, we’ll find out the answer before long.
This is what Peak Oil is all about. World-wide, there are many oil and gas projects that need to be pursued. But they just can’t keep up with the depletion from the “Giant” oilfields that we’ve unconsciously relied upon for years!
So, what do we need to be doing? We need to increase the rate of implementation of the following efforts:
- energy conservation (this is where we can have the greatest effect, the soonest)
- mass transportation retrofits (likely optimized and marketed bus and carpool efforts)
- natural gas vehicles and stations (start with fleets to solve the Catch-22)
- expanded natural gas drilling (solve infrastructure & supply problems)
- wind energy (stop the tax credit hocus pocus – fix it for a reasonable time period)
- vehicular electrical storage research (cost effective and reliable batteries or other devices)
- design & production of more efficient cars (lighter, smaller EV’s, plug-in hybrids and diesels)
- offshore drilling (offshore West Coast, East Coast, Florida Coast)
- biofuels research (enzyme & pyrolysis-based cellulosic ethanol, algae-based oil production)
- nuclear plants (fast-track & standardize the design, licensing and construction)
- coal plants (use best available, cost-effective clean up technology)
- solar thermal innovations & implementations
Author bio
Upstream oil and gas professional with over 25 years of experience. Past Chairman, Houston Chapter of the American Petroleum Institute (API). Member of American Society of Mechanical Engineers (ASME), Society of Petroleum Engineers (SPE), American Solar Energy Society (ASES), Association for the Study of Peak Oil (ASPO-USA).
(31 August 2008)
Martin Payne has written several articls for Energy Bulletin.
Oil Prices and the Mayflower Problem
Kurt Cobb, Scitizen
Do oil prices really tell the market what it needs to know when it needs to know it?
In a parallel universe far, far away where neoclassical economists run everything and conditions allow for perfect markets and perfect information, finite energy resources gradually climb in price as they are depleted. This encourages the development of substitutes over time and results in a smooth transition from one energy system to another.
Back on Earth events in the energy markets are moving along a trajectory quite different from that of our doppelganger universe. This is much to the chagrin of earthbound neoclassical economists who, as it turns out, run practically everything here when it comes to government economic policy and corporate management. Until recently the real prices of oil and natural gas had been declining for more than a century, and the neoclassical economists took this as an indication that technology was expanding the resource base by making more and more of these fossil fuels extractable.
But as Douglas Reynolds explains in his paper, “The Mineral Economy: How Prices and Costs Can Falsely Signal Decreasing Scarcity,” one simply cannot know whether declining real costs for finite mineral resources are due to increasing information about where to find them, advances in the technology for extracting them, or both. Let us back up for a moment and explain why this is so.
(29 August 2008)
Kurt Cobb is a long-time contributor to Energy Bulletin.
