The price of gas

I'm no expert in the field, but one of my best friends is. He's a
geophysicist (With MS degrees in geophysics and geology) who works for
a company that does seismic analysis of potential oil fields for many
of the major oil companies. He's reluctant to participate on usenet as
himself in a discussion (gee, I wonder why), but I asked him some
specific questions about this topic, and paraphrase below. Take it for
what it is worth.

1. Using current technology, how long will current oil reserves last?

This is a difficult question. The lower-end estimates are at about
75-100 years at current useage levels (and average increases)and
current technologies. The higher-end estimates are at over 500 years.
There is no clear consensus in the field about this, in part because
new technologies are developing quickly, and we are constantly
discovering new areas where exploration could be very profitable, and
because the data we are getting on field size and composition is
becoming better all the time. My personal 'guestimate' is much closer
to the 500 years than to the 75 years. Certainly we won't run out of
oil any time during our lifetimes, or our childrens.

2. Like where?

Off the coast of Brazil is very promising, as is the area off Sierra
Leone. The Gulf of Mexico also has great potential. The problems with
each areas are different tho. In the Gulf, the problems are primarily
political and environmental. Florida has consistently acted to
restrict oil field exploitation for fear of pollution. Brazil has some
problems as well politically, in that one of their demands (so far, to
at least one major proposal) has been that Brazilian companies and
workers make up at least 90% of suppliers to any development. But
Brazil doesn't have the kind of experience in the field that would be
needed for a large-scale project. Deep-water rig exploration is highly
specialized (and dangerous), and the people who have the experience
are the Americans and North-Sea types. There are plenty of other
areas. Russia has large numbers of unexplored fields, and both Canad
and Alaska in the US still have great potential. We aren't sure about
ANWR. Obviously there is some oil down there, but we don't know the
extent yet. Political debates aside, it might not even be worth it to
develop.

3. What about other places in the US?

There is plenty of oil under the US. The question is when does it
become economically feasible to get it. At $20 a barrel, there is
really no incentive to spent billions of dollars exploring the Gulf of
Mexico (or even dealing with political bureaucracies like Brazil). At
$50 a barrel it becomes very reasonable to spend that kind of money to
get to what we think are extensive (but relatively hard-to-get-at)
reserves. Same with Alaska and Canada, and even other places like
Pennsylvania where the size of fields might be relatively limited, and
the quality relatively low, but when the price per barrel reaches some
number, it then makes sense to start production from there.
Additionally, the US has large reserves of shale-oil. This can't be
distilled using conventional processes, but there are a number of
technologies that look very promising for managing both the production
and the pollution problems associated with this, and when they are
solved (quite possibly within the next decade) many billions of
barrels of shale-oil will very readily available.

4. What about the middle east?

There are still vast reserves in the middle east. [He told me these
were just ballpark numbers]The total known oil reserves in the world
are estimated to be about 1250 billion barrels. Known reserves just in
Saudi Arabia are along the lines of 400-500 billion barrels. Demand is
supposed to be about 90-100 million barrels per day by 2010. Right
now, it's about 75-80 million. Iraq has large reserves, as does Libya
and several other nations. Remember, these are *known* reserves. There
is quite a bit more out there that we can get (albeit expensively),
and a great deal more beyond that that we can't get to just yet. But
the technology flows with the cost of oil, to a great degree. Saudi
does *not* want oil at $40 a barrel. Because at $40 a barrel, oil
companies are a lot more likely to spend the billions necessary to
develop the shale-oil stuff, the alternative fuel stuff (soybeans
anyone?), and the direct exploitation technology (improved
slant-drilling, cheaper processing for lower-quality crude, deeper
water technology) that will make Saudi oil much less important. Saudi
has enough oil, and enough of an incentive to keep it relatively cheap
that it can slow the development of other technology.

5. How much of this is government overregulation?

LOL. *Which* government? Brazil? Sierra Leone? Russia? Saudi? The EPA?
The state of Florida? Yes, the governmental regulations are a big part
of it. ANWR might have huge amounts of exploitable oil underneath it.
but the government says we can't go get it. At least not yet. But in
my mind, the bigger problem is refinery capacity. Most of the
refineries are at or near capacity, and these things cost a ton of
money to build, and nobody wants them in their backyard. There are
several different types of refineries, but even the 'cheapest' kind
(Called a 'topping' refinery), which can usually only process the
cleanest, highest-quality oil, costs a ton of money, and produces some
obnoxious stuff. The most expensive refineries (Called 'complex' or
'cracking' refineries) can easily cost billions of dollars, are huge,
and can be very polluting. If we start using lower-quality crude, then
we'll need more of the big, complex refineries.




These are not his direct quotes, and I'm sure I mangled some of what
he said, but I thought his opinions might be useful in this
discussion.




"Peter Gottlieb" wrote in message . net...
Wasn't there an article in the WSJ a week or two ago where some oil company
execs said the regs weren't the primary issue?

I didn't look into it further. What's the problem? Failure of the
marketplace to place sufficient refining capacity on line? The price of
bringing more well capacity online is too high or unpalatable to the public?
What? Or is it working the way it's supposed to and there are just a bunch
of people annoyed at higher prices?

Are you an expert in the field (no pun intended) or just going with a gut
feeling? Just curious, because while I would gladly discuss with someone
with significant industry knowledge I really don't have any time to debate
environmental politics or with someone who bases their knowledge on one
party's propaganda (either one). No offense but it's late.


"Tom Sixkiller" wrote in message
...

"Peter Gottlieb" wrote in message
et...
This doesn't sound right. Are you saying the "EPA and others," meaning
government regulation, reduced the oil well reserves?

Reserves (from the time) and known resources are much higher than what
we're
extracting.

I'm no expert in the field, but one of my best friends is.

Thank you for taking the time to write a most enlightening post.

One thing though: You're going to ruin Usenet's reputation for hyperbole if
you keep this up!

:-)
--
Jay Honeck
Iowa City, IA
Pathfinder N56993
www.AlexisParkInn.com
"Your Aviation Destination"

On Tue, 01 Jun 2004 21:18:20 GMT, "Jay Honeck"
wrote:

I'm no expert in the field, but one of my best friends is.

Thank you for taking the time to write a most enlightening post.

One thing though: You're going to ruin Usenet's reputation for hyperbole if
you keep this up!

I still maintain until the average American learns to conserve, gas is
going to be a problem.

No I do not believe that the average American has done much if
anything to reduce their use of gas. It is the attitude they think
they have that creates the problem.

We are going to get few, if any more refineries. Maybe for shale oil
reclamation and technology added to bring out fields that are no
longer good producers, or never were like the ones in central
Michigan.

The problem with those big numbers on reserves is the stuff is not
readily obtainable/available, or still leaves the US at the mercy of
foreign oil. Maybe not the same foreign oil, but foreign never the
less.

There is a real problem with what is defined as current identified
reserves, developed reserves, and accessible reserves.

Regardless we need to get away from our present dependency on gas and
particularly on some one else's. Nor do we want to use our own
reserves as that would leave us even more dependent later on.

Over 20 years ago my wife and I decided we didn't like spending so
much for day-by-day travel. What did we do? As we both worked we
moved from a very nice and relatively new home into a smaller one that
was located in between our work places and the kids had to settle for
changing schools. That alone cut our driving by half.
Was it convenient? No, but it made economic sense.

No, not every one could do that, but a lot could and more could over
time.
Most of us do not need to make 5 trips into town every day. If the
kids have to go to soccer practice, hockey practice, music
lessons...etc, work out schedules with others on any thing that can be
worked out.It may not be nearly as convenient, but it may become a
necessity. Work out different times with the music teacher so trips
can be combined. At least make an effort.

Just remember, what ever the reason the price of gas is high, if we
only use half as much *they* (whether they is OPEC, or the refinery)
won't have the leverage to charge as much.

I quit work and went back to school at age 47. Got a degree and after
graduation got a job that was less than half the distance I had been
driving. No, I never did make the cost back, but it was worth it.

One other energy savings we all need to take a realistic look at is
recycling. Recycling some products makes sense both from economic
and energy standpoints. Recycling some other products is inefficient
from an energy, resource, and economic approach and serves nothing
more than "make work" that has the appearance of being economically
correct.

We tend to blame every one but ourselves. We "claim" we've done all
we can, but that is an out and out excuse.

Even if the refineries had lots of slack and were artificially setting
the price high it is the demand *we* create that allows them to do so.
If they had surplus capacity the price would come down by supply and
demand, but that won't happen as long as we keep coming up with
excuses as to why we have to use as much as we do.

Roger Halstead (K8RI & ARRL life member)
(N833R, S# CD-2 Worlds oldest Debonair)
www.rogerhalstead.com

:-)

"Roger Halstead" wrote in message
...


I still maintain until the average American learns to conserve, gas is
going to be a problem.

Roger, while I agree with the principle that we, in America, must
learn to conserve not abuse what can we do about this:
"With real gross domestic product growing at a rate of 7% a year, China
requires increasing amounts of oil to sustain its economic development. Its
oil consumption grows by 7.5% per year, seven times faster than the
..S." -- as reported by The Institute for the Analysis of Global Security.
The IAG report names the USA as the highest consumer but: "China
currently imports 32% of its oil and is expected to double its need for
imported oil between now and 2010 and become the second largest world oil
consumer." Second place currently belongs to Japan.
We in the US must learn to conserve, but we ain't the only problem and
maybe not the worst. Not when oil consumption in China is increasing "seven
times faster than the U.S."

Roger Halstead wrote:

I still maintain until the average American learns to conserve, gas is
going to be a problem.

It's going to be a problem whether we learn to conserve or not. We *will* learn to
conserve to some extent, because it's going to get more and more expensive as the
Saudi oil runs out.

George Patterson
None of us is as dumb as all of us.

In article , Roger Halstead wrote:
On Tue, 01 Jun 2004 21:18:20 GMT, "Jay Honeck"
wrote:

I'm no expert in the field, but one of my best friends is.

Thank you for taking the time to write a most enlightening post.

One thing though: You're going to ruin Usenet's reputation for hyperbole if
you keep this up!

I still maintain until the average American learns to conserve, gas is
going to be a problem.

The geologist who gave the information above showed exactly the point I
tried to make earlier - we aren't going to run out of oil in absolute
terms, but we are close to running out of _cheap_ oil. All the sources
that were identified in the grandparent post all had one thing in common
- they weren't cheap oil, they were all more expensive oil.

I also agree that we (not just the US, but ourselves) need to reduce
dependence on foreign oil. It's strategically worthwhile to develop
alternative fuel sources. If the fact that our oil is coming largely
from countries that dislike us doesn't get us, then the environmental
consequences may well do. (We'd do well to switch our electricity
generation more to nuclear energy using modern reactor designs, for a
start).

--
Dylan Smith, Castletown, Isle of Man
Flying: http://www.dylansmith.net
Frontier Elite Universe: http://www.alioth.net
"Maintain thine airspeed, lest the ground come up and smite thee"

"Roger Halstead" wrote in message
...
On Tue, 01 Jun 2004 21:18:20 GMT, "Jay Honeck"
wrote:

I still maintain until the average American learns to conserve, gas is
going to be a problem.

That's the function _prices_ serve in a free market.

"Casey Wilson" wrote in message
...

"Roger Halstead" wrote in message
...


I still maintain until the average American learns to conserve, gas is
going to be a problem.

Roger, while I agree with the principle that we, in America, must
learn to conserve not abuse what can we do about this:
"With real gross domestic product growing at a rate of 7% a year,
China
requires increasing amounts of oil to sustain its economic development.
Its
oil consumption grows by 7.5% per year, seven times faster than the
.S." -- as reported by The Institute for the Analysis of Global Security.
The IAG report names the USA as the highest consumer but: "China
currently imports 32% of its oil and is expected to double its need for
imported oil between now and 2010 and become the second largest world oil
consumer." Second place currently belongs to Japan.
We in the US must learn to conserve, but we ain't the only problem and
maybe not the worst. Not when oil consumption in China is increasing
"seven
times faster than the U.S."

China is only making up for lost time in its industrialisation. Not only
that when every Chinese family has as many cars as the average American
family then you can start to point a finger at the Chinese.

with 1.5bn people, their perhead consumption is a fraction of the US.

Now if you want to start a war about oil........