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October 31, 2009
Oil Supply And Demand
Julian Murdoch thinks oil supply and demand are out of whack. OPEC has publicly stated that they believe inventories in developed OECD countries to be equal to roughly 61 days of demand--a number OPEC is none too happy about. They'd prefer the world to be constantly on the brink of running out (that is, 55 days or less). So with all of this supply, you'd expect to see OPEC talking production cuts--or at least a drop in the price of oil.He does not say we have an oil bubble. But if you consider that supply is high and yet prices keep rising it seems obvious that there is a bubble. And it may be more of a bubble than people think. There are a lot of new technologies becoming available sooner or later that will cut the cost of drilling wells. One of them is laser drilling of wells. Laser drilling, Graves said, would have several advantages over conventional drilling:He goes on to say: Compare this with the peak oiler theory:Well OK! That article was from 2005 and so far the laser technology is not commercial despite advances in high power solid state lasers. Here a nice video about solid state lasers. However, the technology is advancing rapidly so it is only a matter of time.So, as we slide down the Hubbert's Curve, not only will the rate of production decrease, but the cost of that production will increase.Laser drilling may actually make production of the "hard to get" oil and gas easier than production of the stuff which was "easy to get". This would cause a lot of havoc with reserve numbers because commercially unfeasible small/deep deposits would suddenly become "proven" (i.e. exploitable with current technology). But that is not all there is going on in the field. Exxon-Mobile announced in 2005 some very simple ways that it could reduce the cost of drilling substantially. Exxon Mobil Corporation announced today that its drilling organization has developed an optimization process that consistently reduces the time required to drill oil and gas wells by up to 35 percent. ExxonMobil's Fast Drill Process (FDP) achieves this breakthrough performance by using real-time, computer analysis of the drilling system's energy consumption. This analysis, in turn, helps improve the management of the factors that determine drilling rate, such as weight on the drill bit, rotary speed and torque.So that technology is probably already being deployed. It may explain in part the recent reduction in costs for drilling natural gas wells. There are other techniques that are coming to fruition. Here is another one from 2005. Expectations are that widespread adoption of microhole technology could spawn a wave of "infill development"--drilling wells spaced between existing wells--that could tap potentially billions of barrels of bypassed oil at shallow depths in mature producing areas.I knew it. That evil Bush was in cahoots with the oil companies to increase American oil supplies and reduce American dependence on the terrorist supporting nations of the Middle East. How evil can you get? How about another Exxon project to lower the costs of drilling for natural gas? "We're about 15 minutes away from a new frac being born," Randy Tolman, Exxon's project coordinator for the Piceance Basin, shouts over the noise. He invented this faster method of fracturing, or "fracing," the underground layers of rock and sand to unlock natural gas.Do you suppose the Greenhouse gas hysteria is a plot by the oil/natural gas companies to get government to shut down their competition? I wouldn't put it past them. Thomas Edison used similar methods to get his competition, the George Westinghouse Company's Tesla invented AC electricity system, shut down. Fortunately it didn't work. Will the CO2 hysteria work against the coal companies? So far the answer is no. It all depends on the ability of the interested parties (Al Gore will make tens of millions) to get the Senate to pass the Cap Coal and Tax the People Bill. They appear to be stymied. Good. Ah but we are not done yet. Jared Potter is working on a water/flame drill in order to tap deep geothermal energy sources. Obviously it might also be useful for oil and natural gas. Conventional geothermal power plants draw upon underground aquifers of hot water relatively close to the surface to create steam that drives electricity-generating turbines. The problem is that underground water currently tapped for geothermal is found mainly in the western United States. But the technology Potter is developing could drill much deeper, meaning geothermal energy could be generated nationwide.You can watch a video of the drill in operation. Here is some of what the people who posted the video have to say: Inspired by designs created by his father decades ago, Jared Potter is building an arsenal of ultra-powerful flame-jet drills. As seen in the NatGeo video above, one prototype directs a jet of burning hydrogen at 3200°F against a slab of solid granite. The rock doesn't melt, as one might expect under such a blast of heat; instead, the high temperature causes the rock to fracture as it expands along existing micro-cracks in the material. After a short exposure to the flame-jet drill, a gaping, perfectly smooth borehole has been created in the granite.The drill could drill at up to 100 ft an hour. Not as fast as conventional drilling, however there would be no need to lift mile long strings of pipe out of the well to replace drill bits. Or at least it wouldn't have to be done as often. And when you are replacing a drill bit you aren't drilling. And that is not the only place such work is being done. The Swiss are working on it too. Heated oxygen, ethanol and water are pumped into the reactor burner through various pipelines and valves and mix under temperature and pressure conditions, which correspond to the supercritical state of water (see box). The auto-ignition of the mixture is being observed through small sapphire-glass windows by means of a camera. A newly developed sensor plate measures the heat flux from the flame to the plate and records the temperature distribution on the surface for different distances between the burner outlet and the plate.And that is just what we know publicly. Who knows what is going on in labs all around the world that is currently being kept secret for commercial advantage? Bottom line? We may be running out of oil. Or not. But I do think fears of a near term peak oil limit on production are greatly exaggerated. Near term our limits are political not geological or technological. But isn't it always that way? And you know what they call a system where businessmen are in cahoots with the government to restrict the competition? National Socialism. H/T pbelter at Talk Polywell Cross Posted at Power and Control posted by Simon on 10.31.09 at 04:07 PM
Comments
"Near term our limits are political not geological or technological" Roger that. Just this year they have closed off thousands of acres of land just in Utah. I'm not sure how many other states have lost land that can be developed for oil and gas but it is over a dozen. Also several leases that were already sign sealed and almost delivered were yanked. Which by the way is illegal. But it happened anyway. Then you have the numerous lawsuits by the Eco-terrorists all over the U.S. (and Canada)that are holding up any exploration and costing the oil companys millions in legal fees and lost time. So there you have it. We are living on top of reserves that would make us able to not only support our needs for hundreds of years but even have some left over to sell. It is a crime in progress. Papa Ray Papa Ray · November 1, 2009 12:12 AM Post a comment
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It takes a lot of isobutane to make geothermal energy work...