Monday, August 07, 2006

Alaskan oil production facing major setback

Just because this won't effect gasoline inventories or crude availability, don't think that we won't be paying for this at the pump. The decision by BP was an environmentally conservative choice, choosing to replace a section of pipeline that was very close to the acceptable limit for corrosion. The fact that the pipeline has suffered so much corrosion leads to the obvious conclusion that oil from the north slope is sour, and places a very high strain on the infrastructure that handles it, the people who work around it, and the refineries that turn it into something worth putting into our vehicles. "Sour" oil contains hydrogen sulfide, a highly toxic gas that is not only expensive to remove, but hazardous to all employees who work near it.

This shouldn't effect the price of gasoline whatsoever; in fact the government's offer to open the SPR should cause a downward trend in prices. Processing sour Alaskan oil is far more expensive than the cleaner, lighter oil in the SPR that typically comes from wells in the Gulf of Mexico, or imported Saudi Arabian crude. The technical difficulties in producing gasoline and diesel fuel are particularly interesting to me these days as we face declining worldwide production due to the maturity and depletion of the great oil wells that sustained the awesome abundance of cheap fuels for decades past.

Here's something scary: The all-time highest oil producing country for a single day was the USA in 1973, when we produced 10,500,000 barrels nationwide. Saudi Arabia has come close, but they peaked in 1981 just shy of our record. The scary part about it is that both of the highest-producing nations have already seen their greatest production days, and both are in a steady state of decline. American oil production has fallen to just over 5,000,000 barrels per day, nationwide. Saudi Arabia's great Ghawar oilfield produces this amount by itself every single day. It hasn't come without great difficulty, however. The King of all Kings, Ghawar, has been producing more and more water alongside the oil, which strains refinery capacity. In the 1970's and 1980's, the oil that came from the Saudi giants was "dry", containing almost no water. Nowadays, water cuts of 30% are typical throughout the Kingdom. So, to produce 5,000,000 barrels of oil, you have to pump, transfer, and process over 7,000,000 barrels of fluid. This, along with the politics we often discuss, is the reason gasoline will never be cheap again.

6 comments:

Green Hell said...

Not that I've seen it yet, but I was wondering if anybody here had seen "Who Killed the Electric Car?"

I was wondering what people's thoughts on the movie were...

BigNewsDay said...

No, I've not seen the movie yet. I had the trailer posted here a couple of months ago, and I look forward to seeing it. I have a feeling it is going to piss me off really bad.

BigNewsDay said...

Axe, it's a real shame that the consumers are getting screwed because the fucking oil companies failed to maintain their shit. Somehow, all of the oil company apologists are going to find some reason to blame the left fo this.

Green Hell said...

I know the feeling.

The guy who produced it was on Jon Stewart the other night, and what little he said started to piss me off!

BlackLabelAxe said...

It's a fact that Alaskan oil is not cheap to produce, and it's not easy to make something out of it. They'll probably raise the prices to around $3.25-$3.50/gallon, which should easily finance this repair. Sour crude really wallops your gear- ask any senior technician at Saudi Aramco who's worked at Abqaiq.

It's also funny to note that this shortage should have the most notable impact on BP branded gasoline, but watch how the Seven Sisters unite in their 'cross the board price hike. Such is the tactic of an unholy alliance between the oil giants that regularly team up to act like one giant monopoly.

Please also note that this is not a flaw within capitalism itself- this is a flaw within a government that heavily subsidizes major players in the oil business to the point where the little guy can't bring a competitive product to the market anymore. Eliminating competition, the most important check and balance in capitalism, the system more closely resembles a command economy than a free market.

Bushwack said...

Blacklabel, Good read, Bad news, Roll with the punches...
BND, even someone as far right as me wouldn't blame this on the left.
Even though.......... LMAO.