Peter McKenzie-Brown's  Instablog

By Peter McKenzie-Brown
About 20 years ago I wrote a speech for Bill Hopper, who was then chairman and CEO of Petro-Canada. He had just taken on a one-year term as chair of the Canadian Petroleum Association (the CPA; now CAPP), which I then worked for.

The process was strange beyond imagination. Instead of simply going to his office to find out what he wanted to say, I learned at the last minute that I was to go with an entourage: CPA president Ian Smyth; vice president Hans Maciej; and my boss, Norm Elliott. Among the other members of the CPA’s board of governors, Hopper alone demanded that amount of attention. The interview took place in Hopper’s palatial offices in Petro-Canada Centre. Not surprisingly, the interview was a flop – a waste of time for all concerned.

This vignette is a reasonable caricature of the early years for the most controversial petroleum company in Canadian history. Especially under Hopper’s leadership, Petro-Canada set the national standard for self-importance, arrogance and underperformance. Although the worst times are long behind us, the company’s epitaph cannot be written without reference to those bad old days. In some ways, they were with the company to the end.

For example, if you believe that markets are inherently rational, try graphing the company’s share price to those of its peers. Every large Canadian oil company has done better than the People’s Oil Company, as it was once unaffectionately known.

When the crash came a year ago, Petro-Canada collapsed more deeply than most. This left it vulnerable to regime change, which quickly came in the form of a takeover encouraged by complaints from a large shareholder, The Ontario Teachers’ Pension Plan, which wanted to increase shareholder value.

Article continues here: languageinstinct.blogspot.com/2009/10/pe...

I own some of the successor to Petro-Canada, Suncor.

One of the most under-appreciated alternatives to crude oil is biofuel from lowly algae. According to a frequent contributor to this blog, who is developing production in China, algal oil is more than a good alternative. It’s good business. 

 

Media organizations continue to feed us down-turning economic news. That’s fine for now, but why isn’t anyone talking about the problems we will encounter as the global economy starts to strengthen and recover?

Economists and energy traders are increasingly coming to the same conclusion: When the economy begins to get back on its feet again, there will be an immediate ceiling of resistance due to high energy prices which will once again crash the markets. This recurring cycle will continue until world population begins to decline, the economy permanently contracts to keep step with falling oil supply, or we develop energy alternatives and environmental solutions. Of these choices, developing alternatives is better than standing in a soup line during a prolonged worldwide depression and fighting wars for the world’s remaining energy reserves.

Balance of article here: http://languageinstinct.blogspot.com/2009/08/next-step.html

I do not own any shares related to this investment idea.

“This is a way of getting inside the energy system, getting a sense of its possibilities. I’ve been around for a while, and I’ve never seen anything like it.” The speaker is Bob Taylor. After a long corporate career with a pair of big oil companies, he joined Alberta’s Department of Energy’s as assistant deputy minister for oil development. Now retired, in that job he had responsibility for conventional oil, oil sands, land access, and energy and Aboriginal relationships. Today he is excited about something he believes is much bigger than all of these combined.

An engineer by training, Taylor is part of an informal group of senior patch people who have formed a not-for-profit organization they call the Energy Futures Network. They argue that Canadian policy-makers – whether they work in government, industry or the world of NGOs – should be able to take the longest possible view of resources to make sensible decisions.

"The exact analogy [to the modelling system] is the flight simulator. You can get into the simulator and use the controls to see how the plane will respond. The nice thing is that if you crash the plane, you can learn from your mistakes. You don’t want to crash the plane in real life.”

Balance of article here: http://languageinstinct.blogspot.com/2009/07/exploration-fuel.html

he story of petroleum is a story of waste.

Consider the volumes involved: At perhaps 3.5 million barrels per day, Canada is the world’s seventh-largest oil producer, and at 16.9 billion cubic feet per day, the third-largest natural gas producer. Add in the gas liquids and related products and the sheer volume of fossil fuels that flow out of the Canadian soil starts to become astronomical.

And these numbers measure “spec” oil and gas – products that are clean enough for pipeline transport. Consumers rarely consider the huge amounts of waste created as the industry brings its output up to spec.

At every stage, considerable volumes of waste need to be treated. Consider the sources of upstream oilfield waste. Seismic surveys, wellsite construction and drilling produce wastes ranging from bush cuttings to rock chips to drilling and fraccing fluids. Production wastes include salty byproduct water, gunk in tailings ponds, contaminants like carbon dioxide and hydrogen sulfide, and soil contaminated with sulfur. Once a plant needs to be decommissioned or a well shut in and abandoned, the producer creates more wastes that need to be carefully managed.

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by Peter McKenzie-Brown

Once an obscure part of waste management, the injection underground of unwanted gases will soon become a huge part of Western Canada’s business. The industry has had plenty of practice at disposing of nastier materials than carbon dioxide.

Oil and gas operations produce two kinds of acid gases – hydrogen sulfide (H2S) and carbon dioxide (CO2). The former is usually stripped from the gas stream and converted into sulfur. Tom Byrnes, a reservoir engineering manager at the Energy Resources Conservation Board, says the sulfurous impurity is sometimes just stripped from the gas and re-injected underground. “It’s usually an economic question. There may be small volumes of H2S in the gas stream, or the infrastructure [to strip out sulfur] may not be in place to make it practical.” In Alberta, the board regulates all disposals through disposal wells and first approved an H2S re-injection project in 1989.

Both of these acid gases are routinely stripped from natural gas for re-injection, as appropriate. “But the smaller the concentration of H2S or CO2 there is in the gas stream, the more expensive it is to get it out. It’s a problem of diminishing returns,” Byrnes says.

If H2S can have commercial value as a source of sulfur, CO2 is frequently injected into operating oilfields to stimulate production. This is not new. Carbon dioxide has long been used for enhanced oil recovery, to urge additional barrels out of elderly oilfields. One such project has been operating in the 50-year-old Weyburn oilfield in southern Saskatchewan for nine years.

Balance of story at languageinstinct.blogspot.com/2009/06/pr...

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Cleaning up after fossil fuels is a thriving enterprise recession or not

By Peter Mckenzie-Brown

Oil and gas fields, like homes, never stop generating trash. The difference lies in the volume and nature of the rubbish. From exploration through production and eventual abandonment of wells and plants after fossil fuel reservoirs deplete, energy waste management has grown into an industry in its own right.

Common oilfield wastes include oceans of brackish “produced water” that flow to the surface in volumes measured in millions of barrels and have to be separated from oil then put into safe disposal. There are other oil-contaminated materials that can be solid or liquid. The process of completing wells alone generates respectable volumes of drill cuttings and other solids that can no longer be left lying around.

Over the last 25 years, waste regulations have become steadily tougher, encouraging growth of a disposal business that has outlasted boom-and-bust cycles of energy prices and spread across the countryside in tandem with exploration and production operations. Since 1998, the number of producing wells across Western Canada has more than doubled to about 226,000.

 

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