Kezorm

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    • Wed Jun 11th 23:39 PM | Rating: 0 0
      Commented on:
      Transocean: Drilling For Profits
      Leonard, wonderful article. Refreshing for it's lack of hyperbole. The statistic you mentioned about RIG having 7 of the 15 deep-water rigs that will be available between now and 2010 was especially interesting. These rigs are badly needed in Brazilian and Mexican waters, if not elsewhere. I suspect they will be contracted for excellent rates.

      One thing you did not mention, which I think would have been worthy of mention, is the recent depth record in Qatar - something like 40,000 feet of reach drilled without incident in 36 days! What an advertisement for "getting-what-you... !

      To Startouch, I would hope that crews are routinely evacuated before killer storms arrive. If so, the loss of one rig would be bad for any company, but the vast size of Transocean would hopefully allow them to weather such a loss somewhat better than their smaller competitors.
      View article »
    • Wed Jun 11th 00:56 AM | Rating: 0 0
      Commented on:
      Petrobras: Extremely Overvalued

      Lifting costs for oil at Tupi. Around $8 per barrel.

      www.reuters.com/articl...

      Compare the above projections to Von Altendorf:

      "Amortizing exploration and infrastructure, Tupi-Carioca lifting costs may be as little as $40/barrel if they produce 5+ billion barrels, or as high as $80/barrel if reservoirs are compartmentalized.&quo...

      I concur with Anaconda that this was a hit piece. There are links to this article all over the internet and they give an impression of Petrobras that is utterly false.
      View article »
    • Thu Jun 5th 21:16 PM | Rating: 0 0
      Commented on:
      Investing Into the End of the Hydrocarbon Age
      Response to Anaconda:

      I have read alot about abiotic oil but will not digress. I want to make one point in defense of biotic formation for that sub-salt oil. What must have happened to deposit the salt? Yes, sea-water was getting concentrated in a closed basin where evaporation exceeded inflow. What might have been the condition of this closed sea just before the deposition of the salt? That's right, warm, stagnant water. Probably with so little circulation that it was anoxic at depth. So, any algae that grew at the surface; died, and got buried without decaying. Cover this stuff with salt, cook at 300F, and those hydrocarbons which may form, cannot easily escape because of the mile of salt forming above.

      I don't know whether the oil is biotic or abiotic, but the geological context of the Brazilian discoveries makes biotic formation at least plausible.
      View article »
    • Mon Jun 2nd 23:18 PM | Rating: 0 0
      Commented on:
      Petrobras: Extremely Overvalued
      Long, long ago in 2002 some geologists were very excited about the Brazilian sub-salt. Read this for background:

      www.searchanddiscovery...

      Since this was written at least 8, possibly 11 or even 15 holes (depending on the vintage of the article) have been drilled through the deep salt and producible hydrocarbons were found every time. Of the several recent announcements of oil, they have found oil with similar viscosity leading some to suspect potential linkage between reservoirs or even one extremely large reservoir. Given the seismic images in the articles, it seems there may indeed be giant systems spanning tens of miles.

      The author may be confused or befuddled about some things. Here are some examples:

      Altendorf: "Tupi and Carioca..... It is inconceivable that large scale production development can be achieved in less than 10 years."

      OK. So they might not have a hundred wells producing for ten years. So what. Investor's seek growth and opportunity. But this comment should be compared to Brazil's previous accomplishments at disproving the critics. Look at the 4th paragraph of this article recalling the development of the Campos basin:

      www.rigzone.com/news/a...

      excerpt:
      "Pressured by high oil import costs and by the urgent need to trim Brazilian dependence on imported oil, it was at this basin (Campos) that Petrobras created one of the most advanced production development concepts in the world, one that would serve as a model for the industry. Seeking to slash the delay between discovery and production, company technicians opted to install the first Anticipated Production System (APS) on a floating platform in Enchova. The conventional offshore production systems adopted the world over had a very long maturation time, ranging from four to six years. With the APS, the delay between discovery and early production was slashed to a mere four months, leading to great agility, operating flexibility and huge savings in investments. This allowed the company to kick production off while definitive fixed platforms, which would be installed later on, were under construction."

      Fred's comment: One can assume that PBR engineers are even more capable, confident and experienced today.

      Altendorf: "Tupi and Carioca are geologically unrelated to oil-producing Campos reservoirs in a younger formation...."

      Santos Basin, Campos Basin. Two different structures. Are you correcting your own misperception here? Or are you implying some dishonesty or exageration on the part of PBR?

      www.rigzone.com/news/i...

      Altendorf: "...and in contrast they are primarily gas plays because of burial age and maturation in a high temperature-high pressure environment."

      PBR found oil. They intend to produce - oil. And where they found mostly gas, as at Jupiter, they stated that. You seem to think that the theory you were taught once upon a time is more important than what they are actually finding. By implying they are reporting oil when they only, actually found gas...is to basically impugn the honesty of PBR and every journalist who has reported on the subject. Is everyone missing something?

      But the maturation issue is important. Everyone schooled in petroleum geology decades ago was taught about oil depth and temperature windows, below which or beyond which it would be silly to look because the oil would presumably... have been cooked to gas. But oil is where you find it and of late, it is being found at depths where they used to say it could not be. Arthur Eddington once said that "no fact should be accepted until confirmed by theory." I guess you are in Arthur's camp in this regard. But dozens of articles are reporting the API degrees (viscosity) of the oil being found and that is a rather brazen lie if all they are finding is natural gas.

      Temperature? 400 degrees does not melt steel, and PBR is researching products made by companies like Aspen Aerogel who make efficient insulation systems for pipes that will keep the oil warm till it gets to the surface - which is an important point - you want it to stay warm until you get it to your separator. That way paraffins stay dissolved, and the lower viscosity encourages flow.

      Here are articles that seem more careful or honest:

      www.aapg.org/explorer/...

      www.reuters.com/articl...

      In summary, the Brazilian ANP has removed 41 blocks from auction surrounding the BM-S-8,9,21 and 22 area. And they have gone on a shopping spree for drilling rigs. In order for your criticisms to be taken seriously requires us to believe that this is all merely a show, and that the recent discoveries do not actually make PBR a better investment than another company which does not even claim to be making such discoveries. But even that does not make sense for XOM will be drilling at BM-S-22 this year, and are we to believe that they would change their plans about that if only they had your insights on the matter?
      View article »
    • Sat May 31st 23:08 PM | Rating: 0 0
      Commented on:
      In Light of Peak Oil, Financial Diversification Is a Bad Idea
      Hmmm. The S&P 500.... While I am very long oil and minerals, I strongly suspect that the S&P 500 might be a sleeping giant about to awaken. If you look at USA manufacturers who have been profitable in the past few years, just imagine how further declines in the value of the dollar will provide a hurricane-like tailwind. Anyone who recalls the Bucyrus-Erie company in the 1960's would probably classify it as a quintessential rust-belt company. But look at it today! And realize that Milwaukee/Southern Wisconsin has dozens more companies just like that one. So, the falling dollar is not all bad. It just might be restoring an imbalance that sent too many jobs overseas. In fact, when viewed in that weird glow of the falling dollar, the diverse and dynamic USA economy begins to look more and more like Brazil... After all, we have great mineral wealth, monster agriculture, high-tech, excellent infrastructure, and probably also a bounty of energy supplies that have been wisely protected from development under a probably false ecological pretense. So, keep a keen eye on the S&P 500 and especially those that export goods. As the dollar sets, it may rise.
      View article »
    • Sat May 31st 21:31 PM | Rating: 0 0
      Commented on:
      Oil & Gas Exploration SPDR Charts a 'Shooting Star'
      I don't know anything about TA, and must admit a certain contempt for it, but here is a question: Wouldn't such accelerations in the uptrend be the natural outcomes of a genuine, historical mismatch between supply and demand? Image an affluent, and extremely large crowd locked in a giant cavern, and the concession stands have a limited number of hotdogs and sandwiches to sell. Wouldn't the price of the sandwiches tend to accelerate in waves, just like your chart, as people begin to realize their predicament?

      Another question. Suppose the world is making a transition from undervaluing oil, in times of surplus production to one where it's importance and finite supply are finally recognized. What might the shape of that curve be during the transition? Even if we can drill and generally innovate our way out of the scarcity crisis, the curve during that crisis might look very much like the present curve.
      View article »
    • Mon May 26th 23:37 PM | Rating: 0 0
      Commented on:
      The Case for Not Drilling ANWR
      To Chad Gray: Good thinking. It would be idiotic to release such a wonderful and valuable resource to the market while profligate uses are encouraged by low prices. Much better for high quality, local sources to be conserved for a time when they are better appreciated and are used by more efficient machines, (like my 1990 Geo Metro for instance.) :)
      To those who reacted negatively to Chad's suggestion, what would you have us do? Release all such known reserves to maintain cheap oil right up until there is zero surplus production, and then expect decades of technological innovation and adaptation to happen overnight - and in the midst of a probable worldwide recession, if not also in the midst of world resource wars?
      Chad is right. Cheap oil will prevent the change that needs to happen, from happening until it would be too late for changes to avert disaster.
      View article »
    • Fri May 16th 11:25 AM | Rating: 0 0
      Commented on:
      Odds Favor Short-Term Slip in Crude Prices
      Until a couple year ago, there was always more supply of light crude than there was demand. It was like a rope which always had slack. For a number of natural and artificial reasons, that has changed. Statistical arguments that do not recognize that fact are bogus. The more you pull on the rope now, the tighter it gets. Until someone begins to remove artificial inhibitions on potential oil supplies, or until high price destroys enough demand, the rope will tighten, price will climb and arguments based on the statistical behavior of prices during times of surplus supply... will fail.
      View article »
    • Fri May 16th 11:13 AM | Rating: 0 0
      Commented on:
      Petrobras is Hoarding the World's Deep Sea Drillers
      Regarding a correction to $110... it is possible that won't happen. Consider Goldman's prediction of a $141 barrel cost average for the 2nd half of the year. If Goldman sees the imbalance of supply and demand sufficient to drive the price that high, then there may be too much tension in the rope, so to speak, to enable a correction as deep as $110.
      View article »
    • Sun May 11th 00:16 AM | Rating: 0 0
      Commented on:
      An Energy Policy That Makes Sense, Revisited
      To Poet1, concerning how much crude oil is or is not available on Alaska's north slope:

      See this rather unusual discussion on youtube:

      www.youtube.com/watch?...

      I would be very interested in hearing what everyone thinks of Mr. Williams report.
      View article »
    • Sat May 10th 23:20 PM | Rating: 0 0
      Commented on:
      A Look at Earnings from Transocean and Devon
      "One thing to note - despite great numbers, the stocks are not reacting. Hence, we could be prone for a pullback shortly in these names. When stocks do not react to great news, that is a potential change in character, just like when stocks shake off bad news and go up."

      I believe that the news below helps to explain why RIG's share price did not surge upwards after the excellent earnings news. First I'll paste in the articles that carried the important news details:

      **********************...
      Jefferies rumor yesterday that "Petrobras is likely to announce letters of intent (LOI) to award long-term contracts for as many as 17 new-build ultra-deepwater rigs."

      online.barrons.com/art...

      This is confirmed by Bloomberg.

      "Brazil is preparing to tap the biggest crude-oil discovery in the Western Hemisphere in three decades, which lies just off its Atlantic coast. Petroleo Brasileiro SA, Brazil's state oil company, is in talks with Houston-based Transocean Inc. to extend offshore drilling contracts."

      bloomberg.com/apps/new......
      **********************...

      1.) RIG is apparently NOT getting these contracts for new builds.

      2.) RIG IS getting contract extensions for rigs already operating there.

      The Barron's article mentioned that smaller firms were getting contracts for the new builds which amounted to something around 2/3rds the dayrates that RIG gets for their state-of-art rigs.

      This implies that Transocean is not getting any of the 17 contracts for new-builds. And this is probably why RIG's share price dropped a bit in the last couple days.

      Does this mean that Transocean is necessarily going to miss the Brazilian sub-salt bonanza? No. Why not? Two main reasons.

      It has been said that it will take 50 rig-years to fully develop the
      5-8 billion barrel Tupi field. If "Sugarloaf" proves itself, and if
      one scales the development effort upwards to accomodate the larger
      field area, then it may require 400 rig-years of work to fully develop
      Sugarloaf. (Just Sugarloaf... which is than 10% of the area with hydrocarbon potential.)

      seekingalpha.com/artic...

      So, 17 drilling rigs will not likely be able to satisfy the demand.

      Furthermore, PBR is NOT the only company that will be needing, and contracting for drilling rigs to explore and develop the Brazilian sub-salt. HES, XOM, GALP and numerous others will also be making their own arrangements for drill ships to operate within other Brazilian claim blocks.

      And Brazil is not the only country with fantastic sub-salt potential. West Africa has the same structures formed at the same time. The GOM, the abyssal GOM, the Scotian shelf and other places far too numerous to mention - ALL have potentially analogous salt formations in need of exploration. If 2008 generates more exciting news from Brazil, it will likely trigger a burst of interest in exploring analogous formations no matter where they are. Any country with off-shore petroleum potential that does not enjoy paying high prices to import crude... will likely, if they have not already, ante up and get in the game.










      View article »
    • Fri May 9th 22:24 PM | Rating: 0 0
      Commented on:
      Why Exxon Still Denies Peak Oil
      Response to DownSouth,

      Your explanation of why oil companies are buying back there own stock was superb!

      Thanks
      View article »
    • Fri May 9th 22:05 PM | Rating: 0 0
      Commented on:
      An Energy Policy That Makes Sense, Revisited
      Reply to mickel98,

      "yet there are nearly no engineers in leadership."

      Yes, I know you said "nearly no engineers", but I thought I'd paste this link anyway:

      bartlett.house.gov/Bio.../

      Congressman Bartlett has been beating the drum about energy scarcity issues for a long time. I've seen him on C-Span and he is as knowledgeable as anyone about Peak Oil. Here is a link to his page on energy policy. (Note the Hirsch report, which is must reading.)

      bartlett.house.gov/Iss...

      Maryland should be very proud to be represented by someone with such excellent and varied credentials.
      View article »
    • Thu May 1st 23:03 PM | Rating: 0 0
      Commented on:
      Oil Bears Outnumber Bulls; Don't Expect $4/Gallon to Be a Tipping Point
      China just announced an 8% y-o-y increase in consumption. If that trend persists, and if Mexico, Russia, Iran and Kuwait have peaked, just where do you think the oil is going to come from to meet the needs of emerging markets?
      View article »
    • Thu May 1st 00:21 AM | Rating: 0 0
      Commented on:
      Petroleo Brasileiro: Reality Begins to Bite
      Dear Otto and Ames, please keep up the propaganda. The buying opportunities for PBR, RIG and POT are priceless. Seriously, this talk about the difficulty of getting oil to the surface needs some perspective. Consider the "difficulty" of pumping Saudi oil, taking all the salt water out of it, putting it on ships, and then sailing 12,000 miles to another set of refineries and pipelines, before finally arriving at your gas station. Frankly, I think drilling a couple miles deeper than normal sounds pretty lame compared to the rest of the chain... which has become so routine no one pays much attention.

      PBR official have discussed the likely production costs. They think it will cost $25 per barrel to produce. Which will be a real drag on profits when oil falls to $50 per barrel. Make sure you wake me up when that happens.

      In the past week or so we have heard Russia admit they will struggle to maintain production at 9 Mbpd. Mexico warns that their production will decline at around 8% per year and their exports even more as home consumption increases. And the Saudi's have announced that they do not plan to produce much more oil per day even when their capacity rises to 12 Mbpd in a few years. Meanwhile, China's oil consumption has risen 8% this past year, India's probably also and the emerging markets together are now drinking more oil than the USA.

      That sound is not a bubble breaking. It is cavitation as the HMS Hubbert's Peak cranks up its screws and prepares to head out to sea, pausing to limit the wake while rounding the Iraq production buoy, then hydroplaning out into open sea leaving commodities shorts sliced and diced as if by a Ginsu. But wait! There's more!

      www.searchanddiscovery...

      This link takes you back 6 years. Look at the domed structure peaking at BM-S-22 where Hess holds a 40% claim. Since this article appeared, Petrobras has drilled 11 holes through the salt and hit oil, gas or valuable condensates EVERY time! This talk about precision targeting is either hogwash, or the Brazilians have a divining rod confirming Lula's speculation that God must be Brazilian. Eleven holes, eleven finds. It is no wonder that in December Brazil announced that they were taking 41 nearby claim blocks off auction.

      Heebner is right. Pass the salt.
      View article »
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