anaconda

10 Notes on the Crude Oil Fixation

Sorry guys, you're all wrong -- okay, not all wrong, but here goes.
Long oil, your argument proves my point -- oil rose more in Dollars than Euros because the Dollar fell in relation to the Euro.
Longoil the guys you mention are a bunch of hacks, shilling for "Peak" oil. I've read their stuff -- a lot of it is outright garbage. And since you're invested in oil - long, I must presume you're a shill too, for your own interest.

Continental shelf and margin oil deposits -- they're huge and virtually untapped, in other words, "scoreboard baby!"

Sorry Flow5, while manufactured goods is a large part of the trade deficit, with the cost of oil this high, that part of the trade deficit is 400 billion, roughly half the total. And Paul Craig Roberts agrees with me -- I read his latest column.

You are right about cost and quality -- as far as it goes, but America needs a "better deal." It makes no sense to have American goods taxed twice: Once in this country and once on the dock in China, while Chinese goods are rebated their VAT for products exported to America and not taxed, here.

In other words, Chinese products imported to America aren't taxed at all. That's not just a bad deal, that's a "Raw Deal."

America can get a better deal, so China will respect us in the morning -- right now they don't -- we're cheap and easy like a Five Dollar whore.

iThinkBig, no the smucks in Washington are getting the message -- the citizens are marching with pitch forks and torches to the Capital.

That sends a "Big Message." By the time the elections roles around even Democrats will be singing a different tune on offshore drilling.

Their political skins are on the line -- that gets their attention.

So, there you have it, all the world's wisdom in a nutshell. Ha Ha.

10 Notes on the Crude Oil Fixation

To Chistletoe: Hoarding is a form of speculation. This writer believes "Peak" oil belief has penetrated the market or at least the consciousness of traders, that along with the falling Dollar -- a falling Dollar is the real reason for high oil prices, helped by the patently false idea of peak oil.

1. Showing a demonstrated capacity to increase oil production would do a lot to flatten the market.

2. showing a capacity to swing into balance both U.S. trade and budget deficits would help flatten the market.

3. Two above, and Fed tools, showing capacity to maintain the value of the Dollar on international currency markets.

4. Showing the United States, in particular, has the 'political will' to explore and produce oil from the most promising locations, wherever those locations are.

Publicize the ultra-deepwater, deep-drilling oil plays like Carioca off the coast of Brazil. These type finds are the future of oil. Offshore is the future of the oil exploration and production.

Check out Oil Is Mastery, which focusses on the ultra-deepwater, deep-drilling sector of the oil industry.

"Peak" oil is a load of Bull -- oil isn't about to "Peak". Oil Is Mastery proves it.

1,238 Billion Barrels of Oil Reserves: Is This an Oil Price Bubble?

This is a conservative estimate.

The estimate does not take into consideration the fast developing ultra-deepwater, deep-drilling exploration that is taking place in the waters off Brazil's coast, not does it consider much of the deepwater oil off of West Africa's coast, not the huge potential oil fields off the America's East coast in the Carolina Trough, which Congressional Democrats won't even let the oil companies take a look at.

Also, new science is suggesting there is lots of oil, if expensive to explore and produce -- $70 a barrel is the average "lift" expense. "Abiotic Principles" have the potential to direct the world to large new oil deposits.

Check out the Oil Is Mastery website -- where Abiotic Principles -- backed up by hard science -- are focussing on ultra-deepwater, deep-drilling, where big results are already coming in off Brazil's coast.

Investing Into the End of the Hydrocarbon Age

Response to Kezorm:
There are two responses. First, the "oil window" of "fossil" theory, dictates that below 15,000 feet deep, oil will not form, or will disassocate, or "crack" because of the heat. This deposit, whatever is down there, is deeper than 15,000 feet deep, and Petrobas' statement said the "oil" is 500 degrees Fahrenheit, way over the tempertaure "fossil" theory's "oil window" states oil will "crack" into gas.

This was the basis for Mr. von Altendorf's stating he thought it would be gas. This writer asked whether von Altendorf subscribed to the "oil window" theory. His answer was not to directly respond, but, rather, to state that abiotic oil was "impossible." This writer took that to mean the "oil window" was inseperable from "fossil" theory.

There is another reason as well. Salt deposits are not strictly from evaporation, they are also a result of "solfataric" action. This is a kind of volcanic process, similar to a sulpher vent. What was interesting about von Altendorf's description of the Carioca field (how he knew, this writer does not know) included dolomite deposits, this was a reason the field was "suspect" as von Altendorf saw dolomite as a sign of low permiabilty. This mineral is also common to these solfataric "vents."

Kezorm, you sound genuine in your interest; check out the Oil Is Mastery website, at the left-hand column there are direct links. Under Eugene Coste, click Canadian Mining Institute Jounal: The Volcanic Origin of Natural Gas and petroleum (1903). This paper explains the "solfataric," volcanic process and the minerals that are expelled. Salt is one. Spindletop, the 1901, Texas gusher, Coste describes as a solfataric mineral "fumarole." The salt dome, that everybody knows about is a result of this action. Coste gives a very good explanation of the salt's presence, and documents salt as a mineral expelled fro solfataric fumaroles. The salt - solfataric association is never rebutted (they do object to his theory of the inorganic source of the oil). But also present is dolomite, actually Coste describes the oil in proximity to the dolomite. So, there is salt and dolomite at Carioca, just like at Spindletop. Dolomite is also found in the Brakken basin in North Dakota, within the oil deposits.

Actually, there is a strong association between petroleum and salt in many, if not most oil deposits.

So, the salt at the Corioca field may not be of depositional origin, but rather 'solfataric' in origin along with the dolomite.

This is entirely consistent with abiotic oil theory.

What Peak oil folks regularly claim is that hydrocarbons are not associated with volcanic action -- this is categorically false. The scientific literature is full of associations between volcanic sites and hydrocarbons.

The science is at Oil Is Mastery. The Corioca field will do a lot to prove abiotic oil, one way, or the other.

Investing Into the End of the Hydrocarbon Age

"THE ELECTRON AGE"

All well and good. This writer supports 'alternative' energy in all its myriad forms. Economics at some level is a function of man's desire -- and the desire to have dispersed energy sources is good in my book. Motivated man, is productive man. There are plenty of motivated men, inventors, who for fortune or intrinsic good, want to develop technologies for this 'Electron Age'.

More power to 'em.

But Mr. Kingsdale's turning phrase: "...[H]ow the hydrocarbon age will end...", is premature.

Petroleum -- crude oil, Texas tea, or an addict's drug, whatever you want to call it, will remain a powerful energy source for more than "ten to twenty years," Mr. Kingsdale muses about.

This writer may have missed Mr. Kingsdale's declaration for Peak oil, but the "ten to twenty years" transition statement suggests that's where he is: Peak oil.

But, that's not where the oil geology is at.

The next five years will prove whether this writer is right or wrong. The Brazil oil finds, specifically, the Carioca field will tell much whether the 'Age of Oil" will shortly pass.

Why?

Because it has been trashed, and dismissed -- chiefly because should it 'pan out' to anywhere close to the initial giddy, ill-advised "champagne popping" statement of 33 billion barrels of crude oil -- a new age will dawn -- the ultra-deep, deep-drilling offshore petroleum age. This would not be a "cheap" age. It averages $70 a barrel to produce -- but it would be stable and plentiful age of oil availability.

Why is this 'new age' trashed and dismissed?

Because it violates the principle's of the "fossil" theory.

This oil -- if it exits -- is too deep to be explained by "fossil" theory.
That's why Mathew Simmons and his acolytes have dismissed it.

But others have not. No, they are spending $750 million a pop for the rigs to get it, and Petrobas has ordered 40 of these ships. Yes, $30 billion in investment. That's part of the money Mathew Simmons is talking about.

This oil, if it exists, and it doesn't turn out to be natural gas, violates the "oil window" that "fossil" theory geologists hold dear.

That's why Alan von Altendorf, an oil geologist, predicts Carioca will be mostly, if not all, natural "gas."

But should it turn out to be mostly oil, it shows there are huge amounts of petroleum to be found. Again, expensive, yes, but available, steady, and consistent.

von Altendorf knows that there is no other explanation for this oil, if it exits, for while only one well test has been made, if it's a real play, then it must be abiotic oil. The science is there, now the observations can be made in the next five years, and, somebody, "way above my pay scale," has bet $30 billion that this is so.

Should this Carioca field 'pan out' and a trend of fields be found running down the lovely coast of Brazil, a new bosum of oil will be available for the world markets.

More power to the 'Electron Age', but don't count out the 'Age of Oil' just yet.

The website, Oil Is Mastery, is focussed on ultra-deepwater, deep-drilling investment.

See for yourself -- the science is there -- that's why Petrobas is rising in value. And the "proof is in the pudding," we will find out, one way, or the other, in the next five years.

Don't you want to get in before the investment "herd?"

Has Oil Production Reached a 'De Facto' Peak?

Peak oil is pure bunk -- always was. Let's look at the U.S. in 1970 when Hubbert predicted his peak in U.S. production.

The price of oil was regulated -- some oil was mandated as cheap as three dollars a barrel. Much of it was mandated at $11 a barrel -- all this was mandated on a complicated formula of the age of the oil well and other factors -- America did not have a free market for oil until after 1980. Guess what? Production hit a plateau. It doesn't take a rocket scientist to figure out why.

Oil companies could make more money on foreign oil -- so they did.

Today, poiltics controlls oil production -- 75% of oil in the world is controlled by nationalized oil companies.

There is a long lead time from exploration to production to market for oil. Many projects are years in the making. What was happening eight to nine years ago? World oil prices dipped briefly under $10 a barrel. What do you get when it costs more to produce oil than you can sell it for? That's right, limited exploration for oil.

This plateau is the direct consequence of that period when little or no exploration for oil was being conducted.

T. Boone Pickens is a shill for higher prices -- it helps his investments, it's his preogative. But keep in mind his self-interested motives, too.

And there are dozens of shills just like him with the same self-interested motives. And, there are others, who have a political agenda for higher oil prices for a myriad of reasons.

The oil geology is not exhausted (reached its half-way point, definition of Peak).

Offshore, continental shelf oil is untapped in many parts of the world, even, here, in the U.S. the entire east coast is off-limits -- politics, again. The Carolina Trough is a virgin territory, and has excellent geological indicators of huge potential oil finds.

Today, oil is being found deeper and deeper in the geologic strata -- that's a fact. And, there are projects underway, which will give a very stong idea of just how deep oil discovery can go.

Massive investment in ultra-deepwater, deep-drilling ships is taking place. These rigs can drill 40,000 TVD . Somebody thinks there is oil down there and are willing to spend $750 million a ship to do it.

Will the oil be expensive? Yes. $70 a barrel to "lift" the oil on average. Energy will never be "cheap" again absent world-wide depression.

And, make no mistake, there are those, who bad-mouth ultra-deep drilling whether on land or sea because it goes against their deepest held beliefs. Even when the list is long, and growing longer, of successful ultra-deep drilling of over 20,000 feet deep, all over the world, not just in the Gulf of Mexico.

ExxonMobil announced this year they are concentrating on making existing assets more productive: Translation: drilling deeper into existing fields primarily in Texas, but in other places as well.

Those with a political agenda will continue their yabbering on Peak oil, no matter what -- the most radical want to de-industrialize America.

But those that are shills for higher prices, based on geology, have nothing to fear of expanded exploration and production -- there is too much pent up demand in the world, and the oil is too expensive to "lift," to sell it "cheap."

So, stop blabbering about Peak oil, before events (oil discoveries) overtake you -- and your beliefs are exposed as being false and your services worthless.

Petrobras: Extremely Overvalued

Mr. Von Altendorf,
By that response, I take it, that the "oil window" is inseperable from fossil theory? It would seem so, as your answer in a strict sense was non-responsive. But it does show that if the "oil window" is proved false, it brings into serious question the entire fossil theory.

That's not what my comment was about, but by your responses, particularly the last one, you have framed the issue, and made it clear what's really at stake, here.

And, this piece and responses, particularly, the gratuitous remark on Ghawar, mark you out as an acolyte of Mathew Simmons, a key Peak oil pusher, not 10 years from now, but imminent Peak oil.

That's what this piece was really all about -- a "hit job" on ultra-deepwater, deep-drilling, but without the courage to be explicit about the reasons for the "hit job," because should this oil find, be as big as initially stated, or anywhere near as big, it blows fossil theory out of the water.

Because it violates a cardinal principle of "fossil" theory -- the "oil window" and with your refusal to answer directly my question, but to skip over to the abiotic postulate, puts that in sharp relief.

This is really about the survival of fossil theory, isn't it?

And Mathew Simmon's reputation in the oil industry.

"...[A] single well test." True. The proof will be in the pudding, as they say.

But your piece was meant as a smear job. This is a quote from one of your responses: "It doesn't have to make financial sense." Obviously, American investors would strongly disagree.

And, that is the more explicit purpose of this piece -- scare investment away from Petrobas -- the stakes couldn't be higher!

Let the battle be joined.

The website Oil Is Mastery is an investment website forcussed on the ultra-deepwater, deep-drilling exploration and production sector of the oil industry.

P.S. Oh, by the way, it's about the geology and engineering -- if the oil is there, and can be "lifted' for production to market:

The financing will take care of itself -- and make everybody filthy rich.

Petrobras: Extremely Overvalued

A von Altendorf,
Do you subscribe to the "oil window" theory?

Petrobras: Extremely Overvalued

A von Altendorf,
Can't locate the average depth of Campos basin oil wells, have to assume current wells do not go below 15,000 feet deep below the sea floor. So, the objection on comparing relatively equal field depths versus different time allotments for your "maturation" statement goes by the boards, but does not change overall critque of "oil window" theory. "That dog don't hunt no more."

Petrobras: Extremely Overvalued

Mr. A von Altendorf:
You state that Petrobas hasn't actually reached Coricoa, but you already know what's down there is only gas -- based on the "oil window" theory? But that theory has been discredited many times over in the Gulf of Mexico, where the oil majors are drilling over 20,000 feet on a regular basis, and a couple are over 30,000 feet deep. Sakhalin Island has a well producing at over 30,000 feet deep. Producing light sweet crude.

There are many wells in Alaska drilled or drilling over 20,000 feet deep, and not for gas, but for oil.

The high pressure you cite, as a reason for gas, actually, is what holds the oil together at that temperature and depth. The "maturation" you cite isn't mentioned as a reason for oil cracking in "oil window" theory. The difference between 24 million and 75 million years, to "mature" into gas, doesn't seems like a credible distinction: At 24 million years the Campos reservoir would have plenty of time to be "cracked" into gas, if the other variables, depth and heat, where the determining factor you claim.

You mention halite -- rock salt, but neglect to mention the difficulty in getting accurate images through that salt -- others call it "abyssal salt" because of the difficulty of getting high resolution images because the salt absorbs and distorts energy waves. Until recently, nobody tried to explore through it because of that difficulty.

but you know exactly what's down there. Your assertion seems to be an overstatement based on the "oil window" theory.

Your follow up comments claim your analysis is based on geology. But by your own statements, there is no geological report, as they haven't reached the formation yet. I repeat: Your analysis is based on a theory that is obsolete and anachronistic -- disproven by geological FACTS, many times over, and by many OIL producing wells.

So, Petrobas has backed off their initial "slip of the tongue," which was possibly a bit giddy, but you fail to explain why Petrobas would come out with a "whole cloth" lie, because if you are correct, that's what it was.

Isn't it just as possible, that with the admitted difficulty of "lifting" the oil, that it was prudent to back off that intial giddy statement?

But you have a dilemma, you accuse them of lying -- their initial statements are much too detailed: 500 Fahrenheit, tremedous pressure, specific depths, and below the salt barrier -- over a kilometer of salt. Petrobas according to your analysis is either lying then or now.

This writer isn't interested in calling Petrobas a liar -- but suggests Petrobas realized "champaign popping" statements, which the 33 billion barrel statement certainly was, out ran their technological capability to get the oil -- therefore, the climb down. But this writer also suggests Petrobas and their field engineers and geologists know what is down there better than you do, sitting in your office.

Your analysis by implication states Petrobas is reckless, for to invest so much in ultra-deepwater, deep-drilling when Corioca is a potential failure -- gas only, wouldn't be worth the cost -- doesn't make sense. Petrobas already has enough drill ships leased for speculative exploration. Their investment, which you cite, only makes sense, if they are extremely confident of a whole series of discoveries along the same trend as a Corioca field that actually has the geological and oil properties first stated in their initial release.

Your analysis is based on an obsolete geological theory, the "oil window," a cynical view of Petrobas as liars, and a reckless company, acting like a drunken sailor in their investment decisions.

Your analysis doesn't fit the facts, as known to this writer, or Petrobas actions, and what is reasonable for an experienced exploration and production campany with specific expertise in the ultra-deepwater, deep-drilling field.

That calls into question the value of the analysis.

Is Oil a Bubble? Part Two

Regrettably, Mr. kahn overstates the bubble. The price most likely will drop, but down to $100 a barrel. That's not a bubble, that's a correction, or "bump." There simply is too much pent up demand in the market (demand is restrained at this price, but will jump at lower prices). Maginal addition to supply, which balances the supply - demand equation is from deepwater, deep-drilling, which costs about $70 a barrel to "lift" during production onto the market.

To Ernie Montague: The supply of petroleum is not constrained from a physical aspect. There is lots of oil to discover and produce, expensive, yes, but will be produced at the right price.

Most of this oil is offshore, as to your comment, "They ain't making oil anymore. Any sophmore in petroleum science knows that."

That may be true. But there is a lot more oil than is currently generally believed. And, sorry, but sophmores in petroleum science don't know squat, because, oil geologists wrap themselves in dogma.

There is hard science, lots of it, that says oil is not due to algae, but you wouldn't learn that in petroleum science class.

Check out today's Oil Is Mastery blog post and subsequent comment on George F. Becker. Interesting science that contradicts "fossil" theory, which has never been rebutted by "fossil" theorists.

T. Boone Pickens Remains a Fervent Oil Bull

Mr. Pickens doesn't go prospecting much anymore, if he ever did. Oil could go higher, but if the U.S. provides stability for the Dollar, exploration will spur production, but there's a long lead time, so prices can't be effected for some time. Eventually prices will be effected, although, the more pent up demand for oil on the world market, the more possible prices will hold, with only gradual decline.

Also, it depends on whether Brazil's huge oil discoveries pan out, and futher ultra-deepwater, deep-drilling finds additional prospects for tapping large oil deposits.

Uncertainties? You bet, that's were the energy for the market resides.

A good blog is Oil Is Mastery.

Gold and Oil Price Limits

This round of commodity inflation is being driven by the weak world reserve currency -- the Dollar -- and by increasing demand in a world economy that has seen an economic run of growth, unmatched in history.

The Federal Reserve has a tightrope to walk. Providing liquidity for the markets, but not generating runaway inflation in the process. Signs are that the Fed understands the dilemma, as the Dollar has stabilized against the Euro and is slightly rising.

Oil as a commodity has been effected the same way.

Oil has an inelastic demand curve, but at some unknown breakpoint, those that can't afford oil and it's derivative products now, will not "grow" their wealth enough to begin consuming oil products, and those that can now afford to consume oil products will cut back consumption -- killing increased demand.

Should the Dollar, which is the monetary vehicle oil is currently largely denominated in, stabilize, that will also help stabilize the price of oil.

The current price is a huge spur to exploration and development of oil, and, while the cost is steep, the technology is available to produce petroleum from sources that were uneconomical, below $70 a barrel: Namely, ultra-deepwater, deep-drilling in offshore areas just beyond the continental shelf.

Brazil has had some huge finds (initial estimate, 33 billion barrels) of oil in the last few months, in geologic formations, which are repeated all over the world, including off the U.S. East coast.

This is a virgin, unexplored territory, and already discovered fields of this geologic type (Brazil) suggest no phyisical shortages are on the economic horizon (30 years).

So, again, monetary and budgetary policy, along with trade policy that protects the value of the Dollar and its world reserve currency status, will go along way to restrain commodity inflation -- as oil is the commodity that is crucial to the rest of the commodity chain.

Oil is the stick that stirs the drink.

Oil is expensive now, but if its price stabilizes, the economy will adjust without being strangled.

Oil is Mastery is a blog that focusses on deep water oil exploration.

Dollar Rallies on Retail Sales, Euro Words

If the Dollar will stabilize or slightly gain in value against the Euro, that would provide relief to the price of oil.

Drivers Are Feeling the Pinch

To Aurelien: To answer your question,
"Why are you so focussed on increased oil production...?"
One, increased oil production will promote a more productive economy that will supply the investment into 'alternative' energy sources; two, the likely potential of energy 'alternatives' is not going to cover the gap between energy needs and energy production, for some time, if ever, if America diverts investment from oil production. Three, time is needed to research, develop, and increase energy output from "alternative' energy sources.

At present alternative energy simply is not advanced enough to provide the energy America gets form oil and gas.

If alternative energy does end up being as productive as you assume, that investment will be made without taking it from oil production.

You assume investment in oil production "diverts" investment in alternative energy, I don't make that assumption, rather, they can be complimentary if done by seperate businesses. You also seem to assume government should direct this investment by commanding oil companies to "divert" their profits to an enterprise (alternative energy) that is peripheral to their core business: Production and marketing of petroleum.

Do you think a strong economy will have more to invest in alternative energy or a weak economy? Oil production is key to a strong economy in my opinion.

"Energy independence" is a myth trotted out at election time. Starting back in the '70's, politicians have said, "under my administration America will be energy independent." It has never happened, it never will. It's better to be realistic and decrease America's reliance on foreign oil. Letting America's oil production fall, like you seem to suggest, will only make us more depedent on foreign oil, not less.

Why would future generations feel "the pain of our shortsightedness" because we explore for oil now? Again, you assume that exploration for oil and investment in 'alternative' energy is mutually exclusive.

Frankly, 'alternative' energy research, investment ,and development is going on as we speak. But time is also critical, technology advances over time, so the more time America has, the better off America will be in terms of developing the successful "cheap renewable energy" you want.

Prices for oil, even with stable and growing supplies are unlikely to drop back to where 'alternative' energy is uneconomical.

But again, we need a strong economy to afford the investment in alternative energy. High oil prices, to the point that it strangles the economy, is not going to promote 'alternative' energy, but, in fact, restrict investment in 'alternative' energy.

Unless, of course, you want the government to do all the spending on research and development, but even then the economy needs to be strong so the government can collect the taxes needed to turn around and spend on research and development.

I don't care how much you "demand' it, if companies aren't making money, they won't be able to invest in alternative energy.

Is that what you want?

By the way, you seem comfortable with "forc[ing] us to change our habbits..." I perfer voluntary choice to "forced behavior" changes.