Open Choke is the nom de plume of an anonymous oil and gas industry executive.
Open Choke's ideas and opinions do not necessarily represent the ideas or opinions of Drillinginfo.com, its owners, or employees.
I just watched the new Star Trek movie. A couple of things struck me.
First, hate speech is tolerated in the future. Bones calls Spock a "green-blooded hobgoblin". Had he kicked him in the head afterwards, he would be going to prison for a hate crime today. He would be immediately terminated by Federation HR for such insulting speech, otherwise.
Second, OSHA is apparently done away with in the future. Most space ships and the like don't seem to have protective railing and have lots of walkways that are narrow bridging over chasms thousands of feet deep.
Lastly, and not such a big thing, they still must have Aggie engineers. The emergency hatch for the "inert reaction fluid" was ten feet up in the air and directly above the electronic system that controls it.
A friend of mine who owns a maquila in Juarez got a phone call this morning from his manager who was freaking out because a car unloaded (perhaps) two police officers and a fellow machine gunned them to death in front of their place in the nice part of Juarez maquila row.
It makes me wonder. The President of Mexico has "declared war" on the drug smugglers. The drug smugglers respond with terroristic violence. The populace wants peace. They blame the government for the violence because they know they can affect the government's action. They know they are powerless to affect the drug run ners behavior.
From this I surmise that most people will accept living under despotic rule and the danger of random death and mutilation instead of sacrificing by escalating violence temporarily to reinstill the rule of law. This seems to be the case in history, except the US.
This leads me to believe that democracy and rule of law will invariably collapse under popular rule due to the instinctive desire to stop the violence. Thus, one bad-ass individual can grab power by just being more ruthless than anyone else, because a civilized society will not have the juevos to counter the horrible behavior.
Would it be (A. Stupid) or (B. Smart) for a group of people in 1709 to plan and pass laws on US energy use and supply in 2009?
Pretty clearly, it would have been a useless excercise in 1709, 1809, 1909, and 1939.
The "answers" available to us in 1959 and 1979 were off by orders of magnitude.
The result is that policy determined and mandates put in place during any of these time frames would have resulted in terrible energy decisions that would have resulted in a significantly reduced American economy and standard of living.
What is it that makes decisions made on the politically tinged "knowledge" we possess today different from the potential results of decisions made then? Are we smarter today? Is our data better? What?
I was watching CNN just now and saw a new commercial from Al "Goebbels" Gore's 100 million dollar propaganda/marketing campaign on "Clean Energy" designed to create public support for subsidies and penalties that will make his investment portfolio worth billions of dollars.
The ad featured an evil-looking squinty-eyed old farmer in a diner. Not one of the salt of the earth types you generally run into, but a bachelor-farmer pissed off guy who looks like he is losing his farm. The kind that would take a swing at you in a bar in, say, Wabek, ND. The kind that Yankee urban assholes THINK is the picture of rural America, and mistakenly cast in an ad to appeal to the flyover state types.
Anyway, this old coot is ranting about how he is sick and tired of the "oil companies" "bellyaching" that clean energy is "too expensive", and how he would like to go Ned Beatty on them. Ok, so maybe I made up the last part. But anyway, pretty creepy.
Of course, like most of Reverand Al's statements and messages, it is a complete lie. Oil companies have never "belly ached" about the cost of alternatives. Why would they? They produce lower cost energy.
For the record, not that Al cares about the truth or anything, but "oil companies" DO care about inexpensive energy. We also believe that people should have lots of energy choices. We believe that America needs as much energy as it can get. What we DON'T believe in is allowing a former VP to highjack the power of government to subsidize energies in which he is significantly invested, OR highjack policy to put a million Americans out of work that do nothing more than provide us with domestic clean burning Natural Gas, and an amazing amount of it.
Only a fool or a liar would NOT want the "Saudi Arabia of Natural Gas" to produce and burn its Natural Gas.
One of the comments in the article mentions "Happiness Inequality". Hmmm. Do we need some Happiness Justice to take care of that? Maybe make them LESS happy? Is it fair that these guys are happier than you? Why should they be? Don't you want to make them feel the unfairness of their happiness on those that are more happiness challenged?
You gotta love Hugo (the Juice) Chavez. This clown may be single handedly responsible for the BTU differential between gas and oil right now. His latest endeavors? He is seizing, without payment, the assets of oil service companies because PDVSA owes too much money.
Now I know that several regular readers of this post are huge Hugo fans... but, as this clown strips more and more liberties and property away from "The People" at a dizzying rate, how, exactly does he represent our Founding Fathers' principals?
Of course, the only real answer is "He doesn't". The only defense that emerges from conversations with my koolaid-drinkin' friends that adore this pudgy despot is that he is "democratically elected". So that makes it all ok. If enough people believe in theft, murder, and pilage, then it is A-OK. Face it, my friends that think this way, I don't want to ever hear any of you say the word Fascist again in a disparaging manner, because that is, after all, what you want.
"We will rescue these assets..." he is quoted as saying. Rescued. The man certainly has gall. Imagine a street punk sticking a Sig Saur in your face and demanding to "rescue" your wallet. How is this any different?
Of course, PDVSA is in a disastrous death spiral. The largest deposits of crude in the Western Hemisphere are quickly on their way to being irrevocably destroyed by this guy. OK, maybe not "irrevocably", but the price tag in deferred maintenance is getting into the 100's of billions.
All in the name of "the People", who he is massively cheating every single day he is in power. Theft on the very grandest scale.
Because he can't pay his service company bills, estimates of which range from between 12 and 40 billion, his rubber stamp congress approved a bill last month that would allow him to pay his bills with new People's Bonds. Some comfort, that. Why not just say "Banana Leaves"? Or, more honestly, "Not at all"?
If you think this is happening just to the big guys, I know a small guy who operates in the Rockies and has a dozen or so workover rigs, all but one are in Venezuala and in the process of being "liberated" by the Hero of Oil Field Equipment Freedom.
Citizens don't seem to understand that bio-fuels and hydrocarbons are merely different forms of solar energy converted to and stored in a form that allows us to use it with incredible efficiency AND allows us to control the timing for which to use it, kind of like organic batteries. The only physical difference between Bio-Fuels and hydrocarbons is the BTU efficiency of each (how many BTU's do we spend to get a BTU? If it is more than one, it is a NOT a source of energy. if it is less than one, it is) and turn-around manufacturing time... millions of years versus several months.
So, our self designated energy ethicists have created for us two dimensions of "goodosity". One axis is carbon footprint, and the other a nebulous and undefinable term called "sustainability". Prior to this last decade, the carbon footprint axis didn't exist. It is still a very open debate whether this is an appropriate axis for "goodosity".
If we could create hydrocarbons from turkey carcasses or landfills, which... WE ALREADY DO... that would be defined in this two dimensional ethical structure as GOOD Hydrocarbons on the "sustainable" axis because we can create a lot of landfills and kill a lot of poultry in a timely fashion, although we might drown in turkey poo. The methane from landfills is "good" on both the sustainable and carbon axis.
Of course, this construct is not limited to just "sustainable" and "low and non-Carbon" axes... we can add more and more dementions. If we are vegans, for instance, then the turkey carcass oil plots very badly on the "animal murder" axis. It doesn't take too many of these ethical axes before you are plumb out of "appropriate" energy altogether at any price. Physical laws have a nasty habit of not respecting human laws or prejudices, and when human rules contradict physical laws, I don't need to tell you which one prevails.
So, lets examine the "sustainability" ethic. Exactly how much fossil supply do you need before you become "sustainable"? For instance, the sun is both finite and fossil, but we have billions of years of future supply, so this is not something to lose sleep over. For our purposes, it is sustainable. Given that we, as a species, have been around 200,000 years, certainly we should feel comfortable saying that a 200,000 year supply of fuel counts as "sustainable". Given the developments of the last Century, ie commercial flight, nuclear power, incredible increases in manufacturing and agricultural output, ad infinitum, I would be willing to say that a couple of hundred years of supply means "sustainable". Does anyone really think we will have gasoline powered vehicles in 2150? Did anyone anticipate in any way shape or form the world today in 1860? If oil and gas have a 200 year supply, would that not count as "sustainable"?
Funny how this histrionic debate is really only about a TIME scale!
Bummer about those Santa Barbara wildfires. According to studies at the National Center for Atmospheric Studies, this pesky wildfire will likely release, in one fell swoop, the amount of EPA and Supreme Court defined Poison Gas CO2 as an entire year of California vehicular transportation.
So, assuming that Californians and, more particularly Californian Legislators and Governer Terminator (as in Terminating Industry and Jobs in California) are SINCERE in their concern over deadly CO2 emmissions, we should expect a 1 year immediate ban on vehicular use, except for Teslas, in that Garden State. Oh wait. New Jersey is the Garden State. Right.
One thing for sure. The CO2 exhaled by California Legislators is deadly. The fact that they live and breathe at all insures that no Californian or his or her property is safe while THAT CO2 is being "emmitted" in Sacramento.
This is a hysterical clip of Carl Icahn describing how Pennzoil and the "fatman" Hugh Leidtke ended up with $2.4 billion and Joe Jamail ended up with $600 million in the Getty highjack. Especially funny was Jamail ordering a bottle of vodka at 10:00 a.m. and telling Icahn, when asked what "good works" he was going to do with $600 million, "Ahmmm gonna buy puuuusssssy, goddamnit".
The big headlines coming out today from the US oilpatch are nearly exclusively about how a bank has re-affirmed credit lines... not about new plays or exciting new wells.
Are banks betting on the come? Certainly they are in commercial real estate. By comparing notes with friends, we have identified several situations where appraised value is down 50%, and banks are refinancing underwater loans in order to keep these from going into liquidation, thus driving values down even more and forcing a loss onto the balance sheet.
Are they doing the same for oil and gas companies? I would guess that the answer is YES if you owe more than $100 or $200 million dollars. Many companies that were 80% or more leveraged at $10 gas and $100 oil are having their borrowing base reaffirmed, and I have only heard of one or two cases of companies in that size range that are finding themselves underwater.
If you are smaller than that, though, all bets are off. Not enough assets to support multiple management teams. Look for consolidations there.
So the theme today is "Everyone (over $100 mil in debt) an Aubrey!"... ie too big to fail.