Energy

[watchingandwaiting]

In all of the discussion relating to energy, always remember the formula - Energy Returned On Energy Invested (EROEI). Simply put, what does it cost to produce? It is like investing money - you wouldn't spend $1.10 to earn a $1.00.

With ethanol you spend around $1.00 to get $0.90 back in energy equivalent (it works so far because the U.S. Government is subsidizing it at about 50 cents per gallon). This has a negative EROEI (0.90:1).

Easy oil used to have an EROEI of aroud 60:1 (return on investment), now it is more like 40:1 (coal is similar at about 30:1).

I don't know what the EROEI of tar sands and shale oil is, but I would not be suprised if it is quite low, like 5:1 or 3:1. Always remember that there is no such thing as a "free lunch". I've heard it said by U.S. Rep. Roscoe Bartlett that (paraphrasing) - getting oil from tar sands is like digging up the bituminous street in from of your house and boiling it to get the oil back out of it.

Just keep all of this in mind as we have these discussions - EROEI. Nothing is free, natural laws have an amazing way of limiting things. Without supernatural intervention, the laws of nature still apply. Also remember that technology is not an energy source, it is merely a way of using it more efficiently or using it up faster.

Stu

[watchingandwaiting]

Wow, the discussion on this thread has become white hot. I fear there are just too many responses to deal with. Thank goodness for a moments relief.

I never dreamed that technical economics would prove to be this interesting to everyone. I'm glad that I was able to bring these things to light.

[Rmf3175]

Wow, the discussion on this thread has become white hot. I fear there are just too many responses to deal with. Thank goodness for a moments relief.

I never dreamed that technical economics would prove to be this interesting to everyone. I'm glad that I was able to bring these things to light.

:aha

I know how ya feel about the posts.

I used to work for an E&P company in western colorado, and have a little background on the spending trends.

I've seen all kinds of stuff relating to this (being a construction supervisor), and my out take is this.....9 out of ten times the supervisors in the field dictate what is spent and where. I had two engineers over me that were right out of college and completely ignorant of what it took to built systems that maximized production and complied with Co. Oil&Gas Commish. They are primarily focused on the subsurface "potentials" which means they crunch numbers for the purpose of prediction, which inturn gets investors on board.

I finally got to the point (after discussin' with the field superint.) of telling these guys who craved power and prestige what I thought. My whole time in the oilfield was in the field, and not in he books. Big difference. I gave them what they wanted to bait in the money and they let me spend it. I tried my best to keep tabs on it but was totally impossibe given the sheer volume.

I had watched as others (consultants) namely in drilling blew this money on personal stuff, and used specific contractors as mediums to extract it in which I still have documented proof of. In case you were wondering this is illegal in a publicly traded company.

I went up the chain after certain people in upper management tried vigorously to get me to use these specific contractors. Needless to say, it was dirty from the top down to me, since I was left standing alone, so I was the threat now. I contacted a blood thirsty lawyer who, after showing the proof I had, wanted to get em big time.

It wasn't worth it to me, having health problems, and such, so I just decided to focus on what God had planned for me. Everyone thought I was crazy for not going after them, but didn't understand how little I value money after all that. No doubt in my mind I, and my kids, could have been set for life, but I just am not into being consumed by the trappings of this world anymore, so I moved on.

My whole point here is that there is a big difference between what is shown on paper for investing, and what is the real costs involved. I am not speaking of this as a consp. theorist, but rather one who has been on the inside and has seen with my own two eyes. We are talking Millions of dollars (Approx 1.5 mill per well on a single pad completed). The golden rule in oil and gas field operations is to keep your expenses high so you have them when you need them, and for some of these that are crooked that means really high so you can live it up in the process.

I could give other examples of trends that I've seen in the past concerning available oil, and the volume of acceptence to refinery terminals, in comparison to gas prices, and it has to due with the marketing and not supply. This was very clear based on the timings of shut downs in production in far off regions of the country. You would think they would up the intake in others but it's not the case. Instead it is just a reason to up the retail prices.

I am mainly just speaking of the things that influence production upstream, and don't know a whole lot about what the gov. does after that, but as with anything else that has to do with greed, I'm sure everyone has their hand in the cookie jar. JMHO:)