Can Someone Simple 'Splain Oil Production & Sales To Me?

[freemonkey]

I am trying to wade through the claims in this, I think he's pulling some of this info out his butt. But it seems this is being discussed and applauded all over the conservative side of the internet.

So, for one, I have some questions regarding the U.S. government's involvement in the production and sales of crude oil and/or gasoline.

[thedoc]

Price is whatever the market will bear.

[freemonkey]

Yep, I get that, thedoc.



My question about the US government involvement has partly to do with whether or not the government is ever involved in the drilling, production and/or sales of oil or gas.

[fragment]

This is relevant to one of the claims:

PolitiFact | Newt Gingrich says U.S. may have 'three times as much oil' as Saudi Arabia

[Angakuk]

Originally Posted by freemonkey

Yep, I get that, thedoc.



My question about the US government involvement has partly to do with whether or not the government is ever involved in the drilling, production and/or sales of oil or gas.

I am by no means an expert on the subject (you should ask Dingfod) but to the best of my knowledge the U.S. government is not directly involved in exploration, drilling, production or sales of oil or gas. The government is indirectly involved through the sale of oil leases the issuance of permits, regulation of the industry, providing subsidies and taxing.

[thedoc]

You wanted simple. If the Gov. can control production it can control prices and control usage. Look at farm subsidies and how the Gov. controls production to keep the prices where they want it. There is a fictional concern about the environment so prices go up people get more fuel effecient and the oil companies keep their profits.

I think the Gov. has their finger in more than we know.

[freemonkey]

Originally Posted by Angakuk

I am by no means an expert on the subject (you should ask Dingfod) but to the best of my knowledge the U.S. government is not directly involved in exploration, drilling, production or sales of oil or gas. The government is indirectly involved through the sale of oil leases the issuance of permits, regulation of the industry, providing subsidies and taxing.

That's what I thought.

[SR71]

Originally Posted by freemonkey

I am trying to wade through the claims in this, I think he's pulling some of this info out his butt. But it seems this is being discussed and applauded all over the conservative side of the internet.

So, for one, I have some questions regarding the U.S. government's involvement in the production and sales of crude oil and/or gasoline.

Preface - This is just a rant. Sorry if I'm just covering stuff you already know or saying things that are wrong.

I'm no expert by a long shot, but following the story of oil is a minor hobby. That article is an interesting twist on claims that peak oil, the point of maximum global production, is far in the future. The claim is made to allay public fears of supply shortfalls that will mean ever increasing costs of petroleum products. The proponents are typically agencies such as the Heartland institute, typically financed by oil producers. The twist is the down playing of Mid East tension. This is in line with propagating a public expectation that oil will remain affordable for the foreseeable future.

Skimming the article, the misrepresentations of truth include counting "technically recoverable" deposits and oil shale as if they are low hanging fruit ripe for the picking. Technically recoverable is really oil that may or may not be there at all. If it is there, it may be difficult, expensive, or impossible to recover. He (they) is (are) also conflating oil shale and shale oil, which are two completely different things. Shale oil can be pumped up by fracking and other methods. Oil shale, the more abundant of the two, has to be mined like ore, heated to high temperature, and the entrapped fluid extracted. What it contains is not even oil, it is kerogen, an oil precursor. The kerogen then needs further pre-processing before refining can even begin. All this means it is extremely expensive to recover. It's sort of like oil sand, only harder to work with and even less productive.

The future discoveries he is talking about are highly speculative, to say the least.

New deposits of oil that are discovered are typically smaller and deeper than previous discoveries. The rock is harder and less porous. The wells run dry more quickly. The oil that comes out is thicker and contains more sulfur and a variety of other contaminants, making it harder to refine.

The US .gov role, so far as I can determine, is really just to regulate to a degree for environmental protection and provide them with land and permissions to drill. An argument can be made that US military capability helps stabilize the security of the complex petroleum infrastructure the world depends on. There have been studies that conclude that the military expense is a substantial fraction of the cost of oil.

A couple of interesting observations -

There really is more oil left in the ground then we have already used. The problem is that the easy oil has been taken, as they say. That which remains will be increasingly costly to recover, refine and transport. In general it will be more damaging to the environment to utilize.

When the oil industry says that the end of oil has been predicted over and over, and that they have always found a way to overcome the obstacles it is largely true. They have been very good at what they do. That said, a number of factors will change that story line going forward, in my humble view.

Sorry for mansplaining and not really answering your question, and not providing any citations. I just felt like having a rant. Yeah, this wasn't a mansplain, it was just a rant.

[SR71]

Three pertinent agencies -

EIA Energy Information Agency

USGS US Geological Survey

Formerly Minerals Management Services, redesignated The Bureau of Ocean Energy Management, Regulation and Enforcement

[SR71]

This article relates more directly to oil, us.gov, and the article in the OP. The sanctions on Iran are making things difficult. I think the author is soft pedaling regarding the Mid East political tension.

Shell to Iran: About that $1B, we're working on it - Business - World business - msnbc.com

Shell and European rivals such as Total and Italy's Eni have built longstanding relationships with Iran, OPEC's second largest exporter, through their work at the country's oilfields and years of crude oil purchases.
But while they are loath to burn bridges with Tehran, they also cannot afford to put business in the United States and elsewhere in the West at risk.

[freemonkey]

Originally Posted by SR71

Sorry for mansplaining and not really answering your question, and not providing any citations. I just felt like having a rant. Yeah, this wasn't a mansplain, it was just a rant.

I'm glad you did! If you have any links that would be helpful. Yes, some of it I did already sort of know, but other parts I didn't. Thanks!

[Watser?]

There's a lot of nonsense, lies and distortions in the article. As SR71 has already pointed out the story about the abundance of oil is technically true but they leave out the important fact that it will be so hard to exploit the oil that prices will still go up. They do that on purpose too IMO, I think they know very well that the argument is not that oil is running out, but that cheap oil is running out.

As for this:

In the West we too readily forget the blood-stained 1,000 year enmity between Shia and Sunni Arabs. Iran’s leaders are Shia, much of the rest of the Middle East is Sunni.

That's like saying Spain is Catholic, England is protestant, they have fought bloody wars over this in the past, so they are natural enemies. It would be as close to the truth. The Shia/Sunni divide is a factor in the power struggles in the Middle-East, but not nearly as important as they make it out to be.

If Israel and the West are nervous about Iran’s nuclear-armed global superpower aims, Iran’s Sunni Arab neighbors are terrified at the thought of a nuclear-armed Tehran and its regional and global ambitions.

This is sorta true, the GCC are terrified. But then they are terrified at everything and we all want them terrified so they'll buy our weapons.
Oh and btw, I still don't think there is an Iranian nuclear weapons program.

And this:

The willingness of regional ‘friends’ to cover any potential Iranian oil shortfall, is highly instructive. Not only does it further confirm that a strike on the Mullahocracy’s nuclear facilities would not cause mayhem in the global oil market, it would actually elicit, as we have said elsewhere, “an enormous collective sigh of relief from Riyadh to Amman to Cairo”—not just in Tel Aviv.

is just wishful thinking extraordinaire. As I said the GCC council members (Saudi Arabia, Oman, the UAE, Qatar, Bahrain, Kuwait) governments are scared of Iran and would like to overthrow the regime. That does not mean their populations do. It definitely does not mean the populations of Jordan or Egypt do, let alone that of Iraq or Syria. The other part of the wishful thinking is the assurance that the West's allies in the region would be able to pump enough oil to compensate for the fact no oil is flowing from Iran. They can't.

They also keep playing down the devastation even an insolated Iran (which it is foolish to think Iran is) could cause. It would be easy for Iran to shut down the Straits of Hormuz and cut off oil exports from the Persian Gulf.

I read this article the other day that the reason Iran is responding to the warmongering with belligerent speeches of its own, is because they WANT oil prices to be high so they make more money on it which offsets Western sanctions.

[SR71]

Here are some posts about oil shale vs. shale oil from a site that is fairly realistic in evaluating energy investments. It's useful because you are not taking the word of some starry eyed green energy hippy like me.

Oil Shale or Shale Oil?

So what exactly is oil shale?
Oddly enough, oil shale is neither oil nor shale; it's an immature source-rock which hasn't generated any oil. It seems more akin to coal or peat. The rock does contain a large amount of kerogen, from which hydrocarbons can be extracted.
And believe me, dear reader, there is plenty of oil to be found.
Although there's an estimated 2.6 trillion barrels of oil shale reserves scattered across the globe, I wouldn't be so quick to label the U.S. oil shale deposit as "reserves." That's a mistake made all too often.
In order to be considered reserves, the deposit needs to have proven economic value. Until that occurs — however unlikely — we'll just keep calling it a "resource."

Shale Oil vs. Oil Shale

The truth is, just five years ago, nobody was paying attention. Now, this story is headlining on the nightly news and trending on every major outlet's website I come across.
As always, the mainstream media is the last to the party. And all too often, they get confused...

That especially goes for the trillions of barrels of oil shale beneath Wyoming, Colorado, and Utah.
When it comes to the Green River Formation, we're talking about finely-grained sedimentary rock that holds a significant amount of kerogen.
Kerogen, unfortunately, is not crude oil.
Thanks to a twist in geological fate, things turned out much differently.
You see, had this resource been buried a little deeper and for a few more million years, we would be sitting on the largest crude oil deposit in the world.
Think of it as the first step in the oil-generating process. In this case, the kerogen has to be heated to release the petroleum-like liquids.

This all goes to that large base portion on the pyramid in the OP link, 1.4 trillion barrels. Counting that as a viable energy source anytime soon is just not realistic.

[davidm]

U.S. domestic crude oil production peaked in 1971. Today we produce about half as much oil as then. Keep that in mind when people talk about "increased" domestic oil production. It is only increasing relative to recent history. The long-term trend of production continues to be downward.

The cheapness of oil and hence energy is defined by EROI (energy returned on energy invested.) At the dawn of the oil age you could invest roughly one barrel of oil and get 100 barrels in return. That's why energy was so cheap. Today it's not so cheap because, despite the technical abundance of oil, it's no longer "low hanging fruit" and it's difficult or impossible to get at. Today maybe the EROI is such that you invest one barrel of oil and get four or five barrels in return. Not so cheap. There is no reason to believe that this trend can be reversed.

[davidm]

National Geographic article from Nov. 2010: Global peak oil production occurred in 2006.

[davidm]

I just read that article that freemonkey linked to. Standard boilerplate right-wing war mongering propaganda served with a heaping helping of lies. Notice in his starry-eyed aggrandizement of the world being "awash" in oil he makes no mention of the cost and difficulty of recovering of this oil, of energy returned over energy invested, or of the fact that shale oil is not really oil. Moreover, note that nowhere does this article address the fact that even if we could, somehow, through improved technology, access an abundance of this oil at an acceptable cost, doing so has dire implications for global warming. But like peak oil and evolution, global warming is ruled out as fact by the right wing because they don't like it. Ergo it's not real.

[SR71]

There is still a lot of debate, even among reasonable people, as to when global peak production will occur. Looking at global production in the last decade, it looks as if we have reached at least an interim plateau. As a footnote, the timing is coincident with modeled projections from Meadows et al Limits to Growth, published 1972. Viewed in the context that oil price went from ~$20 to $100 or more per barrel in less than a decade, this argues strongly that the days of cheap oil are over. Goes to support davidm's point above.

http://www.indexmundi.com/energy.asp...aph=production

[davidm]

I'm just at that "tip of the oil pyramid" that the right-wing idiot posted in that linked article. Just who does he think he's fooling? Dittoheads? Oh, well, them, of course.

LOL, 400 billion barrels of "technically recoverable" crude oil. Yes, pay attention to that word "technically." Most of that would be "technically recoverable" if we wanted to spend more to get it than we would profit off of it (hence rendering it economically useless.)

And what the fuck are "undiscovered resources?" If they're not even discovered you don't know if they exist or not or even if they do, whether you can recover them economically.

Bear in mind, though, that there is believed to be lots of "undiscovered resources" under the Arctic ice cap. Which is why the fossil fuel industry wants it to melt via global warming. They think they can profit off that there bounty! Of course it might be tough to do much of anything in a world of tripped feedback loops that renders much of earth uninhabitable.

God, people are stupid. I can't believe this nincompoop has an audience. Someone please forward my comments to him.

[davidm]

Oh, and one more thing, let's have another fun war in the Middle East, and kill lots more innocent people! That sure worked out well in Iraq, didn't it? As for Israel, maybe it wouldn't feel so threatened if it would stop occupying other peoples' land and treating them like shit. Just a thought.

[SR71]

Originally Posted by fragment

This is relevant to one of the claims:

PolitiFact | Newt Gingrich says U.S. may have 'three times as much oil' as Saudi Arabia

lol libertard fantasy. The sad part is that the coordinated campaign to get people to believe this bunk is surprisingly effective. The libertards are very good at effective propaganda campaigns. They can not be underestimated. They know how to mislead. It's definitely a real thing.

[davidm]

A Fog of Mendacity

[davidm]

United States peak oil.

[Dingfod]

Originally Posted by freemonkey

Yep, I get that, thedoc.



My question about the US government involvement has partly to do with whether or not the government is ever involved in the drilling, production and/or sales of oil or gas.

I confess I did not read the article thoroughly. This is just from what I've learned in 30+ years of experience in the industry.

Normally, the federal government nor any state or local government does not have any direct involvement in the drilling, production, and most certainly not the sales of oil or gas on leases on government or private land. The last oil or gas well drilling the government did, outside of the strategic petroleum reserves (oil storage), involved detonating nuclear weapons underground back in the late 1960s and early 1970s out in Western Colorado. That was a dismal failure, being that the natural gas produced was radioactive. The strategic petroleum reserves (read: storage) in Louisiana and Texas and California and maybe other places they do directly control, but the maximum they can produce is less than a million barrels per day, not that much in the 20 million barrel per day domestic consumption.

The government has quite of bit of indirect involvement, being that much of the offshore and quite a bit of the onshore petroleum energy drilling and production is on federal properties. The federal government auctions leases, administers safety and environment regulations, and collects royalties (typically 12.5%). They do not, however, tell the leaseholders how much they can produce. The Minerals Management Service will sometimes show up out of the blue and order an rig shutdown just to prove the safety systems work properly, but those are almost always back in operation within hours.

The oil shale is proving to be productive, but squeezing it out of the rock is costly and self-limiting by the difficulty. In other words, they don't have shale oil wells flowing 20,000 barrels per day like some Saudi Arabian wells; the typical shale oil well would be a few hundred barrels per day at most.

[Jeroll]

Originally Posted by davidm

United States peak oil.

Strange how evidence backfires. Just at the time when global oil production is going down, we are supposed to believe that CO2 emissions are increasing and heating up the planet?

CO2 from petroleum is increasing, while actual extraction of petroleum is decreasing?

How does *that* work, pray tell?

[Crumb]

Is global production going down?