It has been an interesting vacation week in the Hamptons (and 10 degrees cooler than NYC). My wife’s family have owned a beach house here since 1961. I spent summers in grad school on Fire Island; once we got engaged, summer weekends moved further east.

Some anecdotal observations:

The stores have not been jam packed. South Hampton was not particularly busy. The one crush was the town of West Hampton on July 4th — you can see most of the fireworks display walking through town. Sunday night was totally jammed.

The RE situation appears to be the same as last year. Dunno if you call that stabilization or something else. On our usual 2 mile route to the beach, we have seen 16 houses for sale; last year it was 14 for sale (2008 was also ugly). I also noticed a whole lot of rentals — 4th of July week is quite late for that many empty investment properties (or people who are renting out houses ’cause they need the income).

The party atmosphere remains . . . but it is different.

I’ll try to quantify this more before the week is over . . .

The US consumer continues to shed and incrementally use less debt. May Consumer Credit outstanding fell by $9.1b, almost $7b more than expected and April was revised to a decline of $14.9b from the initial report of a rise of $1b. The decline was led by a $7.3b fall in revolving credit outstanding while non revolving credit fell by $1.8b. The sharp downward revision to the April figure was led by a drop in the non revolving category. Overall consumer credit outstanding now stands at $2.415T, the lowest since March ‘07 and has fallen for 18 of the last 20 months. A combination of debt paydown, more savings and reduced credit access has the consumer doing the tough but rational thing of deleveraging. The resulting higher savings rate, while a crimp to consumer spending, is the seed of investment and is the long term offset to the short term economic impact to 70% of the US economy.

The problem with vacations is that I don’t get to read everything I want to. The following is what i would be pouring over if I weren’t on the beach!

• Hedge Funds ‘Frozen in Headlights’ Cut Trading as Markets Swing (Bloomberg)

• Double-Dip Fears Are Overdone (WSJ)
• Could Japan Collapse? (The Diplomat)

• IMF Raises 2010 Growth Estimate, Sees Recovery Risk (Bloomberg)

• All in on Deflation Bet? (Barron’s)

• Ignore Generic Financial Advice (NYT Bucks)

• Dan Gross on Going Postal: Higher postal rates are good (Slate)

• Obama Decried, Then Used, Some Bush Drilling Policies (WSJ)

• Romeo and Juliets, here I come: Congress reviewing Cuban sanctions, may lift travel ban (Washington Post)

• Secret of AA: After 75 Years, We Don’t Know How It Works (Wired)

What are you reading?

Rich Karlgaard gets all up in the grills of the “über bears” in this post. This alone would not be particularly noteworthy, except Karlgaard is quite charming and somewhat reserved in person.

He calls Robert Prechter “howling insanity,” noted that Paul Farrell is the new “apocalypse beat writer,” and saves particular vitriol for “the oddest of them all, a book writing blowhard Harry Dent.”

I’ll takes pop psychology for $100, Alex

“The howling insanity of Prechter and his fellow bears is rising. My theory about this is admittedly cynical. It could be called The Men Who Want to Be Roubini. The [NYU] econ professor and permabear, Nouriel Roubini, happened to be in the right place at the right time with the right call in September 2008. The result was that Roubini’s lecture fees zoomed from cab fare to $60K in seven seconds.

The Men Who Want to Be Roubini–which is to say rich and famous . . . “

Ouch . . .

He does have some nice things to say about Doug Kass and I. (Dougie — remind me never to piss Rich off!)

>

Source:
Insane Bulls And Bears
Rich Karlgaard
Digital Rules, July 7, 2010 – 3:21 pm

http://blogs.forbes.com/digitalrules/2010/07/insane-bulls-and-bears/

Taking the inflation/deflation debate to a whole new level, the National Inflation Association (I’ve never heard of them) that purports to “Preparing Americans for Hyperinflation,” is urging “Lebron James to consider signing a 3 yr contract with the NBA team of his choice, instead of a 5-6 yr contract, due to the threat of hyperinflation occurring in the US during the next 5 yrs. With all of the talk in the mainstream media about if Lebron will sign with the Cavs, Heat, Knicks, Bulls or Nets, nobody is talking about the threat of hyperinflation and what effect it could have on the real value of Lebron James’ next NBA contract.” Oh boy.

This is a follow up post to 'The Fake Fire Brigade - How We Cheat Ourselves about Our Energy Future', which gave an overview on how difficult it will be to maintain our current energy systems with renewable energy. The main authors are Hannes Kunz, President of Institute for Integrated Economic Research (IIER) and Stephen Balogh, a PhD student at SUNY-ESF and Senior Research Associate at IIER. IIER is a non-profit organization that integrates research from three different areas: the financial/economic system, energy and natural resources, and human behavior. Their objective is to aid policymakers in developing strategies that result in more benign trajectories after global growth ends. The authors wrote over a 10,000 word follow-up to the questions raised in the original posting and we've broken into 4 pieces for readability - the first installment is below the fold.

(The original post and other related content can be found on the IIER website).

This post follows up on the "Fake Fire Brigades", which sparked a large amount of scrutiny, but also received much positive feedback. We're grateful for both. One of the allegations made to our overview was that our claims were "unsubstantiated": we are afraid they are not, but in retrospect the post may have been misleading. When we wrote it we had a choice between two imperfect options:

• make our general case concerning the fact that we cannot expect energy systems to deliver what we're used to in the future with the technology we have available, irrespective of effort;
• analyze one of the “firemen” we consider "fake", and support our conclusions with all the necessary data, then continue with the next one, and so on.

We opted for #1 because the problem we face is a general one, with wide boundaries of analysis. When trying to understand an integrated system, we can’t just look at the parts but instead have to analyze it in its entirety. This is because we might easily find a solution for each individual problem, but may still fail on an aggregate level. This is why we decided to make this general statement about “fake fire brigades”. However, given the abundance of aspects and ideas involved in today’s energy debate, and the limited size of an individual TOD essay, we could only do this and provide a few examples, which made some of our statements rather generic.

This dilemma has gotten us into a position of being called out as propagandists, wanting to prove things that are irrelevant, or simply not doing our math properly. We can safely claim that the only propaganda we are trying to make is for one thing: that human societies should undergo extensive integrated analysis on alternative energy before we lull ourselves with the expectation that our energy future will somehow be at the same or higher level of today’s.

We offered a follow-up post with more detail, and here it is. It contains four elements:

• a few key aspects we consider relevant when understanding energy and its contribution to society
• an analysis of the potential of biomass as a future energy supply
• a close review of electricity delivery systems
• a Q&A section trying to address the concerns voiced after our original post.

Some people walked away from our post thinking that we are against renewables, against nuclear, or against any energy solution. That is not the case. After considerable analysis and effort, we are now simply against the predominant idea that we can more or less continue our fossil-fuel driven lifestyle by slowly replacing oil, coal and gas with other sources and technologies, just by managing them well – maybe coupled with some efficiency gains.

We instead claim that our current expectations for energy delivery systems cannot be maintained, as soon as we HAVE TO use flow-based renewable sources (i.e. almost everything nature provides besides dammed hydropower, biomass and maybe some geothermal power) at a rate of more than 20 or 30% of total consumption. The proposed future of energy delivery has three weak points: technical feasibility, cost, and the ability of us humans to act.

Our post also provided some reason for commenters to caution readers about overpopulation. We agree that we likely face a threat from more and more humans on this planet, particularly for our ecosystems. However, our topic is not really related to population, but rather to standard of living. The problems we describe in our post are confined to advanced economies, the countries with the highest population growth today don’t even have access to the stable and reliable energy services we are used to. And in most OECD countries, policy-makers today are more concerned about shrinking and aging populations. Ultimately, even if advanced economies – for whatever reasons – have to make do with 30 or 50% of today’s energy, this will still be enough to feed everybody, provide shelter, heat and other basic services.

One of the key challenges we see when looking at a systemic view, is that when thinking about future solutions, we engage in double-counting in two ways. First, most tend to ignore the problem that many renewable technologies are still heavily dependent on the application of relatively cheap fossil fuels when it comes to raw material extraction, manufacturing, transportation, installation and maintenance. Those inputs mostly come at relatively low cost. So if these alternative energy technologies (even nuclear plants) will have to be built with renewable sources of power in the future, or with higher priced fossil fuels, this would make these relatively expensive technologies even more expensive. Not taking this into account and banking on past experience about new things always becoming cheaper and cheaper might be a serious mistake.

Second, on societal level, we have a tendency to double-count the few available flexible solutions as problem-solvers for every input that does not deliver its outputs according to our energy demand. In almost every projection of future electricity systems, biomass and hydropower come up as general “fixes”, mostly ignoring the fact that someone else has already claimed the exact same resources for other purposes. That way, each individual system looks theoretically feasible, but when looking at the aggregate, things begin to fall apart, simply because those cure-alls are already spoken for elsewhere in the system, and therefore don’t scale as we would wish them to.

Before going back to that subject, we would like to talk a little bit about the cost of energy.

We want to introduce the aspect of energy pricing, which wasn’t done in our original post. People who commute by car understand that the cost of gasoline has a significant impact on their discretionary income. Someone with a take-home pay of $2’000 per month and a round trip commute of 50 miles each day will have to spend $100 or 5% of his or her income for gasoline bought at a price of $2 per gallon and used in a car that gets 20mpg. If gas prices go up to 4 dollars, suddenly 10% of that person’s budget has to be spent on transportation fuels, and at $6 (the norm in Europe) it becomes $300 (or 15%). What this does is reduce discretionary income that could be spent on other things. The cost of commuting reduces discretional spending and is the equivalent of up to three days’ worth of work (Table 1).


Table 1: discretionary income reductions from changing gas prices

Unfortunately, the methods to mitigate this growing cost incur costs of their own, for example by giving up the job (decreased income), buying a more fuel-efficient car (increased car payments), finding a house or a job involving a shorter commute (cost of moving/changing jobs), or taking public transportation/biking to work (increased time of commute).

What is relevant for individuals is also true for societies in aggregate. The higher the share of our effort that goes into retrieving the energy that keeps our world going, the smaller the share that is available for investment and consumption. Ultimately, this leads to a reduced standard of living (Hall, et al. 2008). To explain that a little better, we might have to go back in history.

When man began, what he used were his bare hands, plus soon some tools, to recover what he needed from his surroundings. With more humans being around, better ways of exploring nature were required, which led to agriculture as a first development. Introducing draft animals further extended the capabilities of humans, as they were able to convert previously unused energy (for example cellulosic biomass from grasses) into the useful energy from a strong ox. Over time, man added energy provided from water and wind, both for mechanical work and for transportation. These transitions basically followed a single concept: it always made sense to implement a new method once it safely returned more useful energy units than what humans had to invest in the technology. For example, building a windmill would make sense if the effort to haul the materials, to erect the structure, to maintain it and to operate it was significantly less than the effort to accomplish the objective of milling manually or with a simple treadmill or one driven by an ox.

The above is nothing but an early example of describing EROI (Energy Return on Energy Investment). The more of our effort goes towards retrieving the energy we (want to) use, the smaller our benefits from that energy.

The theoretical concept works as follows, as most readers of The Oil Drum know: If a person works one hour and – from a draft animal, a wind mill, or a power plant – gets work worth 10 hours back, a net gain of 9 hours can be directed at other things. The bigger that ratio is, the more available time, and the higher the standard of living becomes. In the example above, a farmer working one hour with an ox plowing the fields can do the equivalent of 5-7 hours of a human working alone. Therefore, the farmer can increase his productivity, or have that much more free time. Early grain farms, based primarily on human labor, required about 373 man hours per 100 bushels of wheat and 344 man-hours per 100 bushels of corn. By 1900, with draft animals and steel plows now an integral part of farming, the man-hours were reduced by more than half for corn, and nearly 70% for wheat, even though during that period yields remained steady. After WWII when mechanical tractors and synthetic fertilizers became prevalent, agriculture efficiency rose dramatically, with man-hours per 100 bushels reduced to 18 in 1955 for wheat, and to 22 for corn (Rasmussen 1962). In the same way a farmer employs an ox, modern humans employ cheap energetic sources of labor.

Let’s now spend some time understanding what this means today. A strong healthy human can deliver about 1 kWh of energy per day (on average it probably is closer to 600 W). Given a median household income of $52’029 in the US in 2008 (http://www.census.gov/prod/2009pubs/acsbr08-2.pdf), the average price for one kWh of human labor is $260. Compared to that, the same amount of energy in oil at $20/barrel (the long-term inflation-corrected average) cost us 1.2 cents (today, at $75, it is 4.4 cents/kWh), and an equal amount energy from coal comes at 0.7 cents. The table below shows how different the price of energy is for many sources.


Table 2: cost per kWh, cost related the U.S. if not otherwise stated

The challenge is that we have built our Western lifestyles based on the lowest-cost items in the table, and even until very recently have continued to do so by moving almost all mass-production of key industrial goods to low-cost countries (for either lower energy or labor cost, or both).

Aluminum is one good example. Electricity is the single biggest cost parameter in its production. I.e. it matters greatly whether a smelter has to pay 3 cents, 5 cents or 10 cents per kWh, as it may decide between making a profit and incurring a loss (Figure 1).

Fig 1: relevance of electricity for aluminum production (Source: Energy Trader 02/09)

So, as energy inputs into all our activities have become more and more expensive, we simply have either reduced their use, or have moved their manufacturing to places where people care less about the side effects of cheap energy from coal (like China), or where they are lucky to have abundant low-cost hydropower (like Norway). Both countries have – for exactly that reason – become key places for aluminum production – even though they are quite far away from where most of the bauxite gets mined.

The biggest challenge is that when building our modern systems we never traded like for like. Transition to lower-cost energy usually came at the price of higher overall energy consumption for the same task, for it involves machinery, and buildings, and other infrastructure. And when we began to outsource to far-away countries, there were extra transaction and transportation costs involved, which further increased the energy used. But since it was cheaper, it did not seem to matter.

Fig 2: energy use for driving (1 passenger) and walking (Source: IIER)

For example, when we use a car driving one person around, total energy expended is 400-500 times higher when compared to walking, and that doesn’t even include the infrastructure required beyond the car itself, such as roads. If this system, which until recently operated at a ratio of 4730:1 ($2 gasoline), gets pushed towards 1586:1 ($6 gasoline), it becomes clear that benefits of driving a car are greatly reduced.

So when we designed the world we live in, we did it with energy cost of below 5 cents per kWh in mind. If that price goes to 10 or 15 cents, that might look like a small change, but in fact it cuts our benefits from the applied energy to half or a third of what they were in the beginning. This is like our landlord doubling or tripling the rent over a short period of time, or the interest rates of our mortgage doubling or tripling. In that case, we would have to move to a smaller place.

Fig 3: commercial application tolerance levels for energy prices (IIER calculations)

Figure 3 shows at what price levels certain energy sources become problematic for the key delivery systems they support. The green “comfort zone” is the range where our system runs without much trouble, where we can build and maintain our infrastructure, and keep our current lifestyle. The orange “risk zone” is where first applications start to get into trouble and get squeezed out, typically leading to recessions and significant shifts. The red “danger zone” is when it truly becomes problematic, as almost everything becomes unaffordable very quickly, particularly if all energy sources go up in price at the same time (like it happened in 2007 and 2008, in contrary to the 1973 energy crisis, where the price spike was limited to oil).

Important: The price ranges in Figure 3 don’t refer to private household use, but to the applications that produce whatever we need to live our lives, such as food (e.g. requiring natural gas for fertilizers), industrial goods (using coal and electricity from multiple sources), and transportation (mostly based on oil). The relatively significant differences shown in “acceptable” price levels are mostly related to the usability of individual sources, their energy quality and the ability to store and transport it. We will get to that in the next paragraph.

Other than by reducing our standards to a different, lower level, our current system cannot deal with energy prices in the order of 2, 3 or 5 times their long term averages when we built our societies. And energy efficiency brings, as many studies show, typically 20-30% total energy savings across the entire life cycle of a product. And for many industrial applications, this potential is already partly exhausted, particularly in areas with very high consumption. For example, nitrogen-based fertilizer production (from natural gas or hydrogen) using the Haber-Bosch process has a theoretical minimum energy input of 32 GJ to produce one ton of nitrogen, and most operations run at around 40 GJ per ton. Similar efficiencies are also common for steel, copper and aluminum production in Western societies.

Many people discuss energy economics referring to energy content and cost of primary inputs. In that view, a barrel of oil that costs $75 and has an energy content of 6.1 GJ, which translates to energy cost of $12.30 per GJ (or 4.4 cents per kWh in energy content).Coal , if we use a market price of $2.50 per MBTU, costs approximately $2.36 per GJ (or less than 0.9 cents per kWh). Natural gas that sells at a spot market price of $4 per tcbf (which on average contains about 1MMBTU), comes at a price per GJ of $3.79 (or 1.4 cents per kWh). Please note that the kWh is used for the raw energy, before being converted to anything else.

Unfortunately, this is only half of the truth, because what counts for us humans is not the pure energy content, but instead, the portion of the energy that can be converted to its intended use. A simple example* might illustrate that. Let’s consider our options for cooking food. Using charcoal or coal is a low-tech, but feasible solution. Coal and charcoal is easily transported and stored, but in an open fire only a small portion of the heat reaches the meat. The rest escapes as heat. Thus, maybe 2% or 5% of the BTUs we have paid for support the purpose of cooking our food. It is possible to improve that conversion efficiency by building a coal stove, but even the most efficient one will convert perhaps 10 or 15% of the heat from the burning coal; the rest simply heats up the stove and its surroundings, which is welcome in winter, but maybe not so much in summer. On top of that, the stove itself contains energy used during the extraction of raw materials, its manufacturing and its maintenance. If we assume an overall efficiency of 10% for this application, a kWh of “useful energy” now costs 8 cents.

If we instead choose to use a gas stove, heat can be much better regulated and directed to the surface of our pan or pot, which significantly increases the overall efficiency to maybe around 25%. Higher overall efficiency rates are unlikely due to the fact that we need quite some infrastructure to get the gas to its place of application, either in the form of pipes or an appropriate container. But still, the cost per applied kWh is 8 cents, so the finally usable energy unit has the same price as from coal. An oil stove might even give us a 30% overall conversion efficiency, as the heat can also be applied directly, but because oil is so much easier to store and transport than gas. However, given its high initial price, one applied kWh would cost us 14.7 cents (nearly twice that of natural gas).

*Please note that this is a theoretical example not aimed at being precise, but at illustrating the concept of delivering useful energy.

So in this context, it greatly matters what kind of energy we produce and when. If our output is 1 energy unit (measured in Joules, kWh, BTUs, etc.) worth of highly versatile crude oil, it has a very different value than 1 BTU in a pile of coal which can only be used for certain things in order to become valuable. And even within one system, things are not the same. 1 kWh of electricity from natural gas at a price of 8 cents that can be produced at our leisure is something very different from the same amount, equally produced for 8 cents, by a wind turbine, which gets delivered to us erratically, just when the wind blows. We will get back to this problem in part 2 and 3.

What we've tried to describe above are a few general concepts that tend to get overlooked while analyzing individual technologies. Typically the standard approach used to evaluate and compare energy technologies is EROI, life cycle analysis, or energy payback periods. However, usability and cost – important post-farm gate or post-mine mouth factors – play a decisive role.

Second, equally important, an industrial society is simply not able to provide the same benefits as today once energy inputs into key supplies pass a certain price threshold. Modern societies have been able to steer clear of that reality over the past decades by outsourcing to places where energy is still cheaper, but that potential is now nearly exhausted.

Third of the big mistakes we make when looking at energy cost is that we always talk about small numbers, like "a few cents" without realizing the implications of scale. If the key contributors to our societies suddenly cost 5-10 cents instead of 1-2 cents per kWh, which is (in the best case) where we are headed, this means that our benefits from applying energy to our lives get reduced to one-fifth of what we are used to. That will be a very different lifestyle and one that warrants considerable study.

Our next follow-up post will deal with the potential of biomass as a source for future energy systems.

Work on the relief well is going quite well, as I have been noting. The Wall Street Journal is now reporting that BP is hoping to stop the oil spill through a relief well by July 27, ahead of its public target of mid-August.

Trying to work out exactly where the relief well has reached, relative to set target depths is slightly complicated by the difference between measured depth of the well, and true vertical depth. To use just a portion of the final slide that Kent Wells used in his last technical briefing

If one uses this as a reference to the remarks made by Admiral Allen Wednesday, he notes that the well is within 200 ft of the initial intersection point, which is about 50 ft below the end of the lined section of the original well, which had been cased with a 9 7/8 inch liner. Below that level the well contains the production casing that was inserted into the well, but which was only cemented into place at the lower end. (The Admiral calls this the drill pipe – which is not the right term to use and which can be a bit confusing if you don’t look at the construction of the well). So let me just try and recreate a rough sketch of the area we are talking about.

According to the Congressional testimony the bottom of the lined section of the original well ends at 17,168 ft, which is perhaps 100 ft below the level shown by Mr Wells. This is where the original well was lined with a steel casing, with concrete around and below it, as the original well was drilled. The gap between the steel of the casing and the rock is known as the annulus, and it is this that I show filled with cement in two places.

So if you look at the above sketch of a section through the hole at the end of the 9 7/8th inch segment, the lighter steel casing liner was installed first, then the cement was pushed down to the then bottom of the hole. The cement flowed out and back up the hole giving the sort of “L” shape that the top cement segment has in this section. The hole was thus lined with a cement and steel jacket, before the drill bit on the end of the drill pipe came down and drilled through the cement at the bottom of that section, and on down to the producing formation.

At this point BP could have continued a liner section for the bottom of the well, as they had just done for the segment of the well above, or they could install what is known as production casing. This latter is a long tube that will run from the bottom of the well up to the BOP. They chose to do the latter. Thus the production casing was lowered into place, and the casing section that I show runs the full length of the underground segment of the borehole.

However in installing that continuous tube, instead of filling the gap between the rock and the tube (the annulus) with cement all the way up to the cement above it, they only partially filled the gap, over the lower segment of the well. This left a gap of somewhat indeterminate length where there is no cement between the production casing (the Admiral’s drill pipe) and the rock wall.

With that situation in mind, let me return to the Admiral’s press conference Wednesday. In it, he said that the relief well is still around 15 ft from the original well and with about 200 ft to go to the point of intersection. At this point the well is being drilled in 10 – 15 ft lengths and then surveyed, so that the RW can hit the original well where intended.

The intention is

they'll go through a series of spaces, starting with what they call the annulus, and that's the area in the wellbore outside the casing, and then the casing is outside the well pipe.

They will check at each point on whether or not there is any hydrocarbons there and any pressure. And if there is none, they will attempt to actually apply mud to kill that portion of it. If they can go into the annulus and fill that with mud, and if that stops the problem, then they know the flow to the surface was to the annulus only. If that doesn't stop it and there's indications that there's product going up through the pipe, they will ultimately have to drill through the pipe and apply mud twice.

In other words, they will come into the well around the zone that I have shown with no cement in the annulus. If the well is flowing oil and gas into the space outside of the production casing, then it will be flowing up the outside until it reaches the bottom of the lined section of the well. The flow then moves into the gap between the production casing and the steel casing liner and works its way up to the BOP through that channel.

If that is the case, then the bottom of the production casing may be still sealed, and by just filling the channel from the point of intersection up to the BOP with mud, then the well might be killed.

On the other hand, if the bottom seal at the lower end of the production casing has failed (which might be why the initial negative pressure test showed flow) then oil and gas are flowing up the inside of the production casing, and filling the space outside the production casing with mud won’t stop the flow.

Thus the drill will then restart and drill through the production casing, to fill it, in turn with mud. Both operations will take time. As the Admiral noted

. . .if they have to pump mud up through the annulus and then go into the pipe and pump mud there, too, that's a period of seven, 10 days to accomplish both of those things. And if they have to be done in sequence because of the condition of the wellbore when they go in, it will probably take into August, . . .

And in the meantime, the seas are still not allowing the final connections to be made to the kill circuit on the BOP, to increase oil and gas collected, which in the last report was:

For the first 12 hours on July 7 (midnight to noon), approximately 8,330 barrels of oil were collected and approximately 3,925 barrels of oil and 28.8 million cubic feet of natural gas were flared.

• On July 6, total oil recovered was approx. 24,760 barrels:
• approx. 16,535 barrels of oil were collected,
• approx. 8,225 barrels of oil were flared,
• and approx. 57.5 million cubic feet of natural gas were flared.

Incidentally, it appears that the debate on changing the cap is still going on.

We are still reviewing the technical specifications that were provided to us by BP on not only that cap, but several other options. The procedures on how it would be done, the amount of time at which the well would be open for discharge of some amount of oil, and the weather window that it would take to do that, and that is all under review right now inside the administration, and I wouldn't want to attach a percentage right now.

Chuck Watson has an update on the weather situation, and in particular Tropical Depression 2. He reports:

The National Hurricane Center started formally tracking Tropical Depression #2 last night. This morning it it doesn't look like much, although it might technically reach tropical storm strength before landfall. It is on track to follow in Alex's footsteps, making landfall in northern Mexico or far south Texas.

More importantly for the Gulf, this system is a continuation of the disturbed weather that is keeping wave heights above 3 feet over the entire cleanup and response area. While waves don't interfere with relief well drilling until they are much higher (once in place, most platforms can function in waves over 20 feet, and some platforms can operate in up to 30 ft waves), the smaller waves severely restrict skimming operations and put a lot of stress on protective booms, breaking them, over toping them, and setting up longshore currents that move the oil in to previously untouched areas. In addition, the hookup of the Helix Producer to the existing capture equipment continues to be delayed due to weather.

It looks to be at least this weekend before things calm down.

I like this Googlemaps mash up with the Fortune 500 list; Its from their annual ranking of the world’s largest corporations:

>

Its from the article

China stacks away more oil Sinopec Group has started building another crude reserve base of about 20 million barrels in eastern China and expects to complete it by the end of 2011, according to reports.

Groundbreaking for 3.2 million cubic metres of crude tanks has just begun at Rizhao, a port city in Shandong province, a company official said to Reuters.

The parent of Sinopec Corporation also plans to add a crude reserve base of a similar size in Beihai, in the southwestern Guangxi region, by September 2011.

Shell to end jet fuel supplies to Iran Air - source (Reuters) - Oil major Royal Dutch Shell will not renew its contracts to supply Iran Air with jet fuel in response to pressure from the U.S. to cease business with the Islamic republic, an industry source said on Thursday.

Obama Spill Investigator Sees Role for Oil Self-Policing Agency (Bloomberg) -- William Reilly, co-chairman of President Barack Obama’s commission investigating the BP Plc oil spill, said the oil industry could benefit from a self-policing agency similar to one that monitors the safety of nuclear power plants.

“I’m very interested in using that approach, as an addition, not as a substitute for regulation, but as a way to raise the bar,” Reilly, former administrator of the Environmental Protection Agency, said in an interview today.

Hard Times Wash Up Before BP Oil in Gulf Coast Towns, Bayous May and June mark the peak of shrimp season here, says Griffith, but Lesso’s business is off about 65 percent. Federal and state authorities have shut fishing grounds, and hundreds of boats that would normally be hauling in shrimp have been hired by BP for its cleanup efforts. Lesso’s 35 employees have taken pay cuts as processing plunged from 72,000 pounds a day to 25,000.

Battlefield General: Is Bobby Jindal Making Sense? Bobby Jindal, a Rhodes scholar with a skeletal frame, doesn't look like a battlefield commander. But since the Deepwater Horizon rig exploded, Louisiana's Republican governor has cast the fight to protect the state's coastline as a struggle for survival. "The war against the spill continues," Jindal wrote in a typical Twitter post June 21. "We will not wait on bureaucracy or wishful thinking, we will move forward."

Exxon sees greater scrutiny after spill (Reuters) - Exxon Mobil Corp, the largest U.S. oil company, expects heightened government scrutiny for the industry following BP Plc's well rupture, but no measurable risk is seen longer-term for the company's natural gas exploration plans, CEO Rex Tillerson said on Thursday.

BP stake may help oil sovereign funds diversify A stake in BP PLC may seem like a curious purchase for sovereign wealth funds looking to diversify oil wealth, but it holds a definite allure: gas and renewable energy expertise and exposure to emerging economies.

BP push for Mideast investors may pose problems in U.S. Striking a deal with Abu Dhabi, which is part of the United Arab Emirates, could raise national security concerns.

Four years ago, Congress threatened to block Dubai, another emirate, from operating eight U.S. ports as part of the emirate's takeover of a British company. Dubai relented and agreed to transfer its stake in the facilities to a U.S. entity. And five years ago, Congress foiled China National Offshore Oil Corp.'s bid to buy oil company Unocal Corp. In both cases, lawmakers cited security concerns.

Phil Flynn, vice president and energy analyst with PFGBest Research, said increased Middle Eastern investment would only add to BP's image problems in the United States.

Owner of exploded rig exploits offshore status Transocean is the world’s largest offshore drilling company, but until its Deepwater Horizon rig exploded in the Gulf of Mexico in April, few Americans outside the energy business had heard of it. It is well known, however, in a number of other countries — for testing local laws and regulations.

Iran buys July gasoline from Turkey, Chinese sellers (Reuters) - Iran is buying around half of its gasoline imports in July from Turkey and the rest from Chinese sellers, oil traders said on Thursday.

Many gasoline sellers have stopped trading with Iran due to U.S. sanctions on those that supply the Islamic Republic, making it more expensive for Iran to meet its import needs.

Issuing of new U.S. drill ban over BP depends on case (Reuters) - The Obama administration said on Thursday it will immediately issue a revised ban on deepwater drilling if an appeals court does not allow it to reinstate the six-month moratorium it imposed in the wake of the BP oil spill.

However, it will not impose a new drilling ban if the federal court in New Orleans supports its initial moratorium, an Interior Department official told Reuters.

Giant skimmer gets another shot at Gulf oil spill NEW ORLEANS -- The giant Taiwanese oil skimmer known as 'A Whale' is getting another chance to prove its value in the Gulf of Mexico.

BP May Have Third Vessel Receiving Oil From Leaking Well in 2 to 3 Days BP Plc may start collecting oil aboard a third vessel near its leaking Gulf of Mexico well in two or three days, National Incident Commander Admiral Thad Allen said.

The Helix Producer I, which has the capacity to double the oil collected at the site, may be connected to the Macondo well in the next 48 hours if weather is good, Allen said today at a press conference in Theodore, Alabama.

Obama administration seeks BP plans on oil cap (Reuters) - The Obama administration has asked BP Plc for a detailed timeline and contingency plans for the latest effort to contain the Gulf Coast oil spill.

Egypt, Saudi Aramco to hold oil spill drill in Nov DUBAI (Reuters) - Egypt and Saudi state oil giant Aramco plan to launch an oil spill containment exercise in an Alexandria port in November, an Egyptian official said on Thursday.

The Choice: Drill, Baby, Drill or American Values. You can't Have Both Claiming that domestic drilling is a viable solution to America's energy crisis is dishonest and irresponsible. It is a policy that sows the wind and we are already reaping the whirlwind with human lives, with jobs lost and local economies destroyed, and with the shores of the Gulf. Drilling has a roll in our energy supply but is FAR from providing the answer to America's energy addiction.

Ex-offshore drilling regulator defends her tenure CASPER, Wyo. — The former director of the federal agency that regulates offshore drilling is defending her tenure in the wake of a disastrous oil spill in the Gulf of Mexico, saying no safety rules were relaxed while she was in charge.

BP says no Gulf output shut by storm; restaffing (Reuters) - BP Plc said on Thursday that none of its crude oil production at the Atlantis, Holstein, Mad Dog and Thunder Horse platforms in the Gulf of Mexico was shut by a tropical disturbance, but nonessentials have been evacuated from those sites.

Iran says high oil price will offset sanctions High crude oil prices and better agricultural output will help accelerate Iran's economic growth this year, its Economy Minister Shamseddin Hosseini said today, partly offsetting the impact of sanctions.

Ghana sees 2010 flows Ghana will definitely pump its first barrel of oil in 2010 but it will take four to six months to reach its planned output of 120,000 barrels per day, Energy Minister Joe Oteng-Adjei said today.

Musings: Natural Gas Price Rebound Heat Driven; Supply Still Grows After peaking at $6.01 per thousand cubic feet (Mcf) on January 6th, natural gas futures prices steadily fell until they bottomed at $3.84 on March 29. From that point gas prices rebounded to above $4/Mcf and traded in the low $4 range for the next month. Gas prices began to move higher in response to hotter than normal temperatures finally reaching a near-term peak at $5.19/Mcf in mid June. Since then, gas prices have fluctuated wildly but generally have remained in the upper $4/Mcf range as continued supply growth battled hotter weather and hurricane supply-disruption concerns. The weak U.S. economic figures recently reported have begun to weigh more heavily on gas prices.

PDVSA tracks down stolen goods Venezuela's state oil company PDVSA said it has recovered stolen oilfield equipment taken by thieves who caused a loss of production of some 60,000 barrels per day and oil spills in western Lake Maracaibo.

LNG terminal at Gwadar Port likely alternative Karachi — The much needed Iran Gas Pipeline project seems to be in hot waters international pressures and the UN sanctions against Iran it is learnt.

If the project fails to materialize the government is considering to set up an LNG Terminal at Gwadar port as an alternative to Iran gas pipeline project which is being considered as the savior in the persisting energy crisis in the country.

Energy still king in KSA There is talk of Saudi Aramco deploying over 100 exploration drilling rigs by the end of the first quarter next year, and major project awards have been forthcoming from Abu Dhabi. Companies which have ridden out a period in which collections, or rather payment for work done, has been a major problem should take some respite from the fact that, on the whole, energy has now normalised, and those payment strains should begin easing from the top down.

Has the Green Investment Bank selected the right target? The Green Investment Bank should boost struggling independents not hand public money to multinational utilities.

Wider Metro Manila water rationing looms Energy Secretary Jose Almendras has advised consumers that electricity prices may go up as suppliers are forced to use the more expensive bunker fuel and oil to operate power plants.

But he said: "Hopefully, when the rains are in full swing, and the dams are full, we should see improvement in generating costs."

John Michael Greer: Seeking the Gaianomicon The archetype I proposed as a model for an appropriate-technology revival in the age of peak oil – the archetype of the green wizard – comes with certain standard features in folklore and fantasy. One of them happens to be a full-blown archetype in its own right: the book of ancient and forgotten lore. Those of my readers who plan on becoming green wizards will need to provide themselves with the grimoires, literally “grammars,” of that art, and in this post I propose to explain how to do just that. Yes, it involves a quest; the details will follow in a bit.

Hurdles for a Natural Gas Transition Her calculation runs like this: coal-fired capacity comes to 335,000 megawatts today, and it produces an average of 72 percent of the electricity that would result from around-the-clock full-power operation. Doing that with modern, efficient natural gas plants would consume 39 billion cubic feet of gas a day, or 14.1 trillion cubic feet a year.

That is a rather large number given that today, national consumption of natural gas for all purposes is only a little over 20 trillion cubic feet a year.

Tropical Storm Warning Issued for South Texas, Mexico as Gulf System Forms Residents of south Texas and northeastern Mexico were warned to expect a tropical storm today after a weather depression formed in the Gulf of Mexico, the U.S. National Hurricane Center said.

Lawmakers Oppose Canadian Pipeline Facing a decision on a proposed pipeline to bring Canadian crude oil to the United States, the Obama administration is confronting growing resistance from politicians who oppose the project or, at the very least, urge further study before approval.

The massive pipeline, known as Keystone XL, would allow Canada to export an additional 1.1 million barrels a day of oil to the United States. The United States currently imports 1.9 million barrels a day from Canada. Canadian oil sands are expected to become America’s primary source of imported oil this year.

BP Investigates Resignation of 18 Traders, Singapore's Business Times Says BP Plc is probing the resignation of 18 traders mainly from its Singapore operations, the Business Times reported, citing an unidentified person.

The person declined to specify what BP was investigating, the Singapore-based newspaper reported. The report said the traders had made up almost its entire fuel oil trading team in Singapore.

BP may pay for wasted oil NEW YORK (CNNMoney.com) -- Adding to BP's problems in the Gulf, the company may have to pay the U.S. government royalties on all the uncollected oil currently spewing into the water.

Saudi Investors Have Limited Chance to Buy Stake in BP, Banque Saudi Says Saudi investors have a limited chance to buy a stake at troubled BP Plc, said John Sfakianakis, Chief Economist at Banque Saudi Fransi.

Saudi newspaper Al-Eqtisadiya said on July 7 that a group of Saudi investors were eying a 10 percent to 15 percent stake in the company without mentioning where it got the information. Sfakianakis said such an acquisition was unlikely.

Oil spill response doesn’t address issue The paradox is that, even though Obama cannot stop the oil from gushing, his search for someone’s ass to kick might be an effective solution because it de-politicizes the looming crisis of peak oil. The present oil crisis is not simply signaling an ecological crisis, inadequate administrative oversight, the multiple risks associated with oil extraction, and the greed of BP shareholders. The present oil crisis in the Gulf of Mexico signals a terminal crisis in global capitalism. In the popular media, very little has been done to connect this oil crisis to the crisis of peak oil.

Faith in Government Gone, Citizens Appalled by the Oil Spill Turn to Each Other Nothing says more about citizens' loss of faith in government than a website in Santa Rosa, CA called "StoptheGusher", where ordinary citizens have gathered to share ideas, offer suggestions, and rack their brains about what to do about the Gulf Oil Spill.

Almost three months into this crisis, both BP and the White House appear paralyzed. But on StoptheGusher, people spend hours composing long, intricate plans and copying their Congresspeople, proposing concrete underwater containment barriers, and suggesting organic products such as Kenaf, an oil-soaking plant grown in North Carolina, Georgia and Texas that is ground down, refined and marketed as SupremeSorb.

Rick Rule on Oil & Gas vs. Green Energy Peak oil is more an economic and political phenomenon than it is a geological phenomenon. I think we’re past $40 peak oil but I don’t think we’re past $200 peak oil. There are technologies, as an example, miscible CO2 flooding to recover oil from allegedly depleted oil fields. There are new basins, albeit remote, frontier basins. There are new technologies that allow dry gas or LNG to be substituted for liquid oil. It’s an economic function because these technologies and substitutions require higher energy prices. At $200 oil, we’ve got lots of oil.

Peak oil means expensive food The impacts of even a small drop in production can be devastating. For instance, during the 1970s oil shocks, shortfalls in production as small as 5 per cent caused oil prices to nearly quadruple. The same thing happened in California a few years ago with natural gas. A production drop of less than 5 per cent caused prices to skyrocket by 400 per cent. What, then, can we expect when the annual decline rate, beginning soon, falls into the presently predicted range of 4 to 10 per cent?

Every sector of the economy will be affected, but the initial lack will be felt in terms of food. In this regard, Cuba's experience has relevance for us.

Moving home and hearth While years ago, a modest three-bedroom asbestos home with an outside laundry and gas boiler with the weekly collected dunny was Nirvana, now nothing short of two-and-half-bathrooms, stone kitchen benchtops, eight-kilowatt reverse cycle air-conditioners and if possible, a triple remote-operated garage are regarded the minimum.

Another main difference is that young people now are totally gobsmacked about any notion of saving. Saving, what is that? The hysteric Harvey Norman jingle goes; "I want it noooow". It perfectly sums up our terminal materialism with so many expecting everything immediately, at the same time easily accepting being eternally on the hock as well. Our love of credit has never been higher. 'Peak house mortgage' has overtaken 'peak oil', and this will inevitably also run its course with a sea of mortgage defaults polluting our economic landscape with dire consequences for many.

Heads in the sand How can a city that can't get bike lanes right deal with peak oil?

Patrick Takahashi: Hawaii: The Proposed Symbol of Energy Independence Hawaii is that proverbial canary in the coal mine regarding Peak Oil and the economy. Our only hope is a global partnership to as quickly as possible help us attain a high level of energy independence. But why should Hawaii be singled out for this privilege?

The reasons are many, but the most compelling is that we are the ideal sustainability test tube: progressive leaders, abundance of renewable options, high cost of energy (an electricity bill 250% higher than the national average, so commercialization can more quickly be attained), relatively small size (less than one half of one percent the population of the Nation, so the investment will be affordable), singular political clout (the most powerful congressional member in Senator Daniel Inouye, and leader of the Free World, President Barack Obama, who was born in this state) and, soon, sheer desperation, and, therefore, motivation. Provided is a golden opportunity for the World to work together with us to create a symbol for sustainability.

Soybean Yields Will Drop on Climate, Ozone, University of Illinois Says Climate change and pollution may cut yields for soybeans and other crops by 2050 unless plants are adapted, the University of Illinois said, citing research.

Tests showed crops grown in open fields benefitted less than expected from higher levels of carbon dioxide in the air, the university said in a report published yesterday. The yield increase was only half of that assumed by the United Nations’ climate-change panel to predict world food supply in 2050, according to the report.

Russian Oil Erodes Middle East's Hold on Exports to Asia Russia is sending record amounts of oil to Asia, eroding the dominance of the Middle East, as refiners in South Korea and Japan increase purchases from a source that’s three weeks closer by ship.

South Korean imports of Russian crude climbed to an all- time high of 179,000 barrels a day in May, equal to 7.3 percent of the country’s supplies, according to government data. Japan took an unprecedented 241,000 barrels a day, up 61 percent from a year ago, Ministry of Economy, Trade and Industry data showed.

The first completed segment of the $26 billion East Siberian-Pacific Ocean pipeline is boosting competition between Russia and the Middle East, the world’s two biggest oil suppliers. North Asian processers can access the Russian oil, known as ESPO, for about $1 a barrel less than Dubai crude, according to shipping rates and data compiled by Bloomberg.

Crude Rises to One-Week High as Supplies Drop, IMF Boosts Growth Forecast Crude oil climbed to the highest price in a week as the IMF bolstered its economic outlook and a decline in U.S. crude inventories added to signs of recovery.

U.S. crude stockpiles fell 2 percent to 351.8 million barrels last week, the biggest reduction since September, the American Petroleum Institute reported. The Energy Department will release its own weekly data today. The International Monetary Fund raised its forecast for global growth this year, reflecting a stronger-than-expected first half.

Gas drillers seek input on Pennsylvania natgas tax PHILADELPHIA (Reuters) – Pennsylvania's shale gas industry says any state tax on natural gas collected at the wellhead should be accompanied by new rules and regulations, but critics say that's just a tactic to secure fewer restrictions on their operations.

Ghanaians to Stage a Protest Asking Lawmakers to Raise Petroleum Royalties Ghanaians will today stage a peaceful demonstration asking lawmakers to increase oil-industry royalties by almost double the maximum level.

The protestors want Ghana to increase royalties to 20 percent from between 4 percent and 12.5 percent now, George Kotey, who is leading the demonstration in the capital, Accra, said by phone today.

China to Extend Resources Tax to Entire Nation to Fund Government Spending China plans to extend a tax on oil, gas and coal output to the entire nation, stepping up efforts to raise funds for development of poorer inland provinces in a move that will reduce earnings for resource producers.

Chevron, Rosneft Black Sea Drilling Plans Depend on Request for Tax Breaks Chevron Corp. and OAO Rosneft’s plan to drill for oil in the Russian Black Sea hinge on a request for government tax breaks, according to a copy of their initial drilling agreement obtained by Bloomberg News.

The final agreement is conditional on the group gaining assurances of “fiscal relief” from the Russian government “to ensure the economic viability of the project,” according to the document. The two sides aim to finish negotiations by the end of March and start drilling at the end of next year. Chevron will have a 33.3 percent stake in the venture.

BP dampens hope of early leak fix WASHINGTON (Reuters) – BP dampened hopes that it could plug its leaking Gulf of Mexico well sooner than forecast on Thursday, while a battle between the U.S. government and the oil industry over a deepwater drilling ban heads to court.

BP stuck to its August target to complete a relief well to halt the worst oil spill in U.S. history, after a press report raised hopes the company could stem the 80-day-old leak sooner.

US government launches new website on Gulf oil spill WASHINGTON (AFP) – The US government Wednesday launched a new website to give information on the Gulf of Mexico oil spill, moving away from the portal jointly run with oil giant BP.

Coast Guard Admiral Thad Allen, the top government official handling the spill, said the site www.RestoreTheGulf.gov was "designed to serve as a one-stop repository for news, data and operational updates related to administration-wide efforts to stop the BP oil leak."

Obama administration set for drill ban legal fight WASHINGTON (Reuters) – The Obama administration heads to court on Thursday with a single goal -- to reinstate a six-month moratorium on deepwater oil drilling imposed in response to the BP Plc oil spill but blocked by a federal judge.

The high-stakes showdown starts at 3 p.m. local time (4 p.m. ET) at the U.S. Court of Appeals for the Fifth Circuit in New Orleans, where government lawyers will square off for one hour against drilling companies before a three-judge panel.

Economic peril seen from offshore drilling ban HOUSTON (Reuters) – A Gulf of Mexico deepwater drilling ban has already cost offshore jobs in a nascent U.S. economic recovery and a lengthy moratorium will put the industry at peril, sector executives said on Wednesday.

Moratorium to cut U.S. oil output 82,000 bpd: EIA WASHINGTON (Reuters) – The U.S. offshore oil drilling ban will reduce crude output by an average of 82,000 barrels per day next year, more than previously estimated, the government's top energy forecaster said on Wednesday.

The Energy Information Administration had said last month that the moratorium, which the government put on exploration rigs in response to the BP Plc oil spill, would reduce next year's U.S. crude output by an average of 70,000 bpd.

Base drilling halt on results, not an arbitrary timeline Which is worse: Risking another catastrophic oil spill like BP's April 20 blowout? Or inflicting even more financial damage on the already battered regional economy?

There's no easy answer, despite what the industry and environmentalists say.

Let drilling resume The moratorium neither improves safety nor mitigates risk.

Energy Department Lags in Saving Energy WASHINGTON — Like flossing or losing weight, saving energy is easier to promise than to actually do — even if you are the Department of Energy.

Its Web site advises that choosing new lighting technologies can slash energy use by 50 to 75 percent. But the department is having trouble taking its own advice, according to an internal audit released on Wednesday; many of its offices are still installing obsolete fluorescent bulbs.

Aircraft completes first solar-powered night flight PAYERNE, Switzerland (Reuters) – A giant glider-like aircraft has completed the first night flight propelled only by solar energy, organizers said on Thursday.

Solar Impulse, whose wingspan is the same as an Airbus A340, flew 26 hours and 9 minutes, powered only by solar energy stored during the day. It was also the longest and highest flight in the history of solar aviation, organizers said.

How China Has Pruned Its Families' Trees With a current population of 1.3 billion people, China now boasts fertility rates of around 1.6 births per woman, well below the 2.1 replacement rate at which a population is maintained. But the country is also saddled with one of the planet's worst gender imbalances, largely a result of women aborting female fetuses due to a traditional preference for male offspring. Other countries such as India and South Korea also have skewed sex ratios, but the pressure to bear a son is all the greater in China precisely because many families are limited to just one child. The Chinese Academy of Social Sciences estimates that by 2020 there will be at least 24 million "bare branches" — men destined to stay single because there are not enough wives to go around. As more of those boys become bachelors, China risks all sorts of social plagues — from criminal gangs to greater trafficking in women.

The other danger is that China will grow gray before it is rich enough to cope. Reducing population growth has meant that per capita GDP rates have zoomed upward. But factories are now facing shortages of young, skilled labor. By 2050, one-third of Chinese will be elderly. Despite its communist heritage, the People's Republic has little in the way of a national social-security system. Will a generation of "little emperors" be willing or able to support their parents and grandparents?

Masdar to drive change with carbon data Masdar City is set to reveal the carbon footprint of hundreds of materials that will be used to build the US$22 billion (Dh80.8bn) carbon-neutral development at the edge of the capital.

The data, from Masdar’s efforts to procure low-carbon cement, aluminium, steel and other materials for its groundbreaking city, covers 400 products plucked from the many advertised as environmentally friendly, said Richard Reynolds, the department supply chain manager at Masdar City. It will be disclosed by the end of this year.

A Flush of Funding for Carbon Capture In the endeavor to reduce greenhouse emissions, carbon capture and storage technology continues to generate a lot of interest.

Climate scientists praise report on hacked email scandal SINGAPORE (Reuters) – Leading climate scientists on Thursday welcomed a British report that cleared researchers of exaggerating the effects of global warming and said they hoped it would restore faith in the fight against climate change.

Initial Claims totaled 454k, an 8 week low and 6k below expectations, offsetting a revision upwards by 3k to last week’s level of 475k. Typical July auto plant shutdowns, which influence the summer claims data, will not happen to the same extent as a month ago GM said they were not shutting plants down this summer. The Labor Dept though did say they didn’t see any influence yet in the states that GM does business in but historic seasonal adjustments may be skewed over the next few weeks. Continuing Claims fell a sharp 224k to the lowest since Nov ‘08 and Extended Benefits fell a net 343k. The decline in these longer term claims data would be great if it was due to people finding new jobs but the lack of extension to employment benefits is resulting in people falling off the rolls involuntarily. Net-net, while clouded by the seasonals related to auto shutdowns or not, the 8 week low in the initial claims # is why the futures are rallying.

Why did WWII aircraft have such a heavy influence on traditional hot rod styling? Probably for numerous reasons, starting with the fact that plenty of servicemen returned home from the war and turned to building hot rods. Aluminum components, airplane gauges, belly tankers, bomber seats, Kinmont disc brakes and pin up girl murals are but a few cues we see ramp up heavily in the early post-war (1946 – 1950) era of Hot Rod. It’s often said that truly great, classic design never comes dated or obsolete, but actually keeps on influencing new generations of ideas. It may lie dormant for years, but some young designer discovers it, and that inspires new designs with a nod back to the old. That inspiration probably why most of us are drawn to the HAMB in the first place, right? I’ve included a few vintage aircraft-inspired objects below, and feel free to add some of your own.

…………………

The WSJ’s Heard on the Street column notes that “individual investors are getting scared. That could be a good thing.”

Only 25% of AAII’s members are bullish on stocks, versus nearly 42% who are bears. That is an unusual ratio. The obvious argument is the growing bearishness is bullish. Before you draw that conclusion, the history of this sentiment indicator is rather imprecise when it comes to timing:

“But investors can take their time phoning brokers, counters James Bianco of Bianco Research. Only some 25% of AAII members were bullish on November 27, 2008, he notes. But stocks still fell 23% over the next four months, before finally enjoying a sharp rally.”

I’ll do Jim one better: We had an even greater spread of 24% bulls, 58% bears. The problem with that reading was that it occurred in July 20th, 2006 — 15 months prior to the market’s October 2008 top.

I always prefer actual buy and sell driven data — prices, volume, asset allocation, etc. — versus mere surveys. They can be useful, but have huge limitations. Us humans are notorious for saying what we hope, rather than what actually is. . . .

>

Source:
Overheard: It’s Bearable
WSJ, July 7, 2010, 6:09 P.M. ET
http://online.wsj.com/article/SB10001424052748703636404575353194180224482.html

AAII Sentiment: 58% Bearish
Babak, Trader’s Narrative July 20th, 2006
http://www.tradersnarrative.com/aaii-sentiment-58-bearish-522.html

Well, not quite.

But the European Space Agency released a spectacular picture of the microwave sky Monday, an artful mosaic of interstellar dust and the relic light from the birth of the universe.

Planck sees sky in new light:

>

click for ginormous image

>

Planck, a roughly $800 million mission to detect the leftover radiation from the Big Bang, when a condensed ball of hot gas exploded to form the universe 13.73 billion years ago. Planck collected data for the all-sky map from August 2009 to June 2010.

A friend of mine (and yours) and I have been working on a new project that you guys will hear about soon enough. In doing so, I’ve been reaching out to other parts of the world… learning… loving… and just generally getting inspired by topics that aren’t necessarily related to traditional hot rodding and customizing. The act has felt a bit like treason. I can’t explain why or how really, but my love of traditional hot rodding runs so deep that it’s now personal. By that, I mean that I feel very protective of my internal thoughts.

We’ve been over this… I’m bat shit crazy. Let’s not go back there.

In any case, I began to realize that in some way I relate everything back to hot rodding. And almost everything can be inspiration towards a traditional thought or car. Thinking in this way creates a cultural explosion of sorts… and it’s been really inspiring.

I’m sure this makes no sense to many of you. Hell, I dunno if I’ve made sense of it all yet. BUT, I wanted to share some of this inspiration with you guys. Feed or vomit. Performance with no regard for precedence…

Soon.

This thread is being closed. Please comment on http://www.theoildrum.com/node/6706.

The first relief well at the Deepwater Horizon site appears to be close to setting the last casing in the new hole, before the final step of drilling down to and through the original well casing. While this is bringing the initial major concern (stopping the oil flow) closer to closure, there is still some time to go. Wind and weather are not cooperating and the depression over the Yucatan is reminiscent of Alex, which held up work until wave sizes dropped at the site. Sadly wave heights are now back up to the point that they are holding up work on completing the connections for the new cap to the well. At present, while the connection to the Helix Producer will carry an additional volume away from the BOP through the kill line, perhaps allowing some of the vents on the original cap to be closed, some leakage must still be maintained. (See Chuck Watson's weather update, at the end of this post.)

Since the stage is ripe for the final installation of casing at the lower end of the relief well, I thought I would just repeat a very simplified description of the process that is going on, so that you can understand the delay, before they drill over to intersect the leaking well.

As the well has been drilled down through the ground, it passes through layers where the rock might either be porous enough that the drilling fluids will flow into them, or might itself contain fluid at pressure that can flow into the well, and dilute that mud. In order to stop either event from happening, the drilling process is stopped and a process undertaken that seals off the rock on the sides of the well from the well itself. This is known as casing the well, and running casing, and for this relief well the process has been carried out a number of times as the well was driven. The well is now at the point that the final casing is about to be set, following which the connecting passage over to the flowing well will be undertaken.

The drill string is first taken out of the hole, and the drill bit is removed. The drill string can then be used to lower a larger steel pipe into the well to encase the well, from the bottom of the earlier lining run down to the current bottom end of the well. (Hence the name casing). Having this continuous length of casing in the hole will stop, say water, from getting in and diluting the drilling mud or the mud itself from flowing out into the rock. But if this was all that we did, then it would still leave a problem, since the steel pipe does not completely fit up against the rock wall created by the drilling bit. In other words there will be a gap between the casing and the rock wall, and this will allow fluids to travel up or down. This gap has to be filled, and the filler is normally a special form of cement. The casing has, therefore, been fitted with a small ring, called a shoe, that fits on the bottom end of the casing as it is set in place.

Components used in cementing casing into place (after Schlumberger

The way that the cement is placed is simple in principle, but a fair bit more difficult to do properly and effectively. Think of the long thin tube of casing, filled with a cement that acts something like toothpaste. This cement has to be pushed down the tube so that it squeezes out of the bottom and then flows back up between the casing and the rock wall, filling all the gaps as it is pushed back up to the top of the previous run. Particularly when this last casing is run, it is important that the gap is fully filled. This is because this is the casing that seals the well so that no fluid can escape back up around the casing, rather than flowing from the relief well into the well that is flowing oil and gas. Since the cement will move more easily thorough a larger passage, than a very narrow one, this gap has to be above a certain minimum size. Small centralizers are attached at points down the steel casing to keep it in the middle of the hole, rather than pressing up against one of the walls (since this might leave an open channel up through the cement). (And it was the number of these that caused some of the concerns in the final casing of the well that the Deepwater Horizon ran).

Cementing plugs

A small plastic plug (the bottom plug) is put into the casing ahead of the cement. This separates it from the mud that is already in the hole. It is fitted with wipers, that clean mud from the walls of the casing, and it is pushed down to the bottom of the casing by the cement that is pumped into the well behind it. There are some pictures of some of the tools and descriptions of the process here, here and here.

Once the bottom plug gets to the end of the casing, there are ports it passes that allow the cement to flow out of the casing and back up the outside. Once the cement has been pumped into the casing a second, top plug, also fitted with wipers, is put into the casing and this is then pushed down by the conventional drilling mud. As it is pumped down it forces the plug down, and the cement out and back up to the surface. Because of possible variations in hole size and other possible problems, perhaps about 50% more cement might be pumped into the well than the calculations might suggest. When the top plug hits the bottom plug, then there is a pressure spike at the pumping station, telling the operator that it is finished. The rig then waits on cement (WOC) until the cement is hardened. The drill pipe can then be put back in the hole with the mud motor on it ready to make the connection over to the flowing well.

At present the debate over exchanging the cap on top of the old well does not appear to be totally settled, and Admiral Allen has been meeting with BP to move this part of the operation forward.

Incidentally, while Tony Hayward who has left the scene in the US is still busy on BP business, but was spending the day in Azerbaijan

Mr Hayward re-iterated BP’s commitment to Azerbaijan and to continuing successful cooperation with the government and SOCAR. Mr Hayward once again highlighted the importance of the Azeri-Chirag-Gunashli and Shah Deniz oil and gas development, as well as the Baku-Tbilisi-Ceyhan and South Caucasus Pipeline projects to Azerbaijan, the region and global energy markets.

BP reports the following oil production for July 5:

On July 5, total oil recovered was approx. 24,980 barrels:

• approx. 16,760 barrels of oil were collected,
• approx. 8,220 barrels of oil were flared,
• and approx. 57.1 million cubic feet of natural gas were flared.

Weather Update

Chuck Watson has a brief update on the weather impacts in the Gulf of Mexico:

Weather over the Gulf of Mexico remains unsettled. The remnants of the tropical low that crossed the northern Gulf (tracked as AL95) is now inland. Another tropical low (being tracked as AL96) has just exited the Yucatan peninsula, and may develop in to a tropical storm in the next day or so. It is already producing waves and winds over the central gulf and Deepwater Horizon response area. Winds will remain over 25 knots at least through tomorrow.

Models show AL96 moving along a similar track to Alex, making landfall in northern Mexico or Southern Texas. Therefore, it is highly likely that winds and waves will interfere with cleanup and capture operations through the weekend, but should not interfere with relief well drilling. On the plus side, although low level winds will continue to blow oil on to previously oiled areas in Louisiana, Alabama, and Mississippi, they should keep the oil from spreading further in to Florida. Down side: western Louisiana and Texas may start seeing more oil.

This is a guest post from Steven Kopits. Steven heads the New York office of Douglas-Westwood, energy business consultants.

In my last post, we looked at the supply of oil in the US Energy Information Administration's (EIA's) recently released International Energy Outlook (IEO), which many consider the EIA's definitive annual forecast. This time, we look at the demand side, specifically China. Since the IEO is a government report, many business organizations rely on its forecasts.

Oil demand does not grow linearly with GDP. Rather, the bulk of oil demand growth occurs in the two decades during which societies typically acquire motor vehicles, after which per capita oil demand flattens. For example, per capita oil consumption in the United States is today lower than it was in 1979, even though per capita income has increased substantially since.

Demand levels attained in emerging economies are relatively comparable regionally. For example, per capita consumption in both Korea and Japan peaked at 1.9 U.S. gallons per day. Korean levels are unchanged; Japanese consumption has declined to 1.4 U.S. gal per person in the last decade. (For purposes of comparison, US consumption will be about 2.5 gal / day per capita in 2010, down from 2.9 gal in 2005.)

Both Japan and Korea are effectively islands (Korea due to its closed northern border), and both are densely populated, mountainous Asian countries. In fact, South Korea's population density is three times that of China. As a result, Japan and Korea's per capita oil consumption is comparatively low next to that of countries with large land masses like the United States, Canada and Australia. China has a land mass equal to that of the United States. On the flip side, China has a one-child policy, which may reduce the need for suburban housing.

In any event, without delving deeper, we might expect China's steady state demand for oil could prove not less than that of more advanced Asian nations. Based on the experience of Korea and Japan, China's current population would be expected to consume approximately 55 million barrels per day at steady state (when per capita consumption plateaus), or nearly 2/3 of current global oil production, were the supply available.

This increase in demand can arise quite quickly. Japan's oil demand increased six fold in the twelve years prior to leveling out. Demand can also develop more slowly. In the case of Korea, a six-fold increase in consumption required twenty years, with much of the delay owing to OPEC pricing strategy following the second oil shock of 1979. Korea's model of development is potentially relevant for China, as China faces an oil price environment not entirely different from Korea's after 1979. Importantly, high oil prices from 1979 to 1985 did not destroy Korea's demand for oil. It only deferred it. Thus, we might expect that, were oil prices to fall substantially and durably, China's demand for oil could surge fairly quickly. Indeed, were the oil supply available, China's consumption could increase by more than 40 million barrels per day by 2022.

China's Oil Demand Under Three Scenarios.
Source: EIA, EIA IEO 2010, Douglas-Westwood analysis.

In contrast, the EIA sees China's oil consumption at only 10 mbpd for 2015, a growth rate of approximately 2.7% from current levels, and at only 16 mbpd by 2030. Is this consistent with a country whose vehicle sales are up 56% in the first five months of the year? Where sales of Audi's are up 77%, and those of BMW have doubled compared to the first five months of last year? Is China truly going to be satisfied, as the EIA would have it, with less than 1/5th of the per capita oil consumption of Korea in 2030, even though they should be similar by that time?

The differences in views about China's oil demand outlook have enormous policy implications. If the EIA is right, and China will forget how to grow, then pressures on the oil supply will be modest. On the other hand, if China is to develop like other countries in Asia, the pressure on the oil supply will be crushing, with oil shocks, recessions, and war all conceivable outcomes. The energy--as well as the economic and security--policy differences between the two scenarios are like night and day.

Is the EIA sure it has the numbers right?

U.S. Cuts Price Forecast for Oil on Concern Global Economic Growth to Slow The U.S. Energy Department reduced its crude oil price forecast for 2010 on concern that global economic growth may slow and on ample U.S. stockpiles.

West Texas Intermediate oil, the U.S. benchmark, will average $78.75 a barrel this year, down from last month’s forecast of $82.18, according to its monthly Short-Term Energy Outlook, released today. That’s 28 percent higher than the 2009 average of $61.66 a barrel.

Prices will climb 4.8 percent to average $82.50 a barrel in 2011, the report showed. The estimate for next year was down 3.5 percent from May’s report.

EU Energy Chief Urges Ban on New Offshore Drilling Until BP Probe Finished The European Union’s energy chief urged a ban on new offshore oil drilling until the causes of BP Plc’s spill in the Gulf of Mexico are known, citing the need for “utmost caution.”

The call by European Energy Commissioner Guenther Oettinger is directed at EU national governments, which are responsible for granting oil-exploration permits. The administration of President Barack Obama is fighting to reinstate a temporary ban on deep-water oil drilling that a judge threw out on June 22.

China invests millions into Canada's oil sands BEIJING - Energy-hungry China, once stung in its efforts to secure access to resources in North America, is making a more subtle push into Canada's oil sands, and the new approach is paying off, experts say.

Chevron to get 1/3 stake in Rosneft JV - sources MOSCOW (Reuters) - Chevron will take a roughly 30 percent stake in its Black Sea oil venture with Russia's largest oil producer, Rosneft, industry sources said.

"The ownership structure will be around one-third Chevron, two-thirds Rosneft," a source familiar with the details of project told Reuters.

Court OKs reorganization plan for Utah’s Flying J Just two years ago, Flying J was the 16th-biggest privately held company in the U.S., according to Forbes magazine. What the overhauled Flying J will look like in the future is still hazy. Maggelet said the company won’t discuss that until sometime today.

Flying J, along with its Big West refining and Longhorn Pipeline subsidiaries, filed a voluntary petition for reorganization in December 2008.

The companies said a rapid plunge in oil prices and a sudden freeze in credit markets led to a shortage of cash it needed to run its business.

Chavez will take little more than joy from US oil woes During his election campaign, the US President Barack Obama pledged to end “in 10 years” the country’s dependence on oil from politically unreliable sources.

In the western hemisphere the finger was pointed squarely at Venezuela, the president of which, Hugo Chavez, has often threatened to cut exports to the US in response to real or imagined threats from what he calls the “yanqui empire”.

Mr Obama’s ambitious goal looks even more of a stretch after the environmental disaster in the Gulf of Mexico, the source of expected growth in domestic production. The resulting six-month moratorium on fresh deepwater drilling may lead to a drop of 70,000 barrels per day (bpd) in production next year, the Energy Information Agency says.

Total Reorganizes Oil Sands Portfolio with $1.42B Acquisition Total E&P Canada, a Total subsidiary, has signed an agreement with UTS Energy Corporation (UTS) to acquire UTS Corporation with its main asset, a 20% interest in the Fort Hills mining project in the Athabasca region of the Canadian province of Alberta.

Middle East Crude-Qatar price cut stirs buyers SINGAPORE (Reuters) - The Middle East crude market was firmed on Wednesday as a cut in Qatar's official selling prices (OSPs) for June spurred buying interest.

Traders waited for the release of OSPs from more Gulf producers and crude allocations from top oil exporter Saudi allocations to calculate their requirements for September trading.

Cygnus Confirms Largest Ever Discovered UK Sector of North Sea Endeavour announced that a sixth appraisal well has been successfully drilled and tested in the Cygnus gas field further confirming the field as one of the largest ever discovered in the UK sector of the Southern North Sea. In addition, the Department of Energy and Climate Change has awarded Cygnus field participants interest in P1731 covering blocks 44/11b and 44/12b. This new license contains additional fault blocks forming a northerly extension of the Cygnus structure that are yet to be appraised by drilling.

Iran power deal seen unlikely to address Pakistan’s immediate needs LAHORE: A plan to import 1,000MW electricity from Iran is unlikely to address Pakistan’s immediate energy crisis as the whole process will take at least five years to materialise under the normal security conditions, government officials said on Monday.

Iran-Pakistan gas pipeline While laying the groundwork for strategic relationship with Pakistan, the US is persuading Pakistan to scuttle the Iran-Pakistan gas pipeline project due to its serious reservations about Iran’s nuclear ambitions.

The US administration is sympathetic about the energy problem of Pakistan but opposes the pipeline because it involves Iran, a country US President Obama labels as a ‘rogue state’.

Pakistan Pays Price for Trucking in Afghan War Cargo (Bloomberg) -- Hundreds of trucks and buses leave the main highway in northwest Pakistan each evening at sunset to wait out the overnight closure of a strategic tunnel. Taliban attacks there are raising the cost of supplying U.S. troops in Afghanistan and hurting the local economy.

Egypt: Fights break out amid gas and diesel shortages Problems related to gasoline and diesel fuel shortages in the provinces intensified on Tuesday, as disputes and fights erupted between drivers and gas station owners.

In the Governorate of Assiut, gas stations ran out of supplies of 80- and 90-octane gasoline in addition to diesel fuel. Verbal confrontations developed between drivers and station owners after the owners announced they were out of fuel. Some of the drivers then took to the streets on foot hunting for fuel supplies.

Eskom warns more than 50 towns to pay or get power cut Eskom has warned 11 Free State municipalities, representing more than 50 towns, that it would disconnect their power supply if they did not pay their electricity bills by July 20.

On Wednesday, Democratic Alliance deputy shadow minister for energy David Ross said the Free State government should intervene in the matter to prevent an energy crisis in the province.

Spill veteran says both relief wells may be needed HOUSTON (AP) — A former Pemex engineer in charge of deepwater drilling operations during a 1979 oil spill in the Gulf of Mexico says BP may need both relief wells it's drilling to contain the gusher in the Gulf.

New Report Says Energy Efficiency Measures Have Greatest Impact A new study out today by the Energy Efficiency Council of Australia finds that, "energy efficiency will deliver 65 per cent of worldwide carbon cuts in the energy sector by 2020, and 54 per cent by 2030. This means that in 2020 energy efficiency could have almost twice the impact of renewable energy, nuclear power and clean coal combined."

Chevy Volt coming ... Good luck getting one NEW YORK (CNNMoney.com) -- General Motors is set to begin sales of the Chevrolet Volt electric car by the end of this year. But if you have your heart set on buying one, you'd better cool your heels.

GM plans to build only 10,000 Volts in 2011.

Tesla interest wanes, stock below IPO price NEW YORK (CNNMoney.com) -- Shares of Tesla Motors sank below their initial public offering price Tuesday and continued to remain depressed Wednesday.

Electric refueling: Doing the math Oilbama and what passes for a green movement talk breezily of “clean energy,” as if the only thing blocking a rapid and thorough transition to an alt-energy economy is oil-industry corruption and political indecision.

In the misleading verbiage of such false prophets, you never get any details. Why not? Because the facts are entirely contrary to the promises.

Should Cities Install Moving Sidewalks? If it sounds like the stuff of science fiction … well, it has been. In his short story "The Roads Must Roll," Robert Heinlein imagined the United States — facing a war-strained petroleum shortage that meant the "end of the automobile era was in sight" — shifting to a series of massive commuter moving walkways. Of the first "mechanized road," built between Cincinnati and Cleveland, Heinlein writes: "It was, as one would expect, comparatively primitive in design, being based on the ore belt conveyors of ten years earlier. The fastest strip moved only thirty miles per hour, and was quite narrow, for no one had thought of the possibility of locating retail trade on the strips themselves."

25 million acres of corn with nowhere to go, by 2030? Buried inside the USDA’s Biofuels Strategic Production Report is a startling prediction from both EPA and USDA: if the Renewable Fuel Standard targets are to be met by 2022, there will be a wholesale change in US crop usage.

However, doomsayers who have been predicting an inevitable conflict between food and fuel appear to have been completely off the mark.

Rather than a shortage of food, the increased pace of biotechnology innovation associated with bioenergy is set to usher in a period of food abundance so intense that US food policy may have to move back towards crop subsidies, because there will be far more food available than the world will know what to do with.

South Africa: Pebble Bed Technology is 'A Costly Source of Energy' Johannesburg — THE pebble bed modular reactor (PBMR) technology is unlikely to solve SA's energy shortage in a cost-effective way, according to an Institute of Security Studies paper on the project.

The Case Against the ‘Malaise’ Speech Recently a narrative has sprung up, on the “crunchy” right as well as on the left, that argues that Carter was prescient rather than over-pessimistic, and that America would be better off today if we’d heeded his indictment of consumerism and self-indulgence, rather than spurning him for the go-go optimism of Ronald Reagan.

Peak Oil, Time, And Population There is a close relationship between peak oil and population. Since the 1950s there have been many estimates of the rise and fall of global oil production, but it was perhaps inevitable that the shift has been from optimistic to realistic. After all, it is better for one’s reputation to make errors on the side of caution than to look like foolish by announcing a catastrophe that does not occur. With increasing studies, however, and with increasing proximity to the critical events, realism at last takes over.

We begin with two basic facts. The first is that the world’s present annual consumption of oil is nearly 30 billion barrels. The second is that the world’s present population is nearly 7 billion. From there we can add some reasonable estimates of both oil decline and population decline.

Green religion movement hopes spill wins converts NEW ORLEANS (AP) -- Where would Jesus drill?

Religious leaders who consider environmental protection a godly mission are making the Gulf of Mexico oil spill a rallying cry, hoping it inspires people of faith to support cleaner energy while changing their personal lives to consume less and contemplate more.

Chris Martenson - RESILIENCE: Personal Preparation My “standard of living” is a fraction of what it formerly was, but my quality of life has never been higher. We live in a house less than half the size of our former house, my beloved boat is gone, and we have a garden and chickens in the backyard.

Peering in from the outside someone might conclude that our family had fallen off the back of the American dream truck with a thud. But from the inside they would observe a tight, comfortable, confident, and grounded family. We owe much of our current state of unity to the fact that we embarked on a journey of becoming more self-sufficient and discovered the importance of resilience and community along the way.

Anyone can do the same. But first, we must lay some groundwork and address the question, “Why prepare?”

Beach reading about the great meltdown and the way forward The Long Energency, by James Howard Kunstler. In The Geography of Nowhere, Kunstler offered the most trenchant analysis of the downside of American suburbia and car culture. This 2006 book, published at the height of the boom, looks at how the misallocation of resources into sprawl (and its financing), global competition for more scarce energy resources and climate change will make a future for which few Americans are prepared even now. Essential reading for optimists who worry and other realists.

The aspiration gap A hardcore Plan C advocate can be aggressively unimpressed with conventional measures to conserve energy or use alternatives. The numbers themselves, can be disheartening: if we achieved optimistic projections for the amount of energy that solar and wind could provide by 2020, we are only up to, what, 2% of world BOE usage?

For someone who has invested considerable time, energy, and optimism into solar energy, into electric cars, or into getting 100 mpg from their Prius, Plan C may seem to treat their small measures or first steps, perhaps gained with considerable struggle, with contemptuous disregard: “yes, your electric scooter is cute, but where are we going to come up with the other 219 Million Barrels of Oil Equivalent per day once we are all riding those?”

As the world’s ice melts, the Navy’s role grows Roughead said that the melting Arctic creates all kinds of issues as more water is freed up for fishing, shipping and mineral exploration. The United States, Canada, Russia, Norway and Denmark (via Greenland) have made new claims for territory, prompting Chinese naval Rear Admiral Yin Zhuo to say four months ago, according to the China News Service, “The Arctic belongs to all the people around the world as no nation has sovereignty over it . . . China must play an indispensable role in Arctic exploration as we have one-fifth of the world’s population.’’

For Roughead, that means that the United States needs to become an indispensable player in the global marine legal arena. The first step, he said, is for Congress to finally approve the UN Law of the Sea Convention. The convention has 160 signatories, but not the United States. It creates a global structure for using the oceans. The Obama administration and the preceding Bush administration, as well as other military leaders, support the treaty. But hard-line conservatives and some business interests have blocked passage in the Senate, saying the United States would cede too much to the UN in territorial sovereignty and resource rights.

Simmons unlikely to win $10,000 oil bet with Tierney Matthew Simmons is very unlikely to win his $10,000 bet with NYT columnist John Tierney that the average price of oil in 2010 would be more than $200 a barrel. Of course that was true before 2010 even started, but it's quadruply true now that 2010 is half-over and oil is $73. Simmons needs oil to go well over $300 for the rest of the year.

India oil minister seeks help to offset diesel hike (Reuters) - India's junior oil minister Jitin Prasada said on Wednesday he had urged the farm ministry to raise the price at which government buys grains from local farmers to offset the hike in diesel prices.

Romania dishes out licences Romania granted 20 oilexploration licenses in July, including five in the Black Sea, to companies including Russia's Lukoil, Hungarian Mol and US supermajor Chevron the national agency for mineral resources said.

China Gas Profit Jumps More Than Sevenfold on Sales and Derivative Gains China Gas Holdings Ltd., the supplier of the fuel to homes and business on the mainland, said profit increased more than sevenfold on higher sales and gains in derivatives contracts.

ConocoPhillips asset sale could hit $15bn ConocoPhillips, the third-largest US oil company by market value, has said it could get more than $10 billion from asset sale over the next two years and use the proceeds to reduce debt.

The company could sell closer to $15 billion worth of assets since the sale to date have generated higher premiums than he expected, Deutsche Bank analyst Paul Sankey said to Reuters.

Petrobras Debt Risk Rises More Than Pemex on Deepwater Drill Cost Increase The cost of protecting against a default by Petroleo Brasileiro SA, the largest oil producer in waters below 1,000 feet, is surging relative to Petroleos Mexicanos on concern that deep-water drilling costs will jump.

Credit default swaps that protect against non-payment by Petrobras, as the Rio de Janeiro-based company is known, over five years cost 187 basis points, or 36 more than its Mexican counterpart, which has no production deeper than 1,000 feet (305 meters), according to prices compiled by CMA DataVision. The gap reached a 17-month high of 47 basis points, or 0.47 percentage point, on June 30, up from 19 on April 20, when BP Plc’s rig explosion in the Gulf of Mexico sent oil spewing into the ocean.

Crews connecting oil vessel to ruptured well as leaders pray for Gulf (CNN) -- Interfaith leaders prayed for restoration and renewal for the Gulf of Mexico as they prepared for a tour of the oil-soaked marshes, wetlands and rookeries of the Louisiana coast Wednesday.

Abandoned oil wells make Gulf of Mexico 'environmental minefield' The Gulf of Mexico is packed with abandoned oil wells from a host of companies including BP, according to an investigation by Associated Press, which describes the area as "an environmental minefield that has been ignored for decades".

ExxonMobil Broke Air Pollution Laws, Group Says (AP) The largest U.S. oil refinery violated federal air pollution laws thousands of times during the last five years, releasing 10 million pounds of illegal pollution, including cancer-causing toxins, without facing proper fines or being forced to fix equipment, environmental groups claim.

China and Canada: It's All Business The King, reports the Gazette, told the story of a meeting of his cabinet during which he asked his advisors to pray with him, “May Allah prolong its life,” without saying what “it” was. When asked to clear up the mystery the King said he said, “It is the oil wealth. Just leave the underground wealth for our sons and their sons.” Saudi leaders have well-earned reputations for using only the most optimistic language to describe the state of the kingdom’s oil. To concede, even in the most unstructured environments, for the most benign purposes, that Peak Oil is something to be reckoned with is to cede significant ground.

King Abdullah’s remarks, even after efforts to walk them back by other Saudi officials, are simply the latest reminder that cheap oil is a thing of the past. We’re going to extreme depths, at exorbitant cost, to find and produce crude reserves, which is necessary right now because there is no alternative or alternatives that alone or in combination can replace fossil fuels, still the cheapest way to power cars, cool homes and otherwise light up our lives.

Huhne to overturn ban on councils selling green electricity A ban on councils selling green electricity into the national grid is to be overturned, Climate Change Secretary Chris Huhne announced today as the carbon footprint of every local council in England was published.

In a speech to today’s Local Government Association annual conference, Mr Huhne will say that he wants local councils to be allowed to sell electricity they produce from renewables to the national electricity grid.

European Union Tightens Timber Rules to Help Save Forests, Fight Emissions The European Union decided to make suppliers of timber to Europe guard against illegal logging, bolstering a push to fight climate change through worldwide forest protection.

The European Parliament voted to force companies to use a system of due diligence to ascertain that the timber they sell in the 27-nation EU was harvested legally. A fifth of EU timber imports may come from illegal sources, according to the European Commission, the bloc’s regulatory arm, which proposed the legislation in October 2008.

British activist fighting expulsion from Peru LIMA, Peru – A British religious activist is fighting an expulsion order from Peru's government for allegedly inciting unrest among indigenous peoples protesting environmental damage from oil drilling in the Amazon rainforest.

The Ecological Crisis is an Economic Crisis; the Economic Crisis is an Ecological Crisis The post-WWII boom was based on cheap oil. But oil is nonrenewable, polluting, and causes global warming. It was "cheap" because the capitalists did not pay to prepare for the day when it would be harder to access oil. We have reached that day, which is one aspect of the worldwide crisis of the return to the epoch of capitalist decay.

A Housing Project in Victoria That Embraces Nature VICTORIA, British Columbia — Rare are the homeowners who welcome a sewage treatment plant in their backyards. But at Dockside Green, a 15-acre mixed-use development being built just north of this city’s downtown harbor, neighborhood utilities are less a cause for alarm than part of the amenity package.

“These are our best-selling units,” said Joe Van Belleghem, a local developer who won a city-sponsored competition in 2004 to develop Dockside Green. On a recent Friday afternoon, Mr. Van Belleghem was on site, pointing to ground-floor condominiums with decks jutting over a network of ponds and waterways containing native plants, otters and ducks.

China pumps billions into Canada's oil sands BEIJING (AFP) – Energy-hungry China, once stung in its efforts to secure access to resources in North America, is making a more subtle push into Canada's oil sands, and the new approach is paying off, experts say.

Chinese firms seeking a toehold in the largest known crude deposit outside the Middle East have opted for joint ventures and partial stakes to avoid the kind of political uproar sparked when CNOOC tried to take over US oil group Unocal in 2005.

"They are tiptoeing around the edge, not challenging anybody, not getting in any American Senators' faces -- just very quietly taking a position," said David Hewitt, regional head of oil and gas research at CLSA in Hong Kong.

Crude Oil Falls for a Seventh Day on Signs of Slowing Economy, Fuel Demand Crude oil traded near a one-month low in New York as equity markets declined, fanning concern that the economic recovery may falter and impede fuel demand.

Jeff Rubin: The G8: The biggest brake on growth Of late, the major Western European economies have hardly grown at all, and even those economies that have seen a modest recovery, like the U.S.’s, now show widespread signs of weakness, just as many of President Obama’s stimulus measures are about to run out of gas.

Energy- and resource-rich member states like Russia and Canada are the exceptions, benefitting from the ongoing industrial revolutions in China and India, and the lift they give to commodity prices. (If the OECD still accounted for three quarters of world oil consumption, as it did in the mid-1990s, would oil still be trading at over $70 per barrel?)

Sinopec Cuts Crude Processing at Yangzi Refinery on Losses, Weaker Demand China Petroleum & Chemical Corp., the nation’s largest oil refiner, cut crude processing volume at its Yangzi oil refinery in the eastern Jiangsu province on refining losses and weaker demand, a plant official said.

China Plans New Resource Tax on Coal, Oil, Gas in Western Areas China plans to impose a new tax on coal, oil and gas extraction in western provinces, raising funds to develop its most restive region in a move that will reduce profits for PetroChina Co. and rival resource producers.

Heat Wave Means Natural Gas Rises Most Since '05 in Survey: Energy Markets The hottest U.S. summer in three years and the start of hurricane season means analysts are forecasting the biggest gains in natural-gas futures since 2005 for the six months ending in September.

Gas may climb 27 percent from the first quarter to $4.90 per million British thermal units, according to the median of 13 analyst forecasts in a Bloomberg survey, extending a 19 percent gain in the three months through June 30. The estimates ranged from $4 to $5.50. August-delivery gas was little changed at $4.682 per million Btu yesterday on the New York Mercantile Exchange.

Commodities May Extend Drop This Quarter on `Open Gap': Technical Analysis Commodities may extend the worst slump since 2008 this quarter after an advance in June proved short-lived, Barclays Capital said, citing trading patterns.

Big Oil Firms Accused of Human-Rights Abuses in Burma To the list of Big Oil companies with p.r. problems add two more: Chevron and French energy giant Total. In a report published on Monday, the NGO EarthRights International accuses the firms of being implicated in human-rights violations in Burma, claiming that soldiers guarding Chevron and Total's natural-gas pipeline in the country have murdered locals and forced others to do backbreaking, unpaid labor in order to keep the gas exports flowing smoothly. The report also holds that the revenues from the operation have been propping up the country's oppressive military government for more than a decade, thus fostering harmful political outcomes that affect the entire country.

Fracas erupts over ‘fracking’ practices Despite the best intentions of energy icon T. Boone Pickens and regardless of the controversy over deepwater exploration in the Gulf of Mexico, onshore natural gas operations in the United States face a serious and distracting problem.

Hydraulic fracturing — the now common industry process of injecting water and chemicals into reservoirs to fracture rock and free up gas and oil — is in the cross hairs of shareholders and environmental groups, and is drawing scrutiny from Congress, which is considering increased regulation.

BP gets U.S. demand for notice of asset sales LONDON — BP PLC confirmed Wednesday that it received a demand from U.S. authorities for advance notice of any asset sales or significant cash transfers.

The Financial Times reported that U.S. Assistant Attorney General Tony West, who heads the Civil Division of the U.S. Department of Justice, wrote to Rupert Bondy, BP's general counsel, on June 23. Normally the U.S. Justice Department does not require advance notice of such deals.

BP's Hayward in MidEast talks as relief well advances ABU DHABI/HOUSTON (Reuters) – BP's boss met officials from an Abu Dhabi state fund on Wednesday as hopes for fresh investment and progress toward closing a leaking U.S. oil well lifted the company's battered shares.

Louisiana and Scientists Spar Over How to Stop Oil As the gulf oil spill enters its third month, Louisiana officials have grown increasingly enamored of large-scale engineering projects, like sand berms and rock walls, to keep the oil off their coast. But these projects, which demand the swift restructuring of eastern Louisiana’s dynamic and fragile coast, have brought the desires of state and local officials into sharp conflict not only with a complicated federal bureaucracy charged with protecting wetlands and estuaries, but also with an experienced and highly vocal community of local coastal scientists.

U.S. Deep-Water Drill Ban a `Rational' Response to Emergency, Salazar Says The U.S. government said a ban on deep-water oil drilling is a rational response under emergency circumstances and should be reinstated immediately.

Interior Secretary Kenneth Salazar said in documents filed with the U.S. Court of Appeals in New Orleans that his department acted responsibly by implementing the ban in response to “an unprecedented and ongoing disaster.”

Kuwait rules out increasing its stake in BP KUWAIT CITY (AFP) – Kuwait has ruled out an increase in its stake in British oil giant BP, which is struggling to cap an oil spill disaster in the Gulf of Mexico, a sovereign wealth fund official told AFP on Wednesday.

"We are not currently considering increasing our stake in this company," the official said when asked about the possibility of new Kuwaiti investments in BP.

Mexican Storm System More Likely to Become Cyclone, Hurricane Center Says Thunderstorms moving west-northwest off Mexico’s Yucatan Peninsula in the Bay of Campeche have a 40 percent chance of forming into a tropical cyclone in the next day or so, the U.S. National Hurricane Center said.

The system moving at 10 to 15 miles per hour may become a tropical cyclone before it heads inland over Mexico or southern Texas, the hurricane center said on its Web site at 8 a.m. Miami time. The potential of formation rose from 30 percent yesterday.

As power demand soars from hot weather, grid holds up so far NEW YORK — Electricity demand in the East surged Tuesday near levels not seen since the summer of 2006. The power grid has so far been up to the task.

With temperatures soaring above 100 degrees in cities from New York to Washington, utilities and grid operators saw power output close in on the records set in August 2006. No widespread outages have been reported, although electricity demand typically jumps between 5 and 6 o'clock.

A Blow to Home Retrofits The federal agency that oversees two government-chartered mortgage finance companies imposed new restrictions Tuesday on homeowners’ ability to take advantage of a program that allows them to repay the cost of installing solar panels and other energy improvements through an annual surcharge on their property taxes.

The new guidelines could also make it more difficult for homeowners to obtain mortgages even if they don’t participate in the programs, called Property Assessed Clean Energy, or PACE, but happen to live in an area where they are offered.

Sudden Surplus Calls for Quick Thinking Engineers say that if the power grid becomes more reliant on renewable energy, a lot of new transmission lines will have to be built at some point or there will be unhappy consequences. Mostly this problem has been predicted rather than experienced. But the future may have arrived last month, when the Bonneville Power Administration, a federal agency that oversees power transmission in the Pacific Northwest, had more energy than it could comfortably use.

Soybeans, Corn Climb as Higher Crude Oil Prices Increase Biofuels Demand Soybeans and corn rose in Chicago as gains by crude-oil futures boosted the appeal of crops processed to make biofuels.

The Parking Lot as ‘Solar Grove’ In 2005, Mr. Noble founded Envision Solar, now the country’s leading developer of solar carports. The company’s signature product is “solar groves,” 1,000-square-foot canopies that shade parking lots while generating clean power from an array of photovoltaic panels.

Solar plane sets out on historic flight PAYERNE, Switzerland (AFP) – An experimental solar-powered aircraft took off from a Swiss airbase here shortly after daybreak on Wednesday in a historic bid to fly around the clock and prove the value of solar energy.

In Congo forest, bushmeat trade threatens Pygmies Bushmeat — animals like monkeys and especially antelope — has been a staple of the African diet for millennia. But it has never been consumed as much as now: at least 1.1 million tons each year in the Congo basin alone, according to the World Wildlife Fund. Other estimates put the figure at five times that.

The result: the forests still standing are growing emptier by the day.

Some have suffered 90 percent drops in wildlife, stripped so bare, hunters have been reduced to eating their own hunting dogs, says John Hart, an American conservationist who first lived among the Mbuti in the 1970s.

PG&E opposes CA prop. to halt global warming law California's largest utility says it will oppose Proposition 23, the initiative that seeks to suspend the state's landmark global warming law.

Pacific Gas & Electric Company Chairman and CEO Peter Darbee said in a statement Tuesday that climate change could cost California's economy tens of billions of dollars a year, with losses to agriculture, tourism and other sectors.

CRU climate scientists 'did not withold data' Climate scientists at a top UK research unit have emerged from an inquiry with their reputations for honesty intact but with a lack of openness criticised.

The Independent Climate Change Email Review was set up by the University of East Anglia (UEA) after more than 1,000 e-mails were hacked from its servers.

Climate "sceptics" claimed the e-mails showed that UEA scientists manipulated and suppressed key climate data.

But these accusations are largely dismissed by the report.

This thread is being closed. please comment on http://www.theoildrum.com/node/6701.

Yesterday, I noted that the report from the Unified Command had the well at 17, 400 ft. And I was corrected to note that this is measured depth (MD). Well today the depth has increased a further 300 ft to 17,700 ft , an additional gain of 300 ft, bringing the well to within 60 ft of the point where, earlier, they said they would run the final casing. And at that drilling speed, they should be perhaps there by now, in fact this number would suggest that they might have reached it. There then still remains the delay while they run that casing, which could be some significant additional time, depending on conditions. (The second relief well is at 13,900 ft). The two wells will then be connected, and the bottom kill attempt started.

The complexities of life seem to be influencing other aspects of the spill and situation today. The voyage of the “A Whale” to sweep up large quantities of oil has so far been inconclusive and, despite the large fleet of vessels employed for the process, only an average of 900 barrels a day is reported as having been skimmed and recovered, initially by the two companies BP relied on

BP said it would reach the stated goal largely by deploying two companies that have the necessary expertise, trained staff and equipment: the nonprofit Marine Spill Response Corp. and the for-profit National Response Corp.

Part of the problem of accurately assessing performance comes in the definition of what is being counted as recovered, the oil, or the initial oil and water volume before the oil is recovered. (Of which latter volume some 31.3 million gallons has been recovered). The same sort of questions, in other words, applied to the overall oil recovery as are now being asked of the “A Whale” performance.

More questions are also being asked of other aspects of the spill response. There is an article, for example, in the Times Picayune that critically reviews the move to dredge and create sand islands between the Louisiana coast and the oil spill site. The article notes some of the major concerns, for this series of 6-ft tall berms that will be created over an 80-mile stretch. These include that by changing the seabed geometry, the dredging might reduce the energy-adsorption of the coast as storms approach.

This ties in to the changes in the natural flow patterns of the area, with some areas seeing increased fluid flow that will accelerate erosion, while other areas will lose the ebb and flow of seawater, critical to the health of the protected areas.

The berms created have already been proven to be fragile, with some protective barriers that were emplaced by the National Guard off Holly Beach having been eroded away by the actions of Hurricane Alex. However this was partly due to their location. To be effective the berms, made with Hesco baskets, they need to be further from the water.

The new floating riser system is now anticipated (after the storm delay) to be in place and working by the end of the week. This will capture additional oil through the kill lines, hopefully allowing the vents on the top of the cap to be closed, although there will still be some spill around the base to prevent hydrate formation. (And if the new cap is in place, it will also help with the height of mud column that can be generated when the two wells are connected and the kill begins).

Incidentally the report on waste collection that BP released today does show that some of the boom is being pressure washed to remove and collect the oil that it captured.

The current numbers are:

For the first 12 hours on July 5 (midnight to noon), approximately 8,340 barrels of oil were collected and approximately 4,095 barrels of oil and 28.8 million cubic feet of natural gas were flared.

On July 4, total oil recovered was approx. 24,955 barrels:
• approx. 16,920 barrels of oil were collected,
• approx. 8,035 barrels of oil were flared,
• and approx. 56.9 million cubic feet of natural gas were flared.

Most ordinary buildings in the world use wooden beams to sustain the roof. Domed roofs, which use only stone, are more expensive and so are usually reserved for large buildings, cathedrals and the like. But wood may be so rare and expensive in some areas that stone domes are the only possible kind of roof. One such area is Apulia, in Southern Italy, where we can still find the kind of ancient Mediterranean building called the "trullo" (pl. "trulli"). The picture (made by the author) shows the central area of Alberobello, the only town in the world showing such a concentration of trulli. It looks like an accretion of limestone, a man-made land coral.

A trullo is something that you can't ignore. The first time you see one, from a distance, it looks slender, elegant, even cute. With its conical roof, its round shape, it reminds you of Tolkien's Middle Earth, it looks like a place where hobbits could live. But, as you get close, you see that the trullo was never meant to be cute - it was never made for hobbits to live in. It is a huge mass of stone: thick walls, heavy roof. A trullo is a functional - even brutal - kind of architecture for an arid place where trees are rare. It uses only stone; no wood whatsoever. And if you have no beams to hold the roof, there are big limits to what you can do on a small budget. A trullo was meant as a place where peasants would live and they couldn't afford the domed architecture of cathedrals. A trullo must be small, otherwise the stone walls holding the dome would have to be truly gigantic. That is also the reason why it is round; to save material.

You can make larger inner spaces by connecting several domes together, but the inside remains cramped. And also dark; the trullo has a door because there must be one, but windows would weaken the structure and so there aren't any or, at best, very small ones. That surely created problems of ventilation. Living in a trullo can't have been exactly the top in terms of comfort, at least the way we intend it today. But the thermal inertia of the thick walls offered to dwellers a degree of thermal comfort, winter and summer, that was impossible to obtain without air-conditioned and central heating. The limited space was not such a terrible limitation since, in a Mediterranean climate, you are supposed to live outside for most of the time and you'll go inside only at night and - in summer - to escape the heat of the day. A trullo is sturdy, cheap, practical and very well suited to hot climates.

So, even with all these limits, the trullo is a fascinating kind of architecture. In Apulia, it blends with the landscape in a way that no modern building can; it is a sort of land coral; an accretion of limestone that seem to have been there from the beginning of time. Those trulli still existing in Southern Italy are very popular. Few people remain who can make new ones, but the old ones are carefully maintained and are prized property; owned by proud residents and often rented to tourists. Today, some trulli are heated by natural gas, but the fascination of living in one remains.

Thick stone walls are a characteristic of traditional Mediterranean architecture and in ancient times there existed many kinds of stone buildings; the Sardinian "nuraghi" are an example. Sometimes, this kind of building goes under the Greek name of "tholos" (pl. "tholoi"). But the peculiarity of the Apulian trulli is that they are still inhabited - whereas all the others are ruins. So, one of the reasons of the fascination with the trullo comes from imagining a kind of life that today we have completely forgotten. It comes with the idea of an intelligent adaptation to what the territory can offer: limited resources, limited energy, limited everything. Sustainability, in short. But the fact that the ancient Apulians were able to adapt in such an intelligent way to their environment doesn't mean that their way of life was sustainable. Trees had not been lacking in the area; it was human activity that had destroyed them. The very name of the main city in the region, "Alberobello," comes from the Latin words "silva arboris belli" which stand for "the forest of the battle". There were forests, there, long ago. Now, they are mostly gone.

Agriculture is far from being a sustainable actvity. It involves deforestation and it slowly destroys the fertile soil. With time, people run out of trees and have to think of how to remove the stones that erosion has uncovered. The result are those stone structures that are so common in areas where the soil has been eroded: stone building and stone walls criss-crossing the land. These structures are typical of arid Mediterranean countries, but you can see them also in South-Western Ireland, where there exists the same problem with erosion. In Apulia, indeed, you have not just stone buildings and stone walls, but also piles of stone, so common that they have a specific name (specchia ). All ways of getting rid of too many stones.

Today, cheap artificial fertilizers (made from fossil fuels) have given new life to the badly overexploited Apulian land. Cheap fossil fuels have made possible to build concrete buildings, to heat them with central heating and to cool them with air conditioning. But the fact that today grain is cultivated in the Trulli valley doesn't mean that erosion is gone. And the fact that you can turn on the air conditioning when it is too hot, doesn't mean that the problem of sustainability is gone.

Acknownledgement

I wish to thank Costellazione Apulia for giving me the possibility of visiting the land of the trulli in occasion of the meeting "Raccontami una Storia" in Martina Franca, Italy, on March 19th 2010.

Note: this post has been slightly modified after publication (Thanks to Omnologos for pointing out something that needed to be added to the text)