Good stuff, South Dakota residents vote to allow new refinery to be built

[Aggie Hoopsfan]

http://www.siouxcityjournal.com/articles/2008/06/04/news/top/4e608d46402d5adb8625745e00110beb.txt

:tu

Oh, and fuck the idiots who want to tie it up in court. I bet they're bitching about gas prices, too...

[Don Quixote]

I'm glad the good people of SD want to drill. I'd expect the courts to block it, though.

[clambake]

wait for the other shoe to drop..........it's coming.

[spurster]

According to the article, "The refinery would process 400,000 barrels of tar sands crude a day from Alberta into low-sulfur gasoline, diesel and jet fuel."

I grew up near there. The people who would live near the refinery are as NIMBY and stuck-in-their-ways as anybody, but it's a rural area of generally working poor to lower-middle class. The economic boon is undeniable, and that's what they voted for over the potential environmental costs.

[RandomGuy]

http://www.siouxcityjournal.com/articles/2008/06/04/news/top/4e608d46402d5adb8625745e00110beb.txt

:tu

Oh, and fuck the idiots who want to tie it up in court. I bet they're bitching about gas prices, too...


Hyperion touted the so-called "green" technology in its proposed energy center, which it claims would be the world's cleanest. The refinery would process 400,000 barrels of tar sands crude a day from Alberta into low-sulfur gasoline, diesel and jet fuel.
-------------------------------------------------------------

Tar sands' profitability questionable (http://www.gasandoil.com/goc/news/ntn73931.htm) (gasandoil.com)


But paradoxically, the impending decline of global crude oil production, which is now coming clearly into view, has led to a mad rush to produce the tar sands. And this, in turn, has led to skyrocketing costs... such that now, the real "profit" in producing the tar sands seems to be in government tax breaks, not in actual profit on the resource itself.
-----------------------------------------------------------------

Canada Moves to Phase Out Tax Break for Tar Sands Producers (http://www.rigzone.com/news/article.asp?a_id=42779)


Finance Minister Jim Flaherty said the tax break, instituted in 1996, was no longer necessary due to the high price of crude oil.

Oops.

Repeat after me:

Tar sands are not economically feasible at any oil price without massive government subsidies.


Tar sands are not economically feasible at any oil price without massive government subsidies.


Tar sands are not economically feasible at any oil price without massive government subsidies.


Tar sands are not economically feasible at any oil price without massive government subsidies...


"The Law of Receding Horizons." For those who missed my previous articles on receding horizons, it is a simple concept: as the cost of energy rises, the cost of everything else made with energy (like building materials) also rises. So an energy project which was expected to be profitable when energy costs were x amount higher than today, turns out to still be uneconomical when you get there.

These people have bought themselves a boondoggle sold to them by people who pumped up the benefits and downplayed the risks.

Fuck conservative morons who don't understand basic economics.

[clambake]

yes, that being the other shoe.

[1369]

So RG, the Canadian gov't pulls the tax breaks due to the price of oil now. But weren't the breaks in place to offset the cost in refining the tar sands and put them on an "equal" footing with crude? Now wouldn't the price that the company could conceivably recoup from refining the tar sands make the investment worth it?

I just build these things, not justify the capital expenditures, so I'm genuinely curious.

[Aggie Hoopsfan]

Tar sands pumping didn't used to be profitable when oil was like $60 a barrel.

But now? At $130? Or in another year or so when it's up over $200 a barrel? Let alone by the time they could get this thing built if they started tomorrow...

hell yeah it would be profitable.

[boutons_]

Anything, like a new refinery, that reduces the price of transport fuel is wrong (who thinks this new refinery will have any impact on fuel prices?), since the higher the price, the less it will be consumed.

aka, destruction of demand, which is exactly what is terrifying the auto and oilcos about $130 oil. They will do everything they can, with their $Bs taken from citizen's pockets, to create demand, neutralize climate science, to buy whore-politicians, to subvert democracy, start foreign wars-for-oil, etc, etc.

A new refinery is good for the suppliers, but nobody can show that it's good for demanders. If gasoline prices are more determined by USA-refinery-constricted-supply than by high landed oil price, then the more supply from a new refinery might make a difference.

What is price of a barrel of tar-sands hard-to-refine shit vs the world price of $130? Are the Canadians selling it to USA under the world price? Are domestic oil producers selling their oil cheaper than they could get on the world market? Fuck no. Whether the oil is domestic or imported, the US consumer will pay the same.

In the Repug/right-wing/neo-cunt/conservative universe of smash-mouth adversality and predation, suppliers exist to fuck over demanders and the environment.

[RandomGuy]

So RG, the Canadian gov't pulls the tax breaks due to the price of oil now. But weren't the breaks in place to offset the cost in refining the tar sands and put them on an "equal" footing with crude? Now wouldn't the price that the company could conceivably recoup from refining the tar sands make the investment worth it?

I just build these things, not justify the capital expenditures, so I'm genuinely curious.

Here is the thing one has to keep in mind and it is alluded to by the second article quote, i.e. the law of receding horizons.

Tar sands were uneconomical because (drum roll please) it cost a LOT of energy to get useable materials like fuel from them.

Energy required to get at tar sands includes:
1) Fuel from massive clearing and mining equipment.
2) Transporting sands to processing plant. One ton of sand=one barrel of sour crude, so this s*** is heavy.
3) Using massive amounts of heat to seperate the sand from the oil, resulting in sour crude.
4) Finally, it takes extra energy to refine this especially sour crude into fuel.

Now that we know that it takes a LOT of energy to get useable fuel from tar sands, we are ready for the kicker.

Given the profile (makeup) of how humans currently get energy from various sources, the cost of any given unit of energy is HIGHLY dependent on the price of oil and natural gas.

The thing that sinks the tar sands people is that they project oil to be at X where they will be profitable, but fail to include a commensurate rise in their own costs, i.e. they look at the increased revenues, but not the increased costs. Some of the smarter ones know this, but skew their projections to attract investment capital so they can cash out on it at the expense of the suckers, er, investors.

The answer to your question is:

Only with massive government subsidies.

I would then ask, as I am sure the greenies in parliment will:

If you are going to do subsidies, why not subsidize renewables like wind, or simple energy efficiency measures that DON'T require massively damaging strip-mining?


That last question is one that the Canadian government will be asking itself. The answer to that question will ultimately determine whether or not the tar sands companies will continue to get their subsidies.

I wouldn't bet money on that happening, and neither should anybody else.

[RandomGuy]

Tar sands pumping didn't used to be profitable when oil was like $60 a barrel.

But now? At $130? Or in another year or so when it's up over $200 a barrel? Let alone by the time they could get this thing built if they started tomorrow...

hell yeah it would be profitable.

:rolleyes

Take off your ideological blinders for just a second. Please.

Read this bit and a few related to it.

Gas and oil dot com article: http://www.gasandoil.com/goc/news/ntn73931.htm

not only are costs rising, they're rising faster every year, across the board: for labour,materials, and energy. And in all likelihood, taxes and pollution-related costs will soon join the list.
For example, Canadian Natural Resources said in March it wouldn't move forward with its plans to build an upgrader plant due to runaway costs, and Synenco Energy shelved its upgrader in May. Likewise, last year France's Total announced that it was pushing its tar sands project back by three years, again due to soaring costs for labour and materials.


Moneyweek article: http://www.moneyweek.com/file/21765/are-canadian-tar-sands-the-answer-to-our-oil-needs.html


Limitations on water supply
Another limitation on tar sands expansion is that processing capacity is limited by water supply. Much water is already being recycled using current technology, but current production techniques require 1-2 barrels of “makeup” water per barrel of product.

It will be imperative to develop technology that uses less water or that recycles even more of the water being used. And doing this is not nearly as easy as you might think.

It goes on and on.

Every rational, objective analysis of this says that it will never pan out. The only people who say otherwise are the people who are trying to get you to invest in it.

These articles aren't from some greenie, uber-environmentalists, they are from people who analyse the industry for a living, and make their living analysing possible investments.

You can try arguing with me about this, but you can't argue with the cold hard cost inceases of these projects that always seem to be missing from the investment brochures.

If you believe in it, why not re-align your retirement portfolio to invest in these companies?

Go ahead, I will wait.

I have already put my real money where my mouth is here, by re-aligning my wife's IRA.

We can compare rates of return in 10 years, and ultimately see who was right if you want.

[boutons_]

http://tonto.eia.doe.gov/dnav/pet/hist/mopueus2a.htm

... so where is this new SD refinery going to make any difference in the price of gas?

gas refining capacity is restricting supply and pushing up prices?

[MannyIsGod]

Gas is on the way out. I know that my next car will run at least partialy off batteries, and if we're lucky enough to have access to them, I'll buy a full electric vehicle.

[xrayzebra]

Here is a long article on the Bakken oil field. The one
thing that struck me was the quality of the oil. RG please
note. It is a sweet light crude. Almost gasoline quality
according to the article. And the size of the discovery.
A good read.

http://www.bloomberg.com/apps/news?pid=20601170&refer=home&sid=ayj1uo_gdNI4

[Anti.Hero]

-------------------------------------------------------------

Tar sands' profitability questionable (http://www.gasandoil.com/goc/news/ntn73931.htm) (gasandoil.com)

-----------------------------------------------------------------

Canada Moves to Phase Out Tax Break for Tar Sands Producers (http://www.rigzone.com/news/article.asp?a_id=42779)



Oops.

Repeat after me:

Tar sands are not economically feasible at any oil price without massive government subsidies.


Tar sands are not economically feasible at any oil price without massive government subsidies.


Tar sands are not economically feasible at any oil price without massive government subsidies.


Tar sands are not economically feasible at any oil price without massive government subsidies...



These people have bought themselves a boondoggle sold to them by people who pumped up the benefits and downplayed the risks.

Fuck conservative morons who don't understand basic economics.

oh, they understand economics. They just don't give a fuck.

[RandomGuy]

Here is a long article on the Bakken oil field. The one
thing that struck me was the quality of the oil. RG please
note. It is a sweet light crude. Almost gasoline quality
according to the article. And the size of the discovery.
A good read.

http://www.bloomberg.com/apps/news?pid=20601170&refer=home&sid=ayj1uo_gdNI4

The Bakken oil field is a good discovery.

It also will be tapped out pretty darn quickly. The refinery in the OP article may or may not be able to handle the oil, I am unable to guess.

Bear in mind also that the chemical industry uses about 1/2 of all the oil the US consumes. They compete with you directly when it comes to any given barrel of oil.

Keep in mind that even high-quality finds of light sweet crude only translate into something like 14-20 gallons of gasoline for every barrel of crude.


How many gallons of gasoline come from a barrel of oil?
Each 42-gallon barrel makes about 19½ gallons of gasoline.

(link to source here) (http://www.gravmag.com/oil.html)

That makes any given barrel of oil able to be made into about 50% fuel.

Sooooo

If 1/2 of all barrels of oil go to the chemical industry, and 1/2 of what is left is able to be made into gasoline

Then the maximum amount of gasoline fuel produced from any large deposit will be AT MAXIMUM 25% of the deposit.

[RandomGuy]

Gas is on the way out. I know that my next car will run at least partialy off batteries, and if we're lucky enough to have access to them, I'll buy a full electric vehicle.

Electricity = coal

Kind of a catch 22.

Buy an electric car to get away from high oil prices, and you are socked with high coal prices in the process.

Better to get a motorcycle.

[Extra Stout]

Bear in mind also that the chemical industry uses about 1/2 of all the oil the US consumes. They compete with you directly when it comes to any given barrel of oil.
2007:

US total crude oil and petroleum product consumption was 20,698 mbd

Petrochemical feedstocks were 642 mbd

3 percent is not half.

[Extra Stout]

Electricity = coal

Kind of a catch 22.

Buy an electric car to get away from high oil prices, and you are socked with high coal prices in the process.

Better to get a motorcycle.

Electricity has diversified energy sources. Retail is about 12 cents/kwh.

[Extra Stout]

Oops.

Repeat after me:

Tar sands are not economically feasible at any oil price without massive government subsidies.

4x
...
Shell reports that it makes twice as much per barrel on its tar sands operations than it does on its conventional operations, even before subsidies are taken into account.

Most of the new investment in the tar sands is going into in situ extraction methods which partially crack the bitumen in place so it can be pumped out. Methods include SAGS and THAI. These are much less expensive and less environmentally damaging than the strip-mining operations. They also use only about 5% as much water.

They are having to go in this direction because only 15-20% of the bitumen is close enough to the surface for mining to be viable.

With the emergence of in situ technologies, northern Alberta is experiencing a development boom, with Fort McMurray turning into a Wild West town, overwhelmed by the influx of new workers. Production there is set to quadruple in the next five to ten years.

In unrelated news, Republican bloggers are expressing alarm at the persecution of conservatives by the Alberta Human Rights Commission. Canada is not a free country anymore. It may be necessary to liberate the Albertans from Canadian tyranny!

[RandomGuy]

2007:

US total crude oil and petroleum product consumption was 20,698 mbd

Petrochemical feedstocks were 642 mbd

3 percent is not half.

First, remember that not 100% of a barrel of oil ends up being usable. You get about 20 gallons out of any given 40-50. Any direct comparison of oil consumed to finished product is less than 50%. Even so, with the figures you provide that still makes it only about 6%.

Plus, the article I read on this was in the Wall Street Journal, and was from an interview with a top CEO from Dow, if memory serves. I would trust their reporting on it. There might be some aspect of the fact that I am missing or only half remembering.

http://www.eia.doe.gov/pub/oil_gas/petroleum/analysis_publications/oil_market_basics/images/usconsprodsector.gif

If you look at the "other" and the "distillate" parts of the graph they add up to roughly the same height as the "gasoline".

[RandomGuy]

Shell reports that it makes twice as much per barrel on its tar sands operations than it does on its conventional operations, even before subsidies are taken into account.

Hmmm... Do you have a link for that?

[RandomGuy]

Electricity has diversified energy sources. Retail is about 12 cents/kwh.

Correct. I was speaking more about how coal provides more than half the electricity generated world-wide, and this applies to the US as a whole, as well.

Some countries, like France, Austria, and Iceland use more nuclear, hyrdo-, and geothermal sources than anything else, but they are the exception rather than the rule.

[Extra Stout]

First, remember that not 100% of a barrel of oil ends up being usable. You get about 20 gallons out of any given 40-50. Any direct comparison of oil consumed to finished product is less than 50%. Even so, with the figures you provide that still makes it only about 6%.
Nonsense. You're mistaking the fact that about half a barrel of oil becomes gasoline for the fallacy that only half is "usable."


Plus, the article I read on this was in the Wall Street Journal, and was from an interview with a top CEO from Dow, if memory serves. I would trust their reporting on it. There might be some aspect of the fact that I am missing or only half remembering.

http://www.eia.doe.gov/pub/oil_gas/petroleum/analysis_publications/oil_market_basics/images/usconsprodsector.gif

If you look at the "other" and the "distillate" parts of the graph they add up to roughly the same height as the "gasoline".
Things included in "other":
You need to disabuse yourself of this notion that the only products made from oil are gasoline and petrochemical feedstocks.

The "distillate" portion is something we more commonly call "diesel fuel." The "other" also includes kerosene (mostly for jet fuel), residual fuel oils, lubricants, waxes, petroleum coke, asphalt, natural gas and other light hydrocarbons like propane.

Petrochemical feedstocks make up 3% of a barrel of oil.

[Don Quixote]

In unrelated news, Republican bloggers are expressing alarm at the persecution of conservatives by the Alberta Human Rights Commission. Canada is not a free country anymore. It may be necessary to liberate the Albertans from Canadian tyranny!

Yes, I have heard about this. Mark Steyn got in trouble because a few Moslems didn't like what he wrote in MacLean's. I'm hearing the trial is a total joke.

But ... back to your discussion of oil.

[Extra Stout]

Hmmm... Do you have a link for that?
www.thiswhitesheetofpaperonmydesk.com

You'll have to settle for the per-barrel profit:
Tar sands: $21.75
Conventional: $12.41

They make money hand over fist right now. Part of the reason for that, is the fields have a large supply of captive natural gas the ventures use for fuel in processing. Eventually, within ten or twenty years, that runs out, and the ex situ processes which consist of digging enormous ghastly gashes in the boreal forest (probably environmentally the worst form of resource extraction on earth) become uneconomical, while the new in situ processes deeper underground predominate.

[Extra Stout]

Speaking of other places there are tar sands...

Expect Republicans in Congress to start heating up the rhetoric on the need to invade Venezuela and depose Chavez, because he's "destabilizing" South America or something.

[RandomGuy]

www.thiswhitesheetofpaperonmydesk.com

You'll have to settle for the per-barrel profit:
Tar sands: $21.75
Conventional: $12.41

They make money hand over fist right now. Part of the reason for that, is the fields have a large supply of captive natural gas the ventures use for fuel in processing. Eventually, within ten or twenty years, that runs out, and the ex situ processes which consist of digging enormous ghastly gashes in the boreal forest (probably environmentally the worst form of resource extraction on earth) become uneconomical, while the new in situ processes deeper underground predominate.

Ah, that would make sense. Tar sands themselves are simply almost not worth bothering with, but if it came coupled with bound and extractable natural gas, that would make a huge difference in the economics. Something to read up on.

[xrayzebra]

Speaking of natural gas, it reminds me. I thought
refineries weren't allowed to flare their gas any longer.
I thought they had to re-capture it somehow or other.
Am I wrong?

[RandomGuy]

Speaking of natural gas, it reminds me. I thought
refineries weren't allowed to flare their gas any longer.
I thought they had to re-capture it somehow or other.
Am I wrong?

I think that is correct.

There may have been some requirement to do so, but given the cost of natural gas anymore, it is actually becoming economical to capture the gas and use it for energy.

[xrayzebra]

I think that is correct.

There may have been some requirement to do so, but given the cost of natural gas anymore, it is actually becoming economical to capture the gas and use it for energy.

The last time I was in CC they were still flaring.
Although it has been awhile.

[Extra Stout]

The THAI, or toe-to-heel-air-injection technology, actually is applicable for more than just tar sands. It could also work on depleted wells such as in Texas.

But for Canada... you'll spend $10 million on a well and pump out $500 million worth of oil. Those hockey-swilling Canucks are going to own the United States.

[xrayzebra]

The THAI, or toe-to-heel-air-injection technology, actually is applicable for more than just tar sands. It could also work on depleted wells such as in Texas.

But for Canada... you'll spend $10 million on a well and pump out $500 million worth of oil. Those hockey-swilling Canucks are going to own the United States.

Yeah and they kinda like your name, with Molsons
in front of it. If I remember correctly. Except in
Ontario you had to drink in an all male bar but
always had to go through the ladies bar to get to the bathroom.......but I loved Canada. Although I
was in my twenties in those days and loved sports.
Including the winter sports. But can they drink,
long and hard.