The End of the Oil Age?

 

 

It is impossible for and unsophisticated observer to understand the dynamics of what is going on in the petroleum market and extremely difficult for a sophisticated observer to follow the trends in supply/demand given the sheer number of voices reporting their opinions.

In this post I want to announce a stunning new opinion first reported on the blog “Cassandra’s Legacy” authored by Ugo Bardi who resides in Florence. See: http://cassandralegacy.blogspot.com/2016/07/some-reflections-on-twilight-of-oil-age.html.

In his July 12 2016 blog, Ugo reported on the work by the Hills group

(http://www.thehillsgroup.org).   , who are a group of engineers who have been studying the decline in net delivered energy to society from petroleum. They posit the shocking opinion that the end of the oil age as we know it could be upon us in just a decade. They base their opinion of the steady decline in net energy available since the first well was drilled in Pennsylvania in 1859 to where we are now with various unconventional sources of oil whose extraction and delivery are demanding ever more energy to deliver the end product to the consumers. Simply put, it takes oil energy to get oil energy and when we reach the point where the amount of energy expended matches the energy obtained, the game is over. Let me post a segment from Ugo’s first of three posts from the Hills group which illustrates their alarming conclusion:

 

The end of the Oil Age is now
If we had a whole century ahead of us to transition, it would be comparatively easy.  Unfortunately, we no longer have that leisure since the second key challenge is the remaining time frame for whole system replacement.  What most people miss is that the rapid end of the Oil Age began in 2012 and will be over within some 10 years.  To the best of my knowledge, the most advanced material in this matter is the thermodynamic analysis of the oil industry taken as a whole system (OI) produced by The Hill’s Group (THG) over the last two years or so (http://www.thehillsgroup.org).

THG are seasoned US oil industry engineers led by B.W. Hill.  I find its analysis elegant and rock hard.  For example, one of its outputs concerns oil prices.  Over a 56 year time period, its correlation factor with historical data is 0.995.  In consequence, they began to warn in 2013 about the oil price crash that began late 2014 (see: http://www.thehillsgroup.org/depletion2_022.htm).  In what follows I rely on THG’s report and my own work.

 

Three figures summarize the situation we are in rather well, in my view.

 

Figure 1 – End Game

 

 

For purely thermodynamic reasons net energy delivered to the globalized industrial world (GIW) per barrel by the oil industry (OI) is rapidly trending to zero.  By net energy we mean here what the OI delivers to the GIW, essentially in the form of transport fuels, after the energy used by the OI for exploration, production, transport, refining and end products delivery have been deducted.

However, things break down well before reaching “ground zero”; i.e. within 10 years the OI as we know it will have disintegrated. Actually, a number of analysts from entities like Deloitte or Chatham House, reading financial tea leaves, are progressively reaching the same kind of conclusions.[1][1]

The Oil Age is finishing now, not in a slow, smooth, long slide down from “Peak Oil”, but in a rapid fizzling out of net energy.  This is now combining with things like climate change and the global debt issues to generate what I call a “Perfect Storm” big enough to bring the GIW to its knees.

I would urge the interested reader to read the posts and  go to the Hills group website to explore the details of their methodology. To say that their conclusions are earth shattering would be an understatement.

I have spent time analyzing their data and conclusions and implicit in their work is that it applies on the margin for new supply. There are legacy oil fields where the energy expended to deliver the oil is low because of sunk costs and infrastructure constructed decades ago but for new sources it is a different  story. The Hills Group does not say that we will have no oil in 10 years. They just state that the energy costs of acquiring new oil are steadily climbing and as time goes on society gets less and less energy and less exergy, or the ability to perform work from each bbl of oil.

From my reading I understand that they are talking about the energy available just in oil to get oil energy. Other energy sources like coal or gas or nuclear energy can and is utilized to obtain oil. Their point is  on the net oil energy available after expending oil energy to explore, drill, process and distribute that oil. In most cases oil energy is the only feasible energy available.

I would like to add a few points some of which were covered in the Cassandra’s Legacy blog and some not. Fossil fuels supply 86 % of world energy and the Hills group state that 88% of oil energy is “wasted”.  The percentage breakdown of that “waste” was not broken down in any of the data I was able to examine but the largest waste was unavoidable  thermodynamic waste inherent in the conversion from the chemical energy in the oil into thermal energy and mechanical energy as it is burned or oxidized. I assume that the thermodynamic losses relate to the enthalpy of the reaction combusting the hydrocarbons. Energy is consumed breaking bonds and energy is released forming new bonds in the products of combustion. For example cleaving the carbon/hydrogen bond is an endothermic process. It requires energy to break that bond. The products are CO2 and H20 which bond formation releases more energy than breaking the C/H bonds. Most of the energy consumed in an engine or power plant is wasted and dissipated as heat. Gas engines can be as low as 20% efficient and diesel engines can approach 40%. It is much the same with power plants whether burning oil or coal. Older plants are as low as 30% efficient and as high as 40% but that is still a lot of waste.  After exploration, production, refining, and delivery energy costs have been deducted, then that oil is burned in an engine which is only 20-40% efficient. It is pretty shocking how much we waste. In the case of a 4000 lb automobile, most of the energy is used to get the mass of the car down the road with the human occupants only a tiny percentage of that car’s mass.  The blog and the monographs also failed to mention the fact that since about the mid 60’s, the amount of new discoveries of oil failed to keep pace with world consumption. In 2014 or 2015, if memory serves ,the world used about 31 billion bbls of oil and new discoveries  totaled a bit less than 3 billion bbls and the cost of finding those 3 billion bbls has been going up about 7% a year since about 2000. Clearly business as usual(BAU) cannot continue with these numbers. Either we are going to have to use a whole lot less oil or find a whole lot more. If what new oil we find is too expensive for society, it will crash the economy. But sustained low oil prices will crash the oil industry. If the Hills group conclusions are right that the loss of this resource will be driven by thermodynamic factors and not financial or debt factors then we are entering a new paradigm.  My draw from the work of the Hills group is that oil availability will be rapidly diminishing in the next 10-15 years and if net energy declines as they propose, this rodeo will be over. The end of the oil age may be sooner than we think.

 

Cal 48 For sale: Narrative history of her refit and travels.

Narrative history of our Cal 48 KOHO

Well the day has finally arrived to pass on our beloved Koho to someone who will take care of her. We purchased KOHO in Tampa in 1998, trucked her to Portland OR where we worked on her and then to Pocatello ID to  continue work on her and then to Napa CA to finish the job. I tried to follow the recommendations of a very complete marine survey by RD Shelley in Tampa, FLA as well as my own refit desires. In 2005 we headed south from the Bay Area to spend the Fall and winter in Mexico with the goal of heading across the Pacific in the spring.  I had totally rebuilt and refurbished  the 1967 Yawl personally and with expert help.  Major life events abrogated our world cruising plans and she was dry-docked in San Carlos MX for a few years. In 2009 my daughter Heidi and I sailed her back from southern Mexico to Alaska where she had remained in dry storage in Hoonah, Alaska, a beautiful native community across from Glacier Bay Natl Park.  I brought her back to the Pacific Northwest in May 2014.  I have some current photos taken there last summer. We cruised her a summer visiting old haunts and harbors in SE Alaska but changes to my  health  necessitate  selling this sturdy, swiftboat to someone who will use her. I will post info on these fabulous Cal racers but I see the Cal48 has a facebook page here http://www.facebook.com/#!/pages/CAL-48-Yachts/102018083197140. KOHO also has a Facebook page called Koho Owens created by Heidi here.. with more pictures.
KOHO will be for sale for $39K  which is less than the cost of her refit. She needs little  in the way of work to head across the Gulf of Alaska or around the world. She is primarily set up for Northwest cruising with extensive and expensive electronics(Furuno) including radar, chart plotter and charts, multiple depth sounders including a powerful internal furuno transducer.  The Interphase depth sounder has fwd looking and side scanning modes making it extremely useful navigating into uncharted waters and among pinnacles. It slides out on a track easily seen from the cockpit. I have a full complement of Paper charts but we almost always used a laptop with charts using the Maxsea navigational software.We have CD charts of the ENTIRE WORLD which will go with KOHO.. I added a color LCD display mounted in the cockpit which not only outputted the charts but also Nav Data and even the Furuno 36 mile color Radar NAVNET display.  She also has the optional Furuno Weatherfax/Navtex unit which was very valuable in the Pacific. Koho has 2 Furuno GPSs and an ICOM VHF radio with 2 antennas She sports a commercial hydraulic auto pilot(WH) as well as a canvas sided pilothouse with hard aluminum dodger topped with a large array of solar panels which run all electronics and keep the batteries topped up without the need to run the engine which has a 90 amp and large 200 amp twin belted alternators. She has ample diesel tankage. Her base cupronickel 70 gal factory tank plus an added 50 gallon aluminum keel tank. I installed a fuel polishing system which constantly cleans the tanks when we are under power by means of circulating the fuel through large Racor filters. She has a diesel cookstove(Adriatic) as well as a deluxe Aussie Broadwater propane stove and oven. We lost our Hood furler near a  minimal Cat 1 hurricane in Mexico  but she sails very fast with just hank on sails as she takes little in the way of canvas to make 8-9 knots. We added new sails for her return trip to Alaska from Mexico. She has 2 mains, staysail, storm trysail, storm jib, a 100% jib and a  few rarely used genoas.  We blew out our little mizzen in a gale off Oregon so she will need a new mizzen. During the same gale our old fully battened main parted and we completed the voyage on a backup main. She has all new over strength 316 SS rigging(3/8″), new  oversize super duplex stainless chainplates and  mast tangs, and  bronze 5/8″turnbuckles  with sta-lok or Norseman terminals. The rigging and mast is grounded below water by bronze and copper bolts and strapping  for lightning protection running full length along the keel. We skirted a tropical depression in MX and sailed in  numerous gales on the trip up the West Coast on our way to Alaska. This is one strong boat. Before the refit, not so much. I was formerly a commercial fisherman in the Gulf(Alaska) and have seen some really rough weather and KOHO saw quite a lot of Force 6-8 conditions with no worries. She is sleek, dry and fast and underwent extensive hull and deck and bulkhead reinforcement  to all bulkheadswith epoxy fiberglass, a layer of kevlar and laminated yellow cedar forward for impact protection, and a 5/16” steel shoe  on the fwd keel .  One of our intended destinations as the South Atlantic and Antarctica and hull and rig strength was foremost in our minds. She has sheet urethane foam insulation in hull and deck which keeps her warm and dry below with no annoying water drips.  An overhead was installed using Off white vinyl and #932 eggshell Formical attached to ¼” plywood, screwed to epoxy fastened backing strips facilitating easy removal for later maintenance. The boat from the factory had only painted fiberglass overhead, and cabin sole.  Two Laminated deck beams and additional plywood were added  under high stress areas like deck tracks and under the heavy  windlass.  She  had 2 small areas  under the sidedeck staysail tracks with some dry rot which was repaired with injected West Epoxy following their detailed instructions. Her hull to deck joint was cleaned and sanded and lifted off the hull and reattached with #5200 and rebolted with SS bolts and then re fastened and epoxy glassed inside and out to solve the problem of hull to deck leaks, a common problem in older racers. All the bulkheads were then reglassed to the deck and reinforced where needed with many layers of epoxy and glass especially in high stress areas in the fwd bulkheads.  The leak prone Teak toerail was removed and replaced with a ½”X2” aluminum toerail and  black ¾” X 2” UHMW rub strips bolted or blind tapped to the hull for protection against barnacle encrusted pilings and other boats. New cleats were added which were bolted to ¼” aluminum plates and aluminum angle which were in turn bolted to bulkheads where possible.  Virtually all the blocks were replaced with new Garhauer ss units. In the cold wet Alaskan climate she is warm and dry with her diesel Dickinson stove. Additionally, she has 2 electric 110V baseboard heaters under the salon settes for use in port.  She has a large  powerful Ideal vertical windlass with  400′ of  HT  3/8”chain. The windlass can be operated in the bow with foot controls as well as in the cockpit and has a SS handle for backup hoisting of the 66 lb Bruce anchor. She may be sold with our NZ aluminum hull Hypalon inflatable. She has a Isuzu 60 hp diesel with about 660 hours with a feathering adjustable Italian made  22″ 3 BLADE MAX PROP. She is highly maneuverable with her spade rudder and under power with her large 3 blade feathering prop. She has a large V berth stateroom forward. Aft to port is the forward head with a Lavac toilet used offshore only. Across from the fwd head is a large cedar lined hanging locker with light. Aft is the main salon with a slide out settee berth. Outboard of that is a secure sea berth with lee cloths. She has aqua Naugahyde like upholstery and high density cushions throughout which are in v. good condition, many lightly used. To port in the salon I eliminated the full length settee berth and pilot berths and converted them to food and book and gear storage. The long folding 6′ long salon table was removed and replaced with 2 small folding eating tables. The table was removed because in the narrow hull, it dominated the salon making any movement difficult when folded down and impossible when deployed. Koho has an enormous teak cockpit and we found our family always took our meals there instead of below. I did take care in the salon remodel by leaving virtually all the original cabinet and furniture structure intact and my added cabinetry was attached to the existing framing with aluminum and steel angle brackets.  This would allow a later owner to restore the interior to her original racing configuration should he or she so desire. To continue the tour: aft of the port salon is the Dickinson cookstove mounted centrally  with the ss flue exiting the hull in the midline.  Above deck the flue has strong 316 ss grab rails protecting it from errant lines, sails etc. SS grab rails also protect the deck dorades. To port along the hull is a large gimbaled Broadwater propane stove with oven and broiler. Over this stove I added an opening Bomar deck hatch for ventilation. This  stove  has an electric shut off  solenoid on the two 7.5 gal aluminum  propane tanks  which are located aft of the mizzen masts on deck. After two failures in 3 years(one replaced under warranty) we elected to turn off the tanks manually. The poorly insulated Cal 48 icebox was replaced with a foam insulated custom fridge with a Glacier Bay type vacupanel lid. It is cooled by a 1/2 horse 12 V powered commercial compressor utilizing a water cooled cupronickel condenser and ss holding plate.All maintenance controls are easily accessed below the Port berth. Additionally it has a finned air cooled condenser for use in dry storage. To starboard is the unusual salon entry ladder flanking a large hanging locker which we used for food storage. The small shallow sink was replaced with a deep double ss sink with both fresh and saltwater faucets. The fresh water is accessed by foot pump. The fresh water tanks are  expensive cupronickel like the diesel tank. They are over 45 years old and have never leaked a drop! the fresh water has  a delicious taste as well. Initially we had a new pressure freshwater pump and accumulator tank installed but disconnected it when we headed across the Pacific to abrogate the accidental depletion of the water tanks. We now use only hand and foot pumps.

Continuing the tour aft you pass through a companionway door into the aft cabin. To stbd is the Nav station, to port is the aft head with another Lavac .  This head diverts waste to a holding tank or overboard by a valve.  I should mention that all the ancient gate valve sea cocks were replaced with marine  ball valve units with new marine hose with all new SS hose clamps. Aft of the head is a double berth. Aft of the Nav Station is a quarter berth traditionally the off watch berth of the skipper. The Nav station is the electronic heart of the boat with a large 12V breaker panel above and 110 V breakers below, well separated for safety.  A Prosine inverter/charger is mounted below. The boat was entirely rewired with tinned copper marine grade wiring with subpanels distributed throughout the boat facilitating troubleshooting of circuits. The original boat had only 2 110V outlets using non marine #14 gauge automobile quality wiring and outdated house breakers.  The 12V wiring was a few  old #14 and #16 gauge circuits with a mix of old breakers and fuses, poorly secured and difficult to access. Treadmaster covered steps allow access to the pilothouse/dodger area. The drop boards are ¾” teak or ¾” acrylic for good bombproof visibility!  The cockpit has a thick laminated glass dodger forward and vinyl windows port, starboard and aft. In warm weather the pilothouse curtains can be lifted and secured. The top of the pilothouse is Aluminum and it is well braced. There is an acrylic hatch in the roof to view the sails and the sides have fiddles to collect rainwater along with SS rails for outboard safety. I designed the pilothouse to be removable for truck transport and we have removed the house both times we trucked Koho across the country. It takes half a day to reassemble and re bolt the house. Both in the pilothouse and below are ample and sturdy grab SS grap rails replacing flimsy teak rails for security in a rolling seaway.  Some double as webbing attachment for deck gear such as the Inflatable. I replaced the low and flimsy factory stanchions and pulpits with thick wall 36″ high  316 SS stanchions using 316 ss sockets of my own design with fish netting for safety. Her aft factory cable quadrant steering was rebuilt with new cable, sprockets and bearings . At sea we rarely steered with anything other than the WH autopilot remote which was powerful, sensitive and accurate and allowed movement forward for enhanced visibility. Aft of the cockpit is the mizzen mast which does double duty as a mounting platform for the electronics. Both masts have steps to the top for facilitating rig inspection and maintenance chores. There is an Aires Windvane mounted on the stern which we used once to confirm it worked properly(which it did). We disconnected  the wind vane lines. It remains as a a backup in case the WH autopilot fails. It never has. I prefer to steer by a heading rather than by wind direction. The WH hydraulic/electric autopilot is the same design as what I had installed on my 80,000 lb commercial Halibut/Salmon troller where it never failed in the at times rough Gulf of Alaska. It performed flawlessly on the recent trip south from Alaska in May 2014, steering virtually the entire way.

The hull was   double epoxy sealed barrier coated  using the WEST System and Copperpoxy followed by conventional antifouling paint. When I purchased her she had a few small blisters despite a well done epoxy barrier coat by her previous owner in Florida. She has been blister free ever since despite spending  years in warm Mexican waters as well as  in SE Alaska. The spade rudder was removed and X-rayed to inspect the  internal steel framing for corrosion, None was found and additional epoxy fiberglass was added. The rudder tube was also epoxy/graphite lined and reinforced per WEST system recommendations to reduce friction. There is a Gore Tex bearing/seal the the top of the rudder housing which has never leaked.

KOHO was painted with Epoxy and top coated with Sterling 2 part LP in 2005. The hull has lost luster and the deck could use a fresh coat after 9 years of wear and tear. Belatedly I must mention that during this long expensive refit,

No boat is perfect and Koho by now after 4 years in the harsh Alaskan climate will need some cosmetic attention.  I removed the shower and water heater for our transpacific trip because her tankage is just 90 gallons.The cockpit  and below deck teak  may need re varnishing and there may be leaks in all the usual places boats can leak. The electronics were all functional when I left her but electronics age just like the rest of us. She will need a new set of batteries if abundant voyaging capacity is desired. She has 2 new deep cycle batteries installed for the trip south from Alaska in 2014. She has capacity below for 7-9  #27 or #31 batteries. This  Cal 48  is big and powerful  and  without modern labor saving aids like headsail furlers, she  can be a real handful in gale conditions and above.  Nevertheless we have sailed her  shorthanded on long  Pacific voyages with just hank on sails. I have extensive offshore experience on a variety of sail and power vessels and I can honestly say I have never sailed a boat as controllable , predictable, stable and comfortable as this Cal 48. Steve Dashew in his book the Offshore Handbook recommended the Cal 48 as an excelled example of classic plastic. But I digress… With the fully battened main and Hood furler, I could single hand her 10 years ago under mild to moderate conditions.  The good news is that her sleek hull is easily driven with only modest canvas..  This boat like most old  CCA racers is not a roomy beamy liveaboard apartment. She has no current shower and we removed the large water heater after it failed very early on. She was designed to go to distant  places fast. That she does. In spades. To my knowledge Koho is structurally sound and most of the expensive refitting and strengthening has been done. If I were to keep her I would purchase a headsail furler, because in gale conditions Koho is perfectly balanced under just mizzen and staysail w or w/o a reefed main.  I would install a new mainsheet traveler  as well.
We may be reached at our mailing address: Hugh Owens, PO Box 309, Wilson WY 83014 or through our web sites: Cal48koho.wordpress.com or cal48koho.blogspot.com or at cal48.com.  Our home phone is 307 203-2109. Call is 307 699-2254. I have additional pictures of the interior.  There are a few short sailing videos of Koho on the other links listed as well as some pics under sail and at anchor.

https://www.flickr.com/photos/12248912@N07/

https://www.youtube.com/watch?v=YnRIDRpGLC0

https://www.youtube.com/watch?v=7hoHlowWo4I

http://svkoho.blogspot.com/2005/12/sf-bay-to-la-paz.html

Nav Station

Carbon Gigaton explosion

I have previously posted Frank Landis’ work in a book entitled Hot Earth Dreams that I reviewed here and this report from a prominent peer reviewed geoscience journal was a stunner if their methodology is to be believed. I reproduce the March 21 2016 article in the British paper the Guardian in its entirety:

 

 

Humanity is pumping climate-warming carbon dioxide into the atmosphere 10 times faster than at any point in the past 66m years, according to new research.

The revelation shows the world has entered “uncharted territory” and that the consequences for life on land and in the oceans may be more severe than at any time since the extinction of the dinosaurs.

It comes as the World Meteorological Organisation released its Status of the Climate Report detailing a string of weather and climate records that were broken in 2015.

“The future is happening now,” said WMO secretary-general Petteri Taalas in a statement released alongside the report. “The alarming rate of change we are now witnessing in our climate as a result of greenhouse gas emission is unprecedented in modern records.”

Scientists have already warned that unchecked global warming will inflict “severe, widespread, and irreversible impacts” on people and the natural world.

But the new research shows how unprecedented the current rate of carbon emissions is, meaning geological records are unable to help predict the impacts of current climate change. Scientists have recently expressed alarm at the heat records shattered in the first months of 2016.

“Our carbon release rate is unprecedented over such a long time period in Earth’s history, [that] it means that we have effectively entered a ‘no-analogue’ state,” said Prof Richard Zeebe, at the University of Hawaii, who led the new work. “The present and future rate of climate change and ocean acidification is too fast for many species to adapt, which is likely to result in widespread future extinctions.”

Many researchers think the human impacts on the planet has already pushed it into a new geological era, dubbed the Anthropocene. Wildlife is already being lost at rates similar to past mass extinctions, driven in part by the destruction of habitats.

“The new results indicate that the current rate of carbon emissions is unprecedented … the most extreme global warming event of the past 66m years, by at least an order of magnitude,” said Peter Stassen, a geologist at the University of Leuven in Belgium, and who was not involved in the work

 

The new research, published in the journal Nature Geoscience, examined an event 56m years ago believed to be the biggest release of carbon into the atmosphere since the dinosaur extinction 66m years ago. The so-called Palaeocene–Eocene Thermal Maximum (PETM) saw temperatures rise by 5C over a few thousand years.

But until now, it had been impossible to determine how rapidly the carbon had been released at the start of the event because dating using radiometry and geological strata lacks sufficient resolution. Zeebe and colleagues developed a new method to determine the rate of temperature and carbon changes, using the stable isotopes of oxygen and carbon.

It revealed that at the start of the PETM, no more than 1bn tonnes of carbon was being released into the atmosphere each year. In stark contrast, 10bn tonnes of carbon are released into the atmosphere every year by fossil fuel-burning and other human activity.

“The consequences are likely to be much more severe,” said Zeebe. “If you kick a system very fast, it usually responds differently than if you nudge it slowly but steadily.”

Scientists have warned that climate change may not cause temperature to rise steadily, but that “tipping points” – such as the loss of all Arctic ice or the mass release of methane from permafrost – could see much sharper and more dangerous changes. “If anthropogenic emissions rates have no analogue in Earth’s recent history, then unforeseeable future responses of the climate system are possible,” the researchers concluded.

“In studying one of the most dramatic episodes of global change since the end of the age of the dinosaurs, these scientists show that we are currently in uncharted territory in the rate carbon is being released into the atmosphere and oceans,” said Candace Major, from the US National Science Foundation, which funded the research.

The source of the PETM carbon emissions is thought to be the mass release of methane which had been frozen as hydrates on the ocean floor. It may have been triggered by a smaller initial release of carbon resulting from hot magma pushing into and melting large limestone deposits.

 

The importance of this research if correct cannot be overstated. There are possibly no relatively recent climate epochs which could be modeled to help explain and project scenarios going forward estimating  the intensity of potential climatic impacts . If 1 GtC has been the average emission over millions of years and our man caused emissions are now 10+, then the impacts on our climate may not even be estimated either temporally or quantitatively. If we have an  augmented explosion of Carbon from methane clathrates and hydrates even close to what happened in the PETM epoch, it will be Katie Bar the Door. More to the point, there may be nothing we can do in the way of Carbon emitting mitigation short of reducing emissions to Zero that would make any difference to the outcome. That is a sobering and depressing thought.

 

 

 

 

Book Review of The English Spy

This is my first Daniel Silva Novel. It is apparently the 11th or 12th novel in the Gabriel Allon series, an Israeli intelligence operative/assasin).
The book begins with an explosion aboard a charter yacht in the Caribbean which kills a divorced English princess(read: Princess Di). The perp, Eamon Quinn, a master bomb maker formerly of the IRA, now a chef on the yacht, escapes in a Zodiac before the timer hits zero. Whodunit? MI-5 and MI-6 get involved tracking down Mr Quinn. Enter Christopher Keller, ex British commando who has been employed as a hit man by a mobster on Corsica but now gets drafted by British intelligence and Gabriel Allon, an Israeli assassin. The chase is on in Ireland, Northern Ireland, England and a variety of European venues. Enter a few Russian women, one a spy, one a mistress of the PM. Enter a few Russians who ordered the hit and who now want to snuff out Gabriel Allon. Boom! goes the bomb vaporizing some innocent women and children in London and almost Mr Allon who hides out in a safe house recovering from his injuries. It seems the bombmaker, Mr Quinn has now made his second attempt on Gabriel Allon, the first being an attempt which nailed Mr Allon’s family killing his son and brain damaging his wife. So now it’s revenge time. We find out that Mr Quinn was working for a higher up in Russia ,(Read: V. Putin). More chasing around Europe ensues until the Gunfight at the OK Corral back on the Aulde Sod . But Quinn slips out of the noose and we are treated to a tender interlude back in good ole Tel Aviv where Gabriel’s wife is great with child(twins). Allon is on paternity leave from taking over as head of Israeli Intelligence in Tel Aviv. You know Tel Aviv, right? It’s the place where Silva informs us “the missles rain down.,” on numerous occasions. The other British assassin, Chris Keller stays on the job chasing Mr Quinn all over the world finally plugging him in Argentina.

So how do I really feel about the book you ask? It’s acceptable Airport kiosk thriller trash by “#1 NY Times best selling Author Daniel Silva!” as the dust jacket screams.
Despite the predictable formulaic format the book does succeed on a few levels. It flows well with decent dialog and lots of action scenes including some nice torture if that is what rings your bell. The women characters come across as beautiful interesting women spies. Character development is marginal . The plot structure uses real world figures and current events as a substitute for coming up with something original. The whole thing is of course utterly implausible. Silva might as well be on permanent retainer to write propaganda action novels for British and Israeli Intelligence which pretty much describes the book.
This is a vapid, vacuous good guy/bad guy book with only British and Israeli action figures written for the type of readership who view the world through binary lenses. The good guys live in Merrie Old England and the Holy Land. The bad guys live in Ireland, Russia, Iran and the Middle East.
The bad thing is that Silva beats the poor reader over the head promoting his Zionist views clothed in a third rate thriller which had to have taken him at least two weekends to write. The good thing is that Daniel Silva is no longer working as a foreign correspondent reporting from the Middle East. I do believe that he could be a good writer in the thriller genre if he could spend a little more time on his craft, find a good editor, develop some original plot lines and maybe try to see the world in a more nuanced light. In the meanwhile if you want to read authors who have mastered the genre ,you need to look at Fredrick Forsyth. Ken Follett and Robert Ludlum and CJ Box. This was my first Silva novel as I stated at the outset. It will be my last.

The Big One

 

My first intimation that all might not be right with my world was jacking up the Tahoe with a long handled floor jack and experiencing excessive fatigue for the level of exertion. I rested and the fatigue passed. Two days later on March 8, 2016, I was working out at the Teton Sports Club at near Cross Fit intensity and noticed marked exertion and some dyspnea and having to leave the class after I noticed some chest tightness. I showered and drove home and lay down waiting for the tightness and shortness of breath to abate. I had taken an aspirin worrying that the pain was at least cardiac based angina. When the pain persisted I took some motrin and a Vicodin which had no effect.  The pain increased markedly and I began to sweat in the cool bedroom. I recognized this as diaphoresis ,  another well recognized symptom of an impending heart attack. I called my wife who left work and drove home to carry me to the emergency room. The staff at St John’s Hospital   https://plus.google.com/+TetonhospitalOrg in Jackson rapidly attended to me slapping on Oxygen and monitoring leads as they performed an EKG. The look on the face of the Emergency Room Doctor showed alarm and I turned around and saw the Q waves and the ST segment elevation characteristic of an inferior myocardial infarction. Dr Adam Johnson, the ER Doc quickly put in two large Iv’s and moved me to the code room and began administering a narcotic analgesic and nitroglycerin to control the pain which was becoming more severe. I heard him call for our resident mountaineer/cardiologist, Dr Ellen Gallant. I was fully alert and aware of all the activity and discussion going on around me and I was pleased that the folks were following correct procedure in the right order. I looked at my wife a former ER nurse herself who appeared calm but concerned seated directly across from me. My daughter arrived in tears. I felt very calm myself and decided to relax knowing that allowing fear to take over would release adrenalin which could worsen an already bad situation. I was acutely aware of all conversations going on around me. It seemed my auditory acuity was enhanced.  ER Medicine had been my profession for 15 years and I had taken care of many emergent chest pain patients in the same way that they were taking care of me. The two doctors conferred and told me that I was a candidate for emergency thrombolytic therapy, a relatively high risk treatment to try to dissolve the clot blocking blood flow in my heart. This was quickly administered and it was shortly thereafter that my vital signs deteriorated. Both pulse and blood pressure fell. At one point I heard the word “asystole” and felt my visual fields narrowing. I still felt hyper alert and aware.  Dr Johnson’s face dropped in front of mine telling me “Dr Owens. Talk to me!” I thought to myself, “What am I supposed to say? I am fine and alert.” I decided to try to reassure him and tried to talk but found I couldn’t formulate any words. The thought occurred to me that I now might have had a stroke, a side effect of thrombolytic therapy. My wife also saw all this and said my blood pressure steadily began to fall from 80 to 60 to 40 to 20 and then to 0 along with no pulsation for a 10 second interval. I was surprised to still be crystal clear in my perception even as I heard ominous expressions like “He’s unresponsive. We’re losing him.”

I didn’t feel like I was being lost but I expected to crash momentarily as I saw them bring over the defibrillator. This was the only time I became alarmed because I didn’t want to be defibrillated while fully awake. The staff continued to administer cardiac drugs, dopamine and atropine. At one point there was discussion of the Atropine dose, .5 mg or 1 mg. I wanted to scream out “1 mg! Give me 1 mg.!” And just when the situation seemed most dire I heard someone say, “We got a pressure”. My pulse remained low and I heard Dr Gallant call for a  balloon pacemaker and a cart was brought over. I could see them staring at the monitor and finally I heard reassuring words like”His pulse is coming back. His blood pressure is increasing.”   Being in cardiogenic shock was extremely uncomfortable but as my vital signs improved I could feel the chest pain slowly starting to fade.  Dr Gallant leaned over me and said I needed to have stint placement and she recommended that I be flown to Idaho Falls to Dr Kip Webb, an interventional cardiologist who was highly experienced in the procedure. I remember arguing with Dr Gallant that I might prefer going to Salt Lake City which was the regional referral center I used when I was still practicing. I also said I might prefer going in an ambulance instead of an aircraft. Dr Gallant said she had complete confidence in Dr Webb but  that this was a time critical situation and that I need to get to Dr Webb as quickly as possible. Dr Gallant is a recently arrived cardiologist with many years of experience in one of the nation’s best Interventional Cardiology hospitals, Columbia Presbyterian in New York City. I decided to shut up and go with her plan. By now I was feeling markedly better with minimal chest pain and improving vital signs. From that point things began to move quickly. There was a snowstorm swirling over the Tetons and a helicopter was ruled out. A Swiss built fixed wing aircraft ambulance named a Pilatus PC-12 was already enroute to the Jackson Hole airport and I was quickly bundled up and loaded into an ambulance and rushed to the airport. My wife, Karlene, was told she might be able to fly with me and I heard someone ask her weight to decide if she was skinny enough to go. The ambulance pulled up to the runway and I was quickly loaded into the fuselage of the Pilatus and minutes later we lifted off the runway and climbed steeply into the snowstorm swirling over the Tetons. The aircraft was quiet and powerful and fast and we finally came out on top of the cloud layer into dazzling sunlight. Unfortunately I felt my chest pain returning.  Looking at my EKG  I  saw my ST segment again lifting, a sign of deteriorating cardiac function.  The nose of the Pilatus dropped as we began our descent into SE Idaho and skimmed over bare wheat and potato fields on approach to the Idaho Falls Airport. We landed smoothly and I was loaded into an ambulance and rushed to Eastern Idaho Regional Medical Center locally called EIRMC or “ERMAC”. Dr Webb was standing by the ER doors. He introduced himself to Karlene and myself and briefly stated his plan and in seconds I was taken direct to the Cath Lab where Dr Webb and his staff rapidly busied themselves for a stint placement. Dr Webb uses a radial artery approach instead of the more traditional groin approach which I was more familiar with. I watched him advance the guide wire and the stint on the monitor . I was experiencing moderately severe chest  pain. He said. “It’s in place and I am inflating the balloon to 15 atmospheres”. The next second I felt an immediate abolition of my chest pain. I was simply stunned. The pain was gone…..completely gone!. Dr Webb placed a second stint lower down in my Right Coronary artery and then said “We’re done. I am going to get your wife so she can see what we did.” I think the whole procedure lasted no more than 15 or 20 minutes.

After a night in the cardiac unit , Karlene and I drove back to Wyoming to try to pick up our lives where we left off. I was extremely luck to have been in the right place at the right time, rapidly treated by experts who saved my life. Dr Webb said this approach can be not only life saving but heart muscle preserving if flow can be restored within a four hour window. Lucky me.

Book Review of Hot Earth Dreams

I want to state at the outset that this is the most important book extant on the subject of climate change. It is certainly one of the four or five most important books I have read in my life and it is a must read for anyone trying to escape the white noise of a civilization approaching stall speed after several hundred years of industrialization made possible by burning the accumulated energy of a few hundred million years of decayed animal and vegetable matter. That burning has had enormous consequence for the planet with an explosion of machines and technology, resource extraction and population growth unimaginable to the people toiling in the fields in a pre fossil fuel era a few hundred years ago. Like all explosions, there are consequences which will follow from the unrestricted burning of oil and gas and coal. That is where Frank Landis steps in with this master work of cause and effect, plausible projection and extrapolation of current trends spinning scenarios which are stunning and disturbing. Unique to his book are timelines of what our future world could look like in the near future. Landis maps this future as beginning when the world has shot its carbon emissions wad sometime in the next 50-100 years and continuing for the next 400,000 years. The early portion of that period beginning roughly at the turn of the next century he calls the High Altithermal which will cover about1500 years. The last 398,5000 years he calls the Deep Altithermal period. The High Altithermal is the period during which the earth continuously warms at about 1 degree C every 40 years peaking at about 5 to 8 deg C in the next 200-300 years. This will be a time of great meteorological change which includes sea level rise brought about by melting of the Greenland and the West Antarctic and East Antarctic ice sheets.
The key figures to remember are how many tons of carbon has been emitted to date and how many more will be emitted in the next 100 years. We have emitted 370 Gigatons of carbon in all our history since we climbed out of the trees onto an African savanna. Giga- = billion. Since 1970 we have emitted twice as much carbon into the atmosphere as we did in all human history prior to 1970. If we continue to emit business as usual, we are on track to emit anywhere from 1000 to 1400 GtC(giga-tons of carbon) by the time we are through by the end of this century. This emission will be matched or exceeded by other sources of carbon such as methane clathrates and methane hydrates being released in a thawing Arctic.
The reader must keep in mind that Landis is offering possible scenarios and timelines all based upon the work of climate scientists using models constructed since the advent of computers. The real value of his book is his broad encompassing eclectic approach to all the features of a warming world beyond climatic and meteorological change. For example how will all organisms and populations and nations adapt to these sudden changes? How will language change? What empires will rise or fall? Will this period we call the anthropocene of evolved humankind cease to exist? What will happen to our economic, social and political structures? What civilizations who have risen and fallen before can contribute to the argument.
Additionally Frank Landis has many chapters on how we humans perceive such a discounted future by clinging to faulty reasoning such as binary thinking, by focusing upon a
Revelations style Apocalypse and wishful thinking where Technology will save us. THEY will think of something, right????
Implicit in his book is a tacit assumption that we are dealing with a collapse of world civilization and a massive die off at some point in the not too distant future. Landis tiptoes around this subject and rarely spins dramatic Mad Max cinematic visions. Only rarely does he get explicit of what might happen and how bad it could be. He is a little more daring in his excellent blog: heteromeles.com. In a recent post he imagined what his home state of California might look like at the end of this century. For example he gives the current population of California(39 million) and estimated population in 2050(52 million) and assumes a 95% die-off by the end of the century taking it to 2.6 million which is still ten times the population before the white man arrived. His statics are cold and dry and he eschews delving into what a 95% die-off would look like, what human suffering it would involve. Whew!
Landis structures the book in a unique fashion keeping chapters short as he jumps from subject to subject. It makes for a book which is read chapter by chapter and can be put down without the reader losing his thread. After all this is not a CJ Box thriller.
The book suffers at times from errors of fact and spelling and syntax and it could use a good edit. Some of the terms he uses such as Terafart referring to a Trillion tons of Carbon is jarring to this reader as well as use of street slang like “…this sucks…” and similar expressions mars what is an otherwise extremely well reasoned and highly readable sentence and paragraph structure. He can be humorous and witty as he lays out a really apocalyptic future. His book is detailed and scientific and well annotated with an extensive bibliography. I do feel that he could add more facets to his diamond such as how and why and if these die-offs are inevitable and how they might look. He also needs a chapter or two on the physics of energy and how it relates to fossil based food, goods and service production and how or if so called renewable energy might mitigate his scenarios.
This copy is a published on demand book which needs a big name publishing house to take over production and distribution to get it the audience it deserves. Hot Earth Dreams 1.0 is an amazing effort and this reader is looking forward to version 2.0 .

Cliodynamics

Cliodynamics is a new field which attempts to put the study of history on a sound scientific footing. And what do new fields need first? You guessed it. A Muse. Let me introduce you to Clio, the Muse of history. Like all good muses Clio comes to us from Greek Mythology. The “dynamics” part I assume refers to system dynamics which for some reason never chose a muse. This term was coined by Peter Turchin. a professor at the University of Connecticut who is a co author  along with Sergey Nefedov of a book I recently read entitled Secular Cycles.  

It is a new slant on an old  theory , that of Social Cycles, the notion that history repeats itself in a repeating sequence of dark ages and golden ages, booms and busts. Turchin and Nefedov’s achievement is applying a number’s based analytical approach to history utilizing a set of variables which they saw as common to eight civilizations they studied from early Roman to late Tzarist Russia. They named this  approach Cliodynamics and dubbed their model a demographic/structural theory. The key variables they emphasized were population, income inequality between elites and commoners, wages and prices, and sociopolitical instability. They called their approach semi-Malthusian. They could just as easily have called it an ecological approach as a good part of their discussion related to carrying capacity of rising and declining populations in the face of disease, famines and wars. They they were looking for patterns in the population and instability oscillations experienced by these eight civilizations. They acknowledged standing on the shoulders of the thinkers and philosophers who preceded them from the 14th century Tunisian Ibn Khaldun, the17th century Neopolitan Giambattista Vico up to contemporaries like Oswald Spengler in the last century. They give particular praise to their associate Jack Goldstone at George Mason University, a sociologist and political scientist specializing in rebellions and revolutions. Goldstone has worked as a consultant to  the Federal Government on a variety of projects dealing with implications of rebellions and instability in relation to US foreign policy.

Their model described four phases which the civilizations cycled through:Expansion, stagflation, crisis and depression . The time span for a full cycle varied but seems to have been around 300 years. The authors emphasize that their study was of agrarian civilizations but most reviewers and others who have commented on the book understandably jump to the applicability of the model to current civilizations. In their conclusion they address this issue with a variety of caveats including a willingness to modify the model to fit contemporary applications. One highly regarded energy and economic blogger, Gail Tverberg described the phases as follows:

 

 

  1. Expansion phase (growth) – Increasing population, relatively low taxes, political stability, low grain prices, and high real (inflation-adjusted) wages.
  2. Stagflation phase (compression) – Slowing population growth, much heavier taxes needed to support a growing elite class, low but increasing political instability, rising grain prices, declining real wages for most workers, increasing indebtedness, and increasing urbanization.
  3. Crisis phase (state breakdown) – Population declining from the peak (typically by disease or by deaths from warfare), high income inequality, political instability increasing to a peak, high but very variable grain prices, high urbanization, tax system in a state of crisis, peasant uprisings.
  4. Depression/inter cycle – Low population, attempts to restore state,  declining economic inequality, grain prices decreasing but variable.

Clearly Dr Turchin is thinking about the fit of his model to our society. He posted a recent paper this month dealing with this very point. I found a posted graph very interesting which I reproduce here:

Income inequality was a key variable in Secular Cycles. I have corresponded with Dr Turchin on this graphic which by the way was not his. I felt it understated current income inequality which is a subject much in current news and opinion. Clearly US well being is negative and inequality is growing.

If I were sitting down with Turchin and Nefedov right now I would be asking how their analysis would apply to the  industrial civilization that has blossomed  in the past 200 years. I have spent some time pondering just the fossil energy contribution to the trajectory of our civilization. Energy has been the catalyst that has driven exponential growth in some of Turchin and Nefedov’s  fundamental variables such as population and carrying capacity and food availability.Elite overproduction has clearly been magnified by the enormous wealth conferred on oil consuming societies both directly and indirectly. It has certainly fueled sociopolitical instability. The Japanese attack on Pearl Harbor occurred as a response to the US and Britain cutting off petroleum access to Japan. If my catalyst assumption  of energy’s contribution holds, how might the variables respond in magnitude, amplification and direction.? Might fossil energy be its own independent variable? And let’s not forget the elephant in the room: Globalization. We have an interlinked industrial civilization and if there were to be collapse of one nation, multiple collapses would almost certainly be likely.

I have found negative comments about Cliodynamics from historians skeptical that there are universal laws underlying social behavior, Many historians consider historical processes non-linear and highly complex and equally skeptical that it can be put on as sound a footing as the empirical sciences

. They point to economics which has tried to emulate and ape the physical sciences by employing complex mathematical formulas and modeling techniques with generally dismal predictive results.  In economics the situation may be improving with the work of Ken Rogoff and Carmen Reinhart looking at 800 years of financial missteps in their book: This time is different:Eight centuries of financial folly. History and economics are pretty closely wedded. Turchin’s work is retrospective and correlation is not the same as causation , but some of the correlations seemed pretty stunning. His observation that elite overproduction preceded the crisis phase in all cases is notable. I think it is healthful that Turchin’s background as an ecologist and statistician has wafted some beneficial cross pollination into the historical field. Whether it can be transformed into a science remains to be seen. Double blind testing, the gold standard of scientific inquiry, will be difficult.And as Niels Bohr said “Prediction is difficult, especially about the future.”

 

Empire Builder

 

       I have spent the past several weeks preparing and boning up on natural gas issues in preparation to be a panelist at a meeting of our local Chamber of Commerce. It went well, was well moderated and we all got our licks in and I hope the audience derived some benefit. I fielded some interesting and penetrating questions both during and afterward. The basic assumptions of the economic community  in our isolated high mountain valley  remain intact despite my best efforts to sound the alarm, Paul Revere style.I have pointed out in numerous articles how tenuous our energy extravagant lifestyle here is in Wyoming and particularly in Jackson Hole. I have pointed out that Frac Gas is a bubble, that Wyoming has the highest per capita energy consumption of the 50 states,  and that our economy has legs because of 500 million years of concentrated sunlight. We have burned through 50% of all the oil that has been drilled here in the US just since the late 80’s.That was the high grade ore , so to speak, conventional light sweet crude, most of which looks like Wesson Oil. Now we are into the dirty stuff from tar pits and sand mines and  4 miles under the Ocean. It’s there for the taking at much greater cost in declining net energy and environmental degradation. Ominously, Wall Street  is in the act slicing and dicing and hyping and spinning the meme of energy independence  in its latest bubble. The political dominated energy propaganda arms of the DOE, IEA and EIA along with the oil majors are keeping the American Dream alive with deceptive, unrealistic and unlikely predictions of future abundance. The fact that these predictions are from the mouths of the least reliable subset of hominids: …ECONOMISTS, seems to have escaped everyone’s notice. There are a few independent analysts I have cited in previous blogs as well as some percipient bloggers.http://karenlynnallen.blogspot.com/2013/02/the-end-of-age-of-oil-has-arrived.html#comment-form.

       But in some ways, the oil and gas story is not the big story. It is a  part of the big story which of course is The Rise and Fall of the American Empire. This is a subject I have covered repeatedly coming at it from different angles:ecological, economic, fiscal, sociopolitical and primarily from the foundation of the empire:Energy. I have studied other empires, why they rose and fell as far back as the Harappan and Indus Valley Empires to our present American Empire.It is an engrossing tale of discovery, of chance, of ambition and greed and invention, determination and cooperation of all the players.It happened because all the pieces were in place, the right place. At the right time. It took the energy of people, of animals and of slaves to build the foundation for this empire. But it was the Exajoules of a vast store of fossil energy that provided the afterburner that blew the United States past its European and Asian rivals.

       Absent this unexpected energy bonus enjoyed by America, there is every reason to believe that establishment of Empire was in our DNA. There were abundant resources, willing hands, and capital all converging on a new world, free for the taking.We were probably foreordained to become an empire but no empires last. Empire rise. Empires grow, and empires fall. It is the wherefore and the how , the anatomy and physiology of empires that I find fascinating. It is the physician in me that drives the desire to understand this civilization but unfortunately the study of empires, both healthy and ailing, has not been the sort of study that has yielded results with the same degree of certitude present in fields such as physics or biology. That is until now. But we may just have a new tool to study and dissect empires. Are there universal laws operating which explain the trajectory of empires?. There are qualitative assessments of empires rise and falls. But might there be quantitative factors that might explain the same? That will be the subject of the next blog on Cliodynamics.

Dispatches from Frackbubble Wyoming

Welcome to my world, Frackhole, Wyoming. If you’re wondering what the roads out here in the West look like, have a gander at this scenic vista of oil and gas trucks as far as the eye can see. Of course there have been many days when the eye can’t see very far because of these trucks and the dubious economic benefit they have provided in my little corner of heaven. You know what I am talking about if you happened to be driving through Pasadena California in say, 1956. You see here in Wyoming in the vicinity of the Pinedale anticline or in the little town of Pavillion, we have this little problem with “externalities.” as the economists like to term it. Other people would call it air and water pollution, but we term it the cost of progress. Wyoming has been pulling gas out of the ground for a long time but it’s only been in the last 5 years that we have had choking  Pasadena smog. Unless you are a underemployed roustabout happy to finally  have a job, or one of  equipment suppliers or camp followers of the oil and gas industry, you might be a wee bit unhappy at water you can’t drink and air you can’t breathe. On the other hand, you might just decide to “cowboy up” as we say. “This isn’t your first rodeo,” as we also say. If you ask some of the denizens of Sublette county what they think, you might  also hear something along the lines of “You can’t eat mountains,” if your job depends upon  those long  truck convoys.

In this blog, I have been covering energy and economy  issues looking at cause and consequence, and at past and future trends. Out here mining and energy pay the bills while the rest of us go along for the ride,  reaping the benefits, paying no income taxes and sending our kids to good schools taught by well paid and well trained teachers. We have seen boom and bust times before and it’s boom now. It’s my guess we are seeing perhaps our last big boom. Vast quantities of oil and gas has been exported but we could always see the mountains. On some days  now we no longer can. It’s no secret that our politicians  have long since been captured by these resource industries. They take the money and turn their backs and when the citizens hold meetings and complain  that their eyes burn and their children can’t breathe, the state tells them to car pool and drink bottled water or call for more studies from non EPA analysts who aren’t biased virementalists.

Now is as good a time as any to get back to why a big reason for  Pasadena air in Sublette County. I have an acquaintance who is a geologist near Pinedale who said some of his new drilling rigs are using Nat Gas instead of diesel. Where was all the ozone coming from? Nat gas is clean, right? So I wondered about the fracking pumps and started digging. It seems they are really huge with very powerful diesel engines on the order of 3000 to 6000 hp. And here is the kicker. They don’t frack with one pump. They might frack with a dozen or two linked together in an array. Here is what they look like:

 

Boys, it looks like we got ourselves a CONVOY!

I have not emphasized the negative environmental cost of energy because until this century, it wasn’t always that obvious other than a occasional drunken tanker skipper blundering into hard things or the occasional blowout or explosion.  Lately these negative externalities are getting harder to avoid as we go down the backside of Hubbert’s Peak going from easy oil and gas to  harder frack gas and shale oil. Now we drill not in good old Texas, home of the Chevy Suburban and longhorns but in  god forsaken deserts in North Africa , the Arctic and deep water Gulf of Mexico. But in the past 5 years with US crude production down under 5 million barrels a day and imports almost 15, the industry decided to go after the hard expensive oil that was left right here in the good ole US of A. Fracking is not entirely new because a screwball in 1920 threw nitroglycerin into an oil well to see if that would perk it up a bit. It did, but the idea of getting oil and gas from tight reservoirs really took off with the first commercially successful venture in the Barnett Shale in Texas in 1998. It is still a very new and somewhat secret technology, not well understood even by its promoters. Some of the early wells in the Barnett and particularly in the Haynesville Shale next door in Louisiana were producing truly astonishing  daily flows with gas pressures approaching 8000 psi. It looked like a whole new game. In mid decade natural gas was $10-13, and . US production of nat gas appeared to be in terminal decline. The government even began permitting LNG import terminals in places like Sabine Pass, LA to fill a looming gas deficit. Companies like  Exxon ,Chevron and Total rushed to get into the next big gold rush. With their financial backing, little known companies like Chenniere were able to line up financing of $10 Billion. Chevron and Total signed long term  delivery contracts until 2029 of $125 Million a year with Chenniere. It has been a disaster for those two with only a single tanker delivery.  Other companies like Chesapeake in Oklahoma City were betting on the domestic fracking technology and were snapping up leases using borrowed money every which way but loose. Wall Street bankers who knew a few things about bubble creating by then, got into the act and began throwing money at any wildcatter with a drill bit and a truck with a frack pump. The boom began as every available rig was rushed to Texas, Louisiana, Arkansas and lately Pennsylvania. Within just a few years the US went from importing 15% of its gas down to only 12%. The early players cleaned up. I even got in buying Chesapeake at under $20 and saw it rocket to $70. It was deja vu 1920’s with everyone doing the Charleston. But then with all this supply, gas started falling, and FALLING, and FALLING until it hit $2 last year. Even well capitalized companies like Exxon said “We are all losing our shirts!”  Today the  spiritual father of this boom Aubrey McClendon, the CEO of Chesapeake, the country’s 2nd largest producer of gas cleaned out his desk and handed in his keys to the executive washroom in downtown Oklahoma City. You can only lose money so long. It looks like Aubrey wont be the last to go. I have covered the fracking bubble for the past year and have pointed out what appeared to me to be the economic insanity of gas fracking with $2 and $3 gas, with each new well costing $10 million and $5000 leases now $30,000. Haynesville was said to be possibly the 4th largest potential gas resource after Quatar, Iran and Russia. That was the hype then.  Wall Street’s snake oil salesmen promised huge EURs(estimated Ultimate Return) using a long term production model as they termed it, of up to 65 years,because the flows were so great and the shale formation so big. But after a few years the producers started whispering to themselves that pressures and flows were dropping like a rock after only a few years. In two years some flows were down 80 to 90%. And some of the new wells were duds. We began hearing the term “sweet spots” where production was high. That’s where you wanted to drill but knowing where the sweet spots were required drilling where it wasn’t so sweet and drillers began burning money as most of the leases were structured as “use it or lose it”. And if annual payments were required, cash flow even from mediocre wells was a consideration.               Then in 2009 the SEC put in some new rules which allowed companies to increase their reserves as long as the companies could demonstrate decent production. It had the effect of allowing better access to credit but demanded more drilling. I think you are seeing that we are in a positive feedback loop in which the more you drill, the more you needed to drill.With all this production, prices kept falling. Almost nobody except a few independent analysts noticed. Not the media including respected organizations like the WSJ, the NY Times, Bloomberg and even the Paris based IEA and the US EIA who chortled on about a brave new world of US energy independence. They predicted the US would be back on top as the world’s biggest coal and oil producer as well as a natural gas exporter.  I didn’t buy it and some very bright energy analysts didn’t either. I pointed out the obvious similarities to the bubbles in tech and real estate. The same Wall Street suits  who brought you  trash real estate derivatives were and are still involved in the Frack bubble. They are even today securitizing gas and oil leases among other products. In a sense, that is what it is about now,  land, not gas.  Wall Street is up to its neck hyping joint ventures, partnerships, asset sales, and stock offerings.They have lately spent a lot of time in China. Even the Hedge funds and private equity guys like the Carlysle Group and Blackstone are in there dealing. It probably wont be long before Mitt Romney smells blood and rushes in to scoop up  the carcasses to slice and dice and sell off.

One of the indicators I follow is the Friday reporting from Baker Hughes giving the quantity and location and type of drilling rigs nationwide. I have mentioned that the fraction of rigs devoted to gas has been declining pretty steeply and here is the latest graph:

 

AS you can see our gas rigs peaked in 08 and have been dropping since  like a stone. You can also see that the US rigs are the majority of world rigs but it should be noted that neither Russia or China, nor off shore rigs are represented.  The steep decline in US gas rigs  portends a decline in production at some point because most of those US rigs were frack wells with steep depletion profiles.  I expect production to fall off in the not too distant future, especially if gas prices remain unsustainably low. There are a lot of big players who are banking on low  gas prices and increasing production as a keystone of their business models to set up petrochemical  and fertilizer plants, nat gas filling stations and LNG Export terminals. There are politicians on all sides who want to see it happen despite the obvious  business conflicts. I see it as very interesting and a subject of a future blog.

Natural Gas Disinformation:Part 2

I recently did a guest editorial in the Jackson News and Guide, our fine local paper in which I commented upon the wisdom of promoting and subsidizing a NG filling station in Jackson. The paper also quoted me during a phone conversation in a recent follow up which was accurate as well as from the promoter Dennis Lamb, John Willott a retired Exxon Senior Vice President, and Keith Phucas of the Wyoming Liberty Group. In the letter I tried to present the economics of NG as a transport fuel by providing hard concrete data and I did not touch upon other important aspects of NG and energy production such as pollution from emissions and contamination of water supplies although I have covered some of those aspects in this blog in the past. In this post I would like to add some detailed supporting data along with tables and graphs which were not feasible in my editorial.. I will provide references to support my data and conclusions within this post and at the end as well. I caution the reader to be circumspect and skeptical of all presented data whether from me or any other source and to do due diligence before reaching their own conclusion. I would urge the reader to rely on independent assessments and audits which is what I try to do.

Dennis Lamb was quoted as saying “Anytime you can get an alternative fuel source that has 10% of the toxins emitted for half the price, it’s a win-win.” I certainly have no idea what this incoherent statement refers to but pulling statements out of context is often unfair and discourteous but I am mystified nonetheless. What toxins is he referring to? Half of what price and where? The two nearest CNG stations to Jackson are in Riverton and Rock springs and the current price is $1.96 and $1.61

respectively. I am under the impression that these prices do not include fuel tax. Prices in the nearest metro areas of SLC and Denver range from $1.30 in SLC and from $2.33 to $2.80 in the Denver Metro where there is of course competition. The 10% toxins part of Lamb’s comment if that is indeed what he said is ludicrous. Promoters of NG like to state that NG is the cleanest fuel of the big three but that is misleading. It is true that there is somewhat less CO2 emitted per BTU of NG when burned at the source.. Here is a link to a graph of emissions of the three energy fuels and their relative emissions over a 20 year period. The graph show that shale gas emissions exceed emissions from diesel, oil, and coal. Another important fact to remember is that methane is 105 times more powerful than CO2 as a greenhouse gas. Hence the worries about the methane hydrates in Siberia which could be released by Global Warming. All fossil fuels contribute to global warming and NG is no less a culprit than coal or oil if you believe this power point presentation. I fail to see the win-win

situation as promoted by Lamb. Looks like win-win if Lamb obtains free taxpayer funds and lose-lose for the rest of us. Which brings up the point of subsidies. How much subsidy did Bob Shervin receive when he built his Sinclair station just up the street from where Lamb wants to site his? I haven’t talked with Shervin but if the taxpayer is going to subsidize Lamb, then I think Shervin and the other station owners deserve the same subsidy, even if it has to be given after the fact.

I would now turn to the supply side of the argument in more detail which I briefly covered in my earlier post. Willott seemed to agree with me when I said there was a 11 to 23 year supply of NG and then and then he added that “some would say it’s more than 150 years of supply.” There is no one credible who is saying any such thing. John flipped from reserves which are economically recoverable to resources which are not at current historical prices. In fairness to John, the NG resource base world wide is probably huge especially from Alaska and Canada through Siberia not to mention worldwide deep water gas resources. Nobody has surveyed Antarctica which almost certainly has a resource. But again:think Reserves not Resources! Could these enormous resources be tapped as John says? Of course they could, but they are not affordable. It’s the same for coal resources. They are huge but the reserves of affordable coal are not. These deceptive statements from their promoters ignore the concept of net energy. If a resource is so deep or so distant that it takes as much energy to mine it as the energy you get out of it, then it is for all intents and purposes a resource that will never be tapped. This is the fraud of the Green River Oil shale formation in Wyoming, Utah and Colorado. It is not even oil but waxy kerogen locked in rock and if it were recoverable as oil it would be the largest fossil energy source in the world. But remember: Economically recoverable and net energy recoverable. It is not now economic and never has been. Remember: It takes energy to get energy. Let’s return to gas.The next graph is the only credible estimate of how much gas we have. It was prepared by the the Potential Gas Committee(PGC), an quasi independent group representing the industry:

The key numbers to look at are the Proved Reserves and the Optimistic reserves. There are 11 years of proved take it to the bank gas you can count on and optimistically(whatever that means) another 11 years. this is at current consumption. I will caution the reader that these numbers jump up and down as gas moves from resource to reserve category and back, but I think it suffices for planning purposes for individuals and governments. You also see probable resources, some of which could be developed at the right price.That is a key point to remember. Very little of that category will come out of the ground at $2 or $3. I will reiterate, the US IS NOT ENERGY SUFFICIENT in NG now and hasn’t been for over 20 years and if companies like Cheniere which is completing its liquefaction facility in Sabine Pass LA have their way, the US could be exporting $3 US gas to a world which is paying in the mid $teens. BC plans to build a similar facility at Prince Rupert. Once this trapped gas has a chance to escape to world markets to trade like oil and coal, I’ll give you 3 guesses what will happen to NG prices. If you are an oil and gas producer in trouble like Chesapeake, it can’t come too soon. That’s why I find it peculiar that John Willott thinks gas prices will stay low. Now lets take a detailed look at gas production in a few selected states and nationwide. I will show Wyoming’s numbers along with the total US production:

Please note that this includes conventional and frac production, The bottom graph can be enlarged to tease out the various large producing states. You will note that production in all states with the exception of LA are flat to declining given the low NG prices. But I concede if gas were to recover to say $13 which it was a few years back, you would likely see these graphs turn up.

I also must again state that if gas were to stay this low as John expects, I can guarantee bankruptcies or buyouts in the gas sector. John’s boss, Rex Tillerson was asked in testimony before the Council of Foreign Relations last June 27 how Exxon was coping with the low NG prices. Here is an excerpt from his testimony as reported in the Wall Street Journal:
By JERRY A. DICOLO And TOM FOWLER

NEW YORK—-Even energy titan Exxon Mobil Corp. is showing signs of strain from low natural-gas prices.

On Wednesday Exxon Chief Executive Rex Tillerson broke from the previous company line that it wasn’t being hurt by natural gas prices, admitting that the Irving, Texas-based firm is among those hurting from the price slump.

“We are all losing our shirts today.” Mr. Tillerson said in a talk before the Council on Foreign Relations in New York. “We’re making no money. It’s all in the red.”

His comments mark a departure from remarks made earlier this year on how lower natural-gas prices hadn’t yet hurt the company because of its operational efficiency and low production costs.

It should be noted that Exxon is the biggest NG player and wants to get its gas into LNG ships where the real money is, ASAP . The idea that the US should keep its gas at home to keep US energy prices low and promote jobs in the domestic Fertilizer and petrochemical industries apparently hasn’t crossed Rex’s mind. Rex like all corporate titans cares only about Exxon’s bottom line and making money for EXXON and the shareholders and if he get’s his LNG export terminals, he will be making money in spades.

Now let’s take a look at how these low NG prices are killing the producers. Art Berman in a recent paper noted that $22 Billion/qtr is needed to maintain domestic NG supply. Cash flow of the 34 largest producers is only $12 billion a quarter which of course leaves a deficit of $10 Billion/qtr!

With losses of this magnitude there is no such thing as retained earnings and so companies like Chesapeake and others have been selling off assets and seeking joint ventures or assuming more debt to keep the party going. Berman’s source was the highly respected Calgary based Energy Player, ARC Financial . Here is their graph:

I leave it to the reader to draw his own conclusions on the feasibility and future of NG as a transport fuel. Based upon my research, I would say that the conclusion is obvious.

As a disclaimer I have both short and long financial positions in many North American energy producers and pipelines including Exxon. I have no intention of converting my car or truck to CNG.

References:

http://www.eeb.cornell.edu/howarth/Marcellus.html

Shale Gas: How clean is it?

http://online.wsj.com/article/SB10001424052702303561504577492501026260464.html

http://www.slate.com/articles/health_and_science/future_tense/2011/12/is_there_really_100_years_worth_of_natural_gas_beneath_the_united_states_.html

http://www.albertaoilmagazine.com/2012/02/is-the-eias-new-shale-gas-estimates-off-base/

Andreoli, D., 2011, The Bakken Boom – A Modern-Day Gold Rush. The Oil Drum: http://www.theoildrum.com/node/8697.

Berman, A.E. and L. Pittinger, 2011, U.S. Shale Gas: Less Abundance, Higher Cost. The Oil Drum: http://www.theoildrum.com/node/8212.

EIA Annual Energy Outlook 2011 Early Release Overview.

EIA Annual Energy Outlook 2011 Natural Gas Tables: http://www.eia.gov/oiaf/aeo/tablebrowser/#release=EARLY2012&subject=0-EA….

Gilbert, D. and R. Dezember, Chesapeake Energy Pulls Back Amid Natural-Gas Glut: Wall Street Journal, January 24, 2011: http://online.wsj.com/article/SB1000142405297020380650457717865173251197….

Potential Gas Committee 2010 Report: http://www.potentialgas.org/.

http://www.theoildrum.com/node/9751

http://www.theoildrum.com/node/9753

And of course my previous blogs on the same and related subjects.

Hugh Owens MD Jackson Hole 2013