[Vision2020] Ga$oline Price$

[Mark Solomon]

Geopolitically and environmentally I agree with 
you but the known extent of the oil sands 
reserves in Alberta has grown dramatically since 
the 2001 data you've listed. The 2006 number for 
proven reserves is now 175 billion barrels with 
estimates of up to two trillion barrels buried 
deeper than the easily removed proven reserves 
(for comparison, the Saudi proven reserves are 
260 billion barrels). Global warming-wise an 
enormous disaster as recovery of oil from the 
sands is energy intensive.

http://www.cbsnews.com/stories/2006/01/20/60minutes/main1225184.shtml

Following is an excellent article on the oil 
sands. Subscriber access only so am posting the 
text.

m.

****

American demand on the rise
Alberta's crudest crude gets new respect as 
conventional oil wells start running dry
Gordon Jaremko, The Edmonton Journal
Published: Thursday, April 26, 2007

EDMONTON - American industry is acquiring a taste 
for Alberta's crudest oil product, oilsands 
bitumen.

"There's a lot of demand," Conoco-Phillips 
refinery chief Larry Ziemba said in describing 
the outlook for oil markets in the United States.

Only five months after committing $5.3 billion to 
overhaul Texas and Illinois refineries for 
bitumen, his firm is considering also switching a 
Montana plant onto the new diet.

ConocoPhillips has plenty of company. BP has 
launched a $3-billion bitumen conversion of an 
Indiana refinery. Marathon Oil Corp. is seeking 
partnerships with Alberta oilsands developers to 
supply other American plants.

UBS Commodities Canada Ltd., a subsidiary of a 
Wall Street financial giant, recently launched a 
new international trading warehouse for Alberta 
oil by leasing two million barrels of storage 
tank capacity at Enbridge Inc.'s Hardisty 
pipeline hub 160 kilometres southeast of Edmonton.

Bitumen fuels a $2-billion plan by TransCanada 
PipeLines and Conoco-Phillips, the Keystone 
Project, to build a new route for shipments of up 
to 590,000 barrels per day from Hardisty to the 
central U.S.

Alberta's lowest-quality crude, diluted with 
higher grades to flow in pipelines, will be a hot 
seller in the U.S. for decades to come, the 
National Energy Board is told in a report 
supporting requests to approve Keystone in time 
for deliveries to begin in 2009.

Exports of heavy-oil blends will increase 
seven-fold over the next three years alone to 
about 350,000 barrels per day, says the survey of 
Canadian and American industry intentions by 
Purvin & Gertz, an international consulting firm.

Southbound bitumen flowing to the U.S. is 
forecast to top one-million barrels daily by 
2015, then keep on growing to nearly 1.5 million 
barrels a day in 2020.

The accelerating traffic will overtake shipping 
space and cause capacity rationing by 2010 on 
Canada's current seven oil export pipelines 
unless Keystone builds its proposed new route, 
the study predicts.

Ziemba forecasts American thirst for oil products 
will grow at a rate of 10 to 15 per cent per 
decade. Washington's Energy Information 
Administration echoes the ConocoPhillips 
executive's expectations in long-range, national 
supply and demand projections.

The EIA predicts recent U.S. deep-water drilling 
breakthroughs will raise production of premium, 
refinery-ready oil, but not by enough to dull 
American appetite for Alberta bitumen. Flows from 
offshore production platforms in the Gulf of 
Mexico are forecast to peak at two million 
barrels per day in 2015 then slowly peter out as 
the new conventional liquid oil pools deplete 
naturally.

U.S. needs for imports will rise 30 per cent to 
about 13 million barrels a day by 2030 even 
though new American supplies of synthetic oil 
made from coal and gas will also be developed, 
the Washington fact-finding agency predicts. 
Production is steadily declining in the 
traditional U.S. oil mainstays, Texas and Alaska.

Unless the energy industry breaks through 
environmental and political walls preserving the 
Arctic National Wildlife Refuge, Alaskan output 
is expected to shrink by 70 per cent over the 
next 25 years to 270,000 barrels daily. The 
entire state will pump out less than current and 
still growing production by each of Alberta's two 
biggest oilsands plants, Suncor and Syncrude.

OIL OCEAN DRIES UP

In Texas, where the century-old industry has no 
counterpart to the oilsands or deep offshore 
drilling, output has dropped every year since 
hitting a peak 3.4 million barrels a day in 1972.

The state slid below the 
one-million-barrels-daily production landmark 
five years ago and is slipping steadily towards 
900,000-barrels daily.

Replacement supplies from the oilsands flow as 
far south as refineries in Beaumont near the Gulf 
of Mexico coast east of Houston, using expanded 
and reversed pipelines that formerly made 
northbound deliveries from Texas.

ConocoPhillips is pouring $1.4 billion into 
keeping alive a historic 81-year-old refinery in 
the legendary northwest Texas Panhandle oil 
boomtown of Borger by converting the plant to 
process Alberta bitumen.

BARGAIN BIN

The molasses-like initial product of the oilsands 
is a bargain for refineries equipped to dine out 
on it with added "upgrader" plants, according to 
records of prices for Alberta crude varieties 
kept by GLJ Petroleum Consultants.

In 2006, the province's heaviest oil fetched an 
average $41.87 a barrel. That was $31.29 or 43 
per cent less than the average $73.16 for 
Edmonton par, the Canadian counterpart to U.S. 
benchmark refinery-ready West Texas Intermediate.

For Alberta bitumen producers, last year was an improvement.

In 2005, before pipeline changes reduced the 
quality discount by giving exporters ability to 
shop around for the best available prices at new 
export destinations, bitumen blends averaged 
$34.07 or 51 per cent less than $69.11 for 
Edmonton par.

The traffic in low-grade crude is forecast to 
keep on growing even though the wide value 
difference between bitumen and refinery-ready oil 
spawned a $40-billion lineup of upgrader projects 
in industrial districts northeast of Edmonton.

Projections of rising bitumen exports differ only 
in detail among forecasters including the NEB, 
Canadian Association of Petroleum Producers, 
Canadian Energy Research Institute and Strategy 
West Inc.

Oilsands production has potential to grow 
five-fold to 5.2 million barrels per day by 2020 
if all known development plans go ahead on their 
announced schedules, show project inventories 
kept by Strategy West, a specialist in the field 
founded by former CERI research chief Bob Dunbar.

Out-of-province sales of unprocessed bitumen 
would grow to 1.7 million barrels daily because 
even the growing lineup of planned upgrader 
plants is too short to process more than 
two-thirds of planned oilsands production.

THERE ARE LIMITS

Labour, materials and capital shortages are 
forecast to limit the industry to three-fold 
growth.

Most-likely development projections predict total 
oilsands output of 3.3 million barrels daily by 
2020, with the volume sold as raw bitumen 
reaching at least 900,000 barrels daily.

Emerging environmental curbs on industrial 
carbon-dioxide emissions cast a shadow on the 
outlook for bitumen upgraders.

NOT A GREEN ENDEAVOUR

The operations emit high volumes of the 
greenhouse gas. Canadian Natural Resources 
deferred a 200,000-

barrels daily upgrader project planned for 
Edmonton or Cold Lake until the federal and 
provincial emissions policies become clear.

But the industry shows no hesitation in advancing 
plans to increase raw bitumen output.

With support from oilsands developers, Enbridge 
this month made construction applications for a 
$1.3-billion US pipeline to import light 
byproducts of central U.S. refineries as 
"diluent" or thinner for bitumen exports.

Output of Alberta's crudest petroleum product 
will hit 1.2 million barrels per day by 2015, say 
new forecasts generated with an industry survey 
done by Enbridge, which is Canada's biggest oil 
pipeline.

gjaremko at thejournal.canwest.com

HOW TO TURN CRUMBLY SAND INTO A MULTIBILLION-DOLLAR ENERGY INDUSTRY

- Oilsands ore: A crumbly, abrasive mixture of 
sharp-edged quartz grains ringed by an inner 
layer of water and an outer layer of bitumen.

Two tonnes of ore make a 159-litre barrel of oil. 
To dig out ore formations, oilsands mines also 
strip off an average two tonnes of rock and soil 
"overburden" per barrel of production.

- Bitumen: One of the most complex naturally 
occurring substances, composed of molecules 
containing more than 2,000 atoms each in the 
heaviest oil produced commercially.

This initial product of oilsands operations 
resembles molasses at room temperature, congeals 
to the consistency of hockey pucks if it cools to 
11 C, and is thinned with lighter oil or natural 
gas byproducts to flow in pipelines.

Raw bitumen averages 83-per-cent carbon, 
10-per-cent hydrogen and five-per-cent sulphur, 
and contains traces of oxygen, nitrogen, methane, 
hydrogen-sulphide, nickel, iron, vanadium, 
titanium and zircon.

- Upgrading: "Cracks" or breaks up bitumen 
molecules and reassembles them as "synthetic" 
light oil cleansed of sulphur and other 
impurities.

Processes used include coking, hydro-treating, 
distillation and catalytic conversion.

Coking, the most common upgrading method, strips 
out the heaviest bitumen ingredients with 500 C 
heat, leaving behind a charcoal-like residue used 
as fuel, exported to steel mills and stockpiled.

Hydrotreating lightens bitumen by adding 
hydrogen. Distillation boils off light liquids 
and gases. Catalytic conversion employs heat, 
beads or pellets of other chemicals and hydrogen 
additions.

Upgraders are complexes of towers, vessels, 
pipelines, control networks and safety systems 
requiring years to design and build by thousands 
of engineers and skilled construction personnel.

Plants can be erected at any locations served by 
pipelines and employ hundreds of highly trained, 
well-paid operators working in shifts around the 
clock 365 days a year.

- Value added: Upgrading as much as doubles the 
value of oilsands production by whipping it into 
light, clean shape for use by refineries built to 
process conventional liquid crude. Raw bitumen 
sells at deep discounts, 30 per cent to 50 per 
cent off prices for benchmark light oil grades.

- End uses: Refined products including fuels, 
lubricants and petrochemical building blocks of 
synthetic items from fabrics to food additives.

© The Edmonton Journal 2007





>Mark et. al.
>
>Assuming those doing long term planning for 
>securing world oil resources have done their 
>homework, which they have, and they are arrogant 
>enough to believe that the USA and it allies, 
>especially Great Britain, should control these 
>resources, via military force if necessary, it 
>does not matter what are the current dominant 
>sources of oil.  Saudi Arabia, Iraq, Kuwait, 
>Iran, and other states in this region, remain 
>the most oil rich area of the world, given 
>current cheaply recoverable oil.  For long term 
>planning to control this oil rich region, 
>meaning fifty to one hundred years out, the fact 
>that oil is now coming from other oil rich 
>states is not critical.  The big oil prize 
>remains the Middle East.  I will not list the 
>billions of barrels of oil resources that 
>indicate the Middle East remains the long term 
>dominant source of easily recoverable oil, 
>because everyone knows this.  Canada is a huge 
>oil resource, now second to Saudi Arabia in 
>listed recoverable oil, but still does not equal 
>the oil resources of the Middle East, even when 
>combined with Mexico and Venezuela, and Canada's 
>oil sands are not as cheap to develop as many 
>Middle East oil sources.  Iraq's reserves are 
>huge and of high quality.  Cost is king.  That 
>is why coal sourced electricity, to switch to 
>the specter of another fossil fuel 
>energy source, of which the USA has the largest 
>reserves of any nation, will remain dominant 
>over all other Green sources, till mitigating 
>factors stop coal's cheap energy expansion, 
>whether it be via mandated CO2 sequestration, 
>CO2 penalties or stringent controls over other 
>atmospheric or environmental damages from coal. 
>Have you seen the demolished mountains in the 
>Appalachians do to coal mining?  Looks like they 
>were nuked!
>
>We can eventually look forward, however, to the 
>raping of Wyoming, Utah and Colorado, to develop 
>the oil shale deposits in the USA, though this 
>currently is a more expensive and 
>environmentally controversial process, assuming 
>we do not find other technologies or sources of 
>energy to fuel our economy and lifestyle, given 
>the huge amount of oil to be extracted, and the 
>obvious blindness of the human race to the 
>foolishness of our out of control domination 
>of the world of nature.  The chart below shows 
>the USA has a huge oil shale potential (can you 
>say "Global Warming?"  I knew you could!):
>
>Read on, fearless reader, in our Brave New 
>World, at United States "Proved Recoverable 
>Reserves" for oil shale.  Do I read this chart 
>wrong when it seems to indicate 60,000 to 80,000 
>million tons of recoverable oil from oil shale 
>in the USA?  I must be misinterpreting this 
>data!  Or it must be wrong!
>
><http://www.worldenergy.org/wec-geis/publications/reports/ser/shale/shale.asp>http://www.worldenergy.org/wec-geis/publications/reports/ser/shale/shale.asp
>
>
>Table 3.1 Oil shale: resources, reserves and production at end-1999
>
><http://www.worldenergy.org/wec-geis/publications/reports/ser/shale/excel_files/shale_3_1.xls>Excel 
>File 
>
>Recovery method
>
>Proved amount in place
>
>Proved recoverable reserves
>
>Average yield of oil
>
>Estimated additional reserves
>
>Production in 1999
>
>
>
>
>
>million tonnes (shale)
>
>million tonnes (oil)
>
>kg oil/ tonne
>
>million tonnes (oil)
>
>thousand tonnes (oil)
>
>Africa
>
>
>
>
>
>
>
>
>
>
>
>
>
>Morocco
>
>surface
>
>12 300
>
>500
>
>50 - 64
>
>5 400
>
>
>
>South Africa
>
>in-situ
>
>73
>
>
>
>10
>
>
>
>
>
>North America
>
>
>
>
>
>
>
>
>
>
>
>
>
>United States of America
>
>surface
>
>3 340 000
>
>60 000 - 80 000
>
>57
>
>62 000
>
>
>
>South America
>
>
>
>
>
>
>
>
>
>
>
>
>
>Brazil
>
>surface
>
>
>
>
>
>70
>
>9 646
>
>195
>
>Asia
>
>
>
>
>
>
>
>
>
>
>
>
>
>Thailand
>
>in-situ
>
>18 668
>
>810
>
>50
>
>
>
>
>
>Turkey
>
>surface
>
>1 640
>
>269
>
>56
>
>
>
>
>
>Europe
>
>
>
>
>
>
>
>
>
>
>
>
>
>Albania
>
>surface
>
>6
>
>
>
>
>
>5
>
>
>
>Estonia
>
>surface
>
>590
>
>
>
>167
>
>
>
>151
>
>
>
>in-situ
>
>910
>
>
>
>
>
>
>
>
>
>Ukraine
>
>in-situ
>
>2 674
>
>300
>
>126
>
>6 200
>
>
>
>Middle East
>
>
>
>
>
>
>
>
>
>
>
>
>
>Israel
>
>surface
>
>15 360
>
>600
>
>62
>
>
>
>
>
>Jordan
>
>surface
>
>40 000
>
>4 000
>
>100
>
>20 000
>
>
>
>Oceania
>
>
>
>
>
>
>
>
>
>
>
>
>
>Australia
>
>in-situ
>
>32 400
>
>1 725
>
>53
>
>35 260
>
>5
>
>Notes:
>
>1. Generally the data shown above are those 
>reported by WEC Member Committees in 2000/2001
>
>2. The data for Albania, Brazil, Israel, South 
>Africa and Ukraine are those reported by WEC 
>Member Committees for SER 1998 3. The data thus 
>constitute a sample, reflecting the information 
>available in particular countries: they should 
>not be considered as complete, or necessarily 
>representative of the situation in each region. 
>For this reason, regional and global aggregates 
>have not been computed
>
>  -------------
>
>Vision2020 Post: Ted Moffett
>
>
>
>On 5/2/07, Mark Solomon 
><<mailto:msolomon at moscow.com>msolomon at moscow.com> 
>wrote:
>
>It's easy to jump into the Middle-East oil nations are the cause of
>everything from empire building to gas prices debate, but it misses a
>couple of key factors regarding oil supply and price. First, of the
>following list of countries, pick the first, second and third largest
>exporters of oil to the US:
>
>Saudi Arabia
>Venezuela,
>Nigeria
>Mexico
>Canada
>Russia
>
>No scrolling down. Make your picks, then read further.
>
>
>
>
>
>
>
>
>
>
>
>
>
>
>
>
>
>
>
>
>If you picked, in order, Canada/Mexico/Saudi Arabia you are up on
>current oil markets. Canada has moved into number one exporter with
>the massive development of the Alberta oil sands. Almost all the oil
>produced is sent to the U.S. Mexico is next with Saudi Arabia a
>distinctly distant third place. (The environmental damage being done
>to mine the oil sands is enormous: huge open pit mines in the
>arboreal forest. If you have google earth on your computer, search
>for Ft. McMurray, Alberta and you'll see the mines just north of
>town.)
>
>Another factor to keep in mind when discussing oil prices is the
>effect of the oil futures market on real price. Futures markets are
>fine when there is relatively free competition in the market place
>but when you have de facto monopolies, such as in the oil world, they
>can be manipulated.
>
>m.
>
>At 3:34 PM -0700 5/2/07, KRFP wrote:
>>Oh, of course, we have to maintain the empire's presence in the
>>vital region.  Especially since Rumsfeld signed the closing orders
>>for our permanent bases in Saudi Arabia (on Sept 12th or 13th, 2001,
>>although it wasn't announced until 2003). Of course any relation to
>>this being exactly what Bin Laden was demanding is purely
>>coincidental.
>>
>>Dave
>>
>>
>>Sunil Ramalingam wrote:
>>>There might be a reduction in numbers at that point, but I bet the
>>>permanent bases will stay.  There is no exit strategy because there
>  >>never was an exit strategy, nor was one desired by the people who
>>>brought us this war.
>>>
>>>Sunil
>>>
>>>
>>>>From: KRFP <<mailto:krfp at radiofreemoscow.org> krfp at radiofreemoscow.org>
>>>>To: <mailto:vision2020 at moscow.com>vision2020 at moscow.com
>>>>Subject: Re: [Vision2020] Ga$oline Price$
>>>>Date: Wed, 02 May 2007 12:59:39 -0700
>>>>
>>>>A fitting testimony to the fourth anniversary of Bush's infamous
>>>>"Mission Accomplished" speech.
>>>>
>>>>Operation Iraqi Liberation (O.I.L .) has been and will continue to be
>>>>about the control of their oil.  It will not end until the Iraqi
>>>>parliament sign away their oil rights to 
>>>>Exxon - BP- <http://et.al>et.al.   Then we
>>>>will see a cheery exit staged for us by whatever administration is "in
>>>>charge".
>>>>
>>>>Dave
>>>>[Disclaimer: this is a personal post I am making using the station's
>>>>account, my views do not necessarily reflect those of the station,
>>>>though in this case they probably do.]
>>>>
>>>>Ellen Roskovich wrote:
>>>>
>>>>>*I just now walked in the door after visiting the gas station.  What a
>>>>>shock!  I was kicking myself for not topping off last Friday when it
>>>>>was still under $3.00.  Isn't anyone mad as hell yet?  The price of
>>>>>gas keeps climbing up and that's going to drive the price of all
>>>>>commodities through the ceiling.  We rely on trucks to get goods to
>>>>>the marketplace. . . you're going to see prices on the shelves
>>>>>climb even more than they have in the past couple weeks.*
>>>>>
>>>>>*Ellen Roskovich  *
>>>>>
>>>>>
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