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gruffydd

Peak Oil And The Saudis

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Just had a long chat with an ex-colleague from the oil industry. He claims that the Saudis are hiding much of their weakening production capacity situation behind refining capacity claims. He suspects that the Saudis cannot pump any more sweet crude (which is what most refineries require to make gasoline). The extra 2 million barrels per day they are now supposedly offering is 'the dregs' - high sulphur 'sour' crude which most refineries can't deal with and even those that can produce a limited range of products out of it. New refineries will be required to deal with this high sulpuhur oil, but these will take 3-6 years to build.

Why are the oil companies returning so much money to shareholders at the moment instead of investing in refining capacity? My ex-colleague claimed that this is partly because they realise we are near peak oil (perhaps coming as early as 2015), so investing in refining capacity might well be a severe mistake in business terms.

Edited by gruffydd

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If anybody had more supply to pump, wouldn't they pump it? In any cartel the tension is co-operate versus cheat. Cartels rarely last because the temptation/economic benefits of cheating are usually so great. With oil at its current price levels, I think it safe to say the heavily indebted Saudis would pump extra if they could do so. That they do not pushes me to support your friend's views: we are at Peak Oil.

Presumably demand will fall due to the high oil price. This will cause the oil price to fall, so demand will rise again and hit the supply constraint pushing the price of oil up again and so repelling demand..

In other words, look out for a "saw tooth" top to the Peak Oil curve. This could go on for years, with the actual peak only being identifiable in hind sight in terms of a long-term moving average, rather than "Thanksgiving 2005" or whatever.

The public will be aware we keep hitting oil crises, and I expect they will blame OPEC, lack of refineries, the Chinese, the Indians, but they'll never blame their own complacent habits of daily life. They will hope for wind turbines, nuclear power, biodiesel, gasoline-from-coal, "massive new supply from major investment", but very few will grasp the real straights their lifestyle is in.

Expect city air quality to fall and lung cancers to increase following a big switch to diesel engined cars. Don't know what motorcyclists will do, since you can't put a diesel engine in a motorbike (never been done successfully, to my knowledge).

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There is a diesel motorbike!

http://www.businessgateway.cranfield.ac.uk...sdetails&id=956

A unique technology partnership between Cranfield University and California-based Hayes Diversified Technologies (HDT) has created the world’s first production diesel military motorbike – and the first bike of any kind with a purpose-designed diesel power unit.

An initial order for 522 diesel motorcycles has already been placed by the US Marines. Delivery is due to commence in early 2005. In addition, keen interest is being shown by the US Army, the UK Ministry of Defence and other NATO forces.

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Expect city air quality to fall and lung cancers to increase following a big switch to diesel engined cars. Don't know what motorcyclists will do, since you can't put a diesel engine in a motorbike (never been done successfully, to my knowledge).

But isn't diesel getting more expensive that petrol due to demand? As the whole car industry moves to diesel, this in turn will lead to a greater supply/demand issues that may result in a cheaper cost/mile for normal petrol engines.

Throw into the mix super efficient 2 stroke engines, hybrid electric etc etc and who knows. - I'll just keep running on pasta and cycle everywhere ;)

Edited by kinesin

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You may be concerned therefore to hear about the new Peak Pasta theory that is gaining credence amongst insiders....

:lol::lol::lol:

The not so funny side, which I suspect you are aware of, is that the hard-core peak oilers go on about how energy intensive our farming methods are, how far we transport food and how half our fertiliser is made from natural gas. Still, I really do need to start pedalling, my gut is getting out of control!

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Just had a long chat with an ex-colleague from the oil industry. He claims that the Saudis are hiding much of their weakening production capacity situation behind refining capacity claims. He suspects that the Saudis cannot pump any more sweet crude (which is what most refineries require to make gasoline). The extra 2 million barrels per day they are now supposedly offering is 'the dregs' - high sulphur 'sour' crude which most refineries can't deal with and even those that can produce a limited range of products out of it.

Your friend is completely right about Saudi production. But the issue with the lack of refining is a result of the worsening quality of Saudi (and global) production, rather than a smokescreen to cover it up.

Refineries can make significant quantities of gasoline and diesel from heavy sour crudes, they just need more bits of kit to do it.

If you take a light sweet crude, such as Brent or Nigerian crudes, all you need to do is heat it up and boil ofr the relatively high quantities of gasoline and diesel it already complains. So you only need a simple refinery - a fractioning tower and a few other bits of kit.

If you do the same to a heavy sour crude, you will mainly get fuel oil - good for running a ship or power station but not much use for anything else. But you can use chemical processes to "crack" the longer fuel oil molecules into shorter gasoline or diesel molecules. It's these units - FCCs and Hydrocrackers - that we need more of in the world as we have more and more heavy crude and less light.

And we also need more units to take out the sulphur from these sour crudes.

So yes, the extra barrels that the Saudis can produce will struggle to find buyers.

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There is a diesel motorbike!

http://www.businessgateway.cranfield.ac.uk...sdetails&id=956

A unique technology partnership between Cranfield University and California-based Hayes Diversified Technologies (HDT) has created the world’s first production diesel military motorbike – and the first bike of any kind with a purpose-designed diesel power unit.

An initial order for 522 diesel motorcycles has already been placed by the US Marines. Delivery is due to commence in early 2005. In addition, keen interest is being shown by the US Army, the UK Ministry of Defence and other NATO forces.

This looks like a great links & resource page for Diesel Motorbikes http://www.peace65.freeserve.co.uk/Pictures/diesel.htm

Check out the photos on the diesel bike rally ! Almost exciting enough to make an HPC regular trade in his Proton :-) http://www.peace65.freeserve.co.uk/Pictures/hamm.htm

Edited by Saving For a Space Ship

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In any cartel the tension is co-operate versus cheat. Cartels rarely last because the temptation/economic benefits of cheating are usually so great. With oil at its current price levels, I think it safe to say the heavily indebted Saudis would pump extra if they could do so.

It's odd that cartels are illegal in the West but that any success that OPEC might have had in terms of cartel behaviour might actually be viewed as being "good" for the world in terms of stretching oil out.

How much are the Saudis indebted? You would have thought that having pumped half their oil they would be sitting on huge cash reserves - what have they been spending it on?! Makes Norway's oil fund look like a very wise idea.

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  • 338 Brexit, House prices and Summer 2020

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      • down 5% +
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      • Even
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      • up 5%



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