Posted: Wed Jul 16, 2008 5:58 am Post subject: Re: Review of the Olduvai Gorge
I get your point Matt. If you haven't guessed I'm a career development geologist.
Yep..lots of well won't be drilled @ $40 that would be drilled @ $140. But that's almost by definition. Oil patch economics are relatively simple at the development phase: a well costing $X will produce a cash flow that has a net present value of $Y (15% is a common discount rate used by most companies). If a project yields a return of 15% or more it will likely be drilled. So a well that fits those economic goals at $140 can't reach them if you drop the price to $40 (and reduce the NPV propotionally).
But let me point out. The oil patch was busting their collective butts and were as giddy as school girls when oil hit $60. Most of the development wells drill now would have been drilled at $60/bbl.
I love stochastic models. Their fun for regional analysis but really suck when it comes to prospect specific analysis.
Posted: Wed Jul 16, 2008 8:00 am Post subject: Re: Review of the Olduvai Gorge
Matt,
It is amazing with all the technological advances in the oil patch they don't use anything very sophisticated in the drill/don't drill decision process. But much of the decision making is based more on qualitative factors then quantitative. This is especially true in exploration economics. I don't bother to look at the economic analysis of wildcat deals I review. By definition wildcat economics are always great. Since there's no proof there are any reserves at the location an exploration geologist can predict as big a "potential" as he likes (within regional limits , of course.) I simply look at it from the stand point of reasonable expectations and well documented geology. Again, the great majority of wildcats will find nothing so figuring out the rate of return to the second decimal place is a little much.
And now for my bit of rude humor for the modeling pros out there: You know what modeling and masturbation have in common? If you're not careful you start to believe it’s the real thing. As I said, I like modeling but that doesn't stop me from taking cheap shots
Posted: Fri Jul 18, 2008 2:04 pm Post subject: Re: Review of the Olduvai Gorge
That's true Matt. That's why it's difficult for me to not come down too hard on folks that swallow those "probable reserve" numbers people throw around. Especially when they are so emphatic about their accuracy. I’ve only drilled two sure shot-can’t miss prospects in my life…and they both turned out to be non-commercial. Hell…one twinned a well with a 100’ feet of pay in it and nothing in my hole. Even when you make a discovery Mother Nature abhors arrogance and can punish you harshly if you start counting your bbls too seriously before they are in the tank.
Joined: Oct 15, 2004 Posts: 2196 Location: Arkansas
Posted: Fri Jul 18, 2008 8:24 pm Post subject: Re: Review of the Olduvai Gorge
Hogan wrote:
US electrical infrastructure near breaking point
Quote:
Experts said this week that the infrastructure that provides electricity to homes and businesses throughout the country is nearing the breaking point because of increased energy demands
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That's part of the nation's grim electrical picture according to industry and homeland security experts who gathered Wednesday at a forum in Shepherdstown to discuss the need for an improved electric transmission infrastructure system in West Virginia and the Mid-Atlantic region.
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"The fact is that the United States has a growing appetite for electricity, and we've done very little about that for several decades ..." Larcamp said. "I don't want to be an alarmist here, but the window within which we can act to maintain reliable power supplies is getting to be tighter and tighter."
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William Brier, vice president of policy and public affairs for EEI, said people have to understand that the nation is not just facing a gasoline crisis, but a full-fledged energy crisis.
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Many of the uses of electricity, particularly in the home, didn't exist 30, 20 or even 10 years ago, he said. The average home today uses 60 percent more electricity than three decades ago. Just two standard cable set top boxes, for example, use the same amount of electricity as a refrigerator.
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"The biggest issue that we face in addition to trying to build this infrastructure is the rising cost of doing it," Brier said.
The same power plant built in 2000 would cost twice as much if it's built in 2008, he added, and the increased costs will ultimately have to be absorbed by consumers.
Joined: Oct 15, 2004 Posts: 2196 Location: Arkansas
Posted: Fri Jul 18, 2008 10:15 pm Post subject: Re: Review of the Olduvai Gorge
Matt,
I can't tell from your post if you are being serious or sarcastic. Do you believe the links in your post refute the linked article on US energy infrastructure?
For example, do you believe that Pickens, who I like BTW, is going to be able to solve the energy issues we face as a nation? He's the first to say the gov't doesn't have a plan, and it would take a national energy policy and effort to address the financial problems facing our electrial grid etc. Further, its also my understanding that his proposed windmill project will only produce enough electricity to power one medium size Texas City.
As for the other Texas windfarm article you linked, here's the relevant portion:
Quote:
The Houston company, headed by the former executive of a small oil company, said it plans to build 500 megawatts of capacity, enough to power a small city or about 125,000 homes. But the firm's executive vice president and general counsel Michael Hansen said it will probably be about four years before construction begins.
So, if Pickens plan and this other plan all pan out as expected, two Texas cities will be powered via wind in, optimally, 4 years. Then, I guess we will begin to build a windfarm for Dallas, maybe Houston, San Antonio, etc. I would be interested to know just how much space that would take up and, how soon that could be done.
So, if its going to take 4 years just to power 125k homes, it doesn't look like Al Gore's 10 year plan is very realistic, but hey, what do you expect from a fat ass preaching against the ills of global warming caused by fossil fuels while he flies and drives (in limos) to pick up his awards and talk about the ills of burning fossil fuels, and living in a mansion using enough power to power over 200 average American homes, and, probably a million Chinese homes. Surely, we aren't following that fat ass hypocrit into battle.
Joined: Oct 15, 2004 Posts: 2196 Location: Arkansas
Posted: Sat Jul 19, 2008 1:24 pm Post subject: Re: Review of the Olduvai Gorge
Quote:
Whats nice about government reports and entities is that they don't tend to write in such a way as to make the reader believe the problems they are referring to are going to jump out of the closet like a boogeyman.
Yes, like notice how they never talk about PO and the need to prevent it. Only private citizens like Simmons and Pickens are taking the messag to the public. Where's your trustworthy gov't?
Should I believe the NERC is anymore honest than say Bernanke, that the housing bust was not going to be a problem, then a contained problem, now admitting he's trying to stop systemic failures that could bring the whole financial system down? Your trust in a gov't that starts wars over WMD that don't exist is greater than mine.
So, the question is, do we have a problem looming or not? At first, your reliance on the NERC suggest you don't see a problem. In fact, you chide those that sound the alarm with this statement:
Quote:
I wonder about motivations, who has their fingers in the pockets of who and wants government money to upgrade a line somewhere, and needs to manufacture a "crisis" to get the contract.
But, then you on to tout Pickens plan? So, is he just lining his own pockets or, is he correct that America has a problem?
Quote:
Pickens is trying to solve massive foreign imports of crude ( his commercials talk about "drilling our way out of the problem" ) by building windmills. An interesting angle.
No, he's not trying to reduce imports of oil by building windmills. To do so would require electric cars. As for reducing imports of foreign oil, he suggests converting vehicles to burning NG.
Quote:
On the page I referenced, he talks about 1.2 trillion dollars to fund his idea...
Where's he going to get all that money? Seems like that will require gov't spending? In light of the fact that the US is broke, I don't think that's very realistic.
And, if it takes 1.2 trillion to convert 20% of our capacity, that dumbass Gore better come up with a way to fund the other 80%, or what, about another $5 trillion dollars? Do you think they can get the US to push this funding bill in front of the current bill to give Paulson unlimited check writing authority to "stabilize" Freddie and Fannie? or the war spending which is "off buget" but running about $12 billion a month? Just to name a few. You do realize that even Pickens toten $1.2 trillion is about half the entire US yearly budget?
Quote:
It strikes me as reasonable to read some of the information provided before making assumptions.
I did read it, but maybe you ought to send it to your beloved NERC, bc the article seems a bit more "alarmist" than those guys are used to. For example:
Quote:
The lack of transmission has been a fundamental issue in Texas, and it’s becoming more and more of an issue elsewhere,”
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The transmission problem is so acute in Texas that turbines are sometimes shut off even when the wind is blowing.
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Lack of transmission is a severe problem in a number of states that, like Texas, want to develop their wind resources.
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But other states may find the Texas model difficult to emulate.
That quote is particularly disheartening, I hope Al Gore realizes that wind may not be the answer for everyone.
I found these comments interesting, bc it shows Pickens is building windmill capacity but, not the transmission capacity? Just shows how uncoordinated this whole move is and that it, while welcomed, is not the panacea in the next, say, 10 years.
Quote:
Jay Rosser, a spokesman for Boone Pickens, the legendary Texas oilman who plans to build what has been called the world’s largest wind farm in the Texas Panhandle, welcomed the announcement.
But because about a quarter of the Pickens project capacity will come online by 2011, two years before the Texas lines are fully ready, “we will move forward with plans to build our own transmission,” he said.
You see, if all goes well, Pickens windmills will be turning in 2011, but your article says, if all goes well, this new transmission capacity that Pickens needs will not be ready until 2013.
Quote:
The lines will not be fully constructed until 2013.
And, unfortunately, the transmission lines will only carry the capacity for 3.7 million homes, but Pickens project only creates enough energy for about 200k homes.
Quote:
The lines can handle 18,500 megawatts of power, enough for 3.7 million homes on a hot day when air-conditioners are running.
We need more windmills or capacity, but from where? and when? and with what money?
You see, I agree with the alarmist Pickens and with the article you linked. You need to decide who you believe, the everything's okay NERC or the Alarmist Pickens. Then, if you side with Pickens, you need to re-read the article you thought I didn't read, and read it closer, bc the situation is not as rosy as you believe it to be.
Lastly, assuming we had the political will in this Country to do anything, it takes at least $1.2 trillion to convert 20% of our capacity, according to your own source. And I have to ask, where is that money going to come from?
Joined: Dec 27, 2004 Posts: 12582 Location: zombie horde wonderland
Posted: Sat Jul 19, 2008 2:16 pm Post subject: Re: Review of the Olduvai Gorge
Maybe Pickens wants to steal people's land (eminent domain) and then sell the power back to them at a profit. _________________ No original ideas are contained in this post.
The truth is, like oil, electrical prices are rising bc of manipulation by the few, basically, an Opec like cartel of various businessmen headed by Boone Pickens, who is also, btw, a member of the NWO, a bildeberger to boot.
If they hadn't killed Tesla, we would all have free electricity
Posted: Sat Jul 19, 2008 2:54 pm Post subject: Re: Review of the Olduvai Gorge
Ludi wrote:
Maybe Pickens wants to steal people's land (eminent domain) and then sell the power back to them at a profit.
Pickens is from the generation of men where things get done. If wind works in Canada it can work in Texas. DFW is exploding in growth and low paying jobs . Something's gotta give. Elec co-ops here in Texas are doing very well keeping rates low. But the masses are moving to the cities where the rates are very high. And damn its hot here, wind at any cost sounds great when its 104 in the shade Id put a windmill up just to stand under it. If peak oil is the truth, then west texas will need something else to depend on, yes?
Joined: Oct 06, 2006 Posts: 1197 Location: was rwwff
Posted: Sat Jul 19, 2008 6:01 pm Post subject: Re: Review of the Olduvai Gorge
Ludi wrote:
Maybe Pickens wants to steal people's land (eminent domain) and then sell the power back to them at a profit.
Nah, doubt it. Leases seem to be the preferred method for other energy developments. I don't think they much like *owning* big chunks of land and carrying the liability and tax burden for it. Nor do I think your typical West Texas landowner would object to signing a lease to site windmills on their property.
Still... remains to be seen of course. _________________ Yes, we are. As we are.
And so shall we remain; Until the end.
Joined: Jul 09, 2008 Posts: 16 Location: Hong Kong
Posted: Mon Jul 21, 2008 1:42 am Post subject: Re: Review of the Olduvai Gorge
and there was a story in Business Week not long ago.
Pickens has bought up most of the water rights in the panhandle with a plan to eventually sell the water to Dallas through a 250 mile pipeline for which he apparently has been given eminent domain under Texas law.
and the authority to issue tax free municipal bonds. Just as if he is his own government out there.
Peak water is the next big thing, you're going to be hearing more and more about it all the time.
Boony is way ahead of the curve as usual. and positioned to line his own pockets at the expense of the taxpayer, as usual.
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. Something's gotta give. Elec co-ops here in Texas are doing very well keeping rates low. But the masses are moving to the cities where the rates are very high. And damn its hot here, wind at any cost sounds great when its 104 in the shade 
