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PeakOil is You

Declining Production in Alaska

General discussions of the systemic, societal and civilisational effects of depletion.

Re: Declining Production in Alaska

Unread postby ROCKMAN » Sun 11 Jun 2017, 15:01:07

"time value of money comes into the equation". Exactly. First, predict the future price of oil is tricky at best. But they could predict the future flow rate thru the pipeline. And remember how rate of return is calculated: with the NET PRESENT VALUE of the revenue stream. Typically reduced by a 10% "discount factor".

IOW revenue generated 10+ years after the revenue stream begins adds very little to the NPV. Thus does very little to increase ROR.
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Re: Declining Production in Alaska

Unread postby Hawkcreek » Thu 15 Jun 2017, 17:10:20

I was doing some more thinking about the flow rates on the Alaska pipeline.
Low flow won't be the thing that kills oil production on the slope - money will be the final knife wound. Even if production went to 100K per day, plans have been made to allow building of new storage tanks at Pump Station 1, and batch transport the oil down the pipeline once a week.
BUT, Until you have been to the slope, you wouldn't believe that it takes literally thousands of people working 12 hour shifts to produce, gather, process, and ship the oil to the pipeline. This includes around 1600 at the Kuparuk and Alpine fields and approx 1800 in Prudhoe Bay.
It will take almost as many people to produce 200,000 barrels as it does 400,000 barrels, all of whom work 12 hour shifts and receive time and a half for about 44 hours each week.
You can't stop plowing the roads when it is 30 below zero, or lay off more than a small percentage of the people who work on, or support the work, happening on the slope. It still takes 2 or 3 fully loaded 737's landing at Prudhoe Bay every day just to deliver the workers to their shifts. The oil companies pay for those flights and for feeding and housing all those employees.
I read somewhere that BP lost around 190 million on their operation at Prudhoe in 2016.
Big oil can lose money for a long time before they decide to call it quits, but if the price stays down too long, or more barrels don't become available ----I believe production will go from poor to ZERO in one day ---- some time in the future.
"It don't make no sense that common sense don't make no sense no more"
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Re: Declining Production in Alaska

Unread postby Plantagenet » Fri 16 Jun 2017, 17:45:05

Hawkcreek wrote: you wouldn't believe that it takes literally thousands of people working 12 hour shifts to produce, gather, process, and ship the oil to the pipeline. This includes around 1600 at the Kuparuk and Alpine fields and approx 1800 in Prudhoe Bay.
It will take almost as many people to produce 200,000 barrels as it does 400,000 barrels, all of whom work 12 hour shifts and receive time and a half for about 44 hours each week.
You can't stop plowing the roads when it is 30 below zero, or lay off more than a small percentage of the people who work on, or support the work, happening on the slope. It still takes 2 or 3 fully loaded 737's landing at Prudhoe Bay every day just to deliver the workers to their shifts. The oil companies pay for those flights and for feeding and housing all those employees.


100% right. +1

AND theres another huge batch of highly trained and highly paid people down in Valdez running the oil tank farm and the marine oil terminal.

Image
Valdez marine terminal

Not to mention the tens of thousands of people in Alaska who aren't hired directly by the oil companies but provide services for the them in trucking companies, airlines, clothing supplies, groceries, etc. etc. etc.

When Prudhoe goes down, much of the state of Alaska is going down.

"Its a brave new world"
---President Obama, 4/25/16
"Il bel far niente"
---traditional Italian saying
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