Community Blogs Avoiding the fiscal cliff Wed, 16 Apr 2014 07:50:00 GMT Republicans do not want to raise taxes and the Democrats do not want to cut spending, thereby producing an impasse. But there are more ways to resolve the impasse that are not being discussed. The feds could grant permits for energy exploration, refineries and LNG export terminals to finance their social programs using the proceeds from the energy sector. Natural Gas The US is swimming in natural gas. According to the Institute for Energy Research, our supply of natural gas is much larger than the demand. We could export it, but the export process requires the gas to be liquefied and loaded on specialty ships. Three permits have been filed with the Department on Energy in 2011, none of them have been granted yet. Five more LNG (liquefied Natural Gas) facilities for export are being planned. I have provided a web link below from Cheniere. They are anxious to build a $10 billion terminal for natural gas export. In March 2012, the price of natural gas (delivered to residential customers, New York) was $2.27 per 1000 cubic feet. In Japan, natural gas costs about $18 per 1000 cubic feet (According to Bloomberg). Our export market is primed and ready to run. New sources of natural gas are being discovered. For example, Chesapeake grew virtually over night to become the second largest US producer of natural gas behind ExxonMobil. Chesapeake has stated that there are tremendous reserves of natural gas in the mid Eastern seaboard. Gulf, deep water drilling Deep water oil drilling in the Gulf could again be running at full operation. Some permits have granted for deep water platforms, but there are deep water drills sitting dormant in the Gulf following the moratorium on deep water drilling. The oil spill caused a drop in production by about 700,000 barrels of oil per day. At $90 per barrel this equates to $63 million per day in revenue that is lost. And this does not account for the thousands of energy workers that were laid off following the moratorium. Any new drilling should obviously proceed with the proper environmental precautions. In 2012, the number of leases for deep water drilling has increased by 16% over any point in the previous 3 years. “Even if they’re up, there are not up as much as they would have been if it weren’t for the policies that this administration has in place ,” John Felmy, chief economist at the Washington-based American Petroleum Institute, said in an interview. “We would like to see even more.” Shale Oil Harold Hamm, who is the CEO of Continental Resources, says there's 24 billion barrels of oil in North Dakota's Bakken formation. So far, they have only tapped 40 million barrels. Continental Resources operates 24 rigs, each rig produces 500 -3000 barrels of crude per day. But there is a massive expansion of oil production in North Dakota. Hess Oil just finished a $1.8 billion drilling operation in North Dakota and is producing 50,000 barrels of oil per day and by 2015 plans to be at 120,000 barrels per day. Marathon Oil produces 25,000 barrels of oil per day, but they have 14 rigs under construction with completion dates planned in mid 2013. A myriad of other oil producers are getting into production; Northern Oil, Newfield Exploration, Williston Basin, Occidental Petroleum, ConocoPhillips, Denbury Resources and others. Likewise, the Eagle Ford shale in Texas oil production is also soaring. Oil production in the Eagle Ford was 4.3 million barrels during 2010. Just one year later it was almost 10 times more – 36.6 million barrels. By the end of 2012, the oil production figure will certainly be over 50 million barrels. ANWAR The oil and natural gas reserves in North Dakota, Texas, Eastern Seaboard and Gulf of Mexico pale in comparison to the reserves in ANWAR. I am not saying that we have turned the oil spigot off. We are producing more oil than we had 10 years ago. But compared to the recoverable reserves (made available by the fracking process), we are only scratching the surface. Thousands of wells could go into production to supply oil and revenues to meet our spending habits. But the big point is that we could be the world’s major oil exporter. But I don’t know if we should be. My fears I am not sure what I fear more; a reduction in oil production with an increase in imports or an all-out expansion in drilling. An all-out expansion will provide jobs and wealth, but also feed government’s insatiable demand for money. Could it produce a Chavez type of oil baron in the White House who buys election after election with promises of greater and greater percentages of oil revenue handed out like candy? Yes, it could. The restriction of permits and production will cause the unemployment rate to stay high and inch us closer to the fiscal cliff, but limit the government’s ability to buy more votes than it already does. A pile of money can cover a multitude of sins and bad decisions. Money is power and power corrupts. Unfortunately, our government is already corrupt. The additional money will only serve to let it become authoritarian. en-us The Engineering Perspective The blog is a view of life, science, politics and education from an engineering perspective. As engineers, we are taught to view the world objectively. We can hope, believe and calculate a particular outcome, but natural laws are inflexible and pay no heed to who we are or what we believe. We must approach the objective dispassionately, while compensating for our own distorted perceptions. Balance is also a key element; balancing between the ideal and the pragmatic, balancing cost and functionality, balancing analysis with action, etc. Scheduling routine critical self-analysis is the foundation to objectivity. If we do not fully understand and compensate for our own failures, tendencies, habits and skewed thought processes, we will not see the world as it is. Without a regular critical self-analysis we will see the world as we are and then fall prey to self-delusion. Failure is a great teacher. When failure is coupled with perseverance, it produces the fruit of patience and humility. An engineer, fresh out of engineering school is typically set up for failure early and often. The failure breaks the new engineer of any ideas of self-importance, arrogance and book smarts. Only then can the new engineer be formed and molded into a productive element in the industry. Thanks, Bernie Mon, 27 Feb 2012 15:48:46 PST