Thursday, September 30, 2010

September TWIP and July VMT

One of the metrics of the economy that serves as a marker to me on how we are doing relates to the use of vehicles, and as a consequence the amount of gas that is being used. Prices of gas haven’t changed much over the past months, nor has the price of crude. Thus without price fluctuations confounding the causes of change, it is possible to get some measure of how we’re doing from how much gas is being used. Recognizing that the summer driving season is now over, but that information is now available on how the patterns of driving went.

This Week in Petroleum, where I get the data on this, has, this week, focused on the impact that Canada is having on imports, given that it is the largest supplier to the USA at the moment. Part of the story they told this week was that the impact of pipeline problems between the two countries had not ultimately had much impact, and service is now resumed.

From TWIP Sept 29, 2010

The Canadian supply has remained relatively steady over the years, and not been much impacted by the declines in demand recently, though as a seasonal event, the demand for crude is currently falling.

If one looks at the TWIP monthly figures rather than the annual demand, the fall in demand that started some months ago, is continuing, and given that domestic production remains relatively level, it will be interesting to see when this turns around.

The amount of gasoline produced from this crude input would, logically, also fall, as it has been though it has just recently had a little uptick, relative to the trend of a year ago.

That is as a result of an increase in demand that can also be seen in the TWIP figures.

One week’s data should not, of course, be construed as having much import on its own, but it is worth watching.

Ethanol production, after a relatively steady, though small increase, concurrently had a slight dip, though this is, I suspect, likely to be insignificant in the longer term.

Looking at vehicle miles driven, the last report for which relates to July numbers, the curve (bearing in mind that it is a 12-month rolling accumulation) has picked up and is now past the early “bump in the road” which we saw earlier in the year.

The slope is not yet that exciting, with the overall levels still equivalent to those back in 2005, but it is upward and a recognition that things are doing better. And it appears to be an across the board increase around the country, and in both rural and urban driving.

The question however, will likely arise before too long as to what impact the increasing demand is going to have on prices. For while the demand in the US and Europe has seen anemic growth, that in Asia is much more robust, and has been consuming the “slack” that had been left in global demand. We shall see how this impacts the capabilities of world suppliers to continue to meet this, in the months ahead.

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Wednesday, September 29, 2010

Wind Energy Makes Progress, but will it be enough?

Over the last few days there have been several stories of wind energy, none in themselves remarkable, but which, put together show the progress that the technology is making. Consider, for example, the small community of Tocco Da Casauria in Central Italy. It is a small town of around 2,700 inhabitants that, because of its remote, mountainous location, has had to face expensive power costs in the past (about 3-times that of the average US household). However it has recently installed four wind turbines, and now not only has enough power for the community, but also exports a sufficient amount that last year it earned about $200,000, enough to significantly help with municipal expenses. (Though the turbines are privately owned the town gets a lease on the land, and a percentage profit from the power sale). Similarly, but on a smaller scale, the town has a solar array that lights the cemetery, raising about $2,000 which helps pay for the upkeep of the place. There have been six turbines in the farm which is one of 249 sites in Italy for which data is easily available, the first two turbines (which generated around 400 kW) were not successful, but the new set averages 2,500 operating hours/year and produces 3.6 MW.

However wind is not yet a major player in the Italian energy mix, and though Italy has a target of 17% renewable energy by 2020, it is still only at 7%, and is not reaching target goals. On the other hand, at the other corner of the European Union, consider the case of Scotland. Although the target is now to have 80% of that nation’s power come from renewable sources by 2020, recent successes have led the First Minister there to predict that 100% of the national power will come from renewable sources by 2025. The target of 80% by 2020 has only just been announced (last week) , up from the previous 50%, based in part on the perceived ability to reach an interim target of 31% by next year. Much of the increase will come from offshore wind farms, though the onshore Whitelee farm (which is expanding) already produces enough electricity to power Glasgow. Another onshore farm is planned for Shetland, but following protests from the local community, Viking Energy has just announced that the farm will be reduced by 23 turbines from the original 150. In addition the farm cannot be justified without a cable to carry the power to the mainland. Permission for that cable has not yet been given. Part of the problem has been the impact of the turbine installation on the deep peat bogs on the islands.

The level of local resistance to the farms, and its potential impact on overall rates for installation of the farms, and thus their contribution to future energy supply may have been underestimated in government. Which could be embarrassing in the future, since the provision of affordable, and sustained power is considered one of their responsibilities.

Whether the potential problems in Scotland presage similar problems for the overall power mix for the entire United Kingdom is similarly a question. The UK has just seen the opening of the Thanet Wind Farm, in the estuary of the River Thames.
London, September 29, 2010 — Vattenfall officially opened the Thanet Offshore Wind Farm, off England’s southeast coast. The wind farm has 100 turbines and will generate electricity equivalent to the annual consumption of over 200,000 British households.

The construction of the 300 MW Thanet Offshore Wind Farm has taken just over two years and the wind farm is expected to operate for at least 25 years. Between 2009 and 2011, Vattenfall plans to double its wind power electricity generation, constructing nine wind farms in six countries to supply electricity equivalent to the demand of 800,000 households annually.

Thanet is so far the company’s largest offshore wind farm . .
This moves the UK into the lead in regard to power from offshore wind farms. The islands have sufficient wind potential that it could provide a greater slice of the energy supply in the future.
The Offshore Valuation Group, made up of government and industry organizations, estimates if Britain were to develop just 29 percent of its potential offshore resource, this could deliver 169 gigawatts of capacity by 2050 and turn Britain into a net exporter of electricity.

This would involve installing 7.2 GW a year -- roughly equivalent to 1,000 7.5 Megawatt turbines -- with fixed offshore wind accounting for 5.4 GW of the average annual build rate needed.

The supply chain needed for this would have annual revenues of 62 billion pounds in 2050 and employ around 145,000 people directly, according to the Offshore Valuation report.
The other side of the story, however, comes from the costs involved. With the increase in the price of steel, and maintenance costs going up current projections may also be low.
However the UKERC have calculated that the cost per unit of energy – known as a Megawatt hour – over the 25 year lifespan of the farm is expected to be £149. That compares with £80 for coal and gas, and £97 for nuclear power.

(An) Onshore wind farm – at £88 per megawatt hour – is almost as efficient of fossil fuels but is hampered by complaints they ruin the landscape
Current government plans are to have as many as 6,000 turbines located onshore, and some 4,000 offshore. However, as the scale of operations grow, so it can be anticipated that the size of the opposition may also increase. This has been, for example, the case in the United States where Senators such as Kennedy on the East Coast, and Feinstein on the West have objected to farm installations. Though the Cape Wind project is now approved. As sites move closer to construction it may be that more of this opposition may arise.

There is also, as the Scottish experience is indicating, the need to install the power cables that will carry the power from where it is generated, to where it is needed. And those cables themselves are sometimes controversial. It seems much easier to install the smaller systems, for local use, as in Italy, where the benefits are more visible.

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Tuesday, September 28, 2010

Faster drilling in Chile

Someone recently told me that after you had been retired a while, you wondered how you ever found time for work. Given that this is the week of my Retirement celebration (a little after the event) I am likely going to be somewhat pre-occupied for most of it, so my apologies if posts appear a bit slower than usual and are shorter.

They are not going quite that slow in Chile, where the miners are now waiting as the three drills now work to enlarge the passages down to the rescue chamber. One of them achieved a rate of advance of 150 ft on Monday this week, and may have gone 243 ft on Tuesday. So that the reamed hole is now 984 ft long. But there are problems with pushing the drills too hard – not the least of this is that you can generate enough torque in the pipe that any sudden release can spin up the head with enough energy that it snaps the pipe. So it is better to be a little slower and make sure that things go according to plan. There is currently also about 15 days of work to be done on the surface, to put all the equipment in place that will be needed, to get all the miners out.

After the holes have been completed, over their full length, the rescuers will line the passage with a steel mesh, and then they will be able to lower the cage, that has now arrived at the site. Before that can be done the cage has to be mounted to a frame, and attached to cables, in such a way as to allow it be raised and lowered safely. That construction is apparently what is going to take the 15 days.

There is a considerable difference in the progress of the three tools, the first one to start turns out to be the slowest, and has not reached the miners with the first hole yet. The second used a pre-existing borehole to give it a start (the T-130) while the oilwell drill is drilling the full sized hole in one pass.
The government said the Strata 950 "Plan A" drill reached 1,667 feet (508 meters) Tuesday morning. Once it breaks through to 2,306 feet (703 meters), this drill will need to start over again, widening the hole to its final diameter of 28 inches (70 centimeters) so that the metal sleeve and escape capsule can pass through.

The other two drills are already carving out holes this wide, and making quick progress: the T-130 "Plan B" drill reached nearly halfway to its 2,047-foot (620-meter) goal Tuesday evening, Sougarret said. The "Plan C" Rig 421 oil well drill has carved out 361 feet (110 meters) of its 1,959-foot (597 meter) goal

The intention once the holes are lined, and the cage able to move up and down it, is first to send down a medic and a trained rescue specialist, who will check on the men’s condition and then help get them to the surface. With the food (about 2,200 calories) that the men are getting they have regained some body mass after the initial starvation. The cages are being called Phoenix, and come with an oxygen supply to help over what could be up to an hour of transit time to the surface.

It is encouraging that progress continues to be ahead of schedule, so that there is a hope that the rescue could be completed some time in October.

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Sunday, September 26, 2010

Ohio's historic temperatures, TOBS and USHCN averages

I have reached Ohio, in checking on how the temperatures of the states have varied over the last hundred or more years. Given that this is the first state where I haven’t previously looked at the homogenized data before looking at the TOBS values, I thought to include both sets into the table that I have been building. Which I did, and there are some 26 stations in the US Historic Climatology Network (USHCN) so that I downloaded these into the table first.

Then I went to get the data from the GISS stations that I am comparing the USHCN to. It turns out that, according to Chiefio there are 5 GISS stations that they continue to draw information from. These are in Columbus, Dayton, Akron, Youngstown and Toledo. Columbus is fine, a full set of data, as is Toledo (though a little difficult to find within the GISS structure). However, when I tried for the other three, there were a couple of surprises. It turns out that there are three different stations that have been taking readings at Dayton. However there is only one still doing so, and it had the longest history (albeit only back to 1948), so I used it. The other stations only have been recording data since 1944. Again it is surprising that other stations weren’t chosen that had a full record.

So what does the data say? Well the two sets don’t initially seem to be that different. Using the plots for the TOBS data, they show the following:

Firstly for the differences between the GISS station average and that of the USHCN, there is obviously a change in the ‘40s as the additional stations are included. Northern places tend to be colder - see below.:

The slope of the trend line is greater with the homogenized data (-0.013) but they are of roughly the same shape. Turning to the state historic temperature trends:

While the temperature trend with time is positive, the raw data gives an increase of only a 0.15 deg per hundred years, while the homogenized data would suggest that the increase is a 0.57 deg temperature rise over the same interval. And in regard to the highest temperature that still seems to have occurred back in 1921.

In Ohio the relationship of temperature with latitude remains linear, and is shown in both homogenized and TOBS data, though the TOBS data gives the better correlation coefficient, otherwise 0.61, (which may be as a result of the homogenization process).

Looking at longitude, there is not much of a trend, as there hasn’t been elsewhere.

Although in this case homogenizing the data improves the correlation (to 0.06).

Homogenizing the data improves the correlation with elevation (but to only 0.22) and the rate of decline (to 0.013) relative to the TOBS data.

In Ohio there was only one place, Millport, where I could not get population data, and this appears to be because it is now considered to be a part of Ashville. Other than that the logarithmic relationship that seemed quite strong in the West, is not doing that well in the East.

And since I now have them on the same page, let me close with a plot of the difference over time between the homogenized data and the TOBS values for the state. And this indicates something that I have had a suspicion about as I have been posting this data. Perhaps it means that that I should go back and make this plot for the other states I have tabulated. (groan).

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Saturday, September 25, 2010

The technology of grouting

For the last two technical talks I have been explaining how, by bolting rock layers around an opening, spraying concrete on the walls of the opening or a combination of both, one can stabilize openings underground. Sometimes, however, the rock itself is relatively weak. (This is a common problem when driving subway systems under major cities, as an example). In these cases the rock won’t have enough strength to hold the walls, until a stronger tunnel lining system is installed. Often that is pre-cast concrete liner segments, but the walls have to be kept open until they can be installed.

Another problem, which is common in almost every underground excavation, is that there is water moving through some of the rocks and, if not dealt with it can fill your excavation very quickly, even if the flow rates don’t initially sound that high. There are two fundamental ways of both increasing rock strength and stopping fluid flow through the rock. The first is to inject some form of grout into the rock, under enough pressure that it will fill all the cracks and then set. The alternative, and becoming more popular method, is to lower the temperature of the rock, so that the water freezes. This increases the rock strength, stops the water flow, and is temporary, rather than a permanent change that can be reversed, after the tunnel is finished. I’ll talk about Ground Freezing in a later post, and in this one I will run through some of the simpler descriptions of Grouting.

When the drillers at the Deepwater Horizon well in the Gulf wanted to stop the flow of oil out of the reservoir into the well, or drilled hole, they pushed a cement down into the well, to fill the gap between the internal casing they were leaving in the well, and the surrounding rock. That initial injection of cement into the well did not work well, and the oil was able to penetrate through cracks, weakness layers or perhaps zones where the cement had not properly set. When the well was finally plugged towards the end of the operation, cement was pumped down the well at higher pressure so that it not only filled any gaps that the oil and gas had been flowing though in the original cement plug, but also moved back into the rock, filling the flow channels that had developed to carry oil and gas from further back in the rock, into the well.

Drilling pattern to inject grout around a tunnel line.

In a grouting operation, that is the goal. Normally a ring of holes are drilled into the wall of the tunnel so that they fan out around the planned tunnel path, and they are about 40 ft long. At this point the cement is brought to the site, ready to be injected. However, it is not just a case of bringing in say 8 bags of cement from the local hardware store. When dealing with the choice of cement, its physical and chemical contents and the pressure at which it will be pushed into the rock there are a number of factors that have to be established first.

The temperature and water chemistry of the surrounding rock are some of the initial critical factors. Changing either will change how fast the cement sets, or if it will. The object in this case is to get the cement to flow into the cracks around the drilled holes, so that the cement will flow to fill those spaces completely, before it sets. But it has to set in a reasonable time for work to continue on schedule. And since water chemistry in a tunnel, and temperature, change – so the mix has to be altered to accommodate those changes.

The next thing that has to be checked depends on the size of the cracks that the cement is being injected into. If the cracks are very thin, and the cement contains particles that are bigger than the crack, then the wall of the opening will act as a filter paper, stopping the cement particles from getting back into the crack and filling it. On the other hand if the particles are too small, then they will not bridge together to block the crack, and stop the fluid flow long enough for the cement to set up. If there are too many large particles then, when they lock together, they leave too large a gap between them, and fluid can still flow, and the rock will remain weak.

Over the years a rough correlation has been developed between how much fluid is flowing though the rock, and the type of rock, and the size of initial particles needed to provide an initial seal of it. But, as with cementing in an oil well, when the first cement injection has been finished, and allowed to set, then the rock is tested to see if the flows have stopped. Very often they have not, though hopefully they have diminished. This is because the first shot into the rock is more aimed at narrowing the flow passages and slowing the flow of fluid through the rock so that when finer particles are used, in secondary grouting, they won’t be carried away into the rock, before they can set up and block the remaining passages.

And so, typically, after the first grouting operation, there will be a second, to further fill the narrower passages in the rock, and those bits not properly sealed by the first injection. The cement grouts also act to give some strength to the rock, since they are filling the spaces within the rock structure with the set-up cement, that has some strength to it.

Rock after grouting (white lines)

However to fill the finer cracks, and to stop the flow cement may be too coarse a material in some of the rocks found. In such a case, then a chemical gel might be injected into the ground to fill those finer cracks. These tend to set up rather more like Jello, and while strong enough to resist water flow, do not usually give any additional strength to the rock.

There is one caution in injecting grouts into the rock that has to be borne in mind (and I know of cases where it wasn’t). Grouting operations force liquid into existing cracks within the rock surface. The liquid hopefully fills those cracks, before it sets, but if it is injected at too high a pressure, then the force on the walls of the crack can cause it/them to grow. At that point the rock will become weaker, instead of stronger, and the section in the tunnel roof/walls that is already open can fall in. Which is not good!

In the main it is not economic to keep injecting more and finer grouts into a rock until the flow is totally stopped. As the flows diminish the costs to stop them rise, and so it is usually the case that the operator accepts a certain small flow rate as the most economic alternative, and makes arrangements to deal with that water as it enters the tunnel. (If not I have seen tunnel floors lifted by the pressure that develops in the water trapped behind them).

Of course, if all else fails, then you can cut a slot into the wall and fill it with cement to completely seal off the excavation – though this is often done with a series of drilled holes, it can also be done with a variety of rock saw.

Grout wall exposed to show the 12-inch thickness and integrity.

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Friday, September 24, 2010

Does the fossil fuel industry need innovation?

Most of the posts that I write tend to deal with the technical side of energy production, rather than more philosophical discussions. However I was recently sent a copy of the new Strumsky, Lobo and Tainter paper on “Complexity and the Productivity of Innovation.” (H/t Nate Hagens). Since, in my day job, I have been one of those innovators in the field of energy (and since also I am going to address this as part of my talk at ASPO in a couple of weeks) I thought I might pen some thoughts that respond to the paper, and explain why I don’t think that the picture is nearly as bleak as the authors seem to suggest.

The point which the paper seeks to make is that, over time, innovation in a field becomes harder, as the early obvious inventions get made and it becomes more difficult to make significant further advances, requiring larger and more complex teams to work longer hours for less overall gain. The metric that is used in the paper is the number of patents that are generated in a field, with that assignation being made by the US Patents and Trademark Office. The authors note that, over time, the number of patents per inventor has declined, while the size of the patenting team has increased, and that the patents per inventor holds true in the fields of energy that include gas, power systems, solar and wind.

My field of knowledge in the area fits more into coal, oil and natural gas production – which may be a field so small that it falls under the radar as regards USPTO classification, certainly in many categorizations of engineering these days mining seems to be a forgotten word and fossil fuels a forbidden topic. But that gripe aside, let me talk about the process of innovation and invention and give some reasons why I disagree with the authors.

There is a saying that, though true, is not considered much because it may have been overused; “necessity is the mother of invention.” (And my thought strays to the day we were scheduled to run a demo for a TV station on a technique for landmine detection and when we ran a test that morning with an “improved” set-up it didn’t work. We had about three hours to work out why it did not, find a way to get it to work, rebuild the tool, and make it work before the crew arrived– our answer aired that night.)

In the field of digging things out of the ground there hasn’t been a whole lot of what might be called revolutionary thought in the past couple of millennia. This has been mainly because the old ideas of a pick and a shovel seem to work remarkable well. True, in the process the pick has moved from being a single point on the end of a manually wielded tool to one of a multiplicity of picks laced around a cutting drum of a rapidly advancing machine, but the principle remains the same. Energy efficiency in the change has gone down, but overall production rates have soared, as machines have got larger and more powerful, when mining underground. On the surface, the load that a single shovel can move went from the few pounds that a miner moved to the 165 tons of a single scoop of “The Captain” 180 cu yd mining shovel bucket.

Thus there has not been a lot of necessity for innovation. What we have is relatively cheap per ton, and it works. Now that is not to say that there isn’t an occasional need for innovation. Back in the 1970’s there were a series of coal mine explosions that killed miners as a result of sparks generated from the picks of mining machines. We developed a machine that used high pressure waterjets to cut the coal, rather than picks, and the technology was picked up by industry to the point of underground trials in Germany. We also worked with CalTech to develop a version for room and pillar mining. In both cases we showed that the tool could mine coal safely and productively without sparks or dust and at energy levels below that of existing equipment. But the world market was considered by GHH to initially be only 14 machines a year, not enough to justify the investment. The need was not great enough, and we looked for more marketable products than large mining machines. Which led on to the development of waterjets for drilling and cutting. But in terms of the overall impact on mining waterjets did not catch on. And patenting the technology proved difficult. Jason and his Argonauts visited a hydraulic mining operation, in what is now Georgia, millennia ago (and stole the sheepskins they were using to catch the gold in the bottom of their flumes). So what is new, apart from raising the pressure a bit?

As a result of a lack of need, there has not been a great deal of significant interest or funding in the actual digging process itself. Back in the energy crisis that ran into the 80’s, increased research funding led to the development of the polycrystalline diamond compact bit, which has since made drilling in hard rock much easier. But after the collapse of oil prices in the ‘80s funding and interest faded away.

So my first argument that I would raise is that there is, as yet, not that much necessity for invention in the fossil energy field, but that when it comes there are lots of different avenues that can be taken. As an illustration, we removed the rock for the Omnimax Theater under the Gateway Arch in St Louis by breaking it out into single large lumps weighing between 1,000 and 2,000 lbs each. Creating a single crack around the blocks took a whole lot less energy than breaking it down into the fragments of a typical mining operation. And it made it a whole lot easier to handle. The necessity was that we had to get the rock out without any of the visitors noticing, so we couldn’t use blasting or any more conventional technique. And as a second example, if you disintegrate rock into its constituent grains at the mining machine, you can separate the valuable mineral there, leave the rest behind, and only haul and process the valuable stuff. Saves a rather large amount of energy, over the increase needed for the conventional process.

Anyway, to get back to the paper, the other thing that is more integral to their discussion relates to how things get invented. In many of the cases I am familiar with there is originally the work of one person. That person has an idea, and some sort of drive to get this idea to work. It is only when a group of other folk has been persuaded that the idea is good that it starts to move toward commercial use – and I would agree with others that a realistic time from innovation to widespread use is about 20-years. And this is the path of revolutionary ideas, the ones that change the paradigm of an industry.

I do not think that this type of innovation is properly recognized in the paper. What the paper discusses is the more conventional evolution of technology once the original concept has moved into use. But it is the revolutionary concepts that will move us forward.

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Thursday, September 23, 2010

The TWIP and changes in regulations

There has been some talk recently of the current Administration raising taxes on oil and natural gas companies. Specifically the suggestion is that Section 199 of the American Jobs Creation Act and Section 1.901-2 of the Treasury Regulations would be repealed. The API recently hosted a conference call on the topic, which I unfortunately missed. A report on the plan has recently been prepared by Dr. Joseph Mason at Louisiana State University , who succinctly describes the results as:
Section 199 was enacted by President Bush in 2004 to provide taxpayers benefits for production activities in the United States. The provision grants a “deduction equal to a percentage of the lesser of ‘qualified production activities income or taxable income.” Under the provision, labor- intensive corporations are particularly favored by being able to deduct a percentage of domestic production activity each year. The repeal would apply solely to oil and gas firms.

Dual capacity credit, (Section 1.901-2) on the other hand, allows companies to deduct taxes on incomes from abroad, offsetting relatively high U.S. taxes on foreign incomes.3 Hence, the dual capacity regulation is a way for American firms to compete efficiently against foreign competitors.

In repealing the dual capacity credit, however, the current administration would effectively double-tax firms conducting business in many foreign countries
With the Australian intent to raise taxes on energy producing companies being one of the causes that led to the collapse of the last Government, this has not deterred the Prime Minister who is now re-committing the Government to a carbon tax. In short, given that governments around the world need to find some new pockets from which to extract the funding to keep their budgets closer to balanced, the energy industry seems to have been chosen as the sacrificial lamb.

In which regard it is interesting to note that the TWIP this week has been looking at the earnings of major oil and natural gas producers. It notes that average earnings were up over the same period last year, albeit still well below the 5-year average. Crude prices are up again, and the major companies have been increasing capital expenditures, with the increased availability of funds again. The oil and gas expenditures for the majors, for example, is not only up over last year, but is 19% over the average for the 2005-2009 timeframe.

Generally in the energy business, industry has to invest an increasingly large amount of money to find and then develop new fields of production. New resources are harder to find, and more expensive to develop, even when things go according to plan. Unfortunately the business is also one where impacts take some time to have an effect. Oil shipped in from the Arabian Gulf takes time to get to the United States, as a trivial example, but more germane, it takes years to find new fields, and then more years to develop them. The problem is that this usually slow response to change means that the impact of changes in the rules don’t always immediately appear to have the consequences that ultimately show up.

I have mentioned before (and will again) the dangers that the UK faces in long term energy supply as power stations are condemned to closure without a surety that there will be power in place and available to meet the evolving gap that this will lead. The world, at present, seems to believe that all will be well thanks to Russia, Turkmenistan and their neighbors who have a plethora of energy to offer. What is usually neglected in that review is the pipeline construction heading from those countries to China. The problem, of course, is that everyone assumes that the energy will be available, not recognizing the growing number of customers who are all bidding for volumes that will not meet global demand over the intermediate time interval. And the frequency with which gas pipelines seem to rupture as it crosses some of those borders is quite remarkable. The latest, between Kazakhstan and Russia occurred early Wednesday.

We are all, I fear, sadly complacent.

Turning just briefly to some of the graphs in the TWIP, and their possible meanings; Refinery inputs have leveled out, a little above last years numbers:

(Source TWIP)

Domestic crude is hovering around where it was at this time last year while imports have fallen from 10 mbd down to about 9.2 mbd since the middle of the summer, but this is a recognition of the change in driving as go go into the Fall. The drop in demand, that was holding off a little when I last commented on the numbers a couple of weeks ago, is now well under way.

(Source TWIP )

Since this is the first year that the EIA is showing ethanol numbers it is worth noting that while ethanol production continues to climb:

(Source TWIP )

the volume in stocks has been declining, though since this is the first year that the record is displayed, it is not yet clear how the seasonal trends will impact the shape of the curve.

(Source TWIP )

Given that, at the end of the month, the EPA is expected to rule on the use of E15 (i.e. 15% ethanol in the mix) ) it is perhaps not wise to make too many comments on the current shape of these graphs, since they are likely to change under that influence.

The anticipated benefit (apart from lowering the amount of crude that has to be imported) is based on an anticipated reduction in pollutants and better burning of the fuel in the engine. It remains to be seen what the unanticipated consequences are.

Since this is the political season our mayor dropped by our service club the other day to comment about the horrors of trying to run a budget as more and more mandates come down from the Federal Government, often written years ago, but only now showing up (so that he was careful to say that both parties share in the blame). His main theme (other than that we are not as bad as we might be, but that street repairs can only fix shorter stretches) was that many of the consequences only show up much later than the legislation, and regulation, and by that time it gets very difficult to correct initial mistakes.

Secure and timely energy supplies are a critical part of the success of industrialized nations. We need to remember that.

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Tuesday, September 21, 2010

Indigenous Energy - Pakistan, India and Bangladesh

Yesterday and this morning I spent my time helping clear up the damage from a storm that hit our town over the summer. We were away, and several trees were left with limbs torn, damaged and in some cases dangling. So, I used the chance to get some of the other trees pruned of dead wood, and to generally clean up around the yard. Now I am left with a reasonable amount of kindling and firewood, to help heat the house over the winter. We have a tile stove, and so the effort is a little more to cut the wood to the shorter lengths, but the work is justified.

The trees remain, and will continue to grow. But other parts of the world are not as fortunate. Judith Curry has written of the facility with which commentators have cited the recent flooding in Pakistan as being due to global warming, when there is a significant case that it could, more correctly, be blamed on inept water and agricultural practice, with a little regional politics thrown in. Unfortunately the problems that she describes illustrate the problems of a country where the pressures of a growing population have sought short-term answers to long-term problems. For example:
Illegal logging supported by the Taliban in the northwest province of Khyber-Pakhtunkhwa has felled as much as 70% of the forest in some districts. The lack of trees, combined with overgrazing by livestock, reduces the soil’s ability to hold water and leads to soil erosion. Flash flooding in the northern, mountainous areas then sends silt downstream, reducing the amount of water the river channel can hold. . . . . . . . . . . . There are a substantial number of barrages (dams) on the Indus River that support irrigation and hydropower. The flood occurred when the rising river bed (owing to the huge silt deposition in the upstream areas) was trapped by the Taunsa barrage, obstructing the water flow. These heavy silt loads were then transported through western tributaries of the Indus River. Construction of protective levees and dykes has also contributed to raising the riverbed and the sedimentation of upstream areas; moreover, the rising riverbed levels have rendered protective levees ineffective.

In 1951 Pakistan held a population of 34 million people, this had increased to 144 million in 2001, and is currently estimated at over 170 million. It is thus now the sixth most populous of nations. The average consumption of 500KWh is a fifth of the global average of 2,500 KWh. Of that thermally generated energy currently produces around 63% of the power, while hydro has produced around 32% (6,500 MW). However, as noted above, the lakes behind the high dams are sedimenting rapidly, as deforestation increases the bearing load of the streams. It is estimated that 20% of the live storage capacity has already gone. Yet, because of its geography, there is a potential for more than doubling the amount of power available to Pakistan from hydro-electricity generation. It has the advantage of being indigenous, in a country that already faces considerable expense in importing energy. There is one project, the Neelum-Jelham scheme, in Kashmir, currently in progress, though it is controversial.
Neelam Jhelum Hydroelectric Project is located near Muzaffarabad, capital of Pakistani Administered Kashmir. It aims to dig a tunnel and divert water of Neelam River from Nauseri, about 41 KM East of Muzzafrabad. A Powerhouse will be constructed at Chatter Kalas, 22 Km South of Muzaffarabad; and after passing through the turbines the water will be released in Jhelum River, about 4 Km South of Chatter Kalas. Once completed, the Neelam Jhelum Hydroelectric Project will produce 969 MW of electricity annually at the cost of US $2.16 billion.

To meet the needs of the population Pakistan has steadily increased oil imports (to about 400,000 bd). It does have natural gas resources, and has seen these rise to almost 4 billion cu ft/day, in the same period. However it has, increasingly, also had to import coal to meet its growing needs. And yet the country has a large coal resource.
Pakistan coal reserves are estimated at 175 billion tons which according to the Vice-Chancellor (VC) of Punjab University, Professor Dr Mujahid Kamran equal 618 billion barrels of crude oil. According to the most reliable analytical reports Saudi Arabian crude oil reserves are estimated at around 260 billion barrels. At 60 Dollars per barrel this equates to 3708 Billion Dollars or approx. 4 Trillion Dollars (at current prices). At future prices these reserves will be worth 8 or 24 Trillion Dollars. This is enough money to build the most modern infrastructure, the best roads, the best hospitals, the best education, the best universities, the best hi-speed rail system and the best public transportation system on the planet.
On the other side of India, there is a planned collaboration between India and Bangladesh to jointly build a 1320 MW coal-fired power plant in Khulna, the land being proposed as Bangladesh’s equity investment.
It is planned that the Khulna plant would use high-quality coal imported through the sea from countries like Indonesia or Australia. The government is not considering import of Indian coal as it is generally low in quality and comparatively more environmentally harmful.
Bangladesh opened its first coal mine in April 2003 and has yet to develop it extensively, though there have already been strong protests over the planned opening of the Phulbari surface mine.

I bring these matters up, because I anticipate that, with the tightening of oil supplies, and the resulting increases in the price of imported energy, that countries will have to rely more on the resources that they find within their own borders. Pakistan, India and Bangladesh will likely be among those nations that will, likely because they have no other viable economic choice, move to an increased reliance on coal-fired power. The reserves are there nationally, even if, for now, the world price for coal is low enough, because of the large size of other national deposits, that they may not be mined. But, in time, they will be. Because, as with places like Haiti, and Lebanon, once the trees are gone they will likely not come back for a very long time.

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Sunday, September 19, 2010

Deepwater Oil Spill - closing the well and the series

The operations to seal the Deepwater Horizon well in the Gulf have now succeeded in putting cement plugs into the well that have effectively ensured that it will remain dead. The well itself was effectively killed when the cement was injected some weeks ago, and the work since has been to ensure that some of the potential problems from subsequent failure of that cement, could not occur. And so the relief well had shown that there were no effective quantities of hydrocarbon products in the annulus, meaning that the well failure had purely been through the shoe and up the production casing, and not up the annulus. Much of the original thought had been that the failure was the other way around, and the caution in the approach has been, in part, in case there was at least some failure up the annulus. That turned out not to be the case, but the relief well injected cement that filled in the voids in the annulus, so that with the cement already injected into the casing, the well is, as the Bureau of Ocean Energy Management, Regulation, and Enforcement certified, now permanently sealed.

This does not end operations at the well. Both the original well and the relief well must now follow the procedures for abandonment of the site. The DDII has been preparing for this, but the procedures that must be followed are relatively standard. I am presuming that the plugs that have been discussed are those at the bottom of the well, but there also need to be plugs installed within the well to ensure that there are no possibility of fluids migrating from one horizon to another. To a large extent this has likely been achieved with the filling of the annulus between the end of the lined well and the top of the cement injected earlier this summer. The well is now effectively totally lined on the outside, and there is a plugged production casing in the middle, which retained its integrity over the course of the events.

Nevertheless the regulations will be followed. For your information the relevant bits are, perhaps:
(a) Isolation of zones in open hole. In uncased portions of wells, cement plugs shall be set to extend from a minimum of 100 feet below the bottom to 100 feet above the top of any oil, gas, or freshwater zones to isolate fluids in the strata in which they are found and to prevent them from escaping into other strata or to the seafloor. The placement of additional cement plugs to prevent the migration of formation fluids in the wellbore may be required by the District Supervisor.
(b) Isolation of open hole. Where there is an open hole below the casing, a cement plug shall be placed in the deepest casing by the displacement method and shall extend a minimum of 100 feet above and 100 feet below the casing shoe. In lieu of setting a cement plug across the casing shoe, the following methods are acceptable:
(1) A cement retainer and a cement plug shall be set. The cement retainer shall have effective back-pressure control and shall be set not less than 50 feet and not more than 100 feet above the casing shoe. The cement plug shall extend at least 100 feet below the casing shoe and at least 50 feet above the retainer.
(2) If lost circulation conditions have been experienced or are anticipated, a permanent-type bridge plug may be placed within the first 150 feet above the casing shoe with a minimum of 50 feet of cement on top of the bridge plug. This bridge plug shall be tested in accordance with paragraph (g) of this section.
(c) Plugging or isolating perforated intervals. A cement plug shall be set by the displacement method opposite all perforations which have not been squeezed with cement. The cement plug shall extend a minimum of
100 feet above the perforated interval and either 100 feet below the perforated interval or down to a casing plug, whichever is the lesser.
In lieu of setting a cement plug by the displacement method, the following methods are acceptable, provided the perforations are isolated from the hole below:
(1) A cement retainer and a cement plug shall be set. The cement retainer shall have effective back-pressure control and shall be set not less than 50 feet and not more than 100 feet above the top of the perforated interval. The cement plug shall extend at least 100 feet below the bottom of the perforated interval with 50 feet placed above the retainer.
(2) A permanent-type bridge plug shall be set within the first 150 feet above the top of the perforated interval with at least 50 feet of cement on top of the bridge plug.
(3) A cement plug which is at least 200 feet long shall be set by the displacement method with the bottom of the plug within the first 100 feet above the top of the perforated interval.
(d) Plugging of casing stubs. If casing is cut and recovered leaving a stub, the stub shall be plugged in accordance with one of the following methods:
(1) A stub terminating inside a casing string shall be plugged with a cement plug extending at least 100 feet above and 100 feet below the stub. In lieu of setting a cement plug across the stub, the following methods are acceptable:
(i) A cement retainer or a permanent-type bridge plug shall be set not less than 50 feet above the stub and capped with at least 50 feet of cement, or
(ii) A cement plug which is at least 200 feet long shall be set with the bottom of the plug within 100 feet above the stub.
(2) If the stub is below the next larger string, plugging shall be accomplished as required to isolate zones or to isolate an open hole as described in paragraphs (a) and (b) of this section.
(e) Plugging of annular space. Any annular space communicating with any open hole and extending to the mud line shall be plugged with at least 200 feet of cement.
(f) Surface plug. A cement plug which is at least 150 feet in length shall be set with the top of the plug within the first 150 feet below the mud line. The plug shall be placed in the smallest string of casing which extends to the mud line.
(g) Testing of plugs. The setting and location of the first plug below the surface plug shall be verified by one of the following methods:
(1) The lessee shall place a minimum pipe weight of 15,000 pounds on the cement plug, cement retainer, or bridge plug. The cement placed above the bridge plug or retainer is not required to be tested.
(2) The lessee shall test the plug with a minimum pump pressure of 1,000 pounds per square inch with a result of no more than a 10-percent pressure drop during a 15-minute period.
(h) Fluid left in hole. Each of the respective intervals of the hole between the various plugs shall be filled with fluid of sufficient density to exert a hydrostatic pressure exceeding the greatest formation pressure in the intervals between the plugs at time of abandonment.
(i) Clearance of location. All wellheads, casings, pilings, and other obstructions shall be removed to a depth of at least 15 feet below the mud line or to a depth approved by the District Supervisor. The lessee shall verify that the location has been cleared of all obstructions in accordance with Sec. 250.704 of this part. The requirement for removing subsea wellheads or other obstructions and for verifying location clearance may be reduced or eliminated when, in the opinion of the District Supervisor, the wellheads or other obstructions would not constitute a hazard to other users of the seafloor or other legitimate uses of the area.
This means that there will be some continuing work at the well, but not a lot, and thus from now on I shall only be intermittently posting on that topic, and will start to write about the more general topics that have been neglected over the past few months.

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The Indiana TOBS temperatures

Back in June I reached the State of Indiana in my survey of how time had affected the state temperatures around the country, and whether the changing numbers of stations that are being used to generate the average values had any overall significance. However, when I reached Indiana, the USHCN site had changed the numbers that had been posted. Instead of just posting the homogenized data for each site after it had been examined relative to other station sites, both RAW and TOBS data was now included. This caused me to go back and revisit all the states I had already reviewed, and I must add those to the State roll at the bottom right of the page. After this weekend it will get a little more complex, since in the states I have not done I will review both the homogenized and TOBS data to see how they differ.

Looking at the TOBS value for Indiana, one of the problems in the state in comparing overall averages to the GISS data is that, as I noted last time, there is a significant impact when the South Bend data is included in the GISS data in 1944, given that it is in the North of the state, and as I have found consistently around the states, there is a strong temperature correlation to latitude.

The curve is not that much different to the one that was generated from the homogenized data. When, however, the overall average temperature for the state is examined, then changing from homogenized to TOBS data does make a difference. With the homogenized data there was an upward trend of 0.005 deg per year. When the TOBS data is examined, there is a change.

Although the change is small, it does shift from a positive trend over the years to a negative. It will be interesting to come back in a while and see how common that is in the Central states that are away from the sea.

Indiana being relatively flat and homogenous as far as geography, one again sees a very good correlation of temperature with latitude.

This is the second state in a row with a very high correlation. Given that this is significantly better than that achieved with the homogenized data, one wonders if the homogenization tends to blur some of the effects, because of the averaging and the way that it is done?

There is also, despite Indiana being relatively flat, a good correlation with elevation.

Again, with the TOBS data, the correlation is stronger than with the homogenized data, suggesting that the homogenization is removing some of the influence of the geography.

However, as with Illinois, while there is significance in the geography, as the populations get larger in the communities the correlations with population become more tenuous.

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Friday, September 17, 2010

Flexible roof support systems

(Note this is part of the series that usually appears on Sundays).

In the last Tech Talk, I discussed the use of rock bolts as a way of building, from relatively boken bits of rock, larger packages that could brace themselves against one another. In this way as they moved into the underlying opening they would act in the same way the blocks of a Roman Arch, and would become self-supporting. I have crudely tried to show the blocks with this figure:

Block building using rock bolts (after Jack Parker).

The intent is to create a compression zone just behind the face, and this can be shown with a photoelastic model, where a set of bolts is used to generate a central compressed zone. The black lines show zones of different compression, and while the bolts are tensioned, they compress the material between the ends.

Photoelastic model of bolt strengthening (after Lou Panek).

Using that model also allows me to point out the snag in just using bolts. You can see the small areas of tension between the bolts, where the compression cones from the plates has yet to intersect. Well if there are small loose pieces of rock there, they will fall out. And over time this “raveling” will get worse, so that any rock at the edges of the compressed pieces that crushes can also fall out. Over time this may mean that a critical block is no longer held properly in place, and it may collapse, bringing down the entire roof.

But when that raveling started, it was very small, and only the weight of the individual small pieces caused them to fall. This can be stopped, therefore, from happening by putting a layer of chicken wire (so-called because we used to use it to build chicken coops) between the bolts. This has no great strength in itself, but it holds the small pieces in place, so that they can’t fall out, and if they are still there, then the small pieces above them can’t fall out either, and so with a relatively weak addition, we gain longer term strength.

The snag, however, in today’s society, is that putting up chicken wire between bolts – since it has to be inserted between the bolt plate and the wall, is labor intensive, and slow. So, perhaps we can replace this thin metal support with something else – how about spraying on a thin layer of concrete?

The concrete can be kept relatively dry, and accelerators can be added to it, so that it can set very quickly, and in this way it is possible, using compressed air, to apply a layer of concrete up to about 6-inches in thickness to the wall, almost as a single layer. (There are application skills that are needed to do that over one’s head). Now we have build a relatively solid wall that the small stuff can’t get through, and the natural arch can build in the surrounding rock.

Applying shotcrete with the operator well back from the face (Evert Hoek)

(As a passing comment for those of a technical bent, concrete sets up as a relatively rigid liner and to get the rock walls to move and support themselves you shouldn’t therefore apply it too soon after making the opening, but if you have to, because the rock is really bad, you might put wooden strips in the shotcrete to give compression members so that the support can yield).

It is not, obviously, quite as easy as it looks, and it has the snag that after you have applied a layer, it is hard to tell what you have covered up. (Though I have only heard of one job where it was stripped off and re-applied). Questions of chemistry, and operator skill all play into getting it put on correctly, and if you are covering over a wet rock, you should allow a path for the water to get out, otherwise the shotcrete might peel off after a while.

Drains in a shotcrete wall. (Evert Hoek)

There is one further thing that can be done, and that is to add small fibers of steel or fiberglass. The problem with concrete is that it is not that strong in tension, and when the tunnel moves there can be some pull or bending of the liner, that could allow it to crack. But by putting less than 5% fiber into the mix, a much stronger layer can be created, especially if a small amount of silica fume is added to the mix, to both help lubricate the mix, and also to improve bonding.

Wires used to reinforce sprayed on concrete (shotcrete).

When this idea was first introduced it met with a lot of cynicism. And obviously it is not the answer in all cases (swelling and plastically deforming rock in particular can cause problems). But the story that I used to tell was of the operation on the West Coast. They were tunneling under a relatively poor sandy rock, that would not stay up. They had strong steel girders for support, and wooden lining between the arches, and still the walls were deforming into the opening.

Then, almost in desperation, they tried spraying the walls with shotcrete, before putting in the arches, and then spraying over those. After a while they increased the spacing between the arches. Then they replaced them with lighter arches, then they continued without arches.

The major advantage that shotcrete provides, particularly when it is combined with rock bolts and the judicious use of steel arches, is that of flexibility. As I mentioned in an earlier post, when you used to drive a tunnel under a harbor, for a certain metro system, you designed the tunnel for a certain estimated condition, and ordered the steel girders ahead of time. If conditions got worse, then you were out of luck, unless you were a lawyer.

However, with the shotcrete, bolt and arch system, the contractor, the owner and other interested parties can have their engineers meet about every 100 ft of tunnel advance and decide if the conditions are getting worse. If so then the shotcrete can be sprayed on a little thicker, the bolts moved a little closer, or light arches inserted. And the converse can also occur, with less support if it is not needed. This flexible approach became known as the New Austrian Tunneling Method, and while it was for a while very controversial, is now much more widely accepted.

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The Gulf and Chile - two quick updates

A couple of quick updates. Firstly Admiral Allen has now announced that the relief well intersected the original well late last night:
Through a combination of sensors embedded in the drilling equipment and sophisticated instrumentation that is capable of sensing distance to the well casing, BP engineers and the federal science team have concluded that the Development Driller III relief well has intersected the Macondo well. This determination was made based on a loss of drilling fluids that indicated communication had been established beyond the relief well, the pressure exerted against the drill bit as it came in contact with the well casing and, finally, an increase in pressure in the choke line of the Macondo well blow out preventer. While each of these indicators taken separately would not necessarily be conclusive, the aggregate data available supports the conclusion that the two wells are joined. It is also important to note that none of the measurements supported a scenario where the annulus of the well is in communication with the reservoir. Accordingly, we intend to proceed with preparation to cement the annulus and complete the bottom kill of the well.

Secondly the drill that had almost reamed the borehole down to the miners now has reached them. Because this particular borehole is a multi-stage ream, and the intersection was with a larger bit, apparently they may be able to assemble the next reaming stage at the bottom of the hole, and then back-ream it upwards. This, if true, is a much better way of doing things, since the larger hole makes it less likely that the chips from the cutting process will block the downward passage.
The machine is creating a conduit about 30 centimeters (12 inches) in diameter and when it reaches the mine gallery where the miners are, 700 meters below ground, a new drill bit will be installed on there and as it is drawn back up to the surface it will widen the conduit to about 65 cm (26 inches) so that a capsule can be sent down to the miners that will be used to extract them one by one.

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Deepwater Oil Spill - patiently waiting, Chilean drilling, and coal in Europe

Well, although the Admiral said that the intersection of the relief well with the Deepwater Horizon well would occur within 24-hours of his last press conference, and we are now past that, there has, as yet, been no word of the current status. BP noted that at 11:30 am on Thursday morning (Central) that DDII, who has the BOP on the failed well, has pulled its diagnostic tools from the well, until the interception is completed. Now the nature of those tools has not been explained, they were, if my memory serves, looking to fish out the dropped drill pipe that had been held by the shear rams in the original BOP. However, it isn’t clear whether even that operation had been completed. Remember also that if the drill pipe is sitting on the cement rather than in it (a function of when it fell), there is not likely to be enough space for any tools to get down to do anything inside the casing (such as perforate it to create a circulation path).

While the BP site notes that the DDIII – which is drilling the relief well – is conducting a ranging run, one should remember the Admiral noting that with the new method they are using they can do the ranging without pulling the drill string back the way that they had to do when they were further away. (It should also be noted that it would not be unheard off for the drill to miss on the first attempt).

It could also be that the well has been intersected, but that the condition of the wall of the well has created an unexpected problem (bear in mind that the relief well is trying to drill into the open hole section of the well, where there is no casing or cement liner on the wall, and the production casing is likely set away from the well wall.)

There are a number of things that can be postulated, we will just have to wait for some official word before we can find out what is happening. Even the ROV camera feeds can find nothing more interesting to show than poking the new BOP with a rubber hose.

Apparently I was wrong in my understanding of what is going on with the rescue of the Chilean miners. I had interpreted the intersection of a drill with a rock bolt as meaning that one of the smaller bores, similar to that which found the miners, had been drilling another small access hole for sending down supplies (such as the empanadas and steaks they will get this weekend to celebrate the 200th anniversary of the country).

However it turns out that there are a couple of other large drilling units on site that are now trying to reach the trapped miners. The one that had the broken bit that took a week to fish from the hole, is being drilled using a T-130 drill, which is reaming one of the supply holes already drilled from 5-inches to 12-inches. That step in the process should be perhaps completed by this weekend, but then the shaft will have to be widened in a second step out to the 28-inch diameter that the miners need to get out.

Reaming the hole in two stages has some advantages, since it does not force the large volumes of debris down the small initial hole,, where larger fragments might jam and stop the advance. The drill is already at the 1,640 ft mark, out of the 2,067 ft needed to reach the miners. The Strata 950 has only reached 1,050 ft.

Meanwhile a third option, using a oil platform drilling rig (Rig 422) has arrived and been set-up. It might be possible for this to drill a larger hole faster, and it is being located so that it has to drill a slightly shorter distance (1,958 ft) to reach the refuge. It can drill at between 65 and 130 ft a day. Apparently the roads over which the parts had to be carried were so bad that several of the haulage trucks arrived on site with flat tires.

And it is worthy of note that the European Union has decided that the last coal mine in Hungary will have to close at the end of this year. Since the mine feeds a local 240 MW power plant, which will immediately begin disassembly, this has implications for both the heating of the community this winter, and for future local unemployment. The argument has been made that because coal mining is subsidized (it used to be in the UK, that coal was subsidized, in part to keep the miners in employment, after the mines were closed unemployment in those regions of the UK was very high for a significant number of years). The mine is currently burning biomass with the coal, in order to reduce pollution, but that is no longer a sufficient justification for its continued operation. It supplies 5% of the energy used in Hungary.

This should be contrasted with plans in the UK to build a new 1.6 GW coal-fired power station at Hunterston in Ayrshire. It is a plan that has led to strong opposition but in all these debates, it is not clear if the reality of alternate supplies at the levels needed has been adequately considered. Given the strong objections from some locals over the siting of wind farms in South-West Scotland (farms it is actually difficult to see, as I have found), one wonders what source of magical power is expected to replace the diminishing contributions from North Sea oil and gas.

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Wednesday, September 15, 2010

Deepwater Oil Spill - nearing intersection, hurricanes, the TWIP and gold

Progress on the Deepwater Horizon well is going well enough that the Admiral considers it likely that the remaining work (other than plug and abandon) may be completed within the next four days.
just to summarize again, in the last 24-hour period we proceeded to go ahead and drill to the intercept. At the time we started drilling we estimated that we were 3.5 horizontal feet away and 50 feet away from the intercept. We drilled down (inaudible), we went through the drill string, we put in a ranging tool just to make sure that we wanted to calibrate what the ranging tool told us versus the equipment that now allows us to do some ranging measurements from inside the drill bit.

The drill string is now packed and it’s commenced drilling so the air at this moment as we’re speaking drilling that last 20/25 feet and they are almost touching the well at this time. That’s the report I got just before I came out here. When we do the intercept, which will be imminently I will say in the next 24 hours because they may elect to pull that drill bit back do another ranging run, which would add time. That’s the reason I’m not going to say it’s going to happen in the next hour.

Sometime in the next 24-hour period, we should do the well intercept. Once the well is intercepted, we’ll have to understand from the pressure differentials and the drilling fluids the nature of the annulus. Once that’s been determined decision, will be made on cement and then once it’s cemented the cement will have to adhere and be pressure tested.

That entire element from this morning I would estimate to be about 96 hours.

It is good that the remaining critical work will be done in this time. Right at the moment there are two Category Four hurricanes in the Atlantic (something that hasn’t happened since 1926). While both of those are likely to head North up the Atlantic, Tropical Storm Karl may turn into a Hurricane after it crosses the Yucatan, which may be some cause for concern because, when it re-enters the Gulf, it will be quite close to the offshore Mexican wells, where over 2 mbd is produced.

The possibility that global warming is causing an increase in hurricane intensity, if not overall numbers, is something that climate scientists continue to debate, but the possibility of another series of hurricanes of the likes of Katrina and Rita clobbering the oil supply/distribution network, regardless of cause, is something that the EIA has to consider, and that is the topic of the front page of the TWIP, this week. The EIA is introducing a Hurricane page, which will, on a hurricane specific basis, show the projected path of the hurricane, and the facilities that might be at risk.

As an example, they showed this illustration from the recent path of hurricane Earl ( a larger version is available here

And speaking of the state of the refineries, with the driving season over, inputs to the refineries have fallen, with most of the drop coming from imports, domestic production even had a slight uptick.

Gasoline production remains constant for the moment:

Although demand has begun its seasonal fall.

Fuel ethanol production continues to rise,

Some of that increased production is going into rebuilding stocks, which had been falling until recently.

Distillate demand is also rising seasonally, and is significantly ahead of where it was last year.

Speaking of things rising, I note the record price for gold on Tuesday, though it has since fallen a little. But it may show what happens when a product that is in demand, passes beyond the point of peak production.

And finally, speaking of mining metals, it appears that the trapped miners in Chile, will have a lot of job offers when they get out safely. We can only hope that this comes sooner rather than later.

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