Eksplorasi.id – You know the saying, “Be careful what you wish for, you just might get it.” Well, the oil patch has wished for Trump. What did we get?
Before I go any further, I want to introduce to you the concept of “Killing the Unchosen Alternative.”
In this, it usually denotes a management decision where there are several viable alternatives.
After discussion, cogitation, studies, and myriad other ways of saying, “We’re thinking about it,” we come to a conclusion and decide on a course of action.
Once the course is decided, we put all of our energies into that path and ignore all other courses that were refused.
The Trump/Clinton election must fall into the same category. Trump won. Hillary lost. We can now completely dispense with all of Hillary’s ideas, promises, plans, or supporters. Trump is the chosen course, so the alternate course must be completely abandoned and all efforts focused on the chosen course.
Keystone XL
First off, if you want a supreme overview of what this project really means, I suggest @WilliamEdwards’ post: “Will Keystone XL Undermine OPEC?”
In short, although those of us on the E&P and Downstream part of Oilpro think that all pipelines are good and should be supported, the Keystone XL pipeline would have the effect of adding a lot of (not-good-quality) oil to an already-oversupplied market. How can this help anyone?
I agree that it is a good idea from a logistics point of view and especially so to the involved players. If you are an owner of the Canadian fields this will help to deliver to market, or if you’re a Canadian oil patch worker, this pipeline is initially beneficial to your present situation.
Long term? Not so much. No matter which side of the energy conundrum you are on, there is no denying that supply/production right now exceeds demand/consumption.
We’ve been having inventory builds for at least the last 3 years, and that simply cannot continue. The XL Pipeline does not address this fundamental problem with today’s oil patch and, in fact, exacerbates the problem.
As much as I did not like the reasons, the delay, or the duplicity of Obama’s approach, the final outcome of “no XL Pipeline” is probably good for the global Oil Economy.
I apologize to my brethren from Canada who don’t like my previous few paragraphs, but reality is better served without a dose of illusion to assuage our feelings.
Shale Oil
Harold Hamm is a confidante of Trump. He is also “Mr. Shale.” Anyone who has read my previous posts knows I am not a real fan of Mr. Hamm for his errant and ill-timed comments.
I will state, though, that since my recent direct reproachment of his ill-advised statements, he has been gratefully silent. But, as a Trump supporter in both name and checkbook, Trump is going to listen to him.
Mr. Shale is not going to be good for oil prices. He’s the epitome of Shale Drilling, and he’s going to push for more. Now, if Trump plans to shut down imports – you cannot just shut down one part of the world; it is all or none – then he’s going to have to come up with about 7 to 10 million barrels per day of replacement oil.
The anti-energy, anti-carbon Canadians who elected Trudeau will have to embrace the pro-energy, pro-carbon Trump to get their oil sands to the US. (Can you say, “Hypocrite?” I bet you can.) The Keystone pipeline is a good way to get about a million of the 5 to 7 million needed.
Arctic drilling may or may not come up with – let’s be generous and say 2 million barrels once developed – some oil. That leaves shale oil to come up with the additional 4 million barrels per day. This last is all condensate.
I’m sorry, but without annexing Venezuela, the plan above is just plain unfeasible. We won’t get energy independence without Canada, Mexico, and Venezuela as partners.
Venezuela won’t happen without a coup, and Mexico won’t be able to think of anything but “wall” when they talk to Trump, so “energy independence” just isn’t in the cards.
At best, we’ll get more oil into the present glut, just exacerbating the present problem. Sorry, Mr. Trump, but “Drill, Baby, Drill!” is a great slogan, but a terrible financial plan.
Coal and LNG
Right now, roughly 1/3 of the US electricity consumption comes from coal. This is not a bad thing, regardless what the Chicken-Little environmentalists want to tell you. Coal is a great power source that is clean in transport, and can be cleaned in use.
The problem with coal is that the green (as in “greenbacks”) lobby is against it. Obama took this hook, line, and sinker so he could expand the Federal Government. For those who enjoy History, I suggest you read the Federalist Papers where our present republic was sold as a weak central government… but I digress.
Coal is not a dirty power source and its emissions and waste (flyash) can actually be utilized for positive purposes. I don’t know if you’re aware, but many of the first vessels to the new world came, burned hardwoods, and took the ash back for fertilizer. By the way, sewage can also be used, but yet again, I digress.
Coal is a great, clean power source. Under Trump, its use should return. This is not the 1950’s to 1970’s use of coal. This is 2016 use of coal. We have precipitators and scrubbers.
What goes up the stack today is mostly steam. We capture the “bad” components for use and sale elsewhere. I’m sorry to you greenhouse gas fanatics, but you have not yet convinced me.
Please stop forging and “adjusting” the data, and you’ll have a better chance of bringing me around, because I really can be convinced. I detest liars, which would bring us back to my Trump-over-Clinton position, but that’s just rehashing old ideas.
So, coal might come back under Trump. This is NOT good for oil and gas, because coal was being supplanted mainly by LNG or CNG, and with coal’s resurgence, this will decelerate. Natural gas will be the main loser to coal, but it might just decrease the amount of oil we need (see previous section) to attain “energy independence.”
Nuclear Energy
Say what you like about the byproducts, as of today, the cleanest, safest, and most reliable energy source we have is nuclear. There are some hurdles, but none of them are all that difficult to overcome.
Nuclear cannot be built around fault zones. The architects and structural engineers can probably come up with a plan to overcome the seismic problems, but I’d prefer to just ignore them. We have some relatively quake-free zones, so that’s where we should focus for locating these plants.
The uranium came from underground when we got it. This is much like oil. Sure, a spill is a concentrated failure and worse than nature might cause, but the hazard was there in oil seeps long before we started using it.
The pollution was localized, but it existed. Nuclear is no different. We don’t manufacture uranium, we mine it. We refine it. We condense it with centrifuges, and what comes out is a more concentrated – more per-unit radioactivity element – than what we started with.
Did you know that gasoline is more volatile than crude oil? It’s the same thing. We concentrate the energy source to make it better at doing its job, which is to provide usable energy.
No one – absolutely no one – has ever found a viable, self-sustaining nuclear generator on earth. Sure, you can move to the sun to get one, but the air conditioning bills are going to be outrageous. Trump should push nuclear energy if he really wants energy independence, or at least moreso than we have now.
EPA
We cannot discuss energy without talking about the US Environmental Protection Agency. I don’t know anyone who doesn’t breathe air or drink water (even you scotch drinkers get it indirectly), so let’s dispense with the “the other guy wants to kill us with pollution and poisons” rhetoric.
We all want cleaner air and water. So, the question becomes, “Has the EPA gone beyond working for the environment, and entered the realm of behavior modification through enforcement?”
In my opinion, it has. Apparently, about 58 million other Americans at least tacitly agree, because of the election results. This comes down to a cost-benefit analysis.
For the last 8 years, Obama and company have concentrated on the “benefit” side only, and ignored the “cost” side. Let’s hope Trump brings this more into balance, and US government policies stop trying to attain utopia and prefer instead to improve reality. We really can’t afford anything else.
By : Don Minter
Source : Oilpro.com
