Life After The Hurricane  

Hurricane damage led of the news here tonight, with the ABC TV reporter looking quite shaken as he reported on the likely death toll and stories of looting amid the remains of New Orleans. The Oil Drum continues posting lots of good stuff, including this scary report on damage to oil and gas production facilities in the wake of Hurricane Katrina - most of which is in contrast to the fairly bland reports I'm seeing in the mass media. There are lots of interesting comments in the follow ups (along with the odd troll).

They also have a report on shortages of fuel at petrol stations ("I'm not asking anybody to panic," said Gov. Mike Easley in North Carolina. "If I find out we need to panic, I'll come back and tell you tomorrow."), while one of the "Seeing the Forest" bloggers has reported their local petrol station has simply given up and closed.

There are MANY production platforms missing (as in not visible from the air). This means they have been totally lost. I am talking about 10's of platforms, not single digit numbers. Each platform can have from 4 to 100+ wells on it. Most larger ones have 20-30 wells in this area, with numerous caisson wells. They are on their sides, on the bottom of the gulf - they will likely be left as reef material, provided we can get permission. MMS regulations require us to plug each of the wells that were on these platforms - HUGE cost now, as the platforms are gone... Hopefully, MMS will grant `abandon in place' status for these wiped out structures.

We also set individual wells as satellites and pipe them back to existing platforms. These stand-alone wells are called caisson wells. 90% of those in the storm path are bent over, rendering them a total loss, We would have to remove the existing bent structure and drill a new well, as bent pipe is basically unusable.

We utilize platforms as gathering hubs. We pipe the raw oil/water to them and then send it on for separation, or separate it there and send finished oil on. Damage to a hub means everything going to the hub is offline indefinitely. There are +/- 15 HUBS missing. MISSING!! As in we cannot find them from the air.

Thus even if the wells feeding the hub are ok, we have nowhere to pump the oil to...

Boing Boing also has a number of good posts on the aftermath, including this, this and this.

The poorest 20% (you can argue with the number -- 10%? 18%? no one knows) of the city was left behind to drown. This was the plan. Forget the sanctimonious bullshit about the bullheaded people who wouldn't leave. The evacuation plan was strictly laissez-faire. It depended on privately owned vehicles, and on having ready cash to fund an evacuation. The planners knew full well that the poor, who in new orleans are overwhelmingly black, wouldn't be able to get out. The resources -- meaning, the political will -- weren't there to get them out.

The Independent also has an article on the aftermath, with Hamish McRae having a look at the implications with an eye to peak oil.

There are three main reasons for this tight market, two on the demand side, one on the supply side. On the demand side, there has been the surge in demand from China, which has now passed Japan as the world's second-largest user of oil. This year, the rise in demand has actually been quite modest but comes on top of several years of rapid increase (see top graph). The second demand side-effect has been the steady rise in US demand, which has climbed alongside the growth of the economy as a whole. There is a particular problem in the shortage of refining capacity in the US, for there has been little new investment in this during the past quarter century. Hence petrol and aircraft fuel prices have risen by even more than the rise in the price of crude. But even had the oil companies put in more capacity and US consumers had cheaper pump prices, this would not of course have affected the price of crude.

Everyone accepts the importance of the demand from China and the US. The third influence is the most contentious because it opens up the great debate as to whether the world is close to peak oil production.

The world's oil reserves are finite and sooner or later oil production will start to decline. The debate is whether that peak is five or 10 years away or whether it is now. The view of the oil majors is that it is some way off, the view also of the world's largest oil producer, Saudi Arabia. The opposing view is more radical and is made by a few independent geologists and oil consultants, including Matt Simmons, who has recently been advising President George Bush.

WorldChanging has a post up on the "suite of environmental factors that have contributed to Katrina's enormously devatating impact on the Gulf Coast" while Billmon has made one of his usual insightful comments.

This tragedy has a minor personal dimension for me. The rice plantation where my great grandmother was raised -- indeed, a good part of the parish where she lived her life -- is now about 8 feet under water, a kind of Cajun version of Atlantis.

But for the people who live in southern Lousiana, the consequences of this environmental fiasco are immediate and staggering. The entire South Lousiana ecosystem is on the verge of collapse, as open water overwhelms salt marshes, and salt marshes intrude into what were once freshwater swamps. Productive fisheries -- the source of a lion's share of the seafood still produced in the United States -- are either vanishing or endangered.

Conservatives who never met a redwood they didn't want to clearcut or a national park they didn't want to turn into a dirt track for off-road vehicles will certainly ignore these losses. But even Dick Cheney might want to think about the effect the destruction of South Lousiana could have on his beloved energy industry. The infrastructure -- drilling platforms, ports, shipyards -- that supports something like 20% of all U.S. oil and gas production is being left further and further out to sea:

As executive director of the Greater LaFourche Port Commission, [Ted Falgout] manages the country's largest transportation hub for offshore oil and gas drilling. There are 600 offshore drilling platforms within 40 miles of the port.

The road connecting Port Fourchon to civilization, Louisiana Route 1, sits four feet above sea level for its final 18 miles. If a hurricane were to wash it away, nearly 20% of the total U.S. oil supply would be jeopardized. Gasoline prices might triple, Falgout warns.

Now, thanks to Katrina, the hidden costs of all those decades of insane policies are being made visible to the entire world.

To be sure, the Corps of Engineers has changed its approach since the concrete-pouring, earth-moving heydays of the 1950s and '60s -- in large part because of pressure from those environmental "extremists" now being demonized by the conservative agitprop machine. But, just as many enviromentalists predicted at the time, those reforms came far too late and did far too little to reverse the damage, or even halt it.

Meanwhile King George has finally made it back from his month long holiday (I'd love to have one of those) and, in a rare concession to reality, noted it will take years to fix the damage. MSNBC has a piece up saying that a political hurricane is about to engulf him as he is held to account for his numerous acts of incompetence. At least he has finally admitted we are in Iraq for the oil.

The Daily Reckoning has alarmingly declared there is "An Oil Panic In Plain Sight" which is at the very bearish end of the spectrum but makes a few interesting points, including a note that the US SPR (which is apparently about to release some oil to cope with the impact of the huricane) is to be enlarged by 300 million barrels. With the US enlarging their strategic reserve and the Chinese beginning to fill theirs it's very hard to see demand falling over the next 12 months.

The Saudis are the "central bank of oil," right? So how come the central bank is scrounging for loose change under the couch cushions?

Earlier this month came news that Saudi Arabia hired five Rowan jackup oil rigs for drilling offshore oil wells on a three year contract. Those rigs are currently under contract in the Gulf of Mexico, so that means Saudi Arabia outbid somebody to get those rigs – and rig rates have already run up to obscenely high levels – 30% to 50% more than a year ago.

Drilling for oil underwater is very expensive. You'd expect the Saudis to be drilling out their cheapest oil first. Don't they have a desert full of this stuff? So why are they suddenly digging deep for underwater oil, and willing to pay a premium to do it?

Unless... maybe the Saudis don't have as much oil as they say they do.

We already know that the Saudis have confessed that OPEC won't be able to meet western oil demand in 10 to 15 years.
I'm starting to think they might come up short a lot sooner than that.

Are the Saudis lying? Well, at least it seems like they're not telling the whole truth. What's more, I believe there's
a whole lot our own government isn't telling us. I'll get to that in a moment. First, some ugly facts...

· The world uses a BILLION barrels of oil every 12 days. Do we find a billion barrels of oil every 12 days? NO! In fact, if everything goes perfectly, we'll find just 30 million barrels of oil in the same time period. If things go badly, we'll find less. Much less.

· The global depletion rate runs at least 5% a year, perhaps much higher , as once-reliable sources of oil are in serious decline. Oil production in Britain fell the steepest of any country last year, with production in the once-prolific North Sea falling by 10% (230,000 barrels per day) last year ... Production in Alaska's Prudhoe Bay has fallen 75% from its peak in 1987 ... Iraq's oil production is still half of what it was before the war ...Mexico's production is declining so quickly it will have to start importing oil in the next 10 years!

· The U.S. Energy Information Agency has fallen in line with the International Energy Agency and admits that oil demand will exceed supply starting in the fourth quarter of this year. Total world demand is expected to be 86.4 million barrels per day, according to the EIA, while total world supply is expected to be 85.4 million barrels per day. The EIA ups the ante by saying there will be a shortfall in the first quarter of 2006 as well.

Publicly, the White House urges calm and predicts that oil prices will retreat from their current high levels. But privately, the U.S. government is quietly planning to add to existing oil reserves at a furious pace.

Squirreled away in new energy legislation is a directive to increase the Strategic Petroleum Reserve from 700 million barrels (70 days' supply of imports) to ONE BILLION BARRELS. They're adding to the SPR when oil prices are sky-high. What are they afraid of?

Joseph Stiglitz made some interesting comments (along with the new American refrain "Blame China") down here at the business leaders conference. He doesn't agree with Chip Goodyear and Steve Forbes about oil prices falling next year.

The global economy is likely to be destabilised by the integration of China and India, one of the world's top economists has warned, as protesters continued to demonstrate against the Sydney meeting of international business leaders.

Speaking at the Forbes CEO conference yesterday, Professor Joseph Stiglitz, a Nobel Prize winner and former chief economist of the World Bank, said an "enormous change" was taking place as more than 2 billion people were integrated into the world economy. Imbalances in the United States - especially its massive deficit and low household savings rate - and soaring oil prices increased the risks as this massive transition was taking place, Professor Stiglitz said.

He also said some people are not benefiting from the global economic system. "Within all of our democracies we learn how to temper capitalism … but at the global level I don't think we do that as well as we do domestically," he said.

Macquarie Bank chief executive, Alan Moss, said the benefits of globalisation needed to reach more people in the developing world. He also defended Australia's progressive tax system - where those on high incomes pay higher marginal tax rates - when asked whether Australia would ever introduce a flat rate of income tax.

BHP Billiton's chief executive, Chip Goodyear, tipped the price of crude oil to pull back from recent record highs in the next 12 months. However, Professor Stiglitz said the price could stay high for an extended period.

Leading retail industry company Westfield are predicting an economic slowdown due to high petrol prices.

For those who like drawing parallels between current events and the script for the Oil Shoockwave exercises, a general strike in Nigeria is on the cards.

Energy Bulletin has a few links to news from Ecuador - strikers may resume their disruption of oil production and the new President is unlikely to be able to prevent this without making major concessions to their demands.

This month, protesters led by local elected officials demanded energy firms invest more in the communities where they drill. They crippled Ecuador's vital oil industry and helped lift world crude prices by dynamiting pipelines and vandalizing pumping equipment.

The protests ended as foreign firms promised to invest more in local development projects and the government tacitly agreed not to prosecute those who carried out the attacks. By doing so, the government sent the message that militants can get away with pressuring the state through violence, Bonilla said.

But tensions were high and activists threaten to resume protests on Tuesday if the firms do not sign the deal.

"The eastern region of Ecuador looks likely to slide into a Nigeria-like condition of chronic unrest and lawlessness, with sporadic interruptions of oil production almost guaranteed," Roger Tissot, Latin American analyst with Washington-based consultancy PFC Energy, said.

Oil is Ecuador's biggest export. The country is South America's biggest supplier to the United States after Venezuela.

Energy Bulletin also has a link to an interesting article on developments in the Gulf of Guinea in West Africa.

The conflict of interests over the oil-rich Gulf of Guinea among global oil majors emerged this week soon after a South Korean consortium exercised a special right to acquire two deepwater blocks in Nigeria, Africa's top oil producer,at the just-concluded licensing round at the weekend.

The Gulf of Guinea, famous for its light, sweet crude highly valued by the US market, is believed to hold as much as 10 percent of the world's oil reserves, but almost all of its crude are produced by Western oil giants such as Royal Dutch Shell, ExxonMobil, Chevron and Total. According to the US National Intelligence Council, the United States in diversifying its sources of oil hopes to increase its reliance on the gulf oil from the current level of 15 percent to 25 percent of oil imports in 10 years.

The Center for Strategic and International Studies (CSIS), a Washington-based think tank, in its July report, said: "The Gulf of Guinea is a nexus of vital US foreign policy priorities."

Hurricane Katrina is also getting plenty of attention in the parahistory world, with all sorts of weird conspiracy theories about HAARP and the like swirling around (I hadn't realised this particular branch of parahistory even existed). As usual, Jeff at RI does the best job of making this sort of stuff sound sort of sane (which is a pretty amazing achievement when you are considering the possibility that the US government has the ability to control the direction of hurricanes and has used this power to devastate New Orleans and oil production in the GOM).

The magnitude of the devastation, and the rapidly deteriorating situation in New Orleans, seems finally to be dawning on the corporate media. Still, the lead story too often is "looting," like it too often isn't when the looters are CEOs stealing the necessities of someone else's life. We ought to remember Donald Rumsfeld's analysis of the tearing of another city's social fabric: "The images you are seeing on television you are seeing over and over and over, and it's the same picture of some person walking out of some building with a vase, and you see it 20 times and you think, 'My goodness, were there that many vases?'"

New Orleans Mayor Ray Nagin is "very upset" an attempt to plug the breach in the levee was called off, and doesn't know by whom: "He said the sandbags were ready and all the helicopter had to do was 'show up'.... He was assured that officials had a plan and a timeline to drop the sandbags on the levee breach." He is still not sure who gave the order to cancel it. At another Press Conference, Nagin complained about being unable to reach the White House, as the White House said they were in constant communication, and FEMA representatives claimed everything were under control.

Since 2003, Washington has been diverting funds intended for the repair of the New Orleans' levee system and pouring them into the breach of Iraq. Nearly half of Louisiana's National Guard are also in Iraq, I suppose to fight the hurricane over there so we don't have to fight it over here. Instead of the protection of the Guard, the Gulf Coast is falling under the authority of Northern Command ("Defending the Homeland is Job #1") which, since it's creation in 2002, has been a violation of the spirit and the law of the Posse Comitatus Act. But nevermind that now, since martial law has made land in New Orleans.

There is something unnatural about this. I don't mean to suggest that the hurricane was driven by HAARP or scalar waves, though I could...