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Post Harvey Fallout on the Oil Business

Discussion in 'Energy, Environment, and Policy' started by wdolson, Aug 28, 2017.

  1. wdolson

    wdolson Supporting Member

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    Some articles say 10% other say 15%, but a significant percentage of the US refining capacity is in the destruction zone from this hurricane. Almost all of those refineries are shut down right now because of the flooding and storm damage. There are concerns oil imports will be curbed after the refineries are back in operation because port facilities have been damaged.

    Gasoline prices will likely be going up, especially in the SE. That probably won't hurt EV sales, though the length of the shortage will determine the impact. If the shortage is long, that could encourage more people to think seriously about EVs.
     
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  2. Hotlobstah

    Hotlobstah Member

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    There will need to be a pretty tremendous spike(to $4 I think) before "regular folks" think of an EV as a possibility. Our local news(Boston no less) just advised for everyone to stock up on gas now as we may see increases in the .05 to .10 range. Going from $2.20 to 2.30 is nothing for most people.
     
  3. kort677

    kort677 Banned

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    gas prices in the southern tier will spike a bit as these refineries that have been hit by the storm recover. there is far more to the story than refining gas as many of the pipelines will be back up and they won't be able to move crude or refined products that are exported and imported through the port as well.
    the effect on prices at the pump could be dramatic for a while but should come right back down when the backlogs of oil begin to hit the markets.
     
  4. TheTalkingMule

    TheTalkingMule Active Member

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    Harvey related issues are tanking WTI today and dragging brent down with it. How low can it go?
     
  5. kort677

    kort677 Banned

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    interesting, I guess that there is concern for the coming glut of crude that will be backed up because the pipelines through the houston area are closed for awhile. what are the prices for the products doing?
     
  6. jbcarioca

    jbcarioca Active Member

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    Actually the reality is far more depressing than that:
    the Gulf Coast Basin and nearby areas are major shale production areas for oil and gas;
    The area from Corpus Christi to east of Houston is of major importance in:
    1) basic chemicals;
    2) other chemical products like paints, coatings, adhesives, cosmetics;
    3) oil refining;

    Then the area is the largest US export base for everything from refined products like gasoline, fuel oil etc to natural gas and all those chemicals.

    The largest export market for almost all of that stuff is Mexico, but there are worldwide markets.

    A reasonable estimate would suggest US exports in these categories will be down by medium double digits or more until recovery can happen. I have no idea, but it is quite reasonable to estimate years, as we are hearing in other aspects.

    From the standpoint of the ICE-age economy this is catastrophic for North America and beyond.

    One can only wonder what the broader implications might be.
     
  7. kort677

    kort677 Banned

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    I don't think that the situation is as dire as you seem to think it is. there will be a big disruption but I think the recovery will take as long as you think it will. once the repairs are made to the refineries things will get back up to speed fairly quick.
     
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  8. jbcarioca

    jbcarioca Active Member

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    I hope you're right. Obviously I am hearing from people in the shoes of the storm. OTOH saltwater inundations of wild, gas and petrochemical installations is hugely destructive on many levels.
     
  9. kort677

    kort677 Banned

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    the thing about the flooding is that for the most part beyond the immediate shorelines it isn't salt waters from the gulf that is causing the floods it is the massive rainfall and if I'm not mistaken rainfall isn't tainted like salt waters are.
     
  10. jbcarioca

    jbcarioca Active Member

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    That is mostly true, and we hope it is less harmful. It is good for someone to be a bit more optimistic than are some others. It is also true that much of the refining and petrochemical infrastructure is in need of updating anyway, so this becomes an ideal time to accomplish that. rebuilding "better than ever" is possible. The pace of shale extraction recovery is probably unknowable right now, partly because there have not yet been such events that affected shale extraction.

    Crassly, perhaps, Tesla may be the least affected carmaker by all this.
     
  11. kort677

    kort677 Banned

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  12. jbcarioca

    jbcarioca Active Member

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  13. kort677

    kort677 Banned

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    if you are referring to the rigs in the gulf, from what I'm hearing they are only shut down, the rigs haven't been impacted much because the storm only became very intense much closer to shore.
    Like I noted, production isn't the concern, the shipping and especially the refining processes are what is concern to the markets.
     
  14. jbcarioca

    jbcarioca Active Member

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    No, I am referring to the onshore shale oil and gas production that is the major development of the last decade in precisely the region affected by Harvey.
    http://www.searchanddiscovery.com/documents/2012/10429dennen/ndx_dennen.pdf
    The linked document described both the geology and it's extent, but does not show anything about where the shale operations are taking place.
    One of the larger plays in the area is the Eagle Ford described in this article:
    Eagle Ford Shale Fuels Corpus Christi Boom

    For context, there is abundant history with conventional vertical oil and gas platforms offshore in violent weather on a worldwide basis, and even more extensive experience with onshore wells. There is much less with shale operations because those are much newer and fewer of those have been located so close to ocean influences as has been the eagle Ford and others in the Gulf Coast.

    The reason for the concern is that this production depends on injection of carefully controlled substances in order to control the hydraulic fracturing (called fracking) process.
    This is the process that has been controversial because of groundwater pollution, earthquakes and other disturbances. Nobody has well documented evidence of what effects may result from this type of event. They might be inconsequential, they might be very destructive, nobody knows.

    My relatives that live in the area may have been directly affected by these activities. Harvey presents yet another risk factor.

    Sorry for being long winded. I hope this explains why I made the statements I did, whether or not one thinks the concerns as I stated them are justified.
     
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  15. kort677

    kort677 Banned

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    all interesting points, I can't really offer anything about your concerns.
     
  16. wdolson

    wdolson Supporting Member

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    The friend who was here last week and is now trying to get home was involved in bringing that big play of shale oil and gas online. He also worked on a lot of plays out in the Gulf. He's a retired Geophysicist who worked in the oil biz for 40 years. My sister is a production Geologist in California.

    I doubt the aftermath of this storm is going to affect production much. Oil is produced in some of the most difficult conditions in the world. Though getting the oil to its destination might be difficult if pipelines are damaged.

    Refineries are the truly fragile part of the equation. Refineries are complex chemical labs on an industrial scale. One of the things that gave Homeland Security fits after 9/11 was the problem of securing the refineries from terrorism. They were very soft targets easy to knock offline.

    According to the news, one of the problems in the industrial part of Houston now is leaking chemicals from all the industrial plants. It's getting into the air and water and people are getting sick. Oil refineries alone have some nasty chemicals onsite. And then there are other chemical plants leaking too.

    I suspect one or more refineries is going to be offline for a year or more. There won't be enough people to do the work repairing them.

    The US could see high gasoline prices while the rest of the world has low prices due to poor refining capability.
     
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  17. TheTalkingMule

    TheTalkingMule Active Member

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    There's a huge glut of crude from fracking, so the loss of oil production shouldn't be a problem(notice oil prices way down today). The problem will be the refineries shutting down for a week or more.
     
  18. wdolson

    wdolson Supporting Member

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    Yes, the bottleneck in the US is definitely refining, not production. With all refineries up an running, there is barely enough capacity to meet demand. With 10% of refining capacity shut off, the stored backlog will be exhausted within a few days.
     
  19. kort677

    kort677 Banned

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    the possible glut of crude and resulting lower prices because nobody wants to own the crude if they can't ship it is one part and if they can't get the system in the houston area up and running quickly will result in cheap crude in the US WTI market but will result in much higher product prices. crude needs to be refined into product for it to hold value.
     
  20. kort677

    kort677 Banned

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    right now refining is close to zero in the houston area, how long it takes to ramp up production to get the system in sync is the big question.
     

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