What is Behind the Oil Crisis?

[-1=e^ipi]

Presumably some engineering would have to go into making sure that it is stable, both in initial site selection as well as potentially reinforcing the cavern after it is created.

It also doesn't have to be directly underneath the lake but can be offset by a considerable distance, as needed, at the cost of a very slight loss of efficiency of the system.

I'm skeptical that this is a cheaper option compared to making a more conventional hydroelectric dams.

Anyway, thought I would try to quantify the idea of raising the height of Lake Ontario say by 1 meter (so half a meter drop height + half a meter of storage capacity). Surface area is 1.9 x 10^10 m^2, so that would lead to 9.5 x 10^9 m^3 of storage volume.

Rate of water flow out of lake Ontario is 6910 m^3/s. So this means it might be possible to store as much as 2.2 x 10^11 m^3 of water for Lake Ontario (but I'm choosing a low amount because obviously flooding cities such as Toronto would be problematic).

If I calculated it correctly, this gives 12.9 GWh of annual storage capacity. Not very much...

Anyway, flooding cities to avoid cities being flooded. Wonder if people would buy it.

Edited September 11, 2015 by -1=e^ipi

[eyeball]

Anything's possible, and if there was sufficient interest/funding I'm sure an adequate way to contain the radiation could be devised. But you're right, the idea could never be implemented in the real world, not in Western countries anyway and probably not anywhere else either due to treaties regarding nuclear weapons.

In the 1960s, people investigated peaceful uses of nuclear weapons for terrain modification (Project Plowshare), but that was done without properly understanding the dangers in the way we do today. The project was scrapped after some tests. I bet it could be done much more safely and productively today.

No way. Not with today's government's aversion to any oversight of their regulatory responsibilities. Ditto the private sector.

[GostHacked]

It's simple, do the math. People can equip homes with batteries but that doesn't really make a dent in the overall dynamics of the power grid, so to be able to rely primarily on transient energy sources like solar and wind, you need enough energy storage to smooth over the variations on a grid scale (whether that storage is centralized or if it's a bunch of individual installations in people's homes and businesses doesn't change the end result of how much storage is needed). The numbers have been posted here before, but they don't really strike home until you look through the math yourself. Here's what you should do to answer your own question:

That said, you CAN store energy on grid scales with current technology, just not with batteries. You can store the energy using pumped hydro systems. Unfortunately, no one is lobbying for these, despite the fact that they can be built today, for a tiny fraction of the cost compared to batteries per kWh stored, and are far more efficient in energy storage and recovery compared to charging and discharging batteries. In many areas, the needed systems can be retrofitted onto existing dams, while in other areas terrain would have to be modified. But even the necessary large scale terrain modification is still far cheaper than trying to store relevant amounts of energy in batteries.

When I am using the term batteries, it can mean any type of power storage device. Capacitors can be a battery. People also thought it was not feasible for cars. Until the Tesla cars rolled off the line. Well started with something like the GM EV, which was received very well and those who 'owned' the cars fought tooth and nail with GM to keep them.

But I would say that if people had to count on themselves to produce and store power, you'd see a reduction in the use of the electronic we all use. The amount of power to keep this world connected and always online is ... very large and I would argue one of the biggest power consumers on the planet. But regardless.

[GostHacked]

Actually the easiest way to implement pumped hydro storage in otherwise flat terrain that does not avail itself to natural hydro might be to find any old decent sized surface lake (or, I suppose, you can use seawater), go like 1-2 km down so you have a nice big height difference to maximize the potential energy, and detonate a high yield hydrogen bomb under ground to create a big cavern. The hydro generator can sit between the lake and the cavern and energy is extracted by letting water flow from the lake down into the cavern, and stored by pumping it back up.

A 20 MT device should produce a cavern about one cubic km in size. With an average height difference of 1 km between it and a lake, you can store 10^16 J which is ~ 2800 GWh.

How much energy are you needing to pump the water back up? Are you sure detonating bombs underground is a great idea?

Edited September 12, 2015 by GostHacked

[cannuck]

The refineries are making record profits. That's why. It's not the pump operators and it's not the extractors making money now (except for the fact that the extractors own refineries too).

Only to some extent. Most oil and gas producers have backed away from refining as much as the can - because it is very hard to earn a buck vs. what they can do with the same capital just selling crude. Also, the environmental risks are massive (take a look at the fiasco of the Hess/PDVSA Hovensa refinery in the USVI for example).

There are literally tens of thousands of oil and gas producers on this continent, and about 160 refineries with maybe 100 owners - so in no way do producers all own refineries.

Just put it a bit into perspective (there are simply rough proportions - ignoring the tax contribution that varies with region). In the US (where it really matters) around Y2K light sweet crude at the wellhead was about $10 a bbl, whereas gasoline sold for $1 a gallon. When refineries were REALLY getting clobbered, crude was over $100 and gasoline at the pumps was $4. I didn't hear anyone complaining that Yanks should be shelling out $10 a gallon to keep the refineries on same level as 15 years ago. So today that $46 WTI is really $40 at the wellhead, and gasoline is about $2/gal and you think this is some kind of windfall????

[bush_cheney2004]

Refined distillates / gasoline are separate markets from crude oil feed stock. It is naive to expect a direct, linear relationship between the two.

[cannuck]

Refined distillates / gasoline are separate markets from crude oil feed stock. It is naive to expect a direct, linear relationship between the two.

Yes, the banks who trade comodites and run those prices up and down do not directly connect the two, but you want to believe that the refineries that have to process the crude have to deal with the fact that the two are very directly connected in trying to run their business. There are a few reasons there has not been a new refinery built in the USA since 1976 and majors sold off many and many more were simply shut down over the last 10 years.

[msj]

There are a few reasons there has not been a new refinery built in the USA since 1976 and majors sold off many and many more were simply shut down over the last 10 years.

Context is everything:

In 2012, Motiva upgraded its refinery in Port Arthur, Texas, making it the largest refinery in the United States with a capacity of 603,000 b/cd as of January 1, 2015.

In 2009, Marathon upgraded its Garyville, Louisiana refinery. As of January 1, 2015, the capacity (b/cd) is more than double its original 1977 capacity.

http://www.eia.gov/tools/faqs/faq.cfm?id=29&t=6

[cybercoma]

So today that $46 WTI is really $40 at the wellhead, and gasoline is about $2/gal and you think this is some kind of windfall????

I do? What I think it is is an explanation for why the cost of fuel is still high despite low oil prices, which people are now speculating will hit $20 a barrel by the end of the year.

[cannuck]

I do? What I think it is is an explanation for why the cost of fuel is still high despite low oil prices, which people are now speculating will hit $20 a barrel by the end of the year.

As I guess I implied, but maybe need to be more specific with: not that long ago gasoline in US averages were around $4 and today with oil at about half that price, the price is averaging about $2 a gallon. If you are asking from a Canadian perspective: the tax bite is much larger, so the refinery cost of crude oil contribution is much smaller - thus the price change is not as significant. Couple that with the fact that most refineries were losing their shirts on $100 oil, so they will have to make that back up now when there is some profit potential. When they get squeezed, the first thing to cut is maintenance budgets, so when prices go back up, you have to replace the value you "mined" from the equipment in days of low margin. BTW: this is exactly what oil and gas producers do as well - run the field into the ground when prices collapse and hope you can survive until they go up before the whole field crashes on you.

As for speculating on what the price will be: NOBODY can predict that, but enough talk from the brokers and analysists could well make that a self-fulfilling prophecy for NYMEX WTI futures. Since that is far, far below KSA's lifting costs (and Nigeria, and Venzuela, and Canada and the USA), I can't see that happening at all.- but I can still remember the sting of $10 wellhead for sweet light and $2 wellhead for heavy sour just 13 years ago. So I should never say never.

[cybercoma]

Speculation from Goldman Sachs http://www.theguardian.com/business/2015/sep/11/goldman-sachs-says-oil-could-fall-to-20-dollars-a-barrel

[msj]

Look up the price difference between WTI and Western Canadian Select.

Prices can do funny things and can go one way or the other and stay there a very long time - or at least long enough for investors, bankers, bond holders, operators, and/or governments to go broke.

At least oil should go up again, eventually.

The next cycle, however, may not be so pleasant if the renewables get some traction.

[cannuck]

Look up the price difference between WTI and Western Canadian Select.

Prices can do funny things and can go one way or the other and stay there a very long time - or at least long enough for investors, bankers, bond holders, operators, and/or governments to go broke.

At least oil should go up again, eventually.

The next cycle, however, may not be so pleasant if the renewables get some traction.

WCS is heavy sour, and as such is discounted from what sweet light fetches. What you don't see from the cheap seats is that the wellhead price is far different from the NYMEX futures quotation (that is for WTI sitting in a tank in Cushing OK).. We like to single out Canada as being screwed over by the Democrats blocking the last link in the pipeline to get WCS into Cushing and on to the Gulf Coast refineries (that are all set up for Venezuelan heavy sour that no longer comes there), but if you watch the posted price for Wyoming Heavy Sour, for instance, it is even lower than WCS. The ones really getting screwed are the independent producers of places such as NW Alberta where $115 WTI meant $55 at the wellhead for Rainbow. Not just the lack of a pipeline to the South, but the HUGE increase in production in Ft. McMurray by majors who can dominate shipping available just pulled the rug out from underneath the little guys (with big lifting costs as well).

The reason we really NEED high crude oil prices is that they facilitate development of alternatives, which, at this stage of the game, could not come anywhere near the volume or price required to work. However, high enough crude oil prices will drive alternatives, especially renewables to a place where they can compete.

Right now, the basics are that $100 oil made all kinds of things possible that made no sense at $50, so a lot of $$ and science went into things such as very long horizontals and 30, 40 or even 50 stage fracs that increased production dramatically in the US, as well as more conventional production being brought on line elsewhere. The long run of high prices had resource countries (Canada being one) hooked on $100. When Russia tipped the scale by invading Ukraine (yes, that really is what they did by proxy) and ISO funded themselves by oil sales, down went the price by design (KSA pumping more). To compensate, Russia, Nigeria, Venezuela, etc. also upped their exports to try to sustain revenue that they needed to satisfy budgets written on $100 a bbl. That further depresses the price from actual market supply/demand pressures. Those weaker economies (led by the US for different reasons) softened demand for China, so their purchases went down (as did the US due to shale production) so the demand side is long term weaker.

No reason to believe there is any relief in sight.