RE: oil

From: Glenn Morton (
Date: Tue Dec 03 2002 - 00:05:14 EST

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    >-----Original Message-----
    >From: Dr. Blake Nelson []
    >Sent: Tuesday, December 03, 2002 1:20 AM
    >To: Glenn Morton
    >Cc: ASA
    >Subject: RE: oil
    >I like to try to do my part. ;) As I have said
    >before, it is often a matter of degree. Sometimes, I
    >can't resist replying to overstatement.
    >Vis-a-vis nuclear power, I will be happy to post some
    >specifics when I have a chance -- I am working 16+
    >hour days on a regular basis these days.
    >While your points have some validity, it is clearly
    >overblown. Think about it logically. Regardless of
    >what happens over the next several decades, new power
    >plants will have to be built. To say that nukes will
    >take up inordinate amounts of GDP over a short time
    >period is simply wrong.

    Take the decline in the North Sea. The production remained flat from 1995
    until 1999. Then it began a decline of 12% per year. As I have said, it
    will take 3-5 years before the world comes to grip with the issue. By then
    you will be down significantly in production. That means a large scale
    nuclear construction effort must occur. If it takes another 3 years to
    bring them online that makes 8 years to get things together. at a 12%
    decline, after 8 years you will only be producing 35% of what you were
    producing. Now, let's remember some significant facts here. Population is
    growing. Demand for hydrocarbons and other forms of energy is increasing.
    Projections say we must go up by 40% by 2020 to remain where we are. Yet, if
    the world begins even a modest 4% you will be producing 25% less oil in 8
    years than you are at the peak. And with nothing but future declines ahead
    of you, you will have to continue this massive investment program. I
    suspect that the investment will have to be made over a much shorter period
    than you are considering.

    Secondly, it isn't at all a sure thing that nuclear plants will be built.
    On Foxnews this weekend a guy was talking about a possible Al-Qaeda attack
    on Indian nuclear plants which are less shielded than those in the US. If
    they succeeded in causing a CHina Syndrome there, no one would build a plant
    regardless of the energy requirements (or the plants would be buried
    underground further increasing the costs.

      Plants (including fossil fuel
    >plants) have life cycles and have to be replaced,
    >especially if they become cost ineffective as new and
    >existing fossil fuel plants will as fossil fuel prices
    >rise and/or operation costs more if something like
    >Kyoto is implemented. The market will sort out the
    >balance between fossil and nukes. One government
    >regulatory change in the US could make this start to
    >happen now.

    Wanna bet? I bet this won't happen until we are way into an energy crisis.

    >Unless you have fossil fuel production plummet (rather
    >than plateau) over a very short-time period, the world
    >will adjust. There will be money to be made on nukes
    >and the private sector will build them and make money.

    Let me answer this in this manner:

    oil field discovered 2000 production
    Ghawar (Saudi Arabia) 1948 4.5 million bopd
    Cantarell (Mexico) 1976 1.2 million bopd
    Burgan (Kuwait) 1938 1.2 million bopd
    Daqing (China) 1959 1.1 million bopd
    Total 8 million bopd

    That represents 10% of the world's production in those 4 fields 3 of which
    are over 50 years old. They can't go on forever. There are rumors in the
    Industry that Ghwar is watering out on the crest and indeed, the Saudi's
    hold info on that field as a national secret. One guy who works for a major
    consulting organization told me that they had finished a study of Ghawar and
    it was indeed drawing more and more water. That is not good news. When it
    declines, it will go fairly rapidly.

    The private sector will be reluctant to build nukes. British Energy, over
    here, is having to be bailed out by the governement to the tune of 600 milli
    on pounds with rumors they may still go under. They are the major nuclear
    electrical generator here. They are losing money hand over fist. Not many in
    the private sector want to follow them.


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