Breaking Point, The End of the Cheap Energy Economy

Future Money Trends
Future Money Trends is expecting the U.S. to face the perfect storm of events that, when combined, will send gas prices past the breaking point for the average American.

 There are three major catalysts that will cause gas prices to reach this breaking point.

Number one, the dollar is in a state of collapse caused by a continuous increase of the money supply by America’s central bank.

Two, instability in the middle east and a potential war with Iran would great disrupt the supply of oil.

Three, the supply of cheap, recoverable oil is dwindling along with a major increase in demand.

America is built for $50 oil and $2 a gallon gasoline. The seriousness of our situation should not be overlooked. We have multiple forces that will drive gas prices past America’s $5 per gallon breaking point… Rising gas prices caused by these three catalysts will break the backs of the American consumer, spiking prices to the point where present day normalcy is no longer the reality.

IEA Oil Dump A Disaster In The Making

Image via WikipediaBrandon Smith
It’s amazing. In the wake of the 2008 derivatives and housing bubble collapse, created by the U.S. Treasury and the private Federal Reserve with engineered low interest rates and easy money designed to artificially pump up the economy after the effects of the dot-com bust, the faltering markets of 2000-2001, and the rapidly depreciating dollar, we have now seen these same entities pour Trillions, yes, TRILLIONS in fiat injections into every conceivable corner of the markets. They have spent incredible sums on toxic equities (worthless equities, and don’t let anyone tell you different) to “ease” the debt spiral, they have propped up almost every large international bank, they have propped up the Federal Government and the Dollar itself with sizable purchases of our own Treasury debt, and, they have even thrown money into the pockets of foreign institutions and corporate beggars. Keep in mind, that all the debt that these actions generate is eventually placed squarely in the lap of one group of people; the American Taxpayer!

They have manipulated unemployment figures. They have consistently released completely fraudulent CPI (inflation) figures based on calculations which neglect numerous factors that used to be counted only two decades ago. They have used coordinated naked short selling in precious metals markets to hold back the natural spikes in gold and silver values. They have blamed every negative development in the economy (that they could not hide) on extraneous circumstances and outside culprits rather than themselves. They have done all this, to conjure the illusion of recovery for an increasingly agitated general public.

So much tap dancing and snake oil selling, and all it took, was the pain of $4 a gallon gas to wipe everything away…

That’s right, when the cost of driving to work, driving to shop, or driving for vacation doubles, the naïve notion that everything is perfectly normal goes right out the window. Americans complain a lot, but they rarely accept a bad situation as inexorable and take measures to fix it themselves. There is always the “chance” that things will get better tomorrow, or so we tell ourselves. We just ride the wave, and expect the pack of sharks at our back will never quite catch up to our boogie-board of blind optimism. However, when something takes a Great White sized bite out our very wallets, we take notice, and search the horizon for a bigger boat.

I have commented in the past that after only a few months of high gas prices, the wind would easily be knocked right out of our puffed up bailout driven recovery, and so far, that is exactly what is happening. Retail sales are fumbling, vacation destinations are crippled, the housing market continues to dive, in part due to the relentlessly high price of energy. When people travel less, they spend less, they buy less, and they relocate less.

In response, the IEA (International Energy Agency), an organization of 28 countries, has made a very sudden and startling announcement; each member nation will begin dumping their strategic crude oil reserves onto the global marketplace to flood the supply side of the equation, and, in theory, drive down overall oil prices. The IEA will release over 60 million barrels a day for at least 30 days into the markets, half of which will come directly out of the strategic reserves of the U.S. This is only the third time in the 37 year history of the IEA that this kind of action has been taken. Surely, governments around the world have finally realized that inflation in energy is going to completely derail what’s left of our financial structure, and they are working to prevent this, right…? More...

Tapping Oil Reserve Still Won't Lower Gas Prices Below $3

Image via WikipediaGasoline prices should drop more quickly now that governments are stepping in to pump up world oil supplies, but drivers are still unlikely to see last summer's levels below $3 a gallon.

Energy market experts are also concerned that the message from the International Energy Agency and U.S. Department of Energy release of 60 million barrels of reserves is that the global economy is weaker than believed.

"The good news is the consumer will see cheaper prices at the pump. I think we could start ticking under $3.50," said Andrew Lipow, president of Lipow Oil Associates. The national average for gasoline is $3.61 per gallon, according to AAA.

Gasoline prices have been been falling, from a high of $3.98 nationally in mid-May.

"I think we were headed lower mostly because of economic softness," said Tom Kloza, chief oil analyst at OPIS. "I believe this will hasten some declines, and I still think that $3.25 to $3.75 is the likely summer 2011 range. I do think you'll see some of the cheaper places get close to $3."

Gasoline prices a year ago averaged $2.74 a gallon, according to AAA. More...

Shell report predicts peak oil now or soon

The industrial doomsday scenario put forward by peak oil theorists isn't just for far flung voices on the Internet anymore.

Peak oil is not a problem of Earth's supplies: there's plenty of oil in a variety of forms. The difficulty is in how much energy it takes to recover and process it. And if it hasn't happened already, soon the demand for energy commodities will soar past existing production capacity and crash headlong into the brick wall of declining discoveries.

The economic effects of this could be devastating to the human populations within industrialized societies, to say the least.

That's not just the line from Noam Chomsky, Michael Rupert and Dmitry Orlov: the second largest company in the world, Shell International, a major player in the energy commodities industries, is saying it too. Read more...

The "Well Integrity Test" Is a Sham

Image by silverfuture via Flickr

Washington's Blog
The "Well Integrity Test" Is a Sham: "This Bet Is Against The Citizens Of The United States Of America Being Smart Enough To Figure Any Of This Out"
Yesterday, I pointed out that two oil industry experts - Robert Cavner and former Shell CEO John Hofmeister - said that the "well integrity test" should not be conducted because there is no benefit, and it could very well blow out the well.

Cavner thinks that the well integrity tests are really an attempt by BP to underestimate the amount of oil gushing out - and so pay lower fines under the Clean Water Act (fines are calculated by the number of barrels leaking into the Gulf) - by waiting to "test" the flow until the flow has been reduced. In the real world, of course, BP could have tested the flow from day one.

Today, an oil and gas industry veteran with 30 years experience who goes by the alias Fishgrease says that the well integrity test is a PR stunt meant to fool the American people:

Yesterday, Our Government bought in to BP's lies and maneuvering. Yesterday, Our Government approved the Integrity Test. That test is now underway.

***

We later received information that the Oil States FlexJoint actually in place is a Model 5, and therefore has a MWP (maximum working pressure) of 5000 psi. So now, the pressures Our Government has signed off on applying, are at least 2,000 psi differential pressure over the rating of the component!

***

I've been battling comments that, surely, this component has a "safety allowance" well above its rating. Boomers, this is pure horseshit. When you're pressuring up against metal with hydrocarbons, the "maximum" in "maximum working pressure" fucking means MAXIMUM. Purposefully exceeding MWP is, in fact, criminally actionable. MWP is enforced in the Oil & Gas industry with perfect vigor. There is no tolerance for exceeding MWP. None. Never. Ever.

You. Don't. Fucking. Do. It.

BP is PLANNING on doing it! They would not and could not do it without the U.S. Government taking full responsibility, in the name of Thad Allen, for the consequences of over-pressuring the FlexJoint.

***

That's alarming enough, but there are many bad things that can happen when you're just sitting there circulating on bottom at 17,840... FOR DAYS. Now that they're having problems with the choke on the capping stack, it might easily be DAYS AND DAYS. You can lose circulation and get stuck. You can lose a mud pump for a matter of minutes and get stuck. You can lose the section of un-cased hole you just drilled (which is at a critical point for the intercept) and make directional control much more difficult getting it back. There are more, and worse things that could happen, but I won't mention them because the crew and equipment on that relief well are the absolute best, and none of those worse things will happen.

But why take these risks? For what? The first relief well is SO close (now stopped)! They have the ability to capture and measure ALL the oil! We already KNOW there is damage downhole! Why would the Government of the United States of America sign off on, and take responsibility for this foolishness?

***

I need to include here that I think this "test" is probably a good political and public relations bet for both the Obama administration and BP. It's really not a test at all and has no chance of actually testing anything about the well, except their ability to shut it in with no surface leaks. They want to shut in the well and get it off the nightly news. They want that so badly they're willing to risk anything for it. That's both BP and Our Government. They shut in the well and Thad Allen is a hero. They fail and he's no more of a moron than he has been for the last three months. If they succeed in shutting it in or not, any damage they've done in the "test" that makes the kill operation more difficult, or even impossible, will be a matter of opinion. This bet is against the citizens of the United States of America being smart enough to figure any of this out. It's not a bet on actual physical outcomes. It has nothing at all to do with what's the best plan for stopping this disaster.

Politics. Public Relations.

Indeed, the well integrity test is exactly like the stress test for the banks: a meaningless PR stunt devised by the industry itself with the blessing of government. See this and this.

"Watching the video feed BP provides just reeks of smoke and mirrors"

Image via Wikipedia

An astute observer exercising independent thought at the "Life After the Oil Crash Forum" writes:

"I tend to think that Matt Simmons, the scientist and experts that "feed" him his information, and other un-related scientists are correct when they say that there are other leaks than the one shown by BP (and watched on this thread). Leaks found miles/kilometers away, in the broken sea floor. This spewing oil well is NOT the only source of the leak, and I think everyone's attention is being diverted in some way, or for some reason.

Even if it may be the only leak source, I just get this FEELING that this darn well-head that everyone seems to be focusing on is a distraction, much like...

Watching the DOW go up and down each day, talking about the stock market fluctuations, all as if THAT was the economy itself while Ignoring actual corporate profit reports, unemployment levels, values of steel and copper, credit default rates, etc...

Watching the price of a barrel of oil when worried about Peak Oil, instead of looking at oil production numbers, supply, demand, where the oil is coming from (countries unfriendly to the USA), or the quality of the oil (light, heavy?).

I feel like LATOCers (Life After the Oil Crash Forum) here are being duped, in a way.

Watching the video feed BP provides just reeks of... smoke and mirrors. It's a distraction from SOMETHING, don't you feel that way? Maybe from the true impact of oil hitting the beaches, or suffocating whale sharks... does this make sense?

But SOMETHING.

In an ambush, some members of your team should be trained to cover the rear, or look the opposite direction of the incoming fire to protect the flank. If everyone reacts toward the initial burst of incoming fire, those who are ambushing you wipe you out from the sides and rear.

So, while everyone here stares at this big gushing oil leak and watches it for days at a time, I'm trying to check our rear and flanks for the enemy we don't see."

Another poster replies:

Here is proof of what you are saying....

Go to this link..http://oilspill.skytruth.org/main

You will see a map with red dots. To your lower right there is a box for SPILL EXTENT with dates. Click on the box for May 22 and look up at the map. You will see a small oil patch forming above Cuba. Now continue up to the last top box.

Report yesterday..http://www.floridaoilspilllaw.com/more-evidence-of-oil-in-south-florida-photos

If you simply go to the site and hit the top box, the 2 spills are not there. Pure deception.

Deepwater Horizon Oil Disaster U.S.A 2010

A video detailing the issues surrounding the 2010 Horizon deepwater oil rig explosion, oil spill, evacuations, illness, news blackouts, FEMA and government corruption.

"Good information, but the music on this video SUCKS!"

Even TEN relief wells will be unable to plug the hole

Rumors abound regarding the nature of subsea operations and the true status of the Deepwater Horizon oil gusher. I've long since dismissed most main stream media accounts as propaganda, and seek out information from web citizens for a clearer picture of the truth.

While most of us realize that not all reports made by citizens are entirely reputable, contrary to corporate-owned media who have historically served as stenographers for the power elite, in most cases, citizens have no vested interest in lying about events.

The compromised well casing has already been mentioned by main stream media. Bearing that in mind, here's a rather disturbing post by "Rob Kall" at "Life After The Oil Crash" forum.

By Rob Kall
June 17, 2010

(...)

Here's the latest report I just received from my contact inside BP:

Ok, here's the deal.

Size of reservoir - estimated by BP and its partner, Andarko to be between 2.5B and 10B bbl. (that's 100,000,000,000 gallons and 400,000,000,000 gallons.
Yes - all of those numbers are BILLIONS.

BP has admitted in at least 3 interviews that the well casing is compromised (broken). So, when they tried the Top Kill - and then the Junk Shot - the stuff shot out the sides and didn't go much down the hole. A REAL top kill should just take a few hours - or it's not going to ever work.

The casing was undoubtedly broken apart by the natural gas 'explosion' at the bottom of the well, which was the result of methane coming out of solution (ie. the methane hydrates melting and expanding dramatically). Much like when your washer's water line has air in it and you shut off the valve and the line 'hammers', the well 'hammered' when the BOP shut (the guess is 80%), and the dramatic upshot in pressure, as well as the acoustic shockwave, broke the casing.

The Question of the Day is: Did the explosion rupture the casing for its entire length?

If that is so, then a relief well will be unable to plug the hole. TEN relief wells would be unable to plug the hole.

The consensus seems to be, among oil people I've spoken with, that this is exactly the case.

If that's so, then the well will run until Obama nukes it. That is the only thing that could close it.

If they can't plug it via the relief wells, and if they don't nuke it (it can't be conventional explosives, for a few reasons), then about 1/2 of the oil and gas will run out. That would be 50 BILLION to 200 BILLION gallons of oil, over a 10 year period. Although, like the interest you pay on a house note, the biggest part would be up-front.

"If pipe in bore hole is perforated, we are in serious trouble"

The evidence is growing stronger and stronger that there is substantial damage beneath the sea floor. Indeed, it appears that BP officials themselves have admitted to such damage. This has enormous impacts on both the amount of oil leaking into the Gulf, and the prospects for quickly stopping the leak this summer. Washington's Blog

Excerpt from Solve Climate.com, May 24th, 2010
By the end of 2008...even industry insiders were starting to acknowledge that the deepwater drilling boom had grown beyond the safety capacity of the oil and gas companies to manage properly. With profits on the line, rig crews were stretched thin and staffed with less experienced operators, as this article from Drilling Contractor acknowledged.

Independent Investigator

The 60-page report which opens the window on these revelations was authored by Dan Zimmerman, an independent environmental investigator of the Northcoast Ocean and River Protection Association (NORPA). He has worked with numerous groups since 1975, especially on pesticide, forestry and salmon habitat issues. The executive director of Californians for Alternatives to Toxics, Patty Clary, told SolveClimate she has worked with Zimmerman for 14 years and called him "a brilliant researcher."

Zimmerman said that he sent his report last September to hundreds of environmental organizations and individuals, but got no response.

"It's become a popular topic now," he said, with attorneys and environmental groups now examining his report.

Yet Zimmerman was more interested in discussing the Gulf oil spill than his report, expressing concern about the condition of the blowout preventer on the sea floor and the pipe in the bore hole. If the pipe in the bore hole has been perforated, he said, a "top kill" being planned by BP may not stop the leak.

"My concern is that cratering has now occurred and a flow path has been established outside the well bore. If this has occurred we are in serious trouble, more than we currently think."

"If there are plumes of gas and oil rising from the sea floor around the pipeline," Zimmerman said, "that would be an indication. They have submersibles. They should be examining the area around the blowout."

His concerns seem well-founded. One of the most complete and factual chronologies of the events leading up to the BP Gulf of Mexico blowout recounts this situation five minutes before gas shot out of the drill column on the surface of the ocean.

Standpipe pressure increased and decreased twice between 21:30 and 21:42 (standpipe pressure generally reflects bottom hole pressure). This, along with a steady increase in mud pit volume, suggests that surges of gas were entering the drilling fluid from a gas column below the wellhead, and outside of the 7-inch production casing. Gas had probably channeled past the inadequate cement job near the bottom of the well and, by now, had reached the seals and pack-offs separating it from the riser at the sea floor.

Failure of a "top kill" — if it doesn't make matters worse — would leave well control experts with only one final known option for stopping the leak in the Gulf: drilling a relief well. The idea is to reach the oil reservoir with a well drilled on a tangent to the original, and seal it closed. But an industry publication published in 2009 indicates that drilling a relief well to 18,000 feet below the sea bed is beyond the edge of the technical capability of well control experts.

The detection tools used to locate the blowout wells have been successfully used for many years. However, there have been very few relief wells drilled deeper than 16,000 ft. A very deep intercept greater than 20,000 ft will be a challenge to any relief well team. If the deep intercept cannot be made, a shallower depth will need to be chosen. This complicates the kill operation as it will not be made close to the reservoir.

Ocean Boiling with Methane
Zimmerman devotes more than ten pages of his report to a partial listing of blowouts caused by drilling into or through methane hydrates. It is a sobering listing that includes photographs and links to disturbing videos, including one that shows a drill room on a platform at the moment a blowout occurs, and another that shows the ocean boiling with methane escaping around a drilling rig.

A longtime environmentalist, Zimmerman sometimes becomes indignant in his report:

GHG release from offshore O&G operations should be thought of as the O&G industries dirty little secret. Massive releases of methane and CO2 have been occurring from these offshore operations for over 45 years, with little concern shown by the O&G industry for the deadly impacts they have generated...

This pattern of extracting first and asking questions later has always been the method of operation for the oil, gas and coal industries. And they are often helped along by politicians and regulatory agencies. More...

Another oil leak from offshore oil platform #23051 in the Gulf

skytruth.org
Routine Gulf Monitoring - Here's Why We Need It
Three days ago we blogged about a possible small, but persistent, leak from offshore oil platform #23051 in the Gulf of Mexico, not far from the ongoing Deepwater Horizon spill. We asked for confirmation from anyone who might happen to be in the vicinity. Ask, and ye shall receive:

Photograph taken 6/5/10 of apparent oil leak in the vicinity of Platform 23051, courtesy J Henry Fair. Semisubmersible drill rig in foreground; workboat at left where the plume originates at the surface. Note a second plume apparently originating from platform in the background at upper right; this may be Platform 23051 (not yet confirmed).

Professional photographer J Henry Fair flew over the site yesterday using the MMS platform location in our blog post, and took photos of what he found. Here are the two he sent us today. There is an obvious plume of oil in the water next to a semisubmersible drill rig. J Henry identified it as the Ocean Saratoga rig (nice picture here), owned by Diamond Offshore.

The May 17 rig status report available on Diamond Offshore's website (which prominently features a photograph of Senator Mary Landrieu, with the caption "Credit where credit is due") shows the Ocean Saratoga is currently under contract to drill for the same company that owns and operates Platform 23051. The platform may be the one visible in the background of the photo above, apparently trailing another oily-looking plume. So it's possible that we've actually discovered two separate leaks or spills in the same vicinity.

A closer look at the semisubmersible rig, work boat, and apparent plume of oil near the location of Platform 23051 in the Gulf of Mexico, taken June 5, 2010. Photo courtesy J Henry Fair.

J Henry described the workboat at the end of the oil plume as "churning the oil" as if to disperse it more quickly. It's unclear from these pictures if the workboat is itself the source of this oil plume, or if indeed it's motoring around where an oil plume is emerging at the ocean surface in an attempt to break it up. In any event, this spill is certainly large enough to require reporting to the Coast Guard.

Other than us - is anybody watching what's going on out there?

This is why we think America needs publicly transparent, routine satellite monitoring wherever we allow offshore oil and gas drilling.

Relief wells: "You have to hit something the size of a dinner plate miles into the earth"

Image via Wikipedia

Drilling relief wells to stop Gulf oil leak poses challenges
Rebecca Mowbray
The Times-Picayune

With the "top kill" declared a failure and BP moving on to less-desirable options to stop its well from continuing to shoot thousands of barrels of oil each day into the Gulf of Mexico, the grim reality set in that the company may be unable to stop the oil until it completes the first of two "relief wells" in August.

BP has been attempting to contain or stop the flowing oil since its Macondo well exploded April 20, killing 11 people. But the ultimate solution to permanently cap the well is to inject concrete from wells drilled in from the side.

With short-term efforts failing, officials locally and in Washington are beginning to contemplate that the oil could spew until the height of hurricane season.

"There could be oil coming up until August, when the relief wells are dug, " White House energy and climate change adviser Carol Browner said on NBC's "Meet the Press" Sunday morning. "We are prepared for the worst. ... We will continue to assume that we move into the worst-case scenario."

Plaquemines Parish President Billy Nungesser said he got weak in the knees at the Plaquemines Parish Seafood Festival when he saw the news on a Blackberry that efforts to plug the raging well with drilling mud and rubber pieces had failed.

"We're not counting on anything until this relief well is drilled, " Nungesser told CNN Saturday night.

But relief wells are something that, fortunately, engineers don't have to do very often. Drilling the relief well also can be fraught with challenges -- especially working in deep water on a well that has already had problems with gas bubbles.

"You have to hit something the size of a dinner plate miles into the earth, " said Richard Charter, a senior policy adviser at the nonprofit Defenders of Wildlife, who follows spills around the world. "Even in a shallow-water blowout, the drilling of a relief well can be complicated and problematic."

On Sunday, the White House said the government had insisted that BP drill two relief wells instead of one to ensure that it can reach the original well without problems.

Making progress

The company appears to be making progress. Spokesman Graham MacEwen said Friday that the first relief well has now reached 12,090 feet below the floor of the rig, 5,000 feet from the sea floor.

BP interrupted drilling last week to install a blowout preventer, the safety device that's supposed to seal a well in an emergency, but which failed to do so on the main well.

The second relief well, MacEwen said, is 8,650 feet below the floor of the rig.

The relief wells start about a half mile from the original site and try to meet the original at a diagonal.

Drilling a well involves using a pipe that unfolds section by section like an antenna, only upside down.

With each section, the company drills and then pulls out the pipe and puts in casings to form the sides of the well.

Drills are equipped with directional sensors that do three-dimensional surveys to help workers see where the drill bit is and what it's encountering, while metal detectors help guide it toward the metal in the original well.

Once the drills intersect with the original well, typically just above or below where the problem occurred, cement is pumped in to seal it.

Dave Rensink, president-elect of the American Association of Petroleum Geologists, said that drilling a relief well is not that different from drilling a regular well, except that the target is much smaller.

"The only problem is really finding it, " Rensink said of the original well. "You're trying to intersect the well bore, which is about a foot wide, with another well bore, which is about a foot wide. The probability of finding it the first time ... is probably pretty low."

When the company drills into the well casing but misses the right spot, it will need to set a cement plug.

As BP tries to meet the original well, it will need to have plenty of mud on hand, because when the drill actually connects, the mud from the relief well will have a tendency to get sucked into the lower pressure of the original well, and drillers could lose control of the relief well.

"That clearly is a risk. They need to be very specifically prepared when they penetrate the existing well bore, " Rensink said. "You want to make sure you're not creating a problem in your relief well that's the same problem as on your existing well."

No guarantee on timing

With the failure of the top kill, BP plans to cut off the broken riser pipe and install a cap with a "straw" in it that could siphon oil up to a drill ship.

The company may also try installing a new blowout preventer on top of the broken one and using it to try to shut off the well.

Even if the company goes that route and it succeeds in stemming the flow of oil, BP will still move forward with drilling the relief wells because it will enable the company to seal off the top and bottom of the well, making the fix more durable.

But examples from elsewhere in the world show there's no guarantee on the timing, and that drilling a relief well can be dangerous.

The world's worst well blowout and oil spill, the Ixtoc I well in Mexico's Bay of Campeche, was ultimately stopped with a relief well after a containment dome, junk shot and top kill failed, but it took nearly 10 months.

The oil platform sat in about 150 feet of water and blew out in early June 1979 at a depth of 11,625 feet.

According to a 1981 report from the Society of Petroleum Engineers detailing how Pemex, the Mexican state oil company, stopped the well, engineers decided to start drilling two relief wells at the end of June.

Progress was slow. It took one well until Nov. 20 to reach the original well, and the second took until Feb. 5, 1980.

Shutting down the main well took multiple attempts in February and March 1980 as Pemex shot drilling mud through both wells and gradually decreased the flow of oil.

The oil stopped flowing on March 17, and then it took a few more weeks to plug the wells with cement, wrapping up the operation in early April.

The blowout, according to the Society of Petroleum Engineers, lasted for nine months and 22 days.

Tyler Priest, a historian at University of Houston who has written a book about the history of offshore drilling, said Pemex thought it would go a lot faster. He cited a headline in the Aug. 6, 1979, issue of Oil & Gas Journal that reads, "Pemex: Ixtoc may flow until Oct. 3."

"They initially estimated three months. It took them almost 10, " Priest said.

'More caution' needed

Certainly, the technology today is much more advanced than when engineers fought to shut down Ixtoc, but even in modern context, relief wells don't always go smoothly.

Last August, the Thai company PTT Exploration and Production Co. was drilling the Montara well in 260 feet of water in the Timor Sea off of Australia when it well blew up and began leaking oil into the ocean.

It took 10 weeks and five tries for the drilling rig brought in to drill the relief well to hit its target about 8,600 feet below the sea floor. On the last try, there was another rig explosion, which burned for two days.

The oil was finally stopped on Nov. 3, and it took until mid-January to cap the well, according to news reports.

A final report from the Australian government on the Montara incident is due June 18.

Like the Montara well, BP's Macondo well has already shown itself to have pockets of gas big enough to interrupt drilling.

Weeks before the April 20 Deepwater Horizon rig explosion, workers on the rig experienced a gas kick so intense that they abandoned any "hot work" -- smoking, welding, cooking or any other use of fire -- for fear of an explosion.

Don Van Nieuwenhuise, a University of Houston geologist, said that BP will have to tread carefully to avoid the problems encountered at Montara.

"You have to be very careful, because you don't want to have another blowout if you hit petroleum or gas in another level, " Van Nieuwenhuise said. "Any relief or kill well needs to be drilled with more caution than the first well, because you don't want a repeat performance."

Van Nieuwenhuise speaks from experience. In 1979, he worked on killing a gas well in the Gulf of Mexico that blew up when workers ran out of drilling mud. Even though it was only in about 60 feet of water, it took about four and a half months to cap the well by drilling a relief well because of concerns about pockets of gas. "We had to stop drilling every 500 feet, " said Van Nieuwenhuise, who was working for Mobil in New Orleans at the time.

Better drilling technology today, Van Nieuwenhuise said, should make the job easier, but the key is to know where the drill bit is in relation to formations of oil and gas in the area.

BP said it's mindful of the risks and is proceeding cautiously with the relief wells.

"We've got many many safety systems in place, both procedural and technical, " MacEwen said. "We're constantly measuring the pressure in the well."

Shadow inventory sales for years to come

Image by Getty Images via Daylife

Shadow inventory sales for years to come – 1.6 million distress sales in 2010, 1.6 million in 2011, and 1.5 million in 2012. By summer of 2011 REO pipeline will rise to 536,000.

Wall Street as usual enjoys denying facts until they become so obvious to the common person on the street. By then, it is too late to react. For example, subprime wasn’t a problem until it lit the fuse that set the global economy into a downward tailspin. Analysts at Barclays Capital are now coming out giving full attention to shadow inventory in the markets. Even though their report states that the pipeline for shadow inventory may be topping out, we have such a large number of distress properties in the pipeline that we won’t see any draw down of distress sales until 2012. And ultimately the sales end is what keeps prices lower because distress properties sell for less. As we know from various reports over 7 million homes are currently 30+ days late or in a state of foreclosure. The new data from Barclays looks at severe distress: More...

Dead Zones: Oil seen from surface a fraction of oil spilled in the Gulf

Image via Wikipedia

Gulf oil spill: real disaster might be lurking beneath the surface
Mark Sappenfield/CSM
From the first moments that the Deepwater Horizon oil rig sank last month, it has been apparent that the blooming Gulf oil spill has been an oil disaster unlike any other. But the full truth of that statement is perhaps only now beginning to become apparent.

The oil that can be seen from the surface is apparently just a fraction of the oil that has spilled into the Gulf of Mexico since April 20, according to an assessment the National Institute for Undersea Science and Technology. Significant amounts of oil are spreading at various levels throughout the water column, says the report, which was posted online a week ago but first published by The New York Times Saturday.

The research, combined with other emerging data, could fundamentally alter researchers’ understanding of the oil spill. It suggests that vastly more oil than previously reported could be spilling from the wellhead and the attached riser pipe that now lies crumpled on the seafloor like a kinked and leaking garden hose.

Moreover, it suggests that serious environmental degradation could take place in the open ocean, creating massive “dead zones” where no creature can live because of the lack of oxygen in the water. The spread of oil at all levels of the Gulf also could become a concern for shore communities in hurricanes, which stir up the water column as they come ashore.

Scientists looking at video of the leak, suggest that as many as 3.4 million gallons of oil could be leaking into the Gulf every day – 16 times more than the current 210,000-gallon-a-day estimate, according to the Times.

The depth of the problem

The fact that the spill could possibly be so radically misunderstood nearly a month after it began speaks to the unique nature of this spill. In particular, it’s depth – 5,000 feet below the ocean surface – makes it both unprecedented and difficult to study.

For experts, “most of their experience is with shallow-water spills that quickly bleed black goo onto beaches that are cleaned up relatively quickly,” says the Los Angeles Times.

That is clearly not what has happened in the Gulf, where shorelines have, so far, emerged relatively unscathed.

The nature of the oil in the Gulf oil spill could be relevant – it is of a lighter grade than that in the Exxon Valdez spill, for example.

More relevant could be the dispersant that BP is applying to the oil at the source. BP officials have hailed the process as a success, noting diminishing oil at the surface. But the dispersant breaks the oil into smaller drops, which might instead be spreading throughout the water column, instead of rising to the surface.

It is not clear what this would mean environmentally, though past research indicates that oil can be trapped in the seabed for decades after oil on the surface is cleaned away.

Complicating projections

It would, however, make predictions for the spill far more complex.

"We have no idea where the oil that isn't reaching the surface is going," James Cowan Jr., an oceanography professor at Louisiana State University, to the Los Angeles Times. "It could go everywhere.

The Gulf currents operate differently at different levels, making the exact location and spread of the oil at different depths hugely important to predictions of where it might end up. Indeed, the system so complex that in time, oil could be taken anywhere from the Mexican Coast to Florida’s Palm Beach, research suggests.

BP has so far rejected any efforts toward pinpointing the exact amount of oil entering the Gulf, saying that effort would detract from other containment efforts, such as the current effort to stopper one of the leaks with a siphon. But getting a more accurate sense of how much oil in leaking could be vital to trying to account for all of it, scientists say.

NPR: Gulf oil spill more than 10X greater than thought

Image by IBRRC via Flickr

desdemonadespair.net

By Frank James and Allison Richards
May 13, 2010, 7:02 pm

NPR has learned that much more oil, 70,000 barrels a day or more than ten times the official estimate, is gushing into the Gulf of Mexico from the Deepwater Horizon pipe, based on scientific analysis of the video released Wednesday.

That's the equivalent of one Exxon Valdez tanker full every four days.

The U.S. Coast Guard has estimated that oil was gushing into the ocean at the rate of 5,000 barrels a day. But, again, NPR has been told that estimate is very low.

By Richard Harris
May 13, 2010

The volume of oil pouring into the Gulf of Mexico from the Deepwater Horizon oil rig may be at least 10 times higher than previously estimated, NPR has learned.

The U.S. Coast Guard has estimated that oil was gushing from a broken pipe on the Gulf floor at the rate of 5,000 barrels a day.

But sophisticated scientific analysis of sea floor video made available Wednesday by the oil company BP shows that the true figure is closer to 70,000 barrels a day, NPR's Richard Harris reports.

That means the oil spilling into the Gulf has already far exceeded the equivalent of the 1989 Exxon Valdez tanker accident in Alaska, which spilled at least 250,000 barrels of oil.

The analysis was conducted by Steve Werely, an associate professor at Purdue University, using a technique called particle image velocimetry. Harris tells Michele Norris that the method is accurate to about 20 percent. That means the flow could range between 56,000 barrels a day and 84,000 barrels a day.

Another analysis by Eugene Chiang, a professor of astrophysics at the University of California Berkeley, calculated the rate of flow to be between 20,000 barrels a day and 100,000 barrels a day — both higher than the Coast Guard's estimate.

But the pipe is spewing both oil and gas and the BP does not make it clear how much is oil and how much gas.

"BP has always said there is no way to measure the amount spilling from the pipe," Harris said.

But, he said, the uncertainty could be reduced if BP would share more information with the scientists.

We'll never know how much oil is leaking into The Gulf of Mexico

Image by Toban Black via Flickr

Kathlyn Stone
Honestly, how much oil is leaking into the Gulf?

We don’t have a clue.

For two weeks oil has been leaking into the Gulf of Mexico from the BP (“Beyond Petroleum,” formerly British Petroleum) offshore well following an oil rig explosion.

The National Oceanic Atmospheric Administration (NOAA) experts estimate that 5,000 barrels a day of oil are spilling into the gulf, up from officials’ initial estimates of 1,000 barrels.

Independent experts such as Ian D. MacDonald, an oceanography professor at Florida State University, suggest the leak volume could be 25,000 barrels a day, much higher than official estimates.

But the truth may be more than what those responsible want us to hear. BP believes the leak could be as high as 60,000 barrels a day, according to a New York Times report on what a BP executive told Congress members at a closed-door briefing this week.

PBS NewHour created a meter showing how much oil may have leaked into the Gulf based on each estimate. Go ahead and enter your figure. It's anyone's guess.

Consumer prices up 2.3% from last year

money.cnn.com
Consumer prices in March rose at a faster pace on an annual basis amid higher utility costs, the government reported Wednesday.

The Consumer Price Index, the government's key measure of inflation, rose 2.3% over the past 12 months, driven by a 41% climb in gasoline costs during the period. In February, prices climbed 2.1% from the previous year.

The core CPI, which economists eye closely because it strips out volatile food and energy prices, was up 1.1% from a year earlier. In February, it inched 1.3% higher year over year.

March: Overall prices inched up 0.1% in the month, as rising costs for electricity were offset by declines in gasoline prices. The increase was in line with the 0.1% gain projected by economists. Prices did not budge in February.

Core CPI for the month of March was unchanged, compared to a 0.1% increase in February. Economists had forecast a 0.1% bump up.

"The rate of inflation was very low this month and still somewhat below the historical average," said Andres Carbacho-Burgos, an economist for Moody's Economy.com.

Historically, CPI stood between an annual rate of 2.4% to 2.5% and core CPI ran from 1.7% to 1.8% annually, he added.

The run-up in March CPI was driven in part by a 2.1% increase in electricity costs, which was offset slightly by a dip in home gas prices. Overall food prices edged up 0.2% during the month.

According to Carbacho-Burgos, the "abnormal" run-up in electricity prices could be related to "some unseasonable variation" in the price of coal, a key component in electricity creation, due to February's volatile weather.

Prices for new and used cars and trucks, airline fares and medical care costs were higher, with medical costs rising for the third straight month. Conversely, the costs for housing and clothing fell. more...

US Govt - "Cash for Appliances" This Fall

Christine Selk with the Oregonian reports:

Inspired by the success of the "Cash for Clunkers" program, the U.S. Department of Energy will launch a "Cash for Appliances" program this fall.

The program will provide nearly $300 million in stimulus funds from the American Recovery and Reinvestment Act to consumers who buy new, energy-efficient kitchen appliances.

"These rebates will help families make the transition to more efficient appliances, making purchases that will directly stimulate the economy and create jobs," Energy Secretary Steven Chu says.

This new rebate program is in addition to a number of U.S. tax credits on energy-efficient products for homes introduced earlier this year. This includes many gas, oil, electric and solar water heaters, which are reimbursed at 30 percent of their purchase price up to $1,500. Many energy-efficient windows, skylights, exterior doors, insulation and HVAC systems are also eligible for a 30 percent tax credit, up to $1,500 per home. (This $1,500 limit is the total for all credits applied to the home across all categories of eligible products).