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Gold/Mining/Energy : PEAK OIL - The New Y2K or The Beginning of the Real End? -- Ignore unavailable to you. Want to Upgrade?

To: kryptonic6 who wrote (61)	2/14/2005 4:37:26 AM
From: Raymond Duray	Respond to of 1183

An Energy Metadirectory: drydipstick.com

To: kryptonic6 who wrote (61)	2/14/2005 9:50:55 AM
From: Wyätt Gwyön	Read Replies (1) \| Respond to of 1183

The last I read, oil currently has an EROEI of 30 to 1 i would think there is wide variation depending on the well. e.g., it is hard to imagine the Saudis are achieving a 30:1 EROEI when they are pumping 7 mmbpd of water into Ghawar. Let's assume that switchgrass yields a 300% (3 to 1) EROEI ratio. That means that oil and energy companies will not have the financial incentive to even CONSIDER this technology until oil's EROEI falls to 3:1 --it simply doesn't make sense from a financial standpoint. i'm not sure about that. obviously it is necessary for the EROEI to be positive from a thermodynamics standpoint (although from a rather artificial political standpoint, this has not seemed to matter to the corn-based ethanol business). but once that ratio is positive, it would seem the varying ratios among different wells, extraction methods, technologies, etc. simply determine their respective economic margins, not whether they are viable at all. thus, obviously a 30:1 well will have a higher economic margin than an Athabascan tar pit. but even with an EROEI of 5:1 (or whatever it is for the tar sands), they have proven economically feasible and indeed profitable (as tar sands investors have realized). in fact, from an investment POV, it would seem that these higher-cost operations are perhaps more attractive in that they provide greater profit leverage as oil rises. (e.g., if a particular tar sand is economically breakeven at $28 WTI, then the profit is $2 when CL is $30; but the profit rises tenfold to $20 when CL is at $48--this is analogous to the preference among some PM investors for high-cost mines due to their upside profit leverage.) however, i think an issue with the low-margin operations is that they are harder to scale. if it were otherwise, tar-rich Canada (with its vast claimed reserves, second only to SA) would outproduce Russia and perhaps CL would be at $28 now. why are they harder to scale? systemic bottlenecks: as some past issues of ASPO have pointed out, in the case of Canadian tar sands, reliance on NG for extraction and other steps poses a clear systemic bottleneck to scalability. according to ASPO, Canada should either reduce their declared tar reserves or reduce their NG reserves, because it would take all the NG in North America to produce their declared tar (and that does not even address the fact that half of their declared "boe" is actually bitumen). so, along those lines, i am curious what might be systemic bottlenecks for large-scale switchgrass-based ethanol refining. as you rightly point out, the 3:1 ratio (assuming it is realizable in practical terms, as opposed to just in an industry-backed white paper) is nowhere near the conventional oil ratio. it may be economically "feasible" at $30 CL, but on what scale? after all, i have read claims that turkey guts can be profitably refined at $12 CL, but obviously the EROEI is going to be negative if you produce turkeys just to turn them into oil. so turkey-gut-derived oil is more like a highly advanced form of energy conservation than a new frontier for "gaining" energy. scale is limited to a level that would presumably not put a big dent in crude prices.