Oil
 

Interesting.

The world is changing. To some, perhaps pretty quickly.

https://time.com/5766188/shell-oil-companies-fossil-fuels-climate-change/

"In the 1990s, he explained, Shell publicly acknowledged climate science and said the world needed to act to combat the problem. But at the time, neither governments nor consumers seemed too concerned about emissions, and the demand for oil was growing like gangbusters to fuel a global economic expansion. So the company dutifully responded to market demands: it produced and sold oil to turn a profit.

Nearly three decades later, Shell’s business model is shifting by the same market-driven calculus. Despite advertising that depicts the oil giant as environmentally friendly, its decision to reduce reliance on oil is not born of benevolence. It’s reacting to market forces. A 2019 McKinsey report predicts that declining gas consumption in the transport sector, because of factors like fuel efficiency and electrification, could lead oil demand to begin decreasing in the early 2030s. “The future of energy needs to evolve as something else,” van Beurden (Shell CEO) says. “And we find a role for ourselves in it.”

Also: https://www.nytimes.com/2020/08/04/business/energy-environment/bp-renewable-investment.html

"European oil companies, much more that their counterparts in the United States, have made a flurry of commitments to reduce carbon emissions in the future, responding to pressure from investors and governments to be on the right side of tackling climate change.

Mr. Looney (CEO BP), though, was more specific in his investment goals, saying that he intended for BP in a decade to be investing around $5 billion a year in renewable energy like wind, solar and hydrogen, a clean-burning gas, about 10 times the current amount. BP’s capital spending is likely to be about $12 billion this year.

He said that he wanted to reduce oil and gas production by about 40 percent in that time frame. As part of the shift, BP, whose origins date back to the discovery of oil in Iran in the early 20th century, would not enter any new countries to explore for oil and would also pare back its refining by about one-third, Mr. Looney said."

Change is in the future. "Positive" opportunities will likely accompany much of the change.

I looked at some charts showing that US gasoline and avgas consumption has been essentially flat (with large ups and downs) since the mid 1990s, with only diesel and petroleum-based chemicals delivering secular growth.

China’s demand growth will start flattening out and Europe is ahead of us.

TX OK ND are going to have to find something else to replace oil as an economic engine. The pandemic has pulled this forward a decade.

Another thing to factor in is regular gasoline powered cars are using a lot less fuel than they were five years ago. Individuals doing the same amount of driving around but using half the fuel.

I thought there was a fault with my latest Corolla's fuel gauge when I first got the car.

I believe there is a more dangerous and immediate concern:

With the reduced demand of fossil fuels because of gubmint meddling (lock-downs), oil refineries have experienced significantly lower production AND lower margins.
That has resulted in numerous refineries shutting down. I know of 5 on the west coast so far and expect at least three more to die in the next two years.
The ones that are still running are hemorrhaging money (like loosing billions per quarter) and are taking drastic steps to survive. They can't keep those losses up for long and they know it.
There will be more refinery closures and they are all fighting to make the other guy next.

Top level managers, being mostly full of BS, see only one option, CUT COSTS!
So they go after the three easiest things: cutting people, cutting training, and cutting maintenance. IOW panic.
They are already cutting corners to save money and instead of fixing it right, they are band-aiding it and just doing it good enough to get by, to keep it running for one more month.
This will not end well.
Imagine the engine in your car has 350k miles on it and is burning oil like nobody's business, so your mechanic decides to just replace one valve guide and fill it up with STP and call it good.
Now imagine that if it fails, it likely would start a very large and dangerous fire resulting in very toxic fumes for miles.

Quick history lesson, that's how they ran refineries 40 years ago and there were lots of explosions, lots of fatalities, and working in a refinery was one of the top 5 most dangerous jobs in the US. You had to hold your breath while driving by because of the fumes.
But gradually over the years, they got better. More emphasis on long-term reliability and less on short-term cost control.
The results were very good and working in a refinery became one of the safest and cleanest jobs around.

But I see all that progress quickly going down the tube.
I'm afraid they will regress to the point where their own mistakes will result in their downfall.
They are worried about which refinery dies next, and praying that a competitor burns to the ground before they do.

I'm fortunate that I got out in time and am watching the train-wreck from the sidelines. But If I lived near a refinery or down-wind of a refinery, I'd be nervous.
Super serial.

https://www.cochranetoday.ca/national-business/exxon-chevron-to-cut-us-jobs-as-oil-industry-struggles-2837187

how much of the reduction is O&G vs. chemicals?

I hear you about the safety issues.

I read the linked article but I don't get how an industry like oil automates? Maybe it's my mental picture of the industry that's way off but it seems like a labor heavy industry.

I drive through Luling, TX several times a week, the pump jacks are still going. We are rolling on through the pandemic. Lock it down all you want, Texas will still be here when you need your bail out, again.

Exxon in Baton Rouge- Refinery, Chem plant, Resins, Polyolifins, Lubricants and Plastics have all cut back. Most are in the refinery. I see changes already in projects, where the refinery, in the past years, wanted triple redundancy on all Instrumentation. I am working on 3 major Flow measurement project for Baton Rouge and Baytown on Coker flow measurement. Absolutely zero redundancy on either project. SO I would agree with Sammy's predication about issues to come with in refineries. Marathon in Garyville just laid of 6 of their tenured Instrument Automation Engineers. Guess whos. taking their place...young EE's that have about 4 years experience. When I get a call from one of these guys with questions that are so basis with regards to Control, it makes me think twice before I walk out into one the units these kids are in charge of.

Formosa still wants to build that chemical complex

another thing - facilities are being inundated and worse by storm activity - e.g. south of Lake Charles

those plants will close and maybe be moved, even if they are sited near ship terminals

Lake Charles will turn into a ghost town without the refineries.

The real bottom line is there simply is NO substitute for petroleum. Everyone in the developed world likes to live in a house with heat and cooling, and clean running water and means to get around in comfort of a car or truck. Petroleum from oil to natural gas provide that.

better to say there is no complete substitute for liquid fuels - a lot of $$ going into algae these days...

There is a substitute for SOME petroleum. Higher efficiency of cars and planes, electric cars, alternative energy won't replace 100% of oil & gas in our lifetime, but will replace 10% to 20% of it in the next decade or two.

Unchanged supply + a 10-20% decline in demand = price crashes.

Price crash = cut in supply, especially higher cost supply.

What's the higher cost supply for oil? Oil sands, shale, new deepwater.

Maybe new deepwater will still go forward for geopolitical reasons - e.g. China might be happy to buy Brazilian offshore fields, to strategically secure oil supply. But hard to see what political imperative exists to support sand and shale operations that are uneconomic.

This is very worrisome. Thanks for the insight.

Yes, a lot of (tax payer) money going into algae. Some of it went into my pocket.
But it's a feel-good pipe dream, no way could it ever be cost neutral unless conventional diesel cost well over $20/gal.

never is a long time

LOL Ok let me re-phrase that:
based on my personal, hands-on experience over the past 2 years, algae bio plants consume more energy than they produce and that will not change in my lifetime.


After that I don't care whatcha do ;)

With regards to Lake Charles, it coming back and actually doing well. They have this infusion of insurance money and can do the project's they didn't have the funds to complete. The Formosa facility has now been pushed back because or...COVID???
The irony in the argument is that in order to manufacture the items that will be used for creating Alternative energy, is done by using fossil fuels. How do you effectively address lubrication with out oil?

that sounds about right