Between the Front & Back: Grundle’s Book Club

Refining guy, so oil and gas adjacent, I guess. My insight into your question comes from both what we see coming into our plant, the difficulties in running it, and also anecdotal insight from my brother in law.

1.) You are correct that the Dakota shale gas is way too light to run at a high percentage of crude diet. We call it "black IPA" because it's basically naphtha with some black dye added. The "environmentalists" are not wrong in that shipping that shit by rail across the country with our current rail infrastructure (a lot of single-wall cars, for example) is incredibly irresponsible and dangerous. We're rolling giant bombs around the country on old, rickety rail infrastructure. The only other crude I've seen that's in the same ballpark as bakken shale is that Russian Vityaz shit. In both cases, it's basically crude in, naphtha out.

Interestingly, though, refineries all over are reconfiguring to handle lighter crude diets. We did so in 2017, with a pretty massive capital project. We can run WAY lighter than we used to be able to. Mostly, though, this is to be able to run lighter Canadian pipeline crudes that we get on the relative cheap. Huge moneymaker. We only run domestic shale if it's at a price we can't refuse, as it's still pretty difficult to run. Which leads to...

2.) Yes, I can totally see that fracking wells are more susceptible to price fluctuations than traditional, large wells. For starters, they're just more expensive to operate. I mentioned ERoEI in another thread. Fracking wells are much lower ERoEI than traditional wells. When margins are lower, it's really boom or bust. Another example of this that I've experienced is Alberta tar sands crude (wanna talk about an ecological disaster...). When oil peaked at over $140 per barrel in 2008 or so, tar sands crude was all the rage, and we were running (PAINFULLY) as much of it as we could. Again, though, I believe this peaked at our plant at something like 17% of diet, as this shit gave us trouble in exactly the opposite direction: all bottoms. When crude is $140 per, and you can get tar sand crude for $90, it's a no-brainer. Then oil drops to normal price. Funny, we don't see much Albian heavy in the diet anymore. I've often wondered how they're doing up there.

3.) The second anecdotal evidence I have to support the boom or bust theory for fracking wells is the actual boom and bust that my brother in law experienced in North Dakota. He followed the black gold rush over there, worked a pressure testing rig for a while, then borrowed some money and started his own pressure testing business. At his peak, he was rolling five rigs and was killing it, then the Saudis opened the faucet and his business went TU. After selling all of his equipment at a decent discount, he was able to pay off all of his creditors and get out with low six figures to show for his five years over there. Sad story.

At this point, I can't even remember what question I'm supposed to be answering here, so I'm just going to leave it at this.
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I understood some of that on first pass, will read again. Thanks.
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Short glossary:

1.) ERoEI: Energy Returned on Energy Invested. It's basically a measure of a well's cost efficiency/profitability. How much energy do you have to expend to extract x amount of energy. When you couldn't swing a pickaxe without creating an oil geyser, ERoEI on many wells was well over 100. That's a pretty good return on investment. Many fracking wells are single digit. In other words, they're working with razor thin margins, making them more susceptible to price fluctuations.

2.) Heavy, light, bottoms, etc.: There are a lot of really good YouTube videos that will give you a basic understanding of how crude distillation works in about 10 minutes. I actually just played hung-over-middle-school-teacher and dialed one up for my trainees last week. To sum it up, raw crude is a mixture of various length hydrocarbon chains with some other crap (sulfur, heavy metals, cancer, etc.) mixed in. You heat it up, pump it to a tall tower with trays at various levels, and chains of similar length tend to settle together on each tray, with the chains getting shorter (lighter material) as you climb the tower. Bottom of your distillation tower will be basically bunker oil (>C40), above that gas oils (C21-C40), diesel (C16-C20), kerosene (C9-C16), then naphtha vapor (C5-C8) mixed with butane/propane/ethane/methane (C4/C3/C2/C1) out the top. These feed stocks are then sent to other units that use catalysts to raise octane or fracture molecules into shorter ones, etc. The main takeaway here is that a refinery is somewhat sensitive to the proportions of these hydrocarbon fractions in the raw crude (the "diet"). Too heavy (high proportion of long-chain hydrocarbons), and you'll overwhelm downstream units like cokers or asphalt plants. Too light, and you'll struggle with, say, tower pressure, furnace duty, and an inability to keep downstream heavy units running. You can't just turn refinery units on and off with a switch based off demand. I'm about to take a unit down for maintenance, for instance, and it'll take two full days to shut down and partially decon.

Therefore, the most valuable crude to a particular refiner is one that perfectly matches the profile of their refinery. It'll have a Goldilocks ratio of light hydrocarbons and enough bottoms to keep the heavy units running, and what's in the middle happens to perfectly match the pricing structure de jour for finished fuels. Usually, this is accomplished by mixing several cheaper crudes together to hit the sweet spot. Point is, these domestic fracked crudes ain't that. They're too light to be a primary feed source--at least for any of the plants that I'm aware of. This makes them only desirable if they're priced right on the market. And you can find some heavier crude to blend with them at a decent price.

Edit: Don't take the fractions listed above as gospel. You'll get slightly different numbers thrown at you depending on the source. Particularly as you get heavier (I mean, propane is propane, but things get a little more nebulous when trying to define something like "bunker fuel"). Besides, it's always a blend at every level in the tower, as some lighter and some heavier molecules are mixed in with the target feed stock.
 
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3. Iran[/b]

Seriously, fuck those guys. I've read a ton of books in the last several years that have some touch point in the Middle East, mostly from a "war on terror" perspective. Iran comes up a lot in those, natch. However, this book for me really crystalized that amount of malarkey the Iranian government drops across the region. Directly or through proxies, Iran seems to responsible for at least 81% of the troubles in the region. Weº know they hate usº, this is understood, but let's not loose sight of how much Iran seems to hate every other ME government.

Aside 1: Who knew that Houthi isn't an ethnic minority group, but an Islamist rebel group named after their former leader who was vaporized by the Saudis? I did not. Just from snips and headlines covering SA's actions against them, I had the impression that Houthis vs. Saudis was something akin to Shiite vs. Sunni. Nope, Iranian backed guerrillas.

Aside 2: What a clusterfuck de-Baathification was in Iraq. Terrible decision.
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Not all books are necessarily good and not all of them are unharmful, some books are harmful! This book is greatly harmful!

Like poisonous, dangerous and addictive drugs which are not available for everyone without restrictions so should be books! Publisher, librarian or an official in the book industry, we don't have the right to make this available to those without knowledge.

@GrundleStiltzkin, @DerekJohnson: We should provide members of online message board community with healthy and good books.
 
3. Iran[/b]

Seriously, fuck those guys. I've read a ton of books in the last several years that have some touch point in the Middle East, mostly from a "war on terror" perspective. Iran comes up a lot in those, natch. However, this book for me really crystalized that amount of malarkey the Iranian government drops across the region. Directly or through proxies, Iran seems to responsible for at least 81% of the troubles in the region. Weº know they hate usº, this is understood, but let's not loose sight of how much Iran seems to hate every other ME government.

Aside 1: Who knew that Houthi isn't an ethnic minority group, but an Islamist rebel group named after their former leader who was vaporized by the Saudis? I did not. Just from snips and headlines covering SA's actions against them, I had the impression that Houthis vs. Saudis was something akin to Shiite vs. Sunni. Nope, Iranian backed guerrillas.

Aside 2: What a clusterfuck de-Baathification was in Iraq. Terrible decision.
Click to expand...

Not all books are necessarily good and not all of them are unharmful, some books are harmful! This book is greatly harmful!

Like poisonous, dangerous and addictive drugs which are not available for everyone without restrictions so should be books! Publisher, librarian or an official in the book industry, we don't have the right to make this available to those without knowledge.

@GrundleStiltzkin, @DerekJohnson: We should provide members of online message board community with healthy and good books.
Click to expand...

A thousand pardons. “Present company excepted.”
 
Is this the thread where I post Dubai Porta Potties?

dubai-porta-potty.jpg


 
I am 80% through the book. I have found it to be eye-opening in spots and somewhat sobering a depressing. You get a strong sense of how mighty and powerful the US economy was pre-covid and we were headed for mightier heights. And with a combination of the Covid and the Biden admin working to shut down fracking, etc. we are making inexplicable decisions to hand our affluence and power away.

 
3. Iran[/b]

Seriously, fuck those guys. I've read a ton of books in the last several years that have some touch point in the Middle East, mostly from a "war on terror" perspective. Iran comes up a lot in those, natch. However, this book for me really crystalized that amount of malarkey the Iranian government drops across the region. Directly or through proxies, Iran seems to responsible for at least 81% of the troubles in the region. Weº know they hate usº, this is understood, but let's not loose sight of how much Iran seems to hate every other ME government.

Aside 1: Who knew that Houthi isn't an ethnic minority group, but an Islamist rebel group named after their former leader who was vaporized by the Saudis? I did not. Just from snips and headlines covering SA's actions against them, I had the impression that Houthis vs. Saudis was something akin to Shiite vs. Sunni. Nope, Iranian backed guerrillas.

Aside 2: What a clusterfuck de-Baathification was in Iraq. Terrible decision.
Click to expand...

Not all books are necessarily good and not all of them are unharmful, some books are harmful! This book is greatly harmful!

Like poisonous, dangerous and addictive drugs which are not available for everyone without restrictions so should be books! Publisher, librarian or an official in the book industry, we don't have the right to make this available to those without knowledge.

@GrundleStiltzkin, @DerekJohnson: We should provide members of online message board community with healthy and good books.
Click to expand...

I lobbied Grundle hard for us to read It's Good to be Gronk.
 
3. Iran[/b]

Seriously, fuck those guys. I've read a ton of books in the last several years that have some touch point in the Middle East, mostly from a "war on terror" perspective. Iran comes up a lot in those, natch. However, this book for me really crystalized that amount of malarkey the Iranian government drops across the region. Directly or through proxies, Iran seems to responsible for at least 81% of the troubles in the region. Weº know they hate usº, this is understood, but let's not loose sight of how much Iran seems to hate every other ME government.

Aside 1: Who knew that Houthi isn't an ethnic minority group, but an Islamist rebel group named after their former leader who was vaporized by the Saudis? I did not. Just from snips and headlines covering SA's actions against them, I had the impression that Houthis vs. Saudis was something akin to Shiite vs. Sunni. Nope, Iranian backed guerrillas.

Aside 2: What a clusterfuck de-Baathification was in Iraq. Terrible decision.
Click to expand...

Not all books are necessarily good and not all of them are unharmful, some books are harmful! This book is greatly harmful!

Like poisonous, dangerous and addictive drugs which are not available for everyone without restrictions so should be books! Publisher, librarian or an official in the book industry, we don't have the right to make this available to those without knowledge.

@GrundleStiltzkin, @DerekJohnson: We should provide members of online message board community with healthy and good books.
Click to expand...

I lobbied Grundle hard for us to read It's Good to be Gronk.
Click to expand...

HYG
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Looks like I've run through my bullet poonts. Sad.

In sum, I thought this was a fantastic book. I love big-picture stuff reinforced with individual examples, and this author is outstanding at that in my opinion. A year ago, this was a subject I knew almost nothing about other than skimming the occasional WSJ article. Then on a whim I read Energy by Rhodes (yes, I know everyone is sick of me raving about that book). That book gave me the foundational understanding of the importance—and historical rarity—of plentiful energy for human prosperity. Stacked up on that, The New Map gave me a better understanding of how that is accomplished from the 30K foot view.

If there's further discussion to have with anyone, I look forward to it. Otherwise, thus ends Book Clerb.

Thanks for reading ;-}
 
Looks like I've run through my bullet poonts. Sad.

In sum, I thought this was a fantastic book. I love big-picture stuff reinforced with individual examples, and this author is outstanding at that in my opinion. A year ago, this was a subject I knew almost nothing about other than skimming the occasional WSJ article. Then on a whim I read Energy by Rhodes (yes, I know everyone is sick of me raving about that book). That book gave me the foundational understanding of the importance—and historical rarity—of plentiful energy for human prosperity. Stacked up on that, The New Map gave me a better understanding of how that is accomplished from the 30K foot view.

If there's further discussion to have with anyone, I look forward to it. Otherwise, thus ends Book Clerb.

Thanks for reading ;-}
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I'll probably will be fully done in another 1 - 2 weeks at my snail's pace. But will have some more thoughts to share.

It's cool that @1to392831weretaken is officially our Refining Superiority Guy now.
 
Haven’t read so I should probably stay out...but I won’t. I can say nothing has been a bigger destroyer of capital ($$$) than shale. Not great for oil companies, but it’s been an absolute boon for the US as a whole...yeah capitalism. It balanced out the capital flow for the US, created jobs galore, and given us a shiteton of natural gas which has kept our power/electricity prices low (compared globally) which has been one of the key drivers for manufacturing (don’t discount energy cost in that renaissance...many people ignore it). Economics on shale plays are completely different than as an example deep water drilling...both in upfront CapEx and cycle time to revenues. Doubt you will see much of the high, high upfront CapEx deep water/Alaska/etc drilling until something structurally changes.

Environmentalist are right about shipping oil on rail cars...fuck them (and Warren Buffet and Russia and others) for using these moron environmentalists to fight all the pipelines. That said, some of that pipeline craziness really screws over Canada and Northern US oil plays (Wyoming and North Dakota) and benefits plays down here so I guess I shouldn’t complain too much. Bad for US...good for Texas. Yeah us.
 
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1. The US shale gas & oil revolution.[/b]

Obviously this one of main thrusts of the book, and one of my big takeaways. I consider myself decently well-read about US news at the topline. I cannot recall reading much if anything about this separate from a partisan view. Plenty of "shale gas will poison water" or "greens are trying to kill jobs." Not much about how impactful this was domestically and internationally. This was a huge eye-opener.

A close corollary to this point, eye-opening reading just how good[/i] the US economy was pre-Vid. Wow, just wow.

Question for my oil & gas guysm: The book makes mention of the short-cycle nature of fracking wells, versus the long-cycle of conventional wells like in Middle East or South America. Out of the scope of the book is the pros and cons of that. Anyone care to expound?

Another related anecdote from the: In 2015 (I think? maybe earlier), Venezuela proposed in an OPEC meeting to push propaganda in the US about the environmental horrors of fracking. Fuck those guys.
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Before picking up this book, I knew jack shit about shale, fracking, etc. Like Grundle I was spoon fed a steady diet of how evil it was. I really want to read more to understand the science behind it. Whatever the truth of its environmental impacts, I’m glad it diversified our country’s energy portfolio. And as this book so brilliantly outlined, without energy independence you’re vulnerable.

Side note, I had no idea that Standing Rock/Dakota Access Pipeline protest are what set off AOC’s political career.
 
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