Thomko Petro Chemical Blog

Thanks to all who sent e-mail from our last post about soaring oil prices. From analysts, politicians and just about everybody weighing in, there are many opinions about the cause and ways to solve our dependency on oil. Here's my personal thoughts on some of the major causes of why oil has risen to all time highs
 . . . CT

For the past 20-25 years, this country has obviously neglected to find other sources of energy and fuel, and instead opted to stay dependent on foreign oil. Now we come to a time when as Thomas Friedman's book title "The World Is Flat" hits us squarely in the face.

This is a global economy - and the rest of the world wants what we have. We are no longer the driving force on the oil & gasoline prices worldwide. Even if we cut back on gasoline consumption - drivers in the rest of the world (China, India, etc) will continue to consume more gasoline. So the answer lies not just in finding more oil, the big pill to swallow is a real alternative energy policy.

While we have been living the "American Dream", much of the rest of the global world is catching up. They want the cars, homes and a lot of the technology we have become accustomed to. There are just not enough resources to supply the demand. Actually from my point of view they are falling into the same trap we now find ourselves - but that's another story . . .  

The facts are crude oil production has remained rather flat - while the need for oil continues to rise - especially from developing countries. The American dollar is at an all time low, and let me state once again that oil is priced worldwide in dollars.

Terrorist activity around the world can send oil souring at any time as we have seen in Nigeria, and threats remain throughout the Middle East. 

Oil speculators also have to be figured into the equation of the rising oil prices. Many institutions playing the market for their investors own far too many oil contracts - and when they announce oil price expectations - prices continue to rise. It's easy to control the price when you own most of the contracts!

And the war in Iraq has dramatically cut their pre-war production of approximately 4 million barrels per day to less than 2 million barrels per day. So in reality this war has also added to the reduction of the global oil supply - and I won't even go into what the threat of war with Iran will do to the world oil market prices.

But there's more bad news . . . Russia, the world's second largest oil exporter is having production problems. Russia's lack of investment in their infrastructure and many aging oil fields has led to their first production decline in 10 years.   

At the end of the day, it's all of us who pull up to the gas pump each week who are the losers. Obviously the elected politicians for the past two decades have not had the country or our best interests at heart. So, it's up to us to make changes in our lives, and try to ride out this economic chaos.

I certainly don't have all the answers, but I do know that we are facing a very bad economic time in this country. It's going to take sacrifice, and hopefully this time we will come out this with a new outlook on alternative energy - but it's not going to happen overnight. 

That's my take . . .

Companies that use the testing process is only growing, and it includes much more than the petro-chemical industry.

Although there is growth all over the Golden Triangle with the expansion of refineries like Motiva and Total, there's a slight bump in the road.

The Industrial Alliance says more and more potential employees are failing drug tests and can't work for the expansion projects.

Some drug screening agencies say companies are calling daily, wanting to have their employees screened.

Rob Bittle is the owner of Advantage Drug Testing in Beaumont. He says his business is booming since the announcement of several refinery expansions in South County. In fact, he says his company has grown more than 300 percent.

But with that growth, comes a problem with finding enough employees to pass the tests. Out of every fifty, eight people will fail. "We do see them and see people denied access and unfortunately they lose their jobs.

This doesn't allow us the number of people we need to build and maintain facilities, according to Mark Viator, a facilitator with the Industrial Alliance.

The Southeast Texas economy at a deficit. "With a current workforce of about 13 to 14 thousand  another 14 thousand. needed. Every employee that walks through the gates must take a drug screening.

"Delivery people, supply people, supply houses, sub contractors, special skills and services, engineers are all required to be drug screened," says Bittle. "They have a responsibility to the community, environment, their employees, their equipment, to make sure people are fit for duty. Not taking drugs. A responsibility and trust the industry is not willing to break."

Drug screening agencies say the number of companies that use the testing process is only growing, and it includes much more than the petro-chemical industry.
 
http://www.kfdm.com/news/says_25751___article.html/drug_people.html

You might lose some sleep when you find out what's really inside your mattress-memory foam or not.

The place where you spend one-third of your life is chock-full of synthetic materials, some potentially toxic.

Since the mid- to late '60s, most mattresses have been made of polyurethane foam, a petroleum-based material that emits volatile organic compounds that can cause respiratory problems and skin irritation.

Formaldehyde, which is used to make one of the adhesives that hold mattresses together, has been linked to asthma, allergies, and lung, nose, and throat cancers. And then there are cotton pesticides and flame-retardant chemicals, which can cause cancer and nervous-system disorders.

In 2005, Walter Bader, owner of the "green mattress" company Lifekind and author of the book Toxic Bedrooms, sent several mattresses to an Atlanta-based lab. A memory-foam model was found to emit 61 chemicals, including the carcinogens benzene and naphthalene.

There is no proven health risk from the substances in mattresses, however, mostly because tracking their long-term effects is virtually impossible.

Heather Stapleton, an environmental chemist at Duke University, says there's simply not enough data to determine whether low levels of these chemicals will eventually make people sick. "It's the dose that makes the poison," she says. "If they're not getting out, maybe it's not a problem-but we don't know. There are plenty of lab studies that show that these compounds are harmful. It's just a question of what levels people are exposed to."

Still, more and more consumers are seeking out mattresses made of natural latex, organic cotton batting, and organic wool. Sales of California-based Vivètique's latex mattresses have increased by 40% annually for the past five years-they now comprise 45% of the company's total sales. And they are even sold by discounter 1-800-Mattress.

Read more at ENN - Should You Ditch Your Chemical Mattress?

Hello!

Good to be back blogging again. Had to take a rest, but all is well. Just needed some R&R. I stopped by Petroleum World and saw this article . . . CT 

"Think beyond petroleum" is a lofty thought. Sidewalk pundits endorse it. It smacks of high-tech. And that got my attention.

Think of fusion. That's the energy-producing concept which uses the hydrogen in heavy sea water. In other words, sea water becomes the fuel for the process. But fusion was not on the list "beyond petroleum." Windmills were high on the list, as they are with most people, except Senator Edward M. Kennedy, who suffers from the NIMBY syndrome. It seems strange to me that windmills were high on the list. My first reaction was that windmills were high-tech in Biblical times and that was before petroleum.

Solar energy was identified as a source to think about. Solar, like wind energy, is limited by location. The Southwest desert areas provide a greater opportunity for the use of solar power, which in these regions may be used to advantage.

Finish reading article at Petroleum World

Tight European Polypropylene Supply Impacts U.S. Supply and Prices

Polypropylene is a petrochemical product that is used in food packaging such as reusable containers, ropes, textiles,  laboratory equipment, loudspeakers, automotive components, and polymer banknotes.
 
Several force majeures declared at crackers in Europe last week causing U.S. polypropylene inventories to be lower, and the strong euro versus the U.S. dollar has caused an increase in price. Demand for the product has also escalated in Brazil, India, Turkey and Israel.    

A force majeure is defined as an event caused by circumstances beyond the control of the facility, contractors, or any entity controlled by the affected facility that prevents the owner or operator from complying with the regulatory requirement to conduct performance tests within the specified time frame. Examples of such events are acts of nature, acts of war or terrorism, or equipment failure or safety hazard beyond the control of the affected facility.

Source: Platts

China breaks up state owned monopoly

China is on a quest for oil, and this announcement shows just how far they will go to get it - Charles

China is breaking the long held state monopoly in their oil sector by allowing private and foreign to participate in the wholesale petroleum business.

China's ministry of commerce has released the documents which detail the guidelines and entry process for domestic and foreign companies. The China Daily newspaper reports that the rules will offer a level playing field for foreign and overseas companies. 

Among the new guidelines are a lifting on the restrictions on the number of gas stations a company can own - and this also applies to Chinese companies. 

China National Petroleum Corporation (CNPC) and China Petroleum and Chemical Corporation (Sinopec), have held a monopoly in the country's wholesale crude market.

In an interview with an European media portal, Ken Cohen, vice-president for public affairs and Sherri Stuewer, vice-president for safety, health and environment explain Exxon's position on climate change and lay down basic principles for a future US policy to reduce greenhouse gas emissions.

Read the full interview
EurActiv.com  - The independent media portal fully dedicated to EU affairs.

"Commercially produced biodiesel is a safe and reliable alternative fuel that can be used in diesel engines with little or no need for modifying engines or fuel systems," says Leon Schumacher.

Petroleum-based diesel and biodiesel both can thicken or gel as the temperature drops. Gelled fuel can clog fuel filters or become too thick to be pumped from the fuel tank to the engine.

Generally speaking, biodiesel gels faster than its petroleum-based counterpart.

READ FULL ARTICLE AT AGRICULTURE ONLINE

Venezuelan president, Hugo Chávez, affirmed Friday that countries members of OPEC cannot allow crude oil prices to be under 50 dollars per barrel, he considers this to be a just price.

"We cannot allow the OPEC countries to lower petroleum under 50 dollars per barrel, “from there up and we are all in agreement”, he said during a ceremony in Caracas.

"We must take care of the price of petroleum, 50 dollars minimum", he repeated.

"Now the maximum price, don’t ask me, where will it end; that will depend on the market evolution," emphasized Chávez.

"During 60 years, almost, we gave them (USA), petroleum for a dollar a barrel, and that is what they developed their countries with”, he commented.

"Capitalism, the great industrial and military machinery from the XX century, what did they use to finance their way of life? Ransacking our oil, that’s how”, he continued.

"It’s enough already, you go to the north countries and they are developed while, here we are, impoverished, misery grazes in our fields and the southern countries, high infantile mortality, diseases, illiteracy ", he pointed out.

Venezuela is the fifth crude exporter in world and one of the main USA suppliers.

As Iraq's brutal summer heat sends temperatures soaring above 104 Fahrenheit, a dire shortage of petroleum products is damaging the economy and cutting electricity supplies in Baghdad to new lows.

The shortage is due to a host of reasons, including rivalries among political parties in the south, but an interior ministry spokesman said the security situation was a major cause.

"In addition to attacks on pipelines, trucks carrying petroleum products are in the sights of the rebels.

Some gas stations had to close after their drivers refused to go pick up gasoline and other products stored in the dangerous areas around Baghdad," said Assem Jihad.

The capital has some 160 gas stations, of which half are privately run, and long lines of motorists stretch in front of those still selling gasoline.

"The daily consumption of gasoline reaches 20 million liters (five million gallons) for the country, of which six to seven million is for Baghdad," where six million people live, said Jihad. "And supply is well below demand."

Sabotage of the oil infrastructure is also ongoing, aggravating the situation, he added, nothing there had been two attacks in the past week on pipelines to the north and south of the capital.

"Certain countries have stopped providing Iraq with petroleum products," he said, without elaborating, after the government halved the six billion dollars allocated to pay for imports.

An oil ministry official, however, singled out the actions of "an internal party that is trying to hinder the improvement of the supply situation".

The official, who asked to remain anonymous, was alluding to the Shiite party Fadhila, which holds 15 seats in parliament and forms part of the dominant Shiite United Iraqi Alliance. But it angrily walked out of talks on forming a new government after it failed to secure the oil ministry.

The party reportedly is interfering with oil supplies heading north to Baghdad, while threatening a strike action, and demanding a cut of export royalties.

Fadhila is powerful in the southern port city of Basra which dominates the drilling and export of the vast majority of Iraq's oil resources.

Electricity production has been affected as well by the oil shortages.

Since the US-led invasion of March 2003, Baghdad residents have always suffered from a lack of electricity, with some neighborhoods receiving power only one hour out of five.

As a result, gasoline-consuming generators are a common sight throughout the city, sometimes powering whole blocks. With soaring temperatures sending residents scurrying to air conditioners, power consumption has risen steeply.

Many of those waiting in the long gas lines carry jerry cans for their generators rather than their cars.

The shortage is only exacerbating the hardships of the Iraqi capital's residents and increasing their criticism of the government which was only sworn in a week earlier.

The Ecuadorean government seized Occidental Petroleum's operations in the oil-rich country, and detailed free trade negotiations. 

U.S. diplomats broke off free-trade negotiations after the Ecuadorean minister of energy announced Occidental's expulsion Tuesday.

As the big oil companies posted huge profits, many producing nations, including some of the United States' largest suppliers in Latin America, have decided that more of those riches should stay at home.

Many Latin American countries opened their energy sectors to private investment in the 1990s, signing contracts that brought in foreign operators when oil was near $15 a barrel.

With oil prices skyroceting, and China and India emerging as new export markets, Latin American leaders are taking a strong stand against major oil companies as voters clamor for political and economic change.

Occidental, the fourth-largest U.S. oil company based in Los Angeles, is Ecuador's biggest foreign oil producer, accounting for about 14 percent of the tiny South American country's output.

"We view it as an expropriation of assets," said Occidental's Larry Meriage, adding that the Ecuadorean government and the company had been in a contractual dispute for more than two years.

Wall Street debt rating firms said the move would not affect Occidental's financial outlook, as the oil fields in question represent only 7% of the company's production.

Occidental, whose holdings were turned over to state-run Petroecuador, has operated in Ecuador since 1995.

"We're the biggest taxpayer in Ecuador," Meriage said. Occidental, which denied breaking its contract, has sought a tax refund of some 75 million dollars and sought to resolve the conflict via international arbitration, according to Meriage.

Meanwhile, Ecuadorean officials have denied that the country was nationalizing its oil assets, believed to be the third-largest in South America.

Bolivia, rich in natural gas but still one of South America's poorest nations, shocked international markets when Evo Morales (pictured at left), its new president and leader of the Movement Toward Socialism, ordered the military to secure oil and gas fields and refineries, declaring the foreign-owned assets property of the state.

The U.S. Geological Survey (USGS) completed and made public a database that has over 65,000 records containing the chemical analysis of crude oil, natural gas and rock samples from thousands of locations worldwide.

This is the only database of its kind and for the first time it is available to the public.

The USGS Organic Geochemistry Data Base (OGDB) contains chemical analysis data for crude oil, natural gas and rock samples analyzed by the USGS Organic Geochemistry Laboratory or by contracted-service laboratories. Data were also obtained from the literature and unpublished public domain sources.

Citgo Petroleum’s program to provide discounted heating oil to American communities is raising political heat on Capitol Hill and in some states in the Northeast.

Read the rest of the article at The Hill, the Newspaper for and about the U.S. Congress

Quote of the Day:

Exxon Mobil Corp.'s senior Vice President Stuart McGill, chided politicians for pursuing policies he said were based on misperceptions, such as petroleum prices being unduly high.

Gasoline may look expensive these days, but it's cheaper than bottled water, he said.

There's no money to buy crude in the Administration's 2007 budget just sent to Congress. 

A law was passed by Congress last year which required the administration to up the capacity of the Strategic Petroleum Reserve (SPR) from approximately 700 million to 1 billion barrels.

Congress created the reserve in 1975 after the Arab oil embargo. Currently four sites in Texas and Louisiana hold 684 million barrels of crude in deep underground caverns.  

After Katrina the administration had to sell approximately 11 million barrels, and a little over 9 million barrels was loaned to oil refineries. This year the reserve is supposed to restored to 700 million barrels. 

The Strategic Petroleum Reserve has been used twice because of an economic disruption in oil supply disruption - In 1991, during Desert Storm and in September, 2005 after Hurricane Katrina. Smaller amounts are withdrawn periodically for testing purposes, and to "exchange" oil. In the exchange, the reserve gains more oil than it releases.  

We need to expand the current reserve, and in order to accomplish this new storage sites will need to be located. The Energy Department estimates it will take 12 years to get the reserve to 1 billion barrels.

Interesting article from "Down Under" - A view from Robert Newman, British novelist, musician and comedian -Australian news - The Age

Newman states, "All hail oil giants BP and Shell for having got beyond petroleum to become non-profit eco-networks supplying green energy. But fail to cheer the Fortune 500 corporations that will save us all and ecologists are denounced as anti-business."

Read the full 2 page article entitled - Consuming the Future 

Michael Lynch is the President and Director of Global Petroleum Service Strategic Energy & Economic Research Inc. (SEER).

Here is a quote from Mr. Lynch who was speaking at a industry conference in the U.K.

"It is true that oil is finite but since 1989 people have repeatedly predicted the peak too soon and have had to keep on increasing their estimate of reserves. Just because a country's output has peaked and gone into decline, it doesn't mean that production can't rise again."

He has over twenty years of experience analyzing international energy, particularly oil and gas markets. He has numerous publications in four languages and speaks regularly at international conferences. He is the primary author of Global Petroleum SEER and Global Petroleum Outlook, which provide short- and long-term oil market analyses.

Does Lynch know something we don't? 

There's a possibly that the U.S will allow energy companies to build new oil refineries. On Friday the House of Representatives approved a bill that encourages building new refineries.

Backers of the bill say that the recent back-to-back hurricanes stressed the serious need for new refineries.

The bill passed 212-210, and not a single democrat voted for the legislation. The bill takes a laissez-faire attitude toward the complex permits required for expanding or building refineries and allows the president to single out federal land where a refinery may be built.

And while this legislation will assist in lowering oil prices, it fails to tackle the rising cost of natural gas or deal with high prices motorists are paying at the pump.

What the bill does do, however, is allow oil companies to dodge overly strict environmental regulations.

The need for more refineries is not a new issue. However, the problem is intensified in the wake of hurricanes Katrina and Rita that shut down a dozen refineries and disrupted a fifth of the country's gasoline supplies

Prospects of the bill in the Senate are uncertain. But one representative who baked the bill said construction of a new U.S. refinery could begin within a year.

Detroit's Big Three auto makers have filed suit against Marathon Petroleum Co. LLC, the latest move in an ongoing dispute over fuel distributed by the oil company that allegedly contaminated gas tank sensors.

Marathon Petroleum, a subsidiary of Houston-based Marathon Oil Corp., is accused by General Motors Corp., Ford Motor Co. and DaimlerChrysler AG of bailing out on its agreement to pay $12 million to repair 12,000 vehicles that were damaged by gasoline distributed by the company in the Louisville area in May 2004.

The suit seeks to force Marathon to back away from its demand for reimbursement of the $12 million it paid to the auto makers that was needed to replace contaminated parts.