Open Choke is the nom de plume of an anonymous oil and gas industry executive. Open Choke's ideas and opinions do not necessarily represent the ideas or opinions of Drillinginfo.com, its owners, or employees.
September 07, 2007
ANWR's 4 billion, perhaps mythical, barrels shouldn't be drilled because it represents less than a year of gross domestic oil consumption.
How many times have you heard that? It is a famous example of statistical misdirection applied by the Haters... of us lovable puppy dog-like oil and gas folk. Using similiar logic, perhaps we shouldn't plant any crops this year because it only represents a years worth of food. Let them eat... Yellow Cake.
In any case, I want to share some real stats with you... the kind that are a little harder to "misdirect".
Fun Fact 1) Gasoline contains 116,000 BTU's/gal, and takes around 22,000 BTU's/gal to find, drill, transport, and refine. NET POSITIVE BTU? 94,000 BTU's or a little bit short of 5:1 leverage, or, put another way Return on BTU Investment.
Corn based ethanol contains 76,000 BTU's/gal, and takes 98,000 BTU's/gal to plant, grow, harvest, and refine. NET POSITIVE BTU? Uhhh. None. -22,000 actually. Less than payback. Kinda like saying "we lose money on every deal but we make it up in volume". I implored the oil and gas lobbying organizations to NOT attack ethanol subsidies by pointing out this physical limitation to lawmakers, because farmers get knee jerk defensive when you try to rip their snouts away from their Pork Trough, an item so important that it nearly is equivalent to a breathing tube... they cannot exist wihtout it anymore... and hell, the negative BTUs are gonna come from hydrocarbons anyway, heh heh.
To be fair, I think human ingenuity in the processing realm will eventually make corn-based ethanol a BTU break even or slightly positive energy contributor across the board given time. But chemistry dictates that it will never be as good as oil... and not even Congress can change chemistry, although I am certain they think they can.
The REALLY sad fact is that corn-based ethanol approaches the same efficiency of some of the drilling deals I have been involved with lately... and nearly all the MLP's I see right now! I wonder what Enervest's John Walker would say about that? He stood up last week in front of hundreds of I-bankers in Dallas and slammed the current MLP craze. A brave man, Walker. a real Texas Ranger.
So, Fun Fact #2) Getting back to ANWR, I thought it might be fun to calculate how many windmills would be needed to make up ANWR. Probably not the kinda fun YOU have, but it suffices for my puny existence....MORE