Tuesday, August 30, 2011

A Chill Wind from the North

The Oil-Rich Alaska North Slope (image from DOE)

The petroleum engineer at The Oil Drum who posts under the handle "Heading Out" drew my attention recently to one of those potentially big stories that serve as a great example of the mountain of challenges facing those of us who will be manning the walls as the Great Collapse gets underway.

His post, with the fairly innocuous title of "Tech Talk - The Coming Problems for the Alaskan Pipeline" illustrates the enormous bind our society will find itself in as the credit bubble unwinds, mood turns surly and magical thinking rears its ugly head in policy circles.

...In July of 2011, TAPS averaged a flow of 459,376 barrels of oil a day, which is down from the average over the past year of some 572,835 bd. And those numbers are becoming something of a concern. While the pipeline produced about 15% of the national domestic production in 2010, the pipeline requires a certain flow level if it is to effectively deliver oil.

The pipeline was built in the years from 1974 to 1977, and between then and now has delivered some 16 billion barrels of oil. At its peak on January 14, 1988, the pipeline flowed at a rate of some 2.145 mbd...

Then he goes on to describe some of the assumptions built into the engineering that went into the pipeline:

...When the pipeline was built it was assumed that it would pump a dry oil (without water content) and that flow rates would remain above 500 kbd. Neither of these conditions is likely to hold true in the future. The oil coming from the wells contains a small (0.35%) percentage of water with higher peaks, and flows are falling below 500 kbd at which level the water starts to separate out from the oil....

And then he addresses what happens if the trend of a decline in pipeline volume continues:

...A reserve is only a reserve as long as it can be viably extracted, which includes the ability to access and utilize the oil and gas. Should the pipeline stop flowing, and there are credible conditions discussed in the report that may lead to such an event, then the remaining oil in the North Slope will be unavailable, as will that currently held in the NPR-A...

According to the report, the danger point gets reached some time in 2020, not even 9 years away now. 

Now, like many issues of resource extraction, the devil is in the details.  The known corrosion problems on the pipeline could shorten the lifespan and an increase in production rates from, well, somewhere, could extend the life.  Debate over details aside, what I want you to pay attention to is that this pipeline was constructed when the Grand SuperCycle trend was still towards optimism.  This was still during an era when big engineering accomplishments could happen, with the implicit assumptions that funding will always be available to keep these grand projects up and operating.

When the world turns towards towards an era that will be impoverished, credit-starved and angry, large-scale projects become very vulnerable to failure.  Look at the report.  If the Alaskan Pipeline falls below roughly 300,000 - 350,000 barrels per day, the entire system could fail.  That means going from at least 300 kbd to zero and that also means all that lovely oil up in the Arctic Circle is going to have to find a new route from wellhead to refinery.

The optimistic view is that this will either never be allowed to happen or that new facilities and infrastructure would pick up the slack.  After the Great Collapse, those assumptions could very well ring hollow.  Then multiply this by the nearly 47,000 miles of Interstate Highways that need keeping up, the levees along the Missouri, Mississippi and Ohio River valleys, rural airports, the national electricity grid and every other Big Engineering project that you see around you and jus think of the money and credit required just to keep it up as well as the vulnerability of it all to anger and unrest.  This will be one of the biggest stories of the next decade, in my opinion, the decay of infrastructure and the response by local communities to the challenges that decay will bring.

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