5 ms·

I walked along Huntington Beach’s beach today to checkout what happened. Although the cleanup workers did a great job, there were still puddles of oil on the sa

by koeng 5y ago

I walked along Huntington Beach’s beach today to checkout what happened. Although the cleanup workers did a great job, there were still puddles of oil on the sand, and you could definitely smell it in the air. The puddles were much clumpier than I imagined, but guess that’s just how crude oil is.

fuzzfactor 5y ago
From looking at the news videos of the tarballs, some crude oil is just like what has made it to the beach. In Alberta CA the famous tar sands are about like this, including even the sand, otherwise this is mainly the remaining wax and tar content which picks up the sand when it washes up. After "weathering" before drifting ashore, most of the light volatile hydrocarbon content has evaporated leaving only the heavy residue consisting of wax & bitumen which balls up as the sheen shrinks naturally. If it was a light crude to begin with that could quite often look more like root beer (complete with foam) when fresh or even be as semi-transparent as iced tea. And can be quite low in viscosity compared to diesel fuel. In the case of really light crude there might only be about 1 percent residuum content, IOW for every 100 barrels spilled only 1 barrel of this tar would remain to wash ashore after evaporation of the light ends. Other times with a heavy crude each barrel might be more than 50 percent residuum, which means orders of magnitude difference in shoreline devastation per barrel lost from the pipeline. Looks like the operator is Amplify Energy whose spokesman didn't seem that well-spoken, and I think it can be recognized as a deer-in-the-headlights moment. Seems like they are one of the ones finding their niche by taking over proven properties from much larger oil companies who had drilled the wells and fully depreciated the assets years ago. Everything has already paid for itself so attractive deals can always be made for next-generation investors. The majors could have easily gone "green" decades ago with their financial resources (could have divested from oil completely) and provided good shareholder returns from pure financial operations, but naturally there is even more money in continuing to bring in gushers. Shell did a bit of that last month when they sold lots of their Texas wells to Conoco, I would expect the ones needing extensive infrastructure repair will be passed on to smaller companies like Amplify before the bill for that kind of thing comes due, while the figures still look as good on paper as they ever did.
- sitkack 5y ago
  Could you explain the economics of selling these wells among companies? It sounds like what you are trying to say is akin to Budget selling its fleet of 1 year old rental cars to Rent -a-Wreck and not doing any maintenance on them in the meantime.
  - fuzzfactor 5y ago
    It's a business gamble that unfortunately has more than just financial consequences if the second-hand hardware fails to continue performing as "reasonably" expected. >Amplify Energy Corp. is an independent oil and natural gas company engaged in the acquisition, development, exploitation and production of oil and natural gas properties. All the actual work is expected to be performed by contractors, so the company can co-exist in the same space as cowboy oilmen who don't have to have great engineers on their staff as long as the contractors have the credentials. Looking at the Amplify portfolio at this early stage in their business, it can be seen that a good number of their properties consist of oilfields where many or most of the wells are not actually producing any more, even though the remaining subsurface reserves are significant. These could be expected to be value acquisitions requiring the lowest possible up-front investment. A rise in the oil price might be what is anticipated before the additional cash could be raised that could be used for refurbishment and to bring non-producing wells back into production. The offshore California play however does have all wells listed as currently producing, plus they ended up with the associated pipeline that goes with it in that case. They may not have as much experience at operating a subsea pipline compared to their efforts getting into the oilwells themselves. Either way, once an asset sale is in the works, expensive maintenance would be deferred from that point so the acquiring operator can bear the costs. This would be figured into the negotiated price. To some extent you get what you pay for, even on the industrial scale.

by koeng 5y ago

fuzzfactor 5y ago

From looking at the news videos of the tarballs, some crude oil is just like what has made it to the beach. In Alberta CA the famous tar sands are about like this, including even the sand, otherwise this is mainly the remaining wax and tar content which picks up the sand when it washes up. After "weathering" before drifting ashore, most of the light volatile hydrocarbon content has evaporated leaving only the heavy residue consisting of wax & bitumen which balls up as the sheen shrinks naturally. If it was a light crude to begin with that could quite often look more like root beer (complete with foam) when fresh or even be as semi-transparent as iced tea. And can be quite low in viscosity compared to diesel fuel. In the case of really light crude there might only be about 1 percent residuum content, IOW for every 100 barrels spilled only 1 barrel of this tar would remain to wash ashore after evaporation of the light ends. Other times with a heavy crude each barrel might be more than 50 percent residuum, which means orders of magnitude difference in shoreline devastation per barrel lost from the pipeline. Looks like the operator is Amplify Energy whose spokesman didn't seem that well-spoken, and I think it can be recognized as a deer-in-the-headlights moment. Seems like they are one of the ones finding their niche by taking over proven properties from much larger oil companies who had drilled the wells and fully depreciated the assets years ago. Everything has already paid for itself so attractive deals can always be made for next-generation investors. The majors could have easily gone "green" decades ago with their financial resources (could have divested from oil completely) and provided good shareholder returns from pure financial operations, but naturally there is even more money in continuing to bring in gushers. Shell did a bit of that last month when they sold lots of their Texas wells to Conoco, I would expect the ones needing extensive infrastructure repair will be passed on to smaller companies like Amplify before the bill for that kind of thing comes due, while the figures still look as good on paper as they ever did.

sitkack 5y ago
Could you explain the economics of selling these wells among companies? It sounds like what you are trying to say is akin to Budget selling its fleet of 1 year old rental cars to Rent -a-Wreck and not doing any maintenance on them in the meantime.
- fuzzfactor 5y ago
  It's a business gamble that unfortunately has more than just financial consequences if the second-hand hardware fails to continue performing as "reasonably" expected. >Amplify Energy Corp. is an independent oil and natural gas company engaged in the acquisition, development, exploitation and production of oil and natural gas properties. All the actual work is expected to be performed by contractors, so the company can co-exist in the same space as cowboy oilmen who don't have to have great engineers on their staff as long as the contractors have the credentials. Looking at the Amplify portfolio at this early stage in their business, it can be seen that a good number of their properties consist of oilfields where many or most of the wells are not actually producing any more, even though the remaining subsurface reserves are significant. These could be expected to be value acquisitions requiring the lowest possible up-front investment. A rise in the oil price might be what is anticipated before the additional cash could be raised that could be used for refurbishment and to bring non-producing wells back into production. The offshore California play however does have all wells listed as currently producing, plus they ended up with the associated pipeline that goes with it in that case. They may not have as much experience at operating a subsea pipline compared to their efforts getting into the oilwells themselves. Either way, once an asset sale is in the works, expensive maintenance would be deferred from that point so the acquiring operator can bear the costs. This would be figured into the negotiated price. To some extent you get what you pay for, even on the industrial scale.