When we began this series of tech talks, a drilling rig was anything that punched a hole through the ground, to get at the oil or natural gas underneath. Once a hole is drilled, however, there is often other work that needs to be done on the well, but now the infrastructure that helped when we drilled the well starts to get in the way when we need to do other things. And so the tool will change to what is known as a workover rig. (Though these could be the old rigs left in place on a platform after the production wells are drilled - just to keep life clear).

Below the fold is a short Thanksgiving comment followed by some Campfire discussion questions.

Most of us have heard that Dubai World is asking for a six month delay in paying back its debt. The debt was supposedly backed by the Dubai government, so Standard & Poor's considers this a default of the Dubai government.

It is a little early to see how the Dubai situation will play out, but it seems to me that there is a significant chance that the Dubai situation will mark the beginning of the next leg down in the downward recessionary spiral and world debt unwind. Oil prices are likely to drop, so few are likely to notice that oil ultimately plays a major role in the continuing debacle.

Peak oil: the summit that dominates the horizon

These expressions of concern have stoked the fires of the "peak oil" community, which has been warning for some years that global politicians are failing to move fast enough to conserve oil and move to a low-carbon economy. The dissidents include experienced oil investors such as Matt Simmons of Simmons & Co, committed green entrepreneurs such as Jeremy Leggett of Solarcentury, as well as many more impartial MPs such as John Hemming and apparently independent academics.

Kjell Aleklett, professor of physics at Uppsala University in Sweden, is one of the latter. His new report, "The Peak of the Oil Age", claims crude production is more likely to be 75m barrels a day by 2030 than the "unrealistic" 105m projected by the IEA. This would clearly lead to massive price escalation in a world that expects to see demand grow to feed the expanding economies of China and India even while politicians try to grow wind, solar and other low-carbon energy sources.

At Odds Over Land, Money and Gas

In New York City, natural gas exploration is largely seen as a threat to the drinking water the city gets from watersheds to the north in the Catskills. But in the rural communities above the shale, the reaction has been far more mixed — and far more contentious.

Some residents welcome the drilling as a modern-day gold rush and salvation from the economic doldrums that they say have chased jobs and young people away from their area. Others express concerns about the environment and quality-of-life issues like noise and heavy-truck traffic.

In some cases, the issue has pitted neighbor against neighbor or spouse against spouse.

This is a guest contribution by Dr Walter Youngquist, best known for GeoDestinies, his classic text on global resources and their depletion that was first published in 1997. I had the good fortune to meet Dr Youngquist at the ASPO conference in Houston two years ago and since then we have shared regular correspondence. Dr Youngquist (now aged 88) is updating GeoDestinies and last week he sent me this piece, seeking opinion. I always find his prose to be eloquent, simple, often understated and as a result very powerful.

I asked if we could publish this short piece on The Oil Drum and he kindly agreed. Many readers of The Oil Drum might feel that they already know much of what is written here, but you need to stop and ask how it is that we know what we know? When the new edition of GeoDestinies is published I'd warmly recommend this to Oil Drum readers as a well referenced, well written source spanning energy, soils, water, metals and population.

The Tragedy of 21 Darts [PDF]

This is a long article on the subject of oil & gas reserves and due diligence.

My purpose is to alert you to revision of SEC Regulation S-K and Regulation S-X effective January 1, 2010. Concealed in a handful of benign new regs is a financial truck bomb that's going to blow away "proved reserves" as a meaningful metric of oil company assets.

Old definition: Proved Reserves are those quantities which can be estimated with reasonable certainty to be commercially recoverable from known reservoirs under defined economic conditions. Proved quantities are limited by the lowest known hydrocarbon as seen in a well penetration unless otherwise indicated by definitive geoscience, engineering, or performance data. Seismic data alone is not sufficient to define fluid contacts. Undeveloped locations may be classified as Proved in undrilled areas of a reservoir that can be judged with reasonable certainty to be commercially productive.

New definition: Industry is no longer constrained by the criterion of certainty. An operator can book incremental proved reserves from planned enhanced recovery projects (gas injection, acid fracturing) based on a pilot project. Coal seam gas, bitumen, oil shale and other unconventional resources can be booked as Proved Reserves. Estimated reservoir properties in the aggregate is a departure from the old rules. The new SEC definition does not require that an analogous reservoir has to be in the immediate area or in pressure communication. Seismic analysis and reservoir models are sufficient to book Proved Reserves.

Hold on to your shorts, it gets worse.

Last Sunday George Will wrote about the abundance of fossil fuels in his column for the Washington Post. He began by surmising that Titusville, PA might have a claim to being most responsible for the modern world through the contribution of oil to world wealth. He then went on to list some of the many folk that have predicted (falsely) the arrival of a peak in oil production and the amount of reserves that are available.

In 1977 . . . Jimmy Carter predicted that mankind "could use up all the proven reserves of oil in the entire world by the end of the next decade." Since then the world has consumed three times more oil than was then in the world's proven reserves.

He does not see that America, or the world for that matter, can wean themselves from a dependence on hydrocarbons, and quotes Keith Rattie, the chief executive of Questar, from a commencement speech as well as Edward Morse, from a story in Foreign Affairs in which Morse states that there is plenty of natural gas available – perhaps a hundred years at the present rate of consumption, and that the deep water fields just beginning to be exploited are significantly larger than thought. And he includes Daniel Yergin as stating that" the resource base of the planet is sufficient to keep up with demand for decades to come.”

Europe’s Busiest Port Expands for Oil Speculators, Idling Ships

(Bloomberg) -- The Port of Rotterdam, Europe’s busiest, expanded its anchorage area to accommodate increasing demand from oil traders storing fuel at sea and more idling ships awaiting cargoes.

Rijkswaterstaat, the Dutch waterways authority, designated an area 15 kilometers (9 miles) northwest off the North Sea resort of Scheveningen as a new anchoring zone, the port authority said in a statement on its Web site today.

“Many tankers are lying at anchor here to wait for orders or for speculative considerations,” the port said in the statement. “The popularity of North Sea anchoring spots has increased considerably.”

This is a guest post by Jean Laherrère on gold. Although of little relevance to our economies in the present day, this precious metal has been used as money for many thousands of years, and still retains its importance and value. In a two part article, Jean analyses how gold mining is subject to depletion.

In this first installment, an assessment of reserves and a production model is presented for each of major gold-producing countries in the world.

Note: This post contains close to 50 images amounting to 2 Mbytes of data.