China Buys Entire Copper Mountain

June 18, 2008

Elaine Meinel Supkis

Everyone is trying to escape inflation. The Chinese are doing a two pronged attack on inflation: they are buying up commodity sources and markets and they are applying traditional bank rules that cut inflation such as raising the reserve ratios and interest rates. Meanwhile, the US struggles to re-animate all the bubbles that are the result of too much credit and liquidity from the central bankers of the G7 nations. Understanding how free trade worked with the floating currency regime to create vast bubbles and inflation surges is very important. As we see in the news this year.

Peru's 'copper mountain' in Chinese hands

By John Simpson
BBC News, Mount Toromocho

It could become the most productive copper mine anywhere on earth. Now it belongs, in effect, to China.
When open-cast mining begins, in three or four years, a Chinese mining company, Chinalco, will send the copper back home to be turned into electrical wire.

The plan is to use it to carry out the electrification of the whole of China. The Peruvian government is happy with the $3bn (£1.53bn) that Chinalco will invest in the Toromocho mines.
The Chinese will be even happier. They have got themselves a bargain.

China's modernization of their nation continues. Just as the government invests in high-speed German train technology or building alternative energy systems, they also are rapidly preparing the ground for direct exploitation of world resources. They are not so worried about the fees and charges they must work with when buying up commodity sources in various nations. This is a government to government deal and the Chinese expect to be able to handle this to their advantage while not building up a reservoir of hatred like the ham-fisted US methods of dealing with South or Central America, for example.

The Chinese want to circumvent the speculators in the G7 nations as well as the flotilla of pirates who infest the global trade/banking systems. In other words, the Chinese do not want Goldman Sachs to muscle in on markets for stuff they need in manufacturing or feeding their people. The Japanese are so worried about the same things, they too are going about the planet buying the same resources the Chinese want. Indeed, I strongly suspect the Japanese and Chinese have worked out a joint relationship concerning all of this. Behind our backs, of course. We see this in other areas:

Japan, China to Explore for Gas in East China Sea

(Bloomberg) -- Japan and China agreed to jointly develop a disputed natural gas field and cooperate in exploration in the East China Sea, ending a four-year argument between Asia's biggest energy consumers over who owns the reserves.

The agreement ``proves that Japan and China can solve difficulties together,'' Japanese Foreign Minister Masahiko Komura told reporters in Tokyo.

HAHAHA. Note how the Japanese boast about doing this with zero US input! China now has a direct line to the headquarters of Fortress Japan. This isn't the only deal they are working out behind our backs. There will be many, many more. This is the fruits of the long, two year fracas over the Japanese insulting WWII vets by honoring war criminals. The US looked the other way while Japanese leaders literally spat on our graves. But the Chinese acted with tremendous ferocity and rage. Fury over losing face made them play hard ball with the Japanese who then surrendered to the Chinese in this matter and in turn, the Chinese suddenly made friends with Japan and rewarded the Japanese leaders for playing this rough and tumble diplomatic game. I covered this story a lot as it developed. I was furious at Bush and Condi Rice, one of the stupidest and most gullible State Department head ever. And she has great competition in that regard.

Like Spain and Portugal or England and France dividing up the planet for exploitation so they would not have military confrontations in distant lands, so it is with China and Japan. They don't want any wars to erupt in their home territories. So they have a new and very secret accord. While our navy stupidly sails merrily about both countries, tootling our horns. Note there was no change in status for us after China kicked sand in our face last year by denying our ships entry to Hong Kong's port, for example. This really impressed Japan. 'You shoved the round eyes into the sea and they retreated. Ahhhh!' said Miz Japan, rubbing her hands.

Indeed, this signaled the end of US power in Asia. The retaliation was for the CIA to enable an uprising in Tibet and then use this as a club to beat China over the head right before the Olympics. It seems to be failing at this point. Which makes China stronger.

Next: a long article by Henry Liu which struggles to explain free trade and the floating currency mess.

China joins export game by Henry C K Liu, Asian Times:

The central banks of these countries competed to keep the exchange values of their currencies low in relation to the dollar and to each other so that they could transfer more wealth to the US while the dollars they earned from export had no choice but to go back to the US to finance the restructuring of the US economy toward new modes of finance capitalism and new generations of high-tech research and development through US defense spending. In 1979, China under Deng Xiaoping joined the export game as a path for domestic development to become the world’s biggest exporter of labor-intensive manufactured goods three decades later.

Constrained by residual limitation on rearmament resulting from their defeat in World War II, both Germany and Japan were unable to absorb significant high-tech research funds in their own defense sectors and had to buy weapon systems from the US all through the Cold War. By continuing to provide a defense umbrella over Japan and Germany after the Cold War, the US managed to preserve its leadership in science and technology, with financing coming mostly from the exporting nations’ trade surpluses. The more the export economies earned in their dollar-denominated trade surpluses, the poorer these exporting nations became in real national wealth.

Twenty-first-century neo-liberal market fundamentalism is not the same as 19th-century mercantilism in that trade surpluses in the form of gold would flow back to the exporting economy. Trade surpluses denominated in dollars for US trade partners merely expanded the US economy globally. The sucking sound that Ross Perot warned about regarding the North American Free Trade Agreement during his 1992 presidential campaign turned out not to be the sound of US jobs migrating to Mexico but the sound of foreign-held dollars rushing into US equity and debt markets.

Normally, I agree with Mr. Liu but in this case, he misunderstands history. I can't blame him. He reads books and looks at stuff but didn't live it or work with it in the past. And one thing I know a LOT about is the relation of the US military/industrial complex and Japan and Germany! I lived overseas and my parents were very involved in all of this. I saw it all close up. Guess what?

Germany, just for example, was VERY involved in our military research and development! Gads! My dad's job in WWII was to go into Germany and bring out the many German scientists and technicians and bring them to the US so we could pick their brains! Even more: many of them went back to Germany! I lived with them! They flew back and forth, 5 years in Germany, 5 years in the US. Ditto, the Japanese! I lived with these scientists.

They taught what they did in the US...BACK HOME. They came home, they went here, they moved about, hauling information and training with them. Ditto the Chinese! I had Chinese rocket scientists live with me and they went back to China afterwards. My dad did this after WWII and the Father of Rockets in China once lived with my dad! When I was a child! Because of the Cold War, the US was very anxious to pull in European and Japanese scientists and engineers. We spread the building of Cold War stuff to all our allies. Then we spread this to China! HAHAHA. Gads. Slit the throat! This was to flummox the Russians. Only we needed the Russians so we invited them here, too and they also fly back and forth between Mother Russia and the West and carry this technology with them.

Liu is totally off base in this case. The reason why Germany, Japan, China and Russia all accepted Funny Money™ while doing this was because they were getting everything from us that mattered: our technology, our skills, our factories, our power. Liu thinks they were content to get paper.

HAHAHA. NO WAY IN HELL. They used this paper to either buy up our commodity sources, buy our infrastructure or buy out our factories. We are being enslaved by them and they do this using these worthless pieces of paper that are WORTH A LOT TO US HERE. As we shall see below in the latest government statistical reports. The wealth of America is definitely flowing to our trade partners.

Barclays will tap sovereign wealth funds to cover its capital needs

Barclays shares surged yesterday after Britain's third-biggest bank set out its intention to raise capital from strategic investors and surprised investors with an upbeat trading statement.

Barclays said a new equity placing and a pre-emptive offer to existing shareholders were "under active consideration". In the open-offer placing, which could come as early as this week, Barclays would agree to sell a stake to strategic investors to cover its capital needs. But it would offer a portion of the new shares to existing shareholders in a "clawback" operation.

See? The top banks in the US and UK must go abroad to seek these dollars. They are begging for these dollars. They are diluting control of their banks because they need these dollars held by Japanese or Chinese. As the Chinese told me very tartly back in 1984: 'We be bank'. Let's look at the last 36 years of the DJIA:

I broke up this time scale to show the different eras. The floating currency era was a time of rising interest rates and Wall Street was totally flat. Then the interest rates began to drop BECAUSE THE US WAS LETTING IN FREE TRADE. This surrender of our sovereignty brought temporary prosperity as US markets grew rapidly due to the Baby Boomers hitting their first family building years while their WWII parents were at their top earning potential years. But starting in 1994 when Japan began to flood the planet with Funny Money™ thanks to their dual process of super-low 0% interest loans coupled with madly exporting manufactured goods led to a feel-good time in the US with super low interest loans here coupled with cheap oil and a huge hike in M3 finances.

This became a massive double bubble. The first one popped in 2000 as Greenspan raised interest rates for a year. Then he dropped rates like a rock when Bush took over and the flood of Funny Money™ doubled. We got a second bubble in stocks, one that is now falling apart. All the engineers of this bubble trouble can see clearly that having both the Bank of Japan and the Federal Reserve drop rates to 1% or less leads to big bubbles. But instead of fearing this, they WANT this to happen! This is the catastrophe that plagues us.

Treasury's TIC Data Shows Solid Foreign Investment

(RTTNews) - The Treasury Department revealed that foreign investment in the United States remained solid in the month of April, despite a wide trade deficit and continuing turmoil in the U.S. financial markets.

Net foreign purchases of long-term U.S. securities came in at $104.8 billion in April, the Treasury Department reported Monday. The department released Treasury International Capital (TIC) data for April, revealing that net foreign purchases of long-term securities, excluding non-market flows such as stock swaps and principal repayment on asset-backed securities, came to $115.1 billion.

Of the $115.1 billion in net purchases, $63.5 were made by foreign investors and $41.3 were made by foreign official institutions.

This news requires the raw data. Which a kind reader sent me. Thanks!

U.S. International Transactions: First Quarter 2008

Foreign-owned assets in the United States

Foreign-owned assets in the United States increased $411.0 billion in the first quarter, following an increase of $380.4 billion in the fourth.

[NOTE: 'assets' are DEBTS. This is increasing like crazy, isn't it?]

U.S. liabilities to foreigners reported by U.S. banks increased $85.7 billion in the first quarter, following an increase of $124.0 billion in the fourth.

[NOTE: our liabilities are not increasing as fast as last year but this is little comfort. Liabilities is fancy talk for 'savings'.]

Net foreign purchases of U.S. Treasury securities were $68.9 billion in the first quarter, up from $60.1 billion in the fourth.

[NOTE: they are buying MORE US debt!]

Transactions in U.S. securities other than U.S. Treasury securities shifted to net foreign sales of $20.1 billion in the first quarter from net foreign purchases of $110.5 billion in the fourth.

Net foreign purchases of U.S. stocks were $8.7 billion, down from $56.2 billion. Transactions in U.S. corporate bonds shifted to net foreign sales of $10.6 billion from net foreign purchases of $37.9 billion. Transactions in U.S. federally sponsored agency bonds shifted to net foreign sales of $18.3 billion from net foreign purchases of $16.4 billion.

Foreign direct investment in the United States increased $46.6 billion in the first quarter, following an increase of $55.7 billion in the fourth. The slowdown was more than accounted for by a shift from an increase to a decrease in net intercompany debt investment in the United States. In contrast, net equity capital investment in the United States and reinvested earnings both picked up.

Foreign official assets in the United States increased $173.5 billion in the first quarter, following an increase of $145.5 billion in the fourth.

Net shipments of U.S. currency to the United States were $0.9 billion in the first quarter, down from net shipments to the United States of $3.5 billion in the fourth.

[NOTE: Our trade rivals are HOLDING dollars, not getting rid of them!]

*************************************************

Investment income

Income receipts on U.S.-owned assets abroad decreased to $198.7 billion from $214.6 billion. The decrease was largely accounted for by a decrease in “other” private receipts (which consists of interest and dividends). Direct investment receipts also decreased.

Unilateral current transfers

Net unilateral current transfers to foreigners were $31.2 billion in the first quarter, up from $29.8 billion in the fourth. The increase was mostly accounted for by an increase in private remittances and other transfers.

U.S.-owned assets abroad increased $286.6 billion in the first quarter, following an increase of $153.8 billion in the fourth.

[NOTE: this is $125 billion less than foreign assets held in the US as we see above.]

U.S. claims on foreigners reported by U.S. banks increased $218.9 billion in the first quarter, following an increase of $115.9 billion in the fourth.

Net U.S. purchases of foreign securities were $38.8 billion in the first quarter, up from $4.2 billion in the fourth. Transactions in foreign stocks shifted to net U.S. purchases of $28.0 billion from net U.S. sales of $9.3 billion. Net U.S. purchases of foreign bonds were $10.8 billion, down from $13.5 billion.

[NOTE: this is far less than foriegn powers buying our securities.]

**************************************************

The U.S. current-account deficit--the combined balances on trade in goods and services, income, and net unilateral current transfers--increased to $176.4 billion (preliminary) in the first quarter of 2008 from $167.2 billion (revised) in the fourth quarter of 2007. The increase was mostly accounted for by a decrease in the surplus on income. In addition, the deficit on goods and net unilateral current transfers to foreigners both increased. An increase in the surplus on services was partly offsetting.

[NOTE: if we keep up this deficit, it will be around $700 billion this year which is totally insane!]

Goods and services

The deficit on goods and services increased to $174.9 billion in the first quarter from $173.8 billion in the fourth.

Goods

The deficit on goods increased to $211.0 billion in the first quarter from $208.9 billion in the fourth.

Goods exports increased to $317.8 billion from $303.2 billion. The largest increases were in nonagricultural industrial supplies and materials and in agricultural products. Consumer goods also increased.

Goods imports increased to $528.8 billion from $512.1 billion. The increase largely resulted from an increase in petroleum and products. Among non petroleum products, the largest increase was in nonpetroleum industrial supplies and materials.

[NOTE: we export more and more and more but import even more and more and more. We have to stop the rapid rise in imports. This especially means importing of oil.]

Bush was on national TV today yelling about how we must pump more oil out of our last oil fields. He wants us to consume all the oil we have and leave nothing for our great grandchildren. This is a catastrophe. We don't need to consume all the oil in America as fast as possible. We need to conserve this so we have something to pass onto our future progeny! We have to control our desire to eat ourselves out of house and home. And we can't make infinite bubbles that give us infinite wealth. This won't work and isn't working as the statistics obviously show.

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Comments

[Richard]

Elaine, great news coverage and analysis.

Today, yen carry trade investors are fleeing the BRICs and semiconductors as the Bank Of Japan cites increasing risks from global inflation.

ActionForex/CEP News/Kevin Franco reports that the Bank of Japan's monetary policy board is concerned about the rising risks to global inflation, according to minutes from the Bank of Japan's, BOJ, monetary policy meeting on May 19 and 20.

"Many members said that the recent rise in the prices of primary commodities was not only due to increased demand brought about by growth in emerging economies, but also to various other factors such as supply constraints, heightened geopolitical risks, accommodative financial conditions (Richard: Bank of Japan 0.5% lending, and US Bank lending used for investing in indexed commodity funds and futures contract speculation), and a 'flight to simplicity'," according to the minutes.

"Some members suggested that the Bank of Japan should pay attention to inflation expectations and price setting by some companies. Core CPI is expected to continue to trend higher and should be watched carefully.

Members also agreed that risks to economic growth both at home and abroad needed to be monitored as well."

"Although overseas economies taken as a whole continued to expand, downside risks remained elevated as the disruptions in global financial markets had continued and growth in the U.S. economy had been sluggish," read the text.

The bear market, starting disinvestment from stocks and bonds worldwide is strongly underway today.

It was on May 19, 2008 that the TAF, TSLF, and PDCF rally ended; and on June 10, 2008, that for all practical purposes the yen carry trade rally ended.

And today, the bear market picked up steam as those with yen carry trade loans sold off traditionally favored yen carry investments: the BRICs, EEB, Semiconductors, XSD, and Nasdaq, QTEC fell significantly in early morning trading.

Banks, KBE, and investment bankers, KCE, also led the overall US market down.

The EUR/JPY, which is the yen carry trade barometer, FXE:FXY, showed a minute downturn at 1.68.

The CRB commodities ETF, RJI, manifested a kind of shooting star, spinning top doji at 13.60 as base metals, JJM, rose 2% on John Simpson's BBC News that 'Copper Mountain', Mount Toromocho, is now in Chinese hands.

The gold ETF, GLD, was pulled up by the base metals action to 87.8, but on falling volume, suggesting that a fall lower to 85.4 or 84.5 is very possible.

Although gold could easily fall lower, I suggest that one dollar cost average a buy of gold at Bullion Vault.com, GoldIsMoney, and in the gold ETF, held in a trust account, not a brokerage account, all before July 4, 2008.

[Blunt Force Trauma]

"Bush was on national TV today yelling about how we must pump more oil out of our last oil fields."

Yes and monkey-boy wants all protected ares to become unprotected in order to start drilling for more oil to keep up this unsustainable Mc Mansion and drive thru Utopia. What a fool and so are those that believe him. Besides, how much oil will there be in those areas anyway? Enough to last a year? Maybe two? What about the expense and damage to those areas in the quest for more fossil fuels? The Alberta oil sands just dumped a major wad into a recreational lake. Yea. Great.

I do believe we are on to our way to our rude awakening and we will not enjoy it one bit. Especially those in major cities where life is decadent and convenient.

[Elaine Meinel Supkis]

I didn't know about the pollution of one of the lakes in Canada! One can read the news all day and miss tons of things.

[Blunt Force Trauma]

Actually it happened in 2000, but they are still fighting over it to this day.

Here is the CBC story on that:

http://www.cbc.ca/canada/calgary/story/2008/06/16/crude-leak.html?ref=rss

[Blunt Force Taruma]

Oops. I'm screwed up today. Grr. The company that is responsible for this event was previously fined in 2000. There. You'll read the story. You'll get it. I need more coffee.

And here's Decider-Commander: Bush urges Congress to end offshore oil drill ban:

http://www.reuters.com/article/newsOne/idUSWAT00968520080618

See? Monkey-boy.

[calvino]

Water depletion has been shoved off as an issue by the band new Stetson hat cowboy Harper. The tar sands area is called the Athabasca basin. The Athabasca river is dropping in levels due to the water consumption of the tar sands industry. The river is at its limit, more development will turn it into a trickle - see the once mighty Colorado as it empties into the Sea of Cortez. Many communities are located on the river and completely dependent on it for water. Yet 'investment pros' are counting on a doubling of production from the basin. So is Sam Bodman, Mr. Energy Secretary. The circus came to town, and it's been there for seven years.

[Gary]

I've been hearing that there will be a polluted sump/lake the size of Ontario and
Erie combined, to contain all the waste water
from processing/flushing that tar sand. Not to mention the increasing speed of depletion
of Alberta's gas fields used in cracking the
oil out of that filthy sand. That gas is used
in my home and others in the NW US for heating purposes.We're going to shiver in
the rain here for this bad craziness.

God, we're just a bunch of bone throwing apes fighting over the shinking pool of
water, er hydrocarbons, on the drought addled savannah. We have NO national purpose anymore that can mobilize us for emergencies like this to commit trillions --we dont have-- for alt-energy research. Something Carter was going to do until it became "morning in
America.

And now all those poowah poowah yuppies on
Nantucket Island will be looking at derricks instead of wind farms off of their pwecious
widdle island that no one else can afford to take the ferry out to.

Ha ha this is what they get for howling about wind farms marring the seacape off of
their little Xanadu.

So much for Scallops being affordable in the
near future. The Portagee fishermen in New
Bedford will go beserk. I feel for them but
not the Grahams and Clintons.

[Elaine Meinel Supkis]

Yes, the tar sands concept is totally crazy. I agree on that. But they will do many desperate things to keep the car status quo running.

[Bear of Little Brain]

Welcome to "Planet Easter Island"

[rockpaperscizzors]

North Dakota and Montana are the 'new' hot spots for oil/gas exploration:
Dakota Oil Fields of Saudi-Sized Reserves Make Farmers Drillers June 3 (Bloomberg)
the Bakken formation, a sprawling deposit of high-quality crude beneath the durum wheat fields of North Dakota, Montana and southern Saskatchewan and Manitoba....
And unlike the tar from Canada's oil sands, Bakken crude needs little refining. Swirl some of it in a Mason jar and it leaves a thin, honey-colored film along the sides. It's light - -almost like gasoline -- and sweet, meaning it's low in sulfur.

Best of all, the Bakken could be huge. The U.S. Geological Survey's Leigh Price, a Denver geochemist who died of a heart attack in 2000, estimated that the Bakken might hold a whopping 413 billion barrels. If so, it would dwarf Saudi Arabia's Ghawar, the world's biggest field
http://www.bloomberg.com/apps/news?pid=20601170&refer=home&sid=ayj1uo_gdNI4

Oil Rigs Begin Drilling in North Dakota’s, The Big Lake
Oil companies are now drilling beneath North Dakota’s big lake.
Oil companies are using advanced horizontal drill techniques to tap crude oil and gas underneath Lake Sakakawea.

State mineral resources director Lynn Helms says it’s a logical extension to the formation known as the Middle Bakken. The formation lies two miles under the surface in western North Dakota and holds millions of barrels of oil
http://paguntaka.org/2008/03/17/oil-rigs-begin-drilling-in-north-dakotas-the-big-lake/

Massive Oil Deposit Could Increase US reserves by 10x

In the next 30 days the USGS (U.S. Geological Survey) will release a new report giving an accurate resource assessment of the Bakken Oil Formation that covers North Dakota and portions of South Dakota and Montana. With new horizontal drilling technology it is believed that from 175 to 500 billion barrels of recoverable oil are held in this 200,000 square mile reserve that was initially discovered in 1951.
http://www.nextenergynews.com/news1/next-energy-news2.13s.html

[Gary]

Happy Daze are here again !

Somebody gimme a Cheezeburger !

Do do do do do do do...Livin' ina USA !

[Michael]

Elaine,

You are consistently confident that China has its current financio-political process and future strategies all worked out (some unilaterally, and some in conspiracy with Japan). In other words, they are in control of their trade, fx, and currency situations, unlike the U.S., Europe, and others.

I am not challenging this view, and in fact my own personal greatest nightmare is that China and Japan both will get tired of collecting increasingly worthless dollar paper and stop buyng our debt (or even worse, start selling what they've already accumulated).

However, to keep things balanced, let's not forget there is another way of interpreting Chinese policy and practice.

Roughly summarized, the contrary interpretation goes like this: The Chinese political economists and government bankers are not sophisticated capitalists (yet) - on the contrary, they are hesitant to take any risk and fear change unless it obviously and immediately meets some pre-established policy goal (such as increasing exports and domestic production or securing vital resources). Their guidelines are essentially "When unsure, buy Treasuries - and you will always be unsure."

[Crimson Ghost]

This headline tell us all we need to know about the Fed and its disdain for working Americans.

Poole Says Fed Has to Deter Inflation From Fueling Wages: Video
Bloomberg, June 17, 2008 09:51 EDT
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aFhz7hzCqm8s

[Elaine Meinel Supkis]

Michael, the Chinese leadership was very naive...in 1984. But that was many years ago. And also, they listened to me back then so they are CERTAINLY not naive at all. They know we are on the path to destruction and face bankruptcy. They knew back in 1984 that if they enabled our government to ignore trade deficits and government deficits, we would spend our way to bankruptcy.

This is their 50 year plan. We are in year 25 of this plan and so far, it is going 100% the way they figured. They lived with me, after all. And got to watch me rage about things for years.

[calvino]

Ghost.. regarding the Fed's indifference. With a hat tip to Kevin Depew. Elaine, this could be material for a future column as well?

quote:

According to AARP, from 1991 to 2007 the rate of bankruptcy filings by seniors increased 150%. for those 75 and older the increase was even larger, 433%. Meanwhile, the filings by people under age 55 decreased for all age demographics over the same time, -24% for 45-54, down 30% for 35-44 and down 46% for 25-34. How could this be?

The reason is simple: the majority of seniors are living on a fixed income while health care, food and energy costs increase even as interest rates have remained artificially low. Real interest rates have been negative for seven years. This punishes anyone who is risk averse and dependent on an income stream from deposited assets.

Yes Mike, keep telling yourself that the Chinese are naive. Also that you did a great job at State toeing that line.

[Gary]

RE: Comments on the Bakken Field in North Dakota. (I will post
again as soon as I hear from K.Deffeyes)

The Bakken stories are mostly hype:

1.The Bakken Formation, initially described by geologist J.W. Nordquist in 1953,[1] is an immense blanket of rock...

Ever heard of the expression it's "like trying to get blood out of a stone"?Well most of the the oil in the Bakken formation is not liquid,it;s locked up in shale rock.

2.Bakken serves as a significant oil reservoir,and until recently has long frustrated efforts to extract its oil, initially discovered in 1951.
Porosities in the Bakken average about 5%, and permeabilities are very low, averaging 0.04 millidarcies—much lower than typical oil reservoirs.[2]

If porosity and permeabilty are that low[5%] the oil is very difficult and costly to extract.A brief description of porosity:

Reservoir Rock - If a rock has enough porosity and permeability that oil or gas can flow through it, then the rock is a potential reservoir. Although the amount of pore space may not be very much, most rocks, in particular sandstones and conglomerates, have at least some porosity. If enough pores are present, the pores are large enough, and the pores are interconnected so that fluids flow through them (i.e., the rock is permeable), then the rock is a potential petroleum reservoir. With sandstones, a porosity of 18% or more is usually needed for an economic oil reservoir. Gas flows easier than oil, so as little as 12% porosity may be enough for a gas reservoir. Less porosity, perhaps as little as 9%, is enough if the reservoir is also fractured. Because of fracturing, limestone and dolomite reservoirs can have much lower porosities than sandstone, yet be capable of producing greater amounts of oil.
source:
http://www.geocities.com/mudsmeller/exploration.html

Its all in the EROI...Energy Returned on Energy Invested
W.Texas EROI was 500:1 ditto for Iraq/Iran/Saudi
30:1 for Prudhoe Bay
2:1 for Alberta Tar Sands
1:1 or less for oil shale....ie, Thermodynamically Impossible
Oil like water can flow uphill towards money only up until some
point. If the EROI is 1:1 or less....Impossible

[andrei]

LEAP/E2020 GEAB N°24

[Elaine Meinel Supkis]

Thanks for the technical clarifications, Gary. Yes, the extraction costs in the form of energy needed plus pollution grows greater and greater as we use up all the cheap, easy oil reserves.

[Canuck]

"Water depletion has been shoved off as an issue by the band new Stetson hat cowboy Harper"

That would be news to this group of scientists and regulators...

http://tinyurl.com/46kq4g

http://tinyurl.com/4b8h6u

[Canuck]

“I've been hearing that there will be a polluted sump/lake the size of Ontario and
Erie combined, to contain all the waste water
from processing/flushing that tar sand. Not to mention the increasing speed of depletion
of Alberta's gas fields used in cracking the
oil out of that filthy sand. That gas is used”

***

Lets see Lake, Erie and Lake Onatrio combined =

http://en.wikipedia.org/wiki/Great_lakes

2,120 cubic km’s of water

45,200 sq km’s area

***

Syncrude, the largest tailings pond in operation since 1973

http://en.wikipedia.org/wiki/
Syncrude_Tailings_Dam

http://www.infoplease.com/ipa/A0001334.html

540,000,000 cubic meters = 0.54 cubic km’s

greatest axial length 18km, worst case area 324 sq km’s

***

Overall tailings by 2010 (all operations)

http://www.dominionpaper.ca/articles/1480

1 billion cu meters = 1 cu km

[Gary]

Mea Culpa on the size quote of the Alberta
Tar Sands sump. It will only be the size
of Lake Ontario

From Richard Heinberg:

""The primary method used to process oil sands yields an oily wastewater. For each barrel of oil recovered, 2.5 barrels of liquid waste are pumped into huge ponds. In the Syncrude pond, 14 miles in circumference, 20 feet of murky water floats on a 130-foot-thick slurry of sand, silt, clay, and unrecovered oil. Residents of northern Alberta have engaged in activist campaigns to close down the oil sands plants because of devastating environmental problems, including displacement of native people, destruction of boreal forests, livestock deaths, and an increase in miscarriages.

"Replacing conventional crude with oil sands to meet the world's energy appetite would require about 700 additional plants the size of the existing Syncrude plant. Together, they would generate a waste pond the size of Lake Ontario. While oil sands represent a potential energy asset for Canada, they cannot make up for the inevitable decline in the global production of conventional oil."

[Canuck]

Tailing equivalencies to Lake Ontario, a patently absurd assertion, stand with it if you must.

They'll never be 700 plants in operation

I was talking to some workers constructing modules in south Edmonton last week, production is on slowdown. They're running out of pipe. That's not even taking into consdieration environmental and economic factors. These factors will prevent viable oprations on the scale suggested.

The assertion that oil sands operations do not fall under environmental protection legislation and scientists/regulators are ignoring and obfuscating environmental impacts in service of economic and political expediency is also false.

I will admit the scenario’s appeal to frothing hysteria however.

[Gary]

Yea, and the "regulations" under
Harper W. Bush are really a thing of
beauty, eh ?

Just like the "regulations" now enforced
by our own new and improved corporate friendly EPA, eh ?

I tink you Canucks are getting hosed by
your own neo-conz now and not ours anymore !

Vive le Canada

[Buffalo Ken]

yeah, but I betcha the "canucks" come out of it way before the us of a does.

they are not nearly in as deep as the us of a is.

[Buffalo Ken]

of course, that is just a "mans" bet. no money - we are just talking here. You know.

But shit, there needs to more discussion and less of a lot of things....

As Alanis Morrisette would say...."the fire trucks are coming round the bend"...."you learn".....

[calvino]

Canuck, the link did not work. Your reliance on the integrity of your regulators is your business. I know that one Christine Todd Whitman, she had some minor post at the DEP in the USA, sent rescue workers and thousands of volunteers to dig through asbestos filled rubble while assuring all that no hazard was present. Now that the disease is taking its toll, the DEP says, nothing was wrong. And if you think that cowboy Harper is not for sale, look at the handover of PWI to Arab interests, right before the big oil spike. When you accuse others of fomenting hysteria, make sure that you are not fomenting somnolence.

[Buffalo Ken]

somnolence - hell yeah, there has been a bunch of that going on around lately....

SLEEP......walking..........

tv watching and all 2
gethor...brain-
less behaving.

Lets just get inwit. No more agenbite.....

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