oil company profits tax

Excerpt:

Plant manager Jimmy Stephens says this time last year, the Durant biodiesel plant was close to shutting down.

"We were in production last year. Now the good news is we survived, where most companies in Oklahoma and the surrounding states have not because of high price of soy bean oil," Stephens said.

Stephens says in 2007, the price of soy bean oil soared above five dollars a gallon, making it impossible to turn a profit. So, production stopped last year.

Since then, plant officials say they have been researching ways to get the plant producing again and make money in the process.

"Used restaurant grease is less than half the cost of soy bean oil, but we have to find a way to refine it, and run it through this plant. So that's what we are doing right now is experimenting ways to refine used restaurant oil," says Stephens.

It comes a whole lot cheaper but there's just one problem, says Stephens. "The plant was originally designed to run soy bean oil and now we have to adapt the plant to run used restaurant grease, fish oil and other alternative feed stocks."

http://www.kxii.com/news/headlines/15861982.html

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Brand X wrote:

No I called every supplier in the US.

I originally was talking about suppliers cost..which is again about $5.00 per gallon currently.

If biodiesel can be made so cheaply from waste vegetable oil, why are the supplier's costs so high?

Quote:

Even regular formula gasoline and diesel doesn't cost the same in every area

I am aware of this fact. Historically gas prices in my part of Florida have been lower than the national average. But ever since Katrina prices here have been close to the national average (we are at $3.12 a gallon for regular gas right now). This tells me that gas prices have pretty much become homogenized across the nation so the costs of different formulas don't influence the retail costs as much as in the past. But that being said, it doesn't explain how something that can be made for $0.50 a gallon can cost the $5 you claim. I think you are talking about prices that are dictated by retail market demand rather than production costs. If biodiesel is $5 a gallon, it's likely due to price gouging.

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Let me take a run at this one flaja.

According to Bloomberg soybean futures today are $0.6742 a pound. The density of soybean oil is 0.92 g/cm^3. Since this is almost the same as specific gravity, soybean oil has a mass of 7.67 pounds per gallon and the feedstock to the biofuel plant using virgin soybean oil is $5.17 per gallon.

Now assuming that you can get used cooking grease, also soybean oil for free, you may be able to process it for $0.50 per gallon if you do not consider capital costs or labor (Utility and processing costs only). So I'll take a grab and say if you can get virgin soybean oil bases biofuel at $5 a gallon you could be getting a cut rate price.

Rap

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Good luck, raprap...I give up on getting through the thickness of that skull.

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Brand X wrote:

Stephens says in 2007, the price of soy bean oil soared above five dollars a gallon, making it impossible to turn a profit. So, production stopped last year.

Is this high price of soybean oil due to its demand as a food crop? If so the price as a fuel will come down in the future. Soy isn't the only vegetable oil that can be used as diesel fuel and as the demand for alternative auto fuels goes up, more oil crops will be planted and this extra supply will lower the price to consumers.

Quote:

"Used restaurant grease is less than half the cost of soy bean oil, but we have to find a way to refine it, and run it through this plant. So that's what we are doing right now is experimenting ways to refine used restaurant oil," says Stephens.

If it's so complicated and expensive, how can so many people be making biodiesel in their garages and backyards?

Quote:

It comes a whole lot cheaper but there's just one problem, says Stephens. "The plant was originally designed to run soy bean oil and now we have to adapt the plant to run used restaurant grease, fish oil and other alternative feed stocks."

Is this plant making biodiesel or using it as a fuel to make something else? My understanding is that the process of turning waste food oil into biodiesel is very simple and requires very little in the way of equipment and it uses common, readily available reagents.

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Brand X wrote:

Good luck, raprap...I give up on getting through the thickness of that skull.

Your insulting tone is uncalled for. I have questioned only your facts, not your intelligence. But instead of trying to clarify what you claim to know about this issue (you haven't even acknowledged the data I posted that is counter to what you claim) you attack my intelligence. Just because the facts that I have at my disposal do not support what you claim to know, does not mean that I don't understand what you claim to know.

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[quote="flaja

Quote:

"Used restaurant grease is less than half the cost of soy bean oil, but we have to find a way to refine it, and run it through this plant. So that's what we are doing right now is experimenting ways to refine used restaurant oil," says Stephens.

If it's so complicated and expensive, how can so many people be making biodiesel in their garages and backyards?[/quote]

Supply and demand.

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Brand X wrote:

Good luck, raprap...I give up on getting through the thickness of that skull.

Earlier in this thread I equated the Energy terms BTU with Kilowatt hour and determined that utility electricity at $0.08 per kilowatt hour was about the same as gasoline at $3 per gallon. I was chastised for equating energy from fuel to electrical energy. As Billy Pilgrim would say--"So it goes."

Rap

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McGentrix wrote:

[quote="flaja
Quote:
"Used restaurant grease is less than half the cost of soy bean oil, but we have to find a way to refine it, and run it through this plant. So that's what we are doing right now is experimenting ways to refine used restaurant oil," says Stephens.

If it's so complicated and expensive, how can so many people be making biodiesel in their garages and backyards?

Supply and demand.[/quote]

Not to mention the oil lobby.

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farmerman wrote:

One of the problems is that SEC doesnt permit reporting the really BIG reserves of Tar sand and "Oil shales" out there in US and CAnada. The US alone has enough "oil shale" to keep us going flat out for over 120 years. (Only problem is that this would mena a learger dependency on deisel since oil shales are actually wax (keragen) shales that have to be esterified and turned into a diesel fule (complex ester). CAnadas tar sand s will soon, I believe, be reported as a petroleum reserve and that will add another 170 Billion Barrles. PS the US oil shales would produce about 2.4 TRILLION barrels of diesel.

Oil companies dont want to see stuff like this on the market so they can keep their prices at record returns.

Ive worked for major oils and was paid in overrides, I still bite the hand that fed me. These guys would sell their kids.

Ive invested in a number of small energy saving goodies at the farm and , SInce I have a large S facing expanse of barn roof , Ive been looking at solar voltaic for 24 volt system use in the house for lots of things. Im having a solar guy come in mid MArch and Pa offers a nice tax incentive and I hear that, (with a new president who isnt a meat puppet of big oil) the tax incentives would quickly be restored and probably made retroactive a few years. (Least my congressman sez so and hes a GOP)

I pick this post as an example of the general lack of understanding the problems of energy in this country.

Example, oil shale, yes there is alot of oil, but it is all buried, it is in a form that is tightly bonded into shale, very difficult to extract economically. Companies have been researching this for decades, and any one of them would love to find an economically viable method to extract the oil. Ideas, research, and pilot programs range from in-situ extraction to mining. All methods are costly, and at this very moment as oil prices rise, oil shale may finally become viable, but even so, only a small fraction of the oil entrapped in the resource can be extracted by any of the methods. Several companies and the government have all spent a considerable amount of money studying and researching the resource, reserves, recoverable reserves, and methods of extraction. Additionally, more energy than used to produce conventional oil sources is required to extract, and water is another commondity that is needed to do it, and water is a problem in the arid west where the resource is located, primarily in northwest Colorado. And as always, the environmentalists fight the development of these resources at every turn, seeking to make the process of development difficult to impossible, and this is on top of the technical problems of producing the oil.

It would be nice if people would become a bit more educated on some of these things before accusing companies of wanting the price to go up. Fact is, oil is a commodity bought and sold on the world market, and energy companies are simply competing in the market. Welcome, the water is warm, to anyone that wishes to make their fortune in energy. At least companies do something productive for their profits, whereas the government does nothing and takes a huge portion in taxes, with simply the stroke of a pen. Last point, energy stocks are held in retirement accounts of millions of Americans, such as teachers, firemen, and workers in all kinds of industries. If they make good profits, I would advise folks to go buy their stock instead of complaining.

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Okie, My company was one of those that did recoverability research in the 1980's when the Green River reserves were only thought to be about 1.2 Trillion barrels.(with a 70% recoverability). The shales have , since been increased in their reserve estimates due to deeper drilling .

Right now, the impediment is primarily environmental and the fact that oil companies are not in any hurry to once again lower the costs for petroleum and have them lose profits. WHen oil prices are maintained high , and the demand met, why screw with that?

The oil shale information centers data sheets start with THIS

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PS, even if recoverability were only 70% (and the fact that the reserves are at 2.4 trillion barrels equivalent) Tht would yield enough petroleum to meet existing needs for about 500 years..

Also,Im afraid that youre dealing with some very old chestnuts there okie.

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The M King Hubbert SChool of PEtroleum geo and engineering at Colo School of Mines has provided us with this item

Quote:

Impressive resource figures. The numbers on oil shale resources around the world are
nothing short of staggering. Most of the following estimates are drawn from Duncan and Swanson
(1965) unless otherwise cited. Oil shale deposits of Late Permian age in southern Brazil have been
estimated to contain 800 billion barrels oil equivalent in shale that yields 10 to 25 gallons per ton, and
3.2 trillion barrels in possible extensions. Resources that yield 5 to 10 gallons of oil per ton were
estimated to hold 4 trillion barrels of oil equivalent in possible extensions. A 200 square-mile Middle
Tertiary lake basin deposit in southwestern Montana has approximately 1000 feet of sediments which
have not been appraised in detail but may contain tens of billion barrels of oil potential. Weeks (1960)
stated "possible potential resources" of higher grade oil shale in the U. S. are approximately 2 trillion
barrels of oil equivalent, and 12 trillion barrels in the world. Duncan and Swanson (1965) estimated a
world oil shale resource of 2.1 quadrillion barrels.
Estimates of the volume of potential oil in the U. S. shale deposits have grown steadily since
they were first studied in detail by the USGS in the early 1900's. Duncan (1981) states "The oil shale
deposits of the United States can be considered collectively as an enormous low-grade source of oil,
hydrocarbon gas, or solid fuel. Deposits with an estimated yield of 10 gallons or
more oil per ton of rock contain more than 2 trillion barrels; their possible extensions may contain an
additional 3 trillion barrels; and, speculatively, other unappraised deposits may contain several times as
much oil."
HC#98/

The issue of recoverability is no longer a problem . Oxy's efforts and China have shown that its possible to produce sizable quantities of the diesel /jet fuel

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Fm

In the late 70s I was going to go to the graduate school at the School of Mines (ChemEng). Their research interests at that time was oil shale extraction and coal liquefaction. Unfortunately, or fortunately depending upon your point of view, becoming a new father led me to a job in the nuclear industry and abandonment of graduate school in general, and Golden in particular, but I still remember reading some of the prospectus for oil shale removal.

One of the proposed methods was to strip the shale and pop the rock in a retort (if done correctly self fueled). Popping was the term used because the rock increased in volume by a factor of 50% as it was processed. Even back then that was an environmental concern because between extraction, processing and recovery one mountain tended to become two. Considerable when you're dealing with the real estate around Dinosaur and Rock Creek. More interesting and less environmentally insulting was insitu extraction. In this you tunneled a grid and placed heat sources in alternate tunnels using the other tunnel grids as collection points. The concept was that the oil from the shale would migrate away from the heat sources and into the collection basin. I don't think recovery would be anywhere near 70%, but it would not create a highly visible environmental insult. A far more interesting, and personally more satisfyingly utile, modification of this second insitu extraction would use low yield thermonuclear devices as heat sources, a strange side benefit of technologies developed from underground testing. In this one a main tunnel would bored into the shale deposit, followed by a lattice of smaller collection tunnels surrounding the main tunnel, a device would be buried in the main tunnel which would then be plugged with chat, mud and muck. The device would then be detonated creating a hot spot to boil the oil out of the shale, which would then condense in the cooler collection tunnels. The advantage with this insitu retorting is that the mountain would stay in place with minimal environmental impact, and small thermonuclear devices are relatively inexpensive and readably available---the disadvantages was selling the public on the use of thermonuclear devices as a construction explosive, and nonproliferation.

Anyway, the easing of the 70's oil crisis set both the oil shale recovery and coal liquefaction on the back burners as profitability fell (If I remember right the profitability of these technologies was oil at $30 a barrel based on 1980 dollars).

Rap

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we developed the "Oxy" method of in situ retorting. A number of our contractors were U MInes Faculty.

The insitu retorting would cut the recoverability to a bout 50% (a WAG) and the shale would be used as fuel to convert. ESterification would be the same as with petroleum (or soybeans).
Oxy had also set off 2 small nuclear "appliances" for fracturing the rock. They did this at NTS I thin k. They had more problems with creating glass by the blast.

The reserves have been increased in US by another trillion barrels or so (I just looked this up aon a GSA site) so, even if we have to use the oil shale to react the oil shale, its no real impediment.

Between Brazil's Prmian field and our Green River, and fields in Russia and China (also a small one in Tennessee, the Deep Ordovician) the update on the Duncan REserve estimate is a wee bit more than 10 TRILLION recoverable barrels of an oil equivalent.

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FM

The wikipedia article on Oil Shale Extractionis interesting if quite brief (probably for reasons of propriety). Nevertheless most of the US technologies mentioned, both ex situ and in situ, date from the 70s with the exception of a Shell pilot plant that started in 2000. What is interesting is the economics of scale that at the time the wiki article was written a large production facility wouldn't be initially profitable until light sweet crude was in the range of $85 to $95 per barrel (2005 bucks). With that benchmark costs are being achieved perhaps my services would be appreciated.

Since I am still in need of employment perhaps a trip to Colorado is in my future, both to satisfy my present curiosity, a need for meaningful employment, a desire to see a winter that isn't dominated by ice storms, to be nearer my children who seem to have migrated to that state, and to ski and flyfish.

Rap

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farmerman wrote:

Okie, My company was one of those that did recoverability research in the 1980's when the Green River reserves were only thought to be about 1.2 Trillion barrels.(with a 70% recoverability). The shales have , since been increased in their reserve estimates due to deeper drilling .

Right now, the impediment is primarily environmental and the fact that oil companies are not in any hurry to once again lower the costs for petroleum and have them lose profits. WHen oil prices are maintained high , and the demand met, why screw with that?

The oil shale information centers data sheets start with THIS

Thanks, and my apologies for characterizing your post as uninformed, you are obviously very informed on this, but I still think unfair in terms of saying the oil companies are holding the oil shale for later simply to drive the price of oil up now. I also worked for a company that had oil shale holdings, and personally knew the engineers and people working on this back in the 70's and early 80's. How many booms have we observed with oil shale now? There is a reason this has not caught fire yet. It is called "economics." The technical problems and the associated costs have simply made it unadviseable to go ahead with this, as the cost of production has not yet competed with conventional oil. Maybe at the price it is now, but what if the price drops below $100, then oil shale is marginal at best, and by the time the projects get off the ground, the price causes shut down of the project, which is what has happened over and over again. See the following article.

http://www.vaildaily.com/article/20071103/NEWS/71102022

As conventional oil reserves tighten and become costlier to produce because of where they are being produced from, oil shale will eventually become viable. And by then, perhaps the technology of extraction can be further improved and economized.

Oil companies do not like to lose money on producing oil, and that is the primary reason so far that they have not dived headlong into producing oil shale. This could change and probably is changing as we speak, that is the ability to make money on oil shale, but it will be a gradual build up of the industry, or a phase in period, as economics allow.

Also, I think the 70% recovery is too high to hope for, as you point out in regard to in-situ, which is the likely route of production. If you mine the shallowest and richest oil shale, it could be a higher recovery, but mining carries with it a whole set of problems by itself.

Last point, environmentalists in conjunction with Democrats will oppose the production of oil shale. They won't even allow us to drill in Alaska, which is a piece of cake in terms of land needed and a few oil wells poked into the ground, with minimal impacts. That is a huge resource being ignored at this very moment. In comparison, building oil shale recovery areas is far more intrusive and complicated, so I personally thinks it makes alot more sense to first produce conventional oil in Alaska, and in offshore areas that have been so far off limits. Oil production is not at all incompatible with the environment. This, I think is a myth perpetrated onto us by the tree huggers.

It is nice to have this huge ace in our hand to be able to play when appropriate and economic, and isn't it nice that one of the largest oil shale resources in the world are right here in this country.

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raprap wrote:

In the late 70s I was going to go to the graduate school at the School of Mines (ChemEng). Their research interests at that time was oil shale extraction and coal liquefaction. Unfortunately, or fortunately depending upon your point of view, becoming a new father led me to a job in the nuclear industry and abandonment of graduate school in general, and Golden in particular, but I still remember reading some of the prospectus for oil shale removal.
Rap

Thanks for the very pertinent information on this. I also spent time in the nuclear industry, before the tree huggers killed the expansion of electrical generation via nuclear in this country a few decades ago. If they had not been allowed to do that, we would be quite a bit better off now than we are.

If the public was properly educated and informed on the issues of energy, we could make a whole lot better decisions than we do now. Now, we get 30 second sound bytes, and perhaps the drive by media will interview some poor slob at a gas station complaining about oil company profits and the price of gasoline, so what can we expect out of the politicians, not much intelligence thats for sure. And the government confiscates a large percentage of oil company profits already for doing little or nothing. If a Democrat is elected, they will confiscate more profits, at the expense of millions of shareholders dividends and stock price as well as future development of energy, to waste on government funded research boondoggles that will be redundant and inefficient at best.

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By the way, one of the funniest things you read from time to time is the idea that cooking grease from restaurants is the answer to our energy problem. Laughing

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okie, we make biodiesel and use mostly donut oil, restaurant chicken oil and other greases. Our technician has the responsibility of scarfing the oil, blending it all in the pilot scale lab (Its a huge empty warhouse that we rent). Then he filters it through a large pressured "Gooch" filter and then runs a methoxylation test with NAOH and methyl acohol at 150 F. Its a pretty much easy process but, you are correct, we are starting to see competition for the waste greases and oils , one tried to charge us for the grease even though he handles it as a Solid Waste product and it goes into a lrecycling facility.
Theres a finite number of donut makers out there. and the nation would have to supplement its energy needs by an obesity plague. We are able to meet about 35% of our comapnies energy needs , 2 drill rigs, 4 trucks, 2 sampling vans, 1 geophysics rig

RAp, the ongoing production research and develoment for oil shale and tar sands is going on up in Canada as we speak. The techniques of hydrofraccing and "Jackback" fracturing are quite mature techniques these days. Hydrofraccing can open the layers between the kerogen containing stuff.

Stateside, They still only have a few token facilities run by Oxy in Wyoming , Montana, and NE Colorado. Now, the real thrust in energy production, is coal bed gasification and diesel/JP production from coal. Coal is keragen also but its easire to frac and the costs are below oil shale retorting. SO, I imagine that Coal bed gas and JP will take over for a while.

The "price" of petroleum is actually adaily response by futures traders. Oil doesnt cost anymore to produce today as it did 3 years ago . So, oil companies dont have any "dog in the fight" to bring prices down.

A resource has the ability to drive its costs up or down directly poportionally to the reserves of the resource(or, in the case of diamonds, forceably keeping diamonds off the market). Oil is sorta going through a "diamond" valuation

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oil company profits tax

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