Otto does PREC

A few interesting Pacific Rubiales items recently, picked up by the always attentive Otto at IKN. Go over there, he’s better at this blogging stuff than I am.

For what it’s worth I watched the video he linked there, and I thought it desperately needed an edit. And I hate, hate hate documentaries with looming drama music. But if for nothing else, it’s worth watching the video to see the spectacular video of the Colombian llanos that are being exploited for both petroleum and palm oil these days. Good to know what kind of paradise you’re wrecking every time you fire up the old V-8.

Chile going renewable

This is what we like to see. Here is January’s power mix in Chile, with year-over-year change in the right-hand column:

The power generation mix in Chile’s main electrical grid, the SIC, has changed a bit over the past year: Solar generation up 22-fold, wind generation up 3.5-fold, hydro generation up 10%, and thermal — meaning fossil fuels — down 6%. Source here.

Add to that what happened in February. Note that solar power quadrupled month-over-month.

According to Business News Americas, the upshot is that February’s solar energy output in the SIC grid increased more than 100-fold over a year earlier. 

Much more solar and wind power has been approved for construction in the country, so next year the GWh from solar should be even higher.

Colombia oil stats get less transparent

Colombia’s Agencia Nacional de Hidrocarburos, the agency that regulates the oil and gas industry, has a long tradition of publishing useful statistics about oil and gas output, oil wells drilled, the extent of seismic exploration — lots of info. Here’s a sample. But lately, the data hasn’t been coming out like clockwork every month. The June numbers failed to show up on schedule so at the end of the month I called the agency. They said they didn’t publish such things. I tweeted about it and all was set straight.

July got posted at some point. August output numbers appeared in early September and the full August report appeared on the ANH website Oct. 4. That same day, the mining ministry put out September output numbers, but the ANH never updated its spreadsheets. Last week, the oil ministry released October output figures — a big gain for once. But on the ANH website, there’s still no sign of even September figures — either preliminary output numbers or the full report. I mentioned it to the ANH on Twitter and they said to get the data from the mining ministry. It makes me wonder why they have stopped publishing. It’s annoying.

Derwick Associates requests censorship, I request details

I couldn’t agree more. Photo I took today in Bogotá.

Derwick Associates is a Venezuelan engineering company that has had incredible success in the three years since it was founded, gaining hundreds of millions of dollars in contracts to procure generating turbines and other materials and to then build electricity plants. Press reports have raised questions about exactly how Derwick got so big, so fast. My colleague Cesar Batiz at Últimas Noticias wrote 14 months ago that the company had gotten very big contracts despite a lack of experience and the relative youth of its managers. He later included Derwick in a larger article about suppliers of electricity equipment that appeared to be overcharging. Both times, he tried to speak with the company, but wasn’t able to get them to reply. Later, the Devil’s Excrement blog ran a piece summarizing Batiz’s findings and adding a curious fact — the company, despite doing such big business, had registered a Florida office that was in a drab office building in a remote area of Fort Lauderdale, by the airport, with neighbors that included US security agencies.

The Devil later took down his post without explanations. I reposted it here, for no reason other than, as I said at the time, I dislike memory holes. I would never have posted it if it seemed that there was anything untoward about the note.

A few weeks ago, I received an e-mail (5 mb PDF) that opened with a letter from Derwick’s lawyers:

I couldn’t agree more. Photo I took today in Bogotá.

The lawyers write about Wiki Anti-Corrupción (WAC), a website I have previously recommended as having a lot of interesting if ill-supported information about corruption in Venezuela. Derwick has sued WAC for defamation in local court in Miami, demanding “not less than $200 million.” They kindly included a copy of their suit (here is the lawsuit on its own, without attachments). They say WAC defamed Derwick and its leaders with claims of money laundering, fuel smuggling, coltan trafficking, and a whole list of other claims. To be clear here, nobody claims that WAC has anything to do with Devil’s Excrement or with me. The lawyers continue, referring to the Devil’s Excrement story I reposted:

The Article — which contains certain of the false and defamatory statements concerning Plaintiffs that appear on the WAC Website and are the subject of the Action — remains accessible on your website.”

But they don’t tell me what those false or defamatory statements might be. They go on:

The original author of the article has removed that page from the [Devil’s Excrement] website after being informed that the page was littered with false and defamatory information about Plaintiffs. Accordingly we request that you also remove the Article.

So there you have the background to my very simple, and I think diplomatic, response:

=======

Mr. Torres:

I received your note of Sept. 21. If you see something on my website that you think is false or defamatory, please identify the problem as specifically as possible and support your position.

We — you and I, together — will then work out how to deal with the problem. A quick correction or a public chance to reply is often a better solution. Deletion is a last resort, and one that often doesn’t work anyway.

So for starters, just send me a copy of the letter you sent to Devil’s Excrement, ok?

Thanks,
Steven
=========

Wiki Anti-Corrupción’s very general response to the case is here.

Venepiramides also weighs in.

For my earlier, rather less diplomatic response, see Twitter.

UPDATE: I hadn’t seen Alek Boyd’s much more complete article about the nice people at Derwick.

Venezuela rationing changes – we’ll see

I wrote a lot about the rationing changes in Venezuela, and WordPress.com, which I don’t recommend, just lost it all. But the short answer to Jakob’s question:

In Venezuela, Chavez is saying that the power-rationing that has been necessary for the last few months is coming to an end…but where is Setty to tell us what is really going on??

is, so far, it’s unclear that this will make a whole lot of difference. If the basic industries and Caracas are going to stick with their savings programs, the only effect of these new measures is that it will free people psychologically to waste even more. But as I wrote before, the rolling blackouts didn’t save energy, and in fact the areas under rolling-blackout rationing all increased energy consumption. A lot.

The best part of this is that the courts will be back in service for more than three hours a day.

The bad news is that the wasteful habits people developed under the blackout rationing system are likely to stay. Without blackouts, that means power use is likely to increase even more. And if they get rid of the rationing for Caracas and the basic industries, Guri’s recent slight recovery is likely to slow, and my call of a bigger crisis in 2011 will become almost a certainty, with or without an unusually rainy season.

Meanwhile Igor Gavidia, who is apparently more or less in charge of the power rationing, says that the power waste in Venezuela is a result of capitalism encouraging waste. Spanish speakers with 18 minutes to spare on some prize demagoguery are encouraged to listen.

1 year later

Tarry wrack washes against the shore of Lake Maracaibo, the result of the constant oil spills into South America's second-largest lake. October 2009

Maracaibo’s maritime industry was nationalized a year ago. For workers, this was good news, as many provisional and part-time workers from private companies became full-time PDVSA employees, with a relatively good pay and benefits package. Unfortunately the result has been less favorable for the industry.

It used to be that when PDVSA, one of its joint ventures or a contractor needed, say, a crane, hauled out onto the lake to do a bit of maintenance work, they would call around to different barge companies, see who had time to do the job, and get the crane. Now, everyone calls the same number: PDVSA Servicios. PDVSA decides what job is most important and dispatches vessels based on the company’s own priority list. In theory this should be OK, as it’s in the company’s interest to conduct routine and preventative maintenance, to boost oil output, to rescue failing wells. But according to people who work at the lake, that’s not what happens.

Instead, they say, PDVSA hasn’t even maintained the vessels themselves. With a smaller fleet and a less contingent workforce, the company hasn’t got the boats or staff to do all the work that needs to be done. They prioritize emergencies above preventive maintenance, so it happens that companies send crews out to do maintenance work and then have to sit around waiting for hours or days for a piece of equipment to be hauled out onto the lake.

PDVSA vessel speeds past collapsing high-voltage tower on Lake Maracaibo, October 2009.

BP spill lessons for Latin America?

Three weeks ago I was snorkeling over some of the best live coral I’ve ever seen at Puinare, a half hour in motorboat off the beach in Puerto La Cruz, Venezuela. I was in awe at the tens of thousands of blue minnows, the plentiful parrot fish, the little christmas-tree-shaped organisms that disappeared in a blink with the slightest disturbance in the water. In March, 131 oil tankers loaded up with cargo in Puerto La Cruz and the adjacent port of Jose and steamed out to sea. Thirty miles offshore, PDVSA just completed its second and third wells in the Mariscal Sucre natural gas development project. And in waters almost as lovely, a few thousand km south, Petrobras and partners are drilling the biggest oil find in decades, in conditions similar to the Gulf of Mexico.

The big BP oil spill in the Gulf of Mexico is a reminder of what can happen when oil and water mix. This is the same kind of drilling that is supposed to be the future of Brazil. Shallower-water offshore reservoirs are under development or exploration not just in Venezuela but in Colombia, Guyana, Suriname, Argentina, Chile and Peru — that is to say, every South American independent state with a coastline, other than Ecuador — plus Mexico. You also find talk, if not much action, about offshore drilling in Cuba, Aruba and Barbados, among other islands.

So what’s the lesson here? Obviously, the U.S. screwed up its regulation and control. Is there anything that South America and the Caribbean can learn from that error?

The U.S. has a big, widespread and powerful environmental movement with the money and technology to monitor water quality independent of the government. This is generally absent in Latin America.

The U.S. has laws allowing independent environmental lawsuits against polluters, without the cooperation or even notification of state authorities. I’m not aware of anything like that here.

Oil companies operating in the U.S. are private, while all of the biggest explorers in South America and Mexico are state-controlled.

Given these differences, I’d say that the biggest lesson is probably the need for extreme independence of environmental authorities and protection for whistle-blowers. Not likely to happen.

One advantage in South America and Mexico is that private oil companies are used to being pushed around, while in the U.S. they are used to having control. Maybe state oil companies should be treated the same way.

Electricity update – opportunity cost

Use of diesel fuel in Venezuelan power plants jumped in March to a record 66,000 barrels a day, up 33% year over year, increasing the opportunity costs of lost diesel sales.

Daily diesel use in power plants (from CNG) multiplied by spot diesel price in U.S. in first week of month (from U.S. EIA), minus $5/barrel shipping cost.

The fuel was used to keep the country’s lights on as hydro dam managers cut power generation 5% to save water after a drought. Conservation programs imposed by the government had little effect, as year-over-year electricity use fell only 1.5% year over year. Electricity use rose to 316 gigawatt-hours a day in March from 303 in January and 309 in February.

The opportunity cost — the money not earned by a dealer that dips into his stash — of diesel consumption rose by about $1 million a day to $7.5 million a day in March, the highest since soaring diesel prices in 2008 meant Venezuela was temporarily sacrificing as much as $9.3 million a day by burning diesel in power plants.

Use of fuel oil fell slightly from February to 54,000 barrels a day, still 11 percent higher than a year earlier. The opportunity cost of fuel oil is lower, as it is a less valuable substance.

If Venezuela reaches the 100,000 barrels a day forecast by the energy ministry in a document that Reuters got a few months ago, and spot diesel prices remain around the $2.89 a gallon seen at the beginning of March, Venezuela will be sacrificing $11 million a day by burning diesel in power plants rather than exporting the fuel.

This can be seen as a lot of money: $10 million a day could build a lot of nice schools, or import a lot of water-heater timers and water-conserving shower-heads. Or it can be seen as less than 1% of GDP, an insiginificant sum compared to the instability that would result from widespread blackouts.

OK, worry if you like

A few posts ago, I upset a Venezuelan reader by suggesting that we probably don’t have to worry about massive electricity outages in 2010, what with rain arriving and Guri Dam’s water level starting to rise. Since then, nationwide power use and hydropower generation both jumped to 1-month highs, the streams feeding Guri settled back to well below their normal rainy-season levels, Planta Centro turbine 1 went back out of service after only one day, and Guri’s water levels fell to 248.66 m above sea level, 13 cm below the prior bottom April 16. So, worry away.

However, collapse won’t happen this year, unless the rains just quit. Water levels have declined 8.66 cm a day for last 3 days. That works out to a meter every 11.5 days, and we have about 7 meters to go before things really fall apart nationwide. Even if the decline speeds up, we have a couple months of slack in there. The problem comes at the end of the rainy season, if we still have only a couple months of slack.

The refinery outage frenzy

PDVSA’s refineries are having problems. This is good news for companies that still have operating refineries, as profits rise when there is less competition, but bad news for consumers of diesel and gasoline. Not to mention bad news for PDVSA, which needs to get all that gasoline and diesel from somewhere.

The latest from Isla in Curacao is that it won’t be back til the beginning of May. I still say that’s wishful thinking. When it went down at the beginning of March, they said it would be at least two weeks til it was fixed. Then April 1, then April 15. From the start, I have said it would be June, and I’m sticking with that. I have never been there, the people I know there have no special information, and I originally didn’t even know which piece of equipment had broken down. I just know how these things work. As soon as we knew they would have to order equipment from overseas, it was clear that it would be months.

This just bums me out. After the weekend fire at the Cardón refinery’s catalytic cracker, one of the most complex parts of the refinery, they are saying all is under control and it will be up and running in a week. They had a fire at the same damn unit less than a month earlier, at which time they got it up and running quickly. This isn’t an old broken-down unit either, this is a piece of equipment that was just rebuilt in a $650 million project that took well over a year.

Meanwhile those projects that are operating are not well maintained. For some reason Youtube is rejecting my video I shot a couple weeks ago from the bus going past the upgraders at Jose, where tarry crude is refined into something that can actually flow at room temperature. The flaring was out of control. A couple stacks had constant 5-meter orange flames illuminating the night, and another was like a dragon, exhaling a raging burst of fire every three seconds.

This is where your fuel comes from. Ride a bike!