Will the trade war hurt US project builds? Not if the US does it right.

[Jan van Eck + 7,558]

IN an article posted today on Oilprice.com, analyst TSVETANA PARASKOVA  quoted some oil industry executives that stated pipeline costs would escalate with the steel tariffs (true) and that it would hurt or cancel needed oilfield and energy infrastructure (probably not true).  Herewith a quote in the trade-war debate:

"Tariffs could stifle hundreds of billions of dollars’ worth of projects — including new pipeline infrastructure needed to get oil and natural gas from the prolific Permian Basin to markets. The steel tariffs alone could increase the cost of a 280-mile pipeline by as much as $76 million.”

OK, so the price of the steel goes up, mostly because pipeline steel, already formed into oilfield pipe, comes from Canada  (remember those guys?).  WIth a hefty tariff, even the devalued Canadian dollar does not keep the final price of the pipe from rising significantly.  But: is that really at issue?  I don't think so.  It is my argument that building expensive dedicated pipelines into the Permian is probably going to prove to be a mistake, as the pipe will end up as a stranded cost. 

It is fairly clear that the Permian, now producing with renewed vigor due to fracking drilling, will rapidly exhaust itself.  Once gone, what can that pipeline be used for?  Is it readily attachable to yet another field or storage depot such as Cushing OK so that it can continue in service?  Or does it just end up sitting there, a bit like a Pyramid, a monument to extraction engineering?  Yet there is another alternative to pipe: rail.  If the funds intended for pipe were put into rail, you would have a great new rail track that can easily be extended to couple into the national system, and used to haul other goods, including wheat, corn, and cattle.  

What would be the cost of rail?  Out in the vast open flatlands, not much.  your land strip is about sixty feet.  You pile on the gravel as ballast, then drop the ties and rails.  The typical cost is less than $1.8 million a mile, so for that 280-mile pipeline you would spend $504 million, but - here is the kicker - that is never a stranded cost.  You get to use that shiny new rail line for the next hundred years.  And you can instantly send that oil to some other location or port, if the destination gets blocked.  You cannot do that with a pipe.  What say you?

[BillKidd + 139]

Very interesting concept, I wonder why nobody every does it. As for the steel, don't they always bury the pipe except for in very cold climes? Could they keep it above ground in the continental USA? Once buried, it ain't gonna be dug up.

What about natural gas from those same oil wells? Would you envision compressing or liquefying and putting on rail car?

EDIT: BTW, regarding the steel tariffs, when I heard of this I immediately was concerned with rising D&C costs per well. Tubulars are exensive and with tariffs, getting more so. Which means that the financial projections of these great wells that all of these exploration companies brag about... the numbers will get worse when the costs/well goes up.

Edited July 12, 2018 by BillKidd

[Jan van Eck + 7,558]

3 hours ago, BillKidd said:

Very interesting concept, I wonder why nobody every does it. As for the steel, don't they always bury the pipe except for in very cold climes? Could they keep it above ground in the continental USA? Once buried, it ain't gonna be dug up.

What about natural gas from those same oil wells? Would you envision compressing or liquefying and putting on rail car?

 

I think that right now some 10% at least of Bakken oil is shipped out by rail.  It goes as far as St. John, New Brunswick, up at the top of the Gulf of Maine, by unit rail train.  There are some problems with oil-by-rail, including the stock of old tank cars that split open in collisions.  Those are being replaced by new versions, but it will take a bit before there is enough stock. 

Oil by rail is totally cost-effective.  The reason it costs more than pipe is because the RR companies are inefficiently set up and they have no incentive to pass along bargains.  So they charge whatever the market will bear (which is a lot!).  Remember that a unit train can travel at a comfortable 50 mph hauling oil in a rail "pipe" of eight feet in diameter, so that oil is "flowing" much faster than it will in a pipe. And the cost of pumping oil is much higher than the cost of using a locomotive to haul it on a steel rail, which as very low friction. 

Since a rail line out of the Permian or any other basin ends up in some Port, all you have to do is extend the other end further out from the oilfield to a junction with another trunk line and you have greatly expanded freight capacity.  For example, the main line of the old Southern Pacific from Chicago to Los Angeles is single track.  It gets so congested that Amtrak was obliged to pay for doubling in some stretches, and after Amtrak paid the bills, the track belonged to, and is under the direct operational control of, the Union Pacific.  How's that for a RR deal? Aside from the abuse of Amtrak, what it points out is that rail capacity is stretched in many areas, and so adding a new mainline into a Port instantly frees up other trackage, and thus is valuable. 

Pipe is put underground to protect it from lightning strikes and tornado damage, and so that roads, cows, and everything in between retains open access across the right-of-way. Above-ground pipe also needs repeated painting.  And you could argue it is vulnerable to vandalism. The idea is that if it sits underground on a bed of sand then nobody bothers it.

PS natural gas could be run on rail, but it takes little energy (relatively speaking) to move gas, so putting it underground and building those compressor sheds seems to be a great solution.  Cheers.

[Jan van Eck + 7,558]

1 hour ago, mthebold said:

Ideally, you'd use pipes for decades, but it's possible they pay for themselves in a few years.  Rail could be $5-8/barrel more expensive than pipes, plus you have to build the rails.  That's a lot of money.  For all we know, pipes to the Permian could pay for themselves in 2-5 years, which would be in line with the capital investments I've seen.  Even if it's 10 years, the Permian should keep them flowing that long. 

 

As for reusing rail lines in West Texas, it's pretty barren out there.  Rail without freight is just as stranded as a pipes without oil. 

So you build a pipeline from the Permian to the Texas Gulf, and then you find that the new customers are sitting in Asia.  Now your tanker has to go around the tip of Cape of Good Hope and over the Indian Ocean and through the Straits of Malacca, around Singapore,and up through the South China Sea to get there.  If you could load in San Diego it is a straight shot across the Pacific. 

Rail is never stranded, because you extend the line to the next Class I RR junction point.  (See my above post). In the worst case, there are automated machines that will pick up an entire rail line in sections, for re-use in another location.  Your money is always going to be earning a return.  Cheers. 

[Jan van Eck + 7,558]

1 hour ago, mthebold said:

Your argument is long on visuals - a good persuasive technique, as Trump has demonstrated - but short on substance.  Visuals work in debates; the professional engineers, directors, and CFO's who make these decisions prefer substance. 

Fine; do it your way.  I really don't mind. Regrets that you dump on my thoughts.  Carry on.

[Rodent + 1,424]

7 hours ago, mthebold said:

You're assuming that California
a)  Has the port capacity to handle millions of barrels of oil per day by rail

b)  Would ever allow such a thing. 
CA already rejected a Permian pipeline, which is the safest, most environmentally friendly transport option.  I doubt they'd be excited about rail.

Whether by rail or by pipeline, you're most likely sending oil to Houston and shipping it around the Cape of Good Hope, but let's assume, for the sake of argument, that rail goes to CA and pipeline goes to Houston.  Even if pipeline to Houston resulted in a longer shipping route, what of it?  That's still cheap relative to rail. 

Rail also requires a little more investment than you're letting on.  Tapping into existing lines and being on your way sounds nice, but skips analysis of the entire system.  Sure, you can connect new line to your existing Class I and divert cars/crews from the rest of the country to handle 1 MMbl/d by rail, but what if you want to ship 3-5 MMbl/d?  Can your Class I RR junction point still handle the traffic?  Do you need to build an additional main line from the Permian to Houston?  Do you have enough oil cars, engines, and operators on the continent, or do you need to hire more expensive, union employees who'll collect a lifetime of salary, pension, and benefits?  Can your rail depots in Houston handle that traffic?  Will rail lines demand higher prices as demand increases?  When we consider all the pieces and all the potential investments, laying pipe starts to sound cheap. 

Your argument is long on visuals - a good persuasive technique, as Trump has demonstrated - but short on substance.  Visuals work in debates; the professional engineers, directors, and CFO's who make these decisions prefer substance. 

and the debate was going so well until that last graph...

it is possible to disagree and state a position, even passionately, without making broad statements that disparage another poster or their ideas.

let's keep the arguments civil please!

 

[BillKidd + 139]

mthebold would probably have been fine if had left out the trump reference, as that kind of semi-insinuated a trump-like characterization to Jan, and he probably doesn't like that. I wouldn't, lol! He probably didn't mean it that way.

The possibilities are interesting.

[NickW + 2,714]

12 hours ago, Jan van Eck said:

I think that right now some 10% at least of Bakken oil is shipped out by rail.  It goes as far as St. John, New Brunswick, up at the top of the Gulf of Maine, by unit rail train.  There are some problems with oil-by-rail, including the stock of old tank cars that split open in collisions.  Those are being replaced by new versions, but it will take a bit before there is enough stock. 

Oil by rail is totally cost-effective.  The reason it costs more than pipe is because the RR companies are inefficiently set up and they have no incentive to pass along bargains.  So they charge whatever the market will bear (which is a lot!).  Remember that a unit train can travel at a comfortable 50 mph hauling oil in a rail "pipe" of eight feet in diameter, so that oil is "flowing" much faster than it will in a pipe. And the cost of pumping oil is much higher than the cost of using a locomotive to haul it on a steel rail, which as very low friction. 

Since a rail line out of the Permian or any other basin ends up in some Port, all you have to do is extend the other end further out from the oilfield to a junction with another trunk line and you have greatly expanded freight capacity.  For example, the main line of the old Southern Pacific from Chicago to Los Angeles is single track.  It gets so congested that Amtrak was obliged to pay for doubling in some stretches, and after Amtrak paid the bills, the track belonged to, and is under the direct operational control of, the Union Pacific.  How's that for a RR deal? Aside from the abuse of Amtrak, what it points out is that rail capacity is stretched in many areas, and so adding a new mainline into a Port instantly frees up other trackage, and thus is valuable. 

Pipe is put underground to protect it from lightning strikes and tornado damage, and so that roads, cows, and everything in between retains open access across the right-of-way. Above-ground pipe also needs repeated painting.  And you could argue it is vulnerable to vandalism. The idea is that if it sits underground on a bed of sand then nobody bothers it.

PS natural gas could be run on rail, but it takes little energy (relatively speaking) to move gas, so putting it underground and building those compressor sheds seems to be a great solution.  Cheers.

How much oil are we talking?

One of these will carry about 750 barrels

https://en.wikipedia.org/wiki/DOT-111_tank_car

You are going to need several thousand if you want to compete in the million BPD pipeline category over the sort of distances quoted.

[Jan van Eck + 7,558]

1 hour ago, NickW said:

You are going to need several thousand if you want to compete in the million BPD pipeline category over the sort of distances quoted.

SO?  Nick, this is America, not England.  This is a country of enthusiastic businessmen.  You want railcars, you go build them!  Lots of them!  Do you have nay idea of how many tank cars are already out there?  "Several thousand" is not a barrier, it is an opportunity!  All kinds of guys will be out there building tank cars if the demand surfaces, they think nothing of setting up a new car plant just for tank, if that is what it starts to look like. 

And that is the nice thing about America.  It is and remains a country of unbounded optimism and opportunity.  Some trifling issue as railcar inventory is not going to slow down the Americans.  Ain't gonna happen.  Hire some welders and build away!

[Jan van Eck + 7,558]

2 hours ago, BillKidd said:

mthebold would probably have been fine if had left out the trump reference, as that kind of semi-insinuated a trump-like characterization to Jan, and he probably doesn't like that. I wouldn't, lol! He probably didn't mean it that way.

The possibilities are interesting.

Bill, Mr. Trump is not competent to run the country. That said, at this point Washington is in such a state of total stand-off and is so totally screwed up that it probably does not make that much difference who is sitting in the White House. The whole thing has degenerated into a long-running soap opera.  America does well, not because of DC, but in spite of it.  DC is basically a parasitic load on the system, sucking off money and energy, mostly to pay the vast entrenched, and unfireable, bureaucracy. 

I once was flying back from central Florida to New England and came over Richmond, Virginia at about 0600.  I was at 2500 feet and over the Interstate 95.  Down below was this vast sea of brake lights, in a mournful procession of automobiles, all headed into DC. Another hundred thousand bureaucrats, heading to their desks, then and there to sit and talk on the phone, write memos, and attend endless meetings.  That is what DC has degenerated into.  Now, this has serious operational implications.  How do you expect to obtain, say, an LNG Terminal Permit from this morass?  Or get a Keystone Pipeline built?  You begin to see the magnitude of the problem when at 2,500 feet in the early dawn. Quite sobering to contemplate. 

Edited July 13, 2018 by Jan van Eck

[NickW + 2,714]

1 hour ago, Jan van Eck said:

SO?  Nick, this is America, not England.  This is a country of enthusiastic businessmen.  You want railcars, you go build them!  Lots of them!  Do you have nay idea of how many tank cars are already out there?  "Several thousand" is not a barrier, it is an opportunity!  All kinds of guys will be out there building tank cars if the demand surfaces, they think nothing of setting up a new car plant just for tank, if that is what it starts to look like. 

And that is the nice thing about America.  It is and remains a country of unbounded optimism and opportunity.  Some trifling issue as railcar inventory is not going to slow down the Americans.  Ain't gonna happen.  Hire some welders and build away!

Had a big delivery of straw today Jan?

I never said it was a barrier but it is a cost you would have to weigh up against the cost of building a pipeline. 

[PaulG + 21]

16 minutes ago, Jan van Eck said:

I think this is where I drop out of Oilprice.com. 

Whatever usefulness I might have contributed in the past has expired, time for me to mover along.  You fellows carry on.

Sorry to see you leave Jan, some of what you wrote truthfully went over my head, but I still enjoyed reading it , and give insight of which I had not considered, for that I will be grateful  

[Tom Kirkman + 8,860]

20 hours ago, Rodent said:

and the debate was going so well until that last [para]graph...

it is possible to disagree and state a position, even passionately, without making broad statements that disparage another poster or their ideas.

let's keep the arguments civil please!

Yep, agreed.  

Time remind again of my general advice as a moderator for this forum:

*** Important !   I do *not* expect others to agree with my opinions.  I tend to have rather unusual opinions about international Oil & Gas.  I *do* hope that readers will fearlessly voice their own views about international oil & gas.

As a former moderator on the Oilpro forum, (and now a moderator here on the Oil Price Community forum) I *encourage* dissent, and *encourage* Freedom of Speech, and *encourage* others to freely voice their views and convictions about oil & gas. 

A diversity of global views is what makes the world a special place.  Conformity is just a slow, painful death of not speaking your mind.  So SPEAK UP.  Please don't be a jerk about about it, though.  If you want others to consider your views, please be willing to consider the views of others.

[Tom Kirkman + 8,860]

13 hours ago, Jan van Eck said:

I think this is where I drop out of Oilprice.com. 

Whatever usefulness I might have contributed in the past has expired, time for me to mover along.  You fellows carry on.

Jan, I hope you will enjoy the weekend, have a few cold ones with some friends, relax and have fun.

And then I hope you will reconsider.  Your "usefulness" here has not "expired" - at least in my opinion.

Please feel free to message me if you wish.

Regardless of any current kerfluffle going on in this thread, your comments here on this forum have been widely read and appreciated, as evidenced by the Leaderboard.  Cheers.

[BillKidd + 139]

17 hours ago, Jan van Eck said:

I think this is where I drop out of Oilprice.com. 

Whatever usefulness I might have contributed in the past has expired, time for me to mover along.  You fellows carry on.

Forums can be contentious, for sure. I hope you will regroup and come back, as your insight is invaluable to this forum. Your creative ideas and vast knowledge of many subjects is second to none, and I belong to a LOT of forums. A fellow like you who will take the time to write very detailed posts is what makes a forum worthwhile. A short Tweet isn't nearly as meaningful as 1,000-word post like you often write.

[Dan Warnick + 6,100]

4 hours ago, BillKidd said:

Forums can be contentious, for sure. I hope you will regroup and come back, as your insight is invaluable to this forum. Your creative ideas and vast knowledge of many subjects is second to none, and I belong to a LOT of forums. A fellow like you who will take the time to write very detailed posts is what makes a forum worthwhile. A short Tweet isn't nearly as meaningful as 1,000-word post like you often write.

I'm with BillKidd on this, Jan.  You and one or two others on the forum ARE the forum.  Please don't let the "rich" comments of others get you down.  And please don't leave the forum.

[Jan van Eck + 7,558]

3 hours ago, Dan Warnick said:

I'm with BillKidd on this, Jan.  You and one or two others on the forum ARE the forum.  Please don't let the "rich" comments of others get you down.  And please don't leave the forum.

Here's the thing, Dan:  I don't want the Forum to turn into a cult of personality.  I appreciate that this may surprise you, but I choose a quite humble life.  I drive an auto that is 18 years old and I mostly do my own repairs. (It has led me to configure new parts to be fabricated on CNC machines to build components better, but you already saw that coming.) I spend little on myself, I leave my earnings for others who are less fortunate. What does it really matter, death comes soon enough. OK, I have an airplane, but I need that for work, cannot operate without it. There are people here in rural Vermont who literally have nothing; is it not better to put my energies into easing that pain rather than spend time aggrandizing myself?  That cow-manure converter I am developing should have a dramatic impact;  I will use the funds to produce houses on the mass-customization principle, where CNC machines and CAD software will cut cross-laminated timber panels into home sections for assembly like a big LEGO set in the field  (see URLs attached below).  

When I write on this Board it is to share ideas and explore others' thinking.  When it gets responded to with dart-throwing then I know I have become over-bearing and I am sensitive to that not being appreciated. I am delighted when others disagree with me and come up with cogent reasons why other ideas are sounder, that is purely intellectual.  I come from a very privileged background, smart hard-working parents who spent their coin on providing a very privileged education for me, and I have obligations to others that flow from that, so it was not wasted. 

You can do a lot for others if you put your mind to it.  Example: there was a fellow down the road from me who was busy changing the clutch on his antique, beat-up pick-up truck in a snowbank in February. It would cost him $650 in a garage and he did not have the 650.  So I found him underneath that heap in seriously cold weather doing the job himself.  Now, that fellow is 76, and he supports disabled family members with that truck doing odd jobs and his $680 in social security.  He is a really nice guy and obviously willing to work very hard.  I looked around and discovered that there is nobody within driving range of 50 miles that does rotor-turning or brake-drum turning here.  When you do a brake job on a car (changing the pads) it is a good idea to re-surface the rotors to have a nice smooth surface for the brake pads.  Garages simply toss away a perfectly good rotor to sell you a new one complete with their mark-up.  But you would be surprised how many  folks here do their own, in the backyard.  If they can re-surface the old rotor for say eight bucks instead of having to buy a new one for fifty or more, each rural car saves $320 in parts bills on a brake job.  For these people, that is a lot of money.

So what I am going to do is buy a rotor/drum resurfacing machine and find a small shop or garage and set this fellow up re-surfacing rotors. He develops an income; the customers have more disposable income for themselves; and because this is an exercise in developing capitalism and not charity, I get paid back a few pennies a rotor and pick up the originating capital, for use in the next deal.  Is that not a better use of my energies than getting booed on this Forum?   Hey, I dunno, you tell me. 

Putting real money into the hands of the rural poor is one of the great challenges of the time.  You can do that by replacing the old, worn-out housing stock which costs so much to maintain and (especially) heat.  There are houses here that easily cost over $6,000 a winter to heat, because they were built a century ago and have zero insulation.  And they are  basically firetraps and should be torn down.  And that is before you see how heat-inefficient the old trailers in these trailer parks are.  What this does is insidious; it sucks up the earnings of the rural poor and keeps them poor, because they cannot develop any capital.

Now if you can build new housing stock, scrap the old stuff, and end up with Mr. Vermonter only paying $480/month all-in for his house, mortgage.heat/utilities, you end up putting about $1,200 of after-tax cash directly into his pocket. He can do a lot with that cash injection, and he no longer has to turn the furnace off at night and sleep with three layers of clothing under five blankets, then get up and heat the house to only 55 degrees because he has no money to pay for more. And you do that by using the resource that the paper-mills have  abandoned: the forests.  I made that presentation to the Governor and he has committed $30 million for this year's first buildings.  But to go further, if you set up a production line to mass-customize those houses, you can bring the costs way, way down, and the servicing of the mortgages remains in-State to again create new employment opportunities. If I can pull that off, I will have effectively single-handedly transformed the entire State.  You can put capitalism to work so everybody can benefit.  One man, one great idea. At least I die with a smile.  Cheers.

https://www.youtube.com/watch?v=BikISh6F1wo

https://www.youtube.com/watch?v=pNr635IIUWg

Edited July 14, 2018 by Jan van Eck

[BillKidd + 139]

That's incredible, Jan, cheers to you! How cool!

Do you have any idea if this CLT works in housing in hot climes or have they only done in it cold climes?

[NickW + 2,714]

As a quick recap this was the comment I made which i don't see as contentious in any way;

How much oil are we talking?

One of these will carry about 750 barrels

https://en.wikipedia.org/wiki/DOT-111_tank_car

You are going to need several thousand if you want to compete in the million BPD pipeline category over the sort of distances quoted.

I was simply making the point that substituting pipelines with rail will come at a significant capital cost not to mention operating cost. 

Forum members can read the following response and draw their own conclusions. The irony is that in a number of other discussions in the areas of renewables / energy storage the 'capital cost barrier'  argument is thrown in like some sort of autonomic response. 

[Jan van Eck + 7,558]

33 minutes ago, BillKidd said:

That's incredible, Jan, cheers to you! How cool!

Do you have any idea if this CLT works in housing in hot climes or have they only done in it cold climes?

The original developers were in Austria and put CLT into action in order to put to use their forests which were basically going to waste.  That was about 1998.  It took off in areas of Europe and England because the product allowed for fast in-fill construction.  Some row house would burn down and then with CLT panels all finished it was possible to build the replacement blocking up the sidewalk with that big crane for only a week, instead of months with steel and concrete.  In those iterations the materials costs were about 15% higher but the construction time (and labor bill) was vastly lower. 

I know of one CLT house that was shipped in panels in a series of sea containers, from Austria to Australia, then the buyer just put it together like so many kids' blocks.  

Where you can really see an impact is in places such as Nevada, where there is no indigenous timber wood and the locals live in those trailers pulled to site with a big truck.  Entire towns in the arid West are nothing but those trailers. They are uncomfortable and a bear to cool, so you have these steep power bills, but there is not much option out there.  I suspect the issue with warm and humid climates would be in the way the wood itself is prepped.  It would have to be brought to the moisture content similar to the outside, instead of completely dry, figure about 14% if in say Florida.  And you might want to treat the outside layer with some form of preservative to beat back the termites.  But remember, CLT is basically a gigantic sheet of plywood on steroids.  Plywood was used on boats, the PT boats of WWII were glued-up and screwed-down sheets of plywood with marine glue to hold it all together, seems to have worked fine.  I would probably look at the glue carefully to be sure it is of a marine grade if using that in a tropical clime.  But I don't face those issues in rural Vermont, which is where it is going first.  In these projects, you fine-tune it as you go.   

Incidentally the highest apartment building to date made totally of CLT is 19 stories, and Skidmore Owings Merrill has designed a skyscraper that goes up to 42 stories.  No steel anywhere.  So it will have an impressive impact in building construction soon enough. For the low-rise, the latest developments is to reduce the total volume of wood by replacing the interior layers with a layer at 90 degrees, as stiffeners, and you attach the interior wallboard to that.  Makes sense, as you avoid the problem of running electrical ducts. Remember that these rural States have a big unemployment problem additional to rural poverty, so this puts a lot of men back to work, cutting the trees, milling the wood, doing the factory, the whole nine yards.  And the final buyer ends up paying a lot less each month for his housing, equivalent to a major raise in pay..  Cheers.

Edited July 14, 2018 by Jan van Eck
"replacing" for "placing"

[BillKidd + 139]

The reason I ask about warmer climes is because that is where I am from and I am love trees lol. I love diversified forests but especially those that are predominately hardwood. But the southern pine forest, like farming a row crop long-term took over during my lifetime, wiping out most of the diversified forests. And now we find that growing southern pine is nothing compared to what it used to be, profit-wise. Paper demand is down and I guess housing demand is down. Trees aren't bringing near what they used to. But hardwood has come way up in value and that means even worse news for the hardwood forests. Either way, it would be cool to find a big boost to timber use. I am no expert but I think they use pine in plywood. Curious if the characteristics of the southern pine are sufficient to work in CLT. I would assume that the trees from Austria are a pine or conifer or whatever the family is called. As opposed to hardwood. And, of course, the benefits to the populace of providing more affordable housing is a great thing. We have tons of mobile homes here and they get destroyed like a bomb hit them in a tornado. And, not very efficient for cooling. That's the biggie here, summer cooling.

[Jan van Eck + 7,558]

1 hour ago, BillKidd said:

The reason I ask about warmer climes is because that is where I am from and I am love trees lol. I love diversified forests but especially those that are predominately hardwood. But the southern pine forest, like farming a row crop long-term took over during my lifetime, wiping out most of the diversified forests. And now we find that growing southern pine is nothing compared to what it used to be, profit-wise. Paper demand is down and I guess housing demand is down. Trees aren't bringing near what they used to. But hardwood has come way up in value and that means even worse news for the hardwood forests. Either way, it would be cool to find a big boost to timber use. I am no expert but I think they use pine in plywood. Curious if the characteristics of the southern pine are sufficient to work in CLT. I would assume that the trees from Austria are a pine or conifer or whatever the family is called. As opposed to hardwood. And, of course, the benefits to the populace of providing more affordable housing is a great thing. We have tons of mobile homes here and they get destroyed like a bomb hit them in a tornado. And, not very efficient for cooling. That's the biggie here, summer cooling.

Southern pine would work perfectly.  It would be a preferred wood for CLT construction.  Probably better than the Northern spruce found in New England and New Brunswick.  Plywood in the USA incidentally comes mostly from the far Northwest, I dunno the stock, hazard a guess at Spruce.  Georgia-Pacific is the big player up there. Southern pine was incidentally a preferred naval wood in the 1800's, it has great stability and tensile strength.  Paper is way down due to the internet and electronic record-keeping; housing is down due to the low birthrate and (now) lower immigration rate, resulting in collapsing demand. That said, demolishing obsolete housing stock and replacing with CLT construction is fairly obvious. 

CLT is quite fire resistant. Think of starting a campfire and trying to light a 24" log.  Won't happen.  You need a lot of thin stuff with surface area.  You don't have that with massive CLT construction; the outside would char, then stop, so the structure survives even a forest fire just fine. Because it is solid, heavy panels and dimensionally stable, I suspect it would resist a tornado just fine. Remember that the roof is also a massive CLT construction, one complete panel each side. Here in New England, where the danger is roof collapse from snow, the massive walls and roof panels would just shrug that off, no biggie. And because the panels can be constructed in one piece to any length, you can go to vast spans, limited only by the transport  (figure 80 feet for a railcar). 

When you toss CLT decking in with Glulam beams, you end up with a bridge that has no steel or concrete, thus is impervious to road salt degradation.  I anticipate a very large market for replacement bridges, built on CNC machines in a factory and hauled to the site, so you can replace an entire bridge in a weekend. Crane the pieces into place and bolt 'er up!  Huzza!

And that's the neat thing about America, it is a place where innovators can actually go explore their ideas, not like in socialist States where the thinking is controlled by govt bureaucrats and remains mired in stagnation.  I don't picture Russia going to CLT construction any time soon.  Maybe after it really takes off in the West, not before.  Cheers. 

[Dan Warnick + 6,100]

11 hours ago, Jan van Eck said:

Here's the thing, Dan:  I don't want the Forum to turn into a cult of personality.  I appreciate that this may surprise you, but I choose a quite humble life.  I drive an auto that is 18 years old and I mostly do my own repairs. (It has led me to configure new parts to be fabricated on CNC machines to build components better, but you already saw that coming.) I spend little on myself, I leave my earnings for others who are less fortunate. What does it really matter, death comes soon enough. OK, I have an airplane, but I need that for work, cannot operate without it. There are people here in rural Vermont who literally have nothing; is it not better to put my energies into easing that pain rather than spend time aggrandizing myself?  That cow-manure converter I am developing should have a dramatic impact;  I will use the funds to produce houses on the mass-customization principle, where CNC machines and CAD software will cut cross-laminated timber panels into home sections for assembly like a big LEGO set in the field  (see URLs attached below).  

When I write on this Board it is to share ideas and explore others' thinking.  When it gets responded to with dart-throwing then I know I have become over-bearing and I am sensitive to that not being appreciated. I am delighted when others disagree with me and come up with cogent reasons why other ideas are sounder, that is purely intellectual.  I come from a very privileged background, smart hard-working parents who spent their coin on providing a very privileged education for me, and I have obligations to others that flow from that, so it was not wasted. 

You can do a lot for others if you put your mind to it.  Example: there was a fellow down the road from me who was busy changing the clutch on his antique, beat-up pick-up truck in a snowbank in February. It would cost him $650 in a garage and he did not have the 650.  So I found him underneath that heap in seriously cold weather doing the job himself.  Now, that fellow is 76, and he supports disabled family members with that truck doing odd jobs and his $680 in social security.  He is a really nice guy and obviously willing to work very hard.  I looked around and discovered that there is nobody within driving range of 50 miles that does rotor-turning or brake-drum turning here.  When you do a brake job on a car (changing the pads) it is a good idea to re-surface the rotors to have a nice smooth surface for the brake pads.  Garages simply toss away a perfectly good rotor to sell you a new one complete with their mark-up.  But you would be surprised how many  folks here do their own, in the backyard.  If they can re-surface the old rotor for say eight bucks instead of having to buy a new one for fifty or more, each rural car saves $320 in parts bills on a brake job.  For these people, that is a lot of money.

So what I am going to do is buy a rotor/drum resurfacing machine and find a small shop or garage and set this fellow up re-surfacing rotors. He develops an income; the customers have more disposable income for themselves; and because this is an exercise in developing capitalism and not charity, I get paid back a few pennies a rotor and pick up the originating capital, for use in the next deal.  Is that not a better use of my energies than getting booed on this Forum?   Hey, I dunno, you tell me. 

Putting real money into the hands of the rural poor is one of the great challenges of the time.  You can do that by replacing the old, worn-out housing stock which costs so much to maintain and (especially) heat.  There are houses here that easily cost over $6,000 a winter to heat, because they were built a century ago and have zero insulation.  And they are  basically firetraps and should be torn down.  And that is before you see how heat-inefficient the old trailers in these trailer parks are.  What this does is insidious; it sucks up the earnings of the rural poor and keeps them poor, because they cannot develop any capital.

Now if you can build new housing stock, scrap the old stuff, and end up with Mr. Vermonter only paying $480/month all-in for his house, mortgage.heat/utilities, you end up putting about $1,200 of after-tax cash directly into his pocket. He can do a lot with that cash injection, and he no longer has to turn the furnace off at night and sleep with three layers of clothing under five blankets, then get up and heat the house to only 55 degrees because he has no money to pay for more. And you do that by using the resource that the paper-mills have  abandoned: the forests.  I made that presentation to the Governor and he has committed $30 million for this year's first buildings.  But to go further, if you set up a production line to mass-customize those houses, you can bring the costs way, way down, and the servicing of the mortgages remains in-State to again create new employment opportunities. If I can pull that off, I will have effectively single-handedly transformed the entire State.  You can put capitalism to work so everybody can benefit.  One man, one great idea. At least I die with a smile.  Cheers.

https://www.youtube.com/watch?v=BikISh6F1wo

https://www.youtube.com/watch?v=pNr635IIUWg

You have my respect, Jan.  I came to this forum looking for information that would help me to make informed decisions about making successfully timed oil trades, that would eventually lead to my being able to contribute to and help improve the lives of people in my host country.  I find it is a good forum for the 1st goal, but I had no idea I would find people here that could actually provide guidance on how I might accomplish the second part of my goals.  You are most definitely the person I am talking about in that respect.  You willingly, freely, and in great detail, give perspective and optimism towards coming up with solutions to the average person's needs and possibly even their realization of some of their dreams (working hard and providing for their own and those around them).  By all means, please continue to share.  You are an inspiration, sir.

[NickW + 2,714]

On 7/12/2018 at 11:38 PM, BillKidd said:

Very interesting concept, I wonder why nobody every does it. As for the steel, don't they always bury the pipe except for in very cold climes? Could they keep it above ground in the continental USA? Once buried, it ain't gonna be dug up.

What about natural gas from those same oil wells? Would you envision compressing or liquefying and putting on rail car?

EDIT: BTW, regarding the steel tariffs, when I heard of this I immediately was concerned with rising D&C costs per well. Tubulars are exensive and with tariffs, getting more so. Which means that the financial projections of these great wells that all of these exploration companies brag about... the numbers will get worse when the costs/well goes up.

Because it is useful as an infill to service stranded oil resources where existing track is nearby or serve as a temporary option prior to a pipeline being built but it can't compete with pipelines for large scale movement of oil. 

As you identify, burying the pipe means the land is returned to its original use - a dual rail track won't allow that. Sure a track may have some dual functionality but I suspect once the oil has run out the line will become derelict. 

The cost of a rail is a lot more than just the track. You have crossings, if its single track you have to build large passing point sidings for them 1-2km tanker trains to pass with all the signalling to go with that. Alternatively you can build twin tracks with the associated costs In some locations you will need tunnels or embankments.

With pipelines you can usually use electricity to do the pumping. With rail, on the assumption its diesel then you will need a lot of expensive diesel as power. 

A pipeline is nice and automated and can largely be coordinated via a control room - send that oil direct to port for loading onto a ship, into storage tanks or straight into the refinery. Not so with rail transport as you have to hook up and empty each of those 750 barrel tankers. 

Finally if tariffs are going to increase the cost of pipelines then the same effect will be felt if the rail option was exercised as an alternative. In the short to medium term the USA is highly reliant on imported steel. 

 

 

 

[NickW + 2,714]

17 hours ago, Jan van Eck said:

The original developers were in Austria and put CLT into action in order to put to use their forests which were basically going to waste.  That was about 1998.  It took off in areas of Europe and England because the product allowed for fast in-fill construction.  Some row house would burn down and then with CLT panels all finished it was possible to build the replacement blocking up the sidewalk with that big crane for only a week, instead of months with steel and concrete.  In those iterations the materials costs were about 15% higher but the construction time (and labor bill) was vastly lower. 

I know of one CLT house that was shipped in panels in a series of sea containers, from Austria to Australia, then the buyer just put it together like so many kids' blocks.  

Where you can really see an impact is in places such as Nevada, where there is no indigenous timber wood and the locals live in those trailers pulled to site with a big truck.  Entire towns in the arid West are nothing but those trailers. They are uncomfortable and a bear to cool, so you have these steep power bills, but there is not much option out there.  I suspect the issue with warm and humid climates would be in the way the wood itself is prepped.  It would have to be brought to the moisture content similar to the outside, instead of completely dry, figure about 14% if in say Florida.  And you might want to treat the outside layer with some form of preservative to beat back the termites.  But remember, CLT is basically a gigantic sheet of plywood on steroids.  Plywood was used on boats, the PT boats of WWII were glued-up and screwed-down sheets of plywood with marine glue to hold it all together, seems to have worked fine.  I would probably look at the glue carefully to be sure it is of a marine grade if using that in a tropical clime.  But I don't face those issues in rural Vermont, which is where it is going first.  In these projects, you fine-tune it as you go.   

Incidentally the highest apartment building to date made totally of CLT is 19 stories, and Skidmore Owings Merrill has designed a skyscraper that goes up to 42 stories.  No steel anywhere.  So it will have an impressive impact in building construction soon enough. For the low-rise, the latest developments is to reduce the total volume of wood by replacing the interior layers with a layer at 90 degrees, as stiffeners, and you attach the interior wallboard to that.  Makes sense, as you avoid the problem of running electrical ducts. Remember that these rural States have a big unemployment problem additional to rural poverty, so this puts a lot of men back to work, cutting the trees, milling the wood, doing the factory, the whole nine yards.  And the final buyer ends up paying a lot less each month for his housing, equivalent to a major raise in pay..  Cheers.

CLT looks like a major improvement over Structural Insulated Board which are bound together with lots of Formaldehyde and other nasties. 

Do you know what type of glue they use?