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Shale’s Debt-Fueled Drilling Boom Is Coming To An End

Shale’s Debt-Fueled Drilling Boom Is Coming To An End

Marcellus shale

The financial struggles of the U.S. shale industry are becoming increasingly hard to ignore, but drillers in Appalachia are in particularly bad shape.

The Permian has recently seen job losses, and for the first time since 2016, the hottest shale basin in the world has seen job growth lag the broader Texas economy. The industry is cutting back amid heightened financial scrutiny from investors, as debt-fueled drilling has become increasingly hard to justify.

But E&P companies focused almost exclusively on gas, such as those in the Marcellus and Utica shales, are in even worse shape. An IEEFA analysis found that seven of the largest producers in Appalachia burned through about a half billion dollars in the third quarter.

Gas production continues to rise, but profits remain elusive. “Despite booming gas output, Appalachian oil and gas companies consistently failed to produce positive cash flow over the past five quarters,” the authors of the IEEFA report said.

Of the seven companies analyzed, five had negative cash flow, including Antero Resources, Chesapeake Energy, EQT, Range Resources, and Southwestern Energy. Only Cabot Oil & Gas and Gulfport Energy had positive cash flow in the third quarter.

The sector was weighed down but a sharp drop in natural gas prices, with Henry Hub off by 18 percent compared to a year earlier. But the losses are highly problematic. After all, we are more than a decade into the shale revolution and the industry is still not really able to post positive cash flow. Worse, these are not the laggards; these are the largest producers in the region.

…click on the above link to read the rest of the article…

Development: a failed project

Development: a failed project

It’s time to abandon development and think about postdevelopment instead.

Deforestation in the name of development | Image: crustmania, CC by 2.0

“They talk to me about progress, about ‘achievements,’ diseases cured, improved standards of living. I am talking about societies drained of their essence, cultures trampled underfoot, institutions undermined, lands confiscated, religions smashed, magnificent artistic creations destroyed, extraordinary possibilities wiped out. They throw facts at my head, statistics, mileages of roads, canals, and railroad tracks. […] I am talking about natural economies that have been disrupted – harmonious and viable economies adapted to the indigenous population – about food crops destroyed, malnutrition permanently introduced, agricultural development oriented solely toward the benefit of the metropolitan countries, about the looting of products, the looting of raw materials.”

– Aime Césaire (1950): ‘Discourse on Colonialism’

Let’s not beat around the bush: to understand the problems with current ‘development’ discourse and practice there is no alternative other than situating ‘development’ as a construct that has resulted from colonialism and that continues to perpetuate itself within this legacy. Nothing illustrates this better than the above quote from Aime Césaire’s powerful essay on the ‘Discourse on Colonialism’. It almost reads like a contemporary critique of failed development interventions, sharply dissecting extractivism, fetishism of economic growth, the global division of labour and the marginalisation of non-Western worldviews, cosmovisions, imaginaries. The text is almost 70 years old, yet its relevance today could not be clearer.

What are the problems with ‘development’?

I only write about ‘development’ in inverted commas. The word, the concept, the practice has been (ab)used for such a broad variety of specific agendas, all of them structured by power hierarchies and asymmetries. Depending on fashionable fads, ‘development’ has come to be conceptualised as development-as-growth, development-as-progress, development-as-empowerment and many more. Fundamentally, ‘development’ has become what Gustavo Esteva calls an ‘amoeba’ term – one lacking any real meaning.

…click on the above link to read the rest of the article…

Western France Runs Out Of Gas As “Massive Strikes” Set To Paralyze Entire Nation

Western France Runs Out Of Gas As “Massive Strikes” Set To Paralyze Entire Nation

France is bracing for major transportation disruptions throughout the country starting Thursday, as trade unions launch a strike in response to changes President Emmanuel Macron wants to make to the country’s retirement system, while port blockades have resulted in widespread fuel shortages across the country. Much of the Paris Metro will be shut down, as will many national and international train lines, including certain Eurostar services. Flights will also be canceled, as air traffic controllers say they will join the protests through Saturday.

Hundreds of filling stations around western France have run out of gasoline and diesel as blockades of oil refineries enter their second week according to industry group UFIP. According to The Local, construction workers have been blockading refineries in Brittany since last week and a blockade at La Rochelle has resumed.

French media reported on Tuesday morning that 390 filling stations have no fuel at all, and another 389 have limited supplies. The areas affected include Brittany, the west of France, the south east coast area around Marseille and some parts of eastern France near the Swiss border.

For an interactive map of which filling stations are affected, click here

Source: thelocal.fr

Workers are staging blockages at depots in Brest, Lorient, Le Mans and Vern-sur-Seiche. Further south, in the region of La Rochelle, another blockade was cleared at 4.30pm on Friday, but resumed at midnight on Monday. The blockaders belong to the public construction group BTP, Bâtiments et Travaux Publics (“Buildings and Public Construction”). They are protesting a fuel tax hike planned for 2020, which they say will have a negative financial impact on their companies. Until now, the so-called gazole non routier (GNR), used mainly by construction workers and farmers, is subject to a tax benefit that is planned to be phased out in 2020.

…click on the above link to read the rest of the article…

Russian Gas Mega-Pipeline To China Goes Online As Putin & Xi Hail Closer Ties

Russian Gas Mega-Pipeline To China Goes Online As Putin & Xi Hail Closer Ties

Late Monday Chinese President Xi Jinping and Russia’s Vladimir Putin jointly launched the major unprecedented cooperative project that had been years in the making called the ‘Power of Siberia’ gas pipeline.

The China-Russia east-route pipeline is now providing China with Russian natural gas, which according to Chinese state media is expected to reach 5 billion cubic meters in 2020 and increase to 38 billion cubic meters annually from 2024.

Crucially, S&P Global Platts estimates that total sales through the pipeline is projected to meet nearly 10% of China’s entire gas supply by 2022, ensuring vital energy security as Beijing continues to feel the pressure and uncertainty of the trade war with Washington. 

A Chinese section of the China-Russia East Route natural gas pipeline in Heihe, China. Image source: CNN/Getty Images

The ceremony to officially bring the pipeline online was held as a video call between Xi and Putin was underway. Xi told Putin: “The East-route natural gas pipeline is a landmark project of China-Russia energy cooperation and a paradigm of deep convergence of both countries’ interests and win-win cooperation.”

The deal had been cemented in May 2014 when Russian gas giant Gazprom signed a 30-year contract with China National Petroleum Corp, after which the pipeline agreements were signed with both leaders present in Shanghai in later 2014.

Gazprom CEO Alexei Miller announced to both leaders that the pipeline had been opened via video link. “Gas is flowing to the gas transmission system of the People’s Republic of China,” he said.

A 30-year deal was signed by Putin and Xi in 2014, and while a final figure has not been announced, it is believed to be worth more than $400 billion. — CNN

Gazprom will oversee operation of the mammoth pipeline which runs more than 8,100 kilometers (5,000 miles) across the two countries.

Art Berman: Houston, We Have A Problem

Art Berman: Houston, We Have A Problem

The surplus energy that powers the world is declining

Every week in our Off The Cuff Series, we interview expert minds on the premium side of PeakProsperity.com. These discussions are unscripted and informal, where my partner Chris Martenson and his guest react to recent macro developments and predict the likeliest repercussions.

Every once in while, when we have an exceptionally timely conversation, we’ll make it available to the public. And we’re doing that this week.

Chris caught petroleum geologist Art Berman right before he went on stage to deliver a presentation on the limitations of shale oil (his excellent slides can be found here). The world is finally starting to realize that the profit-making potential of this space was drastically over-hyped.

But more important, warns Art, is that the souring sentiment on shale oil is a reflection on the bigger challenge ahead of us: How we will power the world in a future of declining net energy?

When we reflect upon the material progress of humankind over the hundred and fifty years, it seems very clear to me that much, if not most, of it happened because humankind moved basically from wood to coal to oil/natural gas. To increasingly more dense sources of energy.

And the result is that we get a whole lot more work out of whatever energy we expend. Less and less of that is done by manual labor.

Everything works to live. Look at the African savanna: it’s all about energy. The animals spend all day long getting food one way or another.  That’s the way life on earth works.

But not so much for us, because we’re fortunate — we humans have all this fossil energy at our disposal. You and I can sit and chat on Skype here without having to do very much.

…click on the above link to read the rest of the article…

The Fatal Flaw In A Perfect Energy Solution

The Fatal Flaw In A Perfect Energy Solution

Solar wind tower

More than thirty years ago a giant tower was built in Manzanares, Spain, to produce electricity in a way that at the time must have seen even more eccentric than it seems now, by harnessing the power of air movement. The Manzanares tower was, sadly, toppled by a storm. Decades ago, several other firms tried to replicate the idea, but none has succeeded. Why?

A simple idea

The idea behind the so-called solar wind towers is pretty straightforward. The more popular version is the solar updraft tower, which works as follows:

On the ground, around the hollow tower, there is a solar energy collector—a transparent surface suspended a little above ground—which heats the air underneath.

As the air heats up, it is drawn into the tower, also called a solar chimney, since hot air is lighter than cold air. It enters the tower and moves up it to escape through the top. In the process, it activates a number of wind turbines located around the base of the tower. The main benefit over other renewable technologies? Doing away with the intermittency of PV solar, since the air beneath the collector could stay hot even when the sun is not shining.

A more recent take on solar wind towers involved water as well. Dubbed the Solar Wind Downdraft Tower, this project first made headlines in 2014, but since then there have been few updates, and those have been far between. The latest was from last year, when the company behind it, Solar Wind Energy Tower, announced a letter of intent by an investment company to provide financing for the project. That financing was to come from investors that the company was yet to find.

…click on the above link to read the rest of the article…

Eastern Europe Is Turning Into An Energy Battleground

Eastern Europe Is Turning Into An Energy Battleground

Gas Flame

Bulgaria has agreed to allow NATO to use its Black Sea port for naval coordination efforts as tensions rise between the Western military alliance and Russia.

The agreement was reached following a meeting between U.S. President Donald Trump and Bulgarian Prime Minister Boyko Borisov at the White House on November 25.

NATO has bolstered its defenses in Eastern Europe, including the Black Sea region, which is becoming a new frontier for energy geopolitics, after Russia annexed Ukraine’s Crimean Peninsula in 2014 and seized Ukrainian Navy vessels last year.

NATO earlier this year carried out military exercises in the Black Sea that involved more than 20 ships and crews from Romania, Bulgaria, Canada, Greece, the Netherlands, and Turkey to the consternation of Moscow. Russia’s Black Sea fleet is based in Crimea.

“Viewing with concern the security situation in the Black Sea, the United States welcomes Bulgaria’s offer to provide a maritime coordination function at Varna in support of NATO’s Tailored Forward Presence initiative,” the United States and Bulgaria said in a joint statement.

U.S. and Bulgarian officials will hold high-level meetings to discuss further maritime military cooperation, the statement said.

NATO members Bulgaria, Romania, and Turkey border the Black Sea along with Ukraine, Georgia, and Russia. Both Ukraine and Georgia have expressed a desire to join NATO.

Trump hosted Romanian President Klaus Iohannis last month as part of a series of engagements with leaders from Central and Eastern Europe, including Poland, the Czech Republic, Slovakia, Hungary, and Austria.

Prior to his arrival in Washington, Borisov told journalists that he would not allow a permanent NATO military base on the Black Sea, a move that would anger Russia.

…click on the above link to read the rest of the article…

Governments Need to Face Reality — the Fossil Fuel Industry Is Collapsing

Governments Need to Face Reality — the Fossil Fuel Industry Is Collapsing

From Saudi Arabia to Alberta, the numbers are clear. But we still shovel taxpayers’ money at oil and gas companies.

oilsands-syncrude.jpg
Government still subsidizes the oil and gas industry, even as the Bank of Canada warns of investment risks. Photo by jasonwoodhead23, Creative Commons license CC BY 2.0.

While Canadian politicians keep up their parochial posturing, a global storm is brewing.

Around the world there is early evidence of a seismic shift. Capital is moving away from fossil fuels, and regions that have let their economies become dependent on oil revenues are showing signs of authoritarian abuses of power. (Sound familiar Alberta?)

Saudi Arabia, for example, planned to sell up to five per cent of state-owned oil company Aramco in what was supposed to be the largest IPO in history, raising $100 billion to improve services and diversify the economy.

Instead, the sale has been scaled back. Only 1.5 per cent of the company will be sold, and the share offering may only raise $25 billion — enough to cover the Saudi government deficit for about six months. 

The precarious balance in Saudi society is maintained through lavish government spending that has relied on oil prices of $85 a barrel to drive revenues. But Brent oil prices have not been at that level in the last five years. Saudi Arabia is running deficits of around $60 billion a year to maintain services — and head off unrest.

Former CIA director David Petraeus noted ominously, “It’s a fact that Saudi Arabia is gradually running out of money.”

Even though Aramco is the most profitable company on the planet, with proven reserves of 270 billion barrels of the world’s cheapest oil, private equity investors so far have taken a pass on the IPO. Oil is a cyclical business, but their reluctance is not due to downturn slump in the sector. The reasons investors snubbed the sale seem more existential.

…click on the above link to read the rest of the article…

Scientists on where to be in the 21st century based on sustainability

Scientists on where to be in the 21st century based on sustainability

Preface. The article below is based on Hall & Day’s book “America’s Most Sustainable Cities and Regions: Surviving the 21st Century Megatrends”. Related articles:

Day, J. W., et al. Oct 2013. Sustainability and place: How emerging mega-trends of the 21st century will affect humans and nature at the landscape level.  Ecological Engineering.

Five scientists have written a peer-reviewed article about where the best and worst places will be in the future in America based on how sustainable a region is when you take into account climate change, energy reserves, population, sea-level rise, increasingly strong hurricanes, and other factors.  Three of the scientists, John W. Day, David Pimentel, and Charles Hall, are “rock stars” in  ecology. Below are some excerpts from this 16 page paper that I found of interest (select the title above to see the full original paper).

Best places to be

…click on the above link to read the rest of the article…

Global oil discoveries far from breaking even with consumption

Global oil discoveries far from breaking even with consumption

This image has an empty alt attribute; its file name is oil-discoveries-rystad-2013-2018.jpg

Preface.  According to Bloomberg (2016), oil discoveries in 2015 were the lowest since 1947, with just 2.7 billion barrels of conventional oil found globally (though Rystad calculated this differently at 5.6, nearly twice as much). Since the world burns 36.5 billion barrels of oil a year in 2019, we’re not even close to breaking even.

Rystad Energy (2019) in “Global discoveries on the rise as majors take a bigger bite” estimates barrels of oil equivalent, which includes both conventional oil and gas. Since oil is the master resource that makes gas, transportation, and all other goods and activities possible, I’ve taken the second number as the percent of oil in the BOE to come up with how much conventional oil was found. It falls way short of the 36.5 billion barrels we’re consuming. The pantry is emptying out, perhaps pushing the peak oil date forward in time as we continue to grow at 1% a year in oil consumption and put nothing at all back on the shelves.  Peak Demand? Ha!  Not until we’re forced to cut back from oil shortages.

2013 50:50 17.4 billion BOE  8.7 billion BOE oil  shortfall: 27.8 billion BOE
2014 54:46 16.0 billion BOE  7.4 billion BOE oil shortfall: 29.1 billion BOE
2015 61:39 14.4 billion BOE  5.6 billion BOE oil shortfall: 30.9 billion BOE
2016 57:43 8.4 billion BOE  3.6 billion BOE oil  shortfall: 32.9 billion BOE
2017 40:60 10.3 billion BOE 6.2 billion BOE oil shortfall: 30.3 billion BOE
2018 46:54 9.1 billion BOE 4.9 billion BOE oil  shortfall: 31.6 billion BOE

This doesn’t include fracked oil, but the IEA expects that to peak somewhere from now to 2023.

What it means is enjoy life while it’s still good, and stock your pantry while you’re at it.

***

Mikael, H. August 29, 2016. Oil Discoveries at 70-Year Low Signal Supply Shortfall Ahead. Bloomberg.

2016 figure only shows exploration results to August. Discoveries were just 230 million barrels in 1947 but skyrocketed the next year when Ghawar was discovered in Saudi Arabia, and is till the world's largest oil field.  Source: Wood Mackenzie
2016 figure only shows exploration results to August. Discoveries were just 230 million barrels in 1947 but skyrocketed the next year when Ghawar was discovered in Saudi Arabia, and it is still the world’s largest oil field, though recently it was learned that Ghawar is in decline at 3.5% a year. Source: Wood Mackenzie
…click on the above link to read the rest of the article…

How safe are utility-scale energy storage batteries?

How safe are utility-scale energy storage batteries?

Preface.  Airplanes can be forced to make an emergency landing if even a small external battery pack, like the kind used to charge cell phones, catches on fire (Mogg 2019).

If a small battery pack can force an airplane to land, imagine the conflagration of a utility scale storage battery might cause.

A lithium-ion battery designed to store just one day of U.S. electricity generation (11 TWh) to balance solar and wind power would be huge.  Using data from the Department of Energy (DOE/EPRI 2013) energy storage handbook, I calculated that the cost of a utility-scale lithium ion battery capable of storing 24 hours of electricity generation in the United States would cost $11.9 trillion dollars, take up 345 square miles, and weigh 74 million tons.

And at least 6 weeks of energy storage is needed to keep the grid up during times when there’s no sun or wind.  This storage has to come mainly from batteries, because there’s very few places to put Compressed Air Energy Storage (CAES), Pumped Hydro energy storage(PHS) (and also because it has a very low energy density), or Concentrated Solar Power with Thermal Energy Storage.  Currently natural gas is the main energy storage, always available to quickly step in when the wind dies and sun goes down, as well as provide power around the clock with help from coal, nuclear, and hydropower.

Storing large amounts of energy, whether it’s in larger rechargeable batteries, or smaller disposable batteries, can be inherently dangerous. The causes of lithium battery failure can include puncture, overcharge, overheating, short circuit, internal cell failure and manufacturing deficiencies.  Nearly all of the utility-scale batteries now on the grid or in development are massive versions the same lithium ion technology that powers cellphones and laptops.

This image has an empty alt attribute; its file name is 2MW-AZ-battery-that-exploded.jpg

…click on the above link to read the rest of the article…

BIGGEST BREAKTHROUGH IN ENERGY: Petroteq Losses Nearly 90% Of Its Value Since Last Report

BIGGEST BREAKTHROUGH IN ENERGY: Petroteq Losses Nearly 90% Of Its Value Since Last Report

Every day a new sucker is born.  That’s precisely why companies like Petroteq exist.  Since I exposed Petroteq back in March 2018, the company has lost nearly 90% of its value.  However, that hasn’t stopped the company from issuing new stock and racking up millions of dollars in funds to keep the scam alive.

I call Petroteq… the GIFT that keeps on TAKING.

Over the past year and a half, I have received several emails from followers or individuals who saw my article and asked if Petroteq was a good investment.  I gather my article published on March 16th, 2018 didn’t provide enough information to “Educate” the individual on why Petroteq was a crappy company.

So, I decided it was best to do an update or PART 2 on the disaster called Petroteq.

Again, back in March, I posted this article on Petroteq, BIGGEST BREAKTHROUGH IN ENERGY:  Investor Warning

If you haven’t read the article, I would recommend it. I am not going to rehash the information that I wrote back in March 2018, but what I am going to do is to show that this company continues to BAMBOOZLE INVESTORS even though the stock price is heading to ZERO.

I first came across the company from an article “TEASED” on Oilprice.com about a new technology that claims to produce oil at $20 a barrel.

Clean Oil That Only Costs $20

At first, I didn’t know what to think about this company because why would the editor in chief at Oilprice.com, James Stafford, publish this on their website if the company wasn’t legit?  However, after a bit of research, I found out that Petroteq was nothing more than your typical RUN-OF-THE-MILL Stock scam.

…click on the above link to read the rest of the article…

[Episode #108] – Will Energy Transition Be Rapid or Gradual?

[Episode #108] – Will Energy Transition Be Rapid or Gradual?

Champions of energy transition see it happening relatively quickly, emphasizing the advances that are being made in technologies, policy, and projects. While fossil fuel incumbents see a long, gradual process of energy transition, assuring us that demand for their products will remain strong for decades to come. So who’s right? Is energy transition going to be rapid, or gradual?

A new paper co-authored by Carbon Tracker, Bloomberg New Energy Finance, and the Rocky Mountain Institute contrasts these narratives and scenarios, and identifies some key distinguishing characteristics that can help us understand where they differ, as well as clarifying their underlying assumptions and perspectives, using those insights to inform our outlooks. In this episode, one of the authors from Carbon Tracker explains the analytical framework applied to these contrasting narratives, and shares his insights about the impact of the energy transition on financial markets, domestic politics and geopolitics, and how incumbents will have to navigate the new reality of climate change.Guest:

Kingsmill Bond is the Energy Strategist for Carbon Tracker, a London-based clean energy think tank. He believes that the energy transition is the most important driver of financial markets and geopolitics in the modern era. Over a 25 year career as an equity analyst and strategist at institutions such as Deutsche Bank, Sberbank and Citibank, he has researched emerging markets, the shale revolution and the impact of US energy independence. At Carbon Tracker, he has written about the impact of the energy transition on financial markets, domestic politics and geopolitics, and authored a series of reports on the myths of the energy transition, looking at the many arguments made by incumbents to deny the reality of change.

On Twitter: @KingsmillBond

On the Web:  Kingsmill’s page at Carbon Tracker

Enviros Tools of Russians? The Weird Conspiracy Theory Firing up Kenney’s Inquiry

Enviros Tools of Russians? The Weird Conspiracy Theory Firing up Kenney’s Inquiry

SPECIAL REPORT: Alberta’s ‘anti-energy’ probe makes a debunked US report its must-read.

LamarSmith.jpg
Texas Republican Lamar Smith, a noted climate denier and big recipient of oil and gas political donations, led a House committee that produced a report suggesting environmentalists are manipulated by the Russian government.

Russian Attempts to Influence U.S. Domestic Energy Markets by Exploiting Social Media was produced by the U.S. House of Representatives Committee on Science, Space and Technology, which at the time was led by a climate change-denying Republican from Texas named Lamar Smith. Upon its release in 2018, Democratic Congressman Raúl Grijalva described the report as “another round of unsupported conspiracy theories,” and it received little traction.

Now the report is officially required reading for Alberta’s inquiry, explicitly included in its terms of reference.

Why would that be? Answers were not forthcoming from Inquiry Commissioner Steve Allan, who didn’t respond to The Tyee’s interview request.

“There is very little the commissioner can share with the media at this time that is not contained on this website,” reads the Alberta Inquiry website. The commission’s terms of reference also explain that “As part of the inquiry, the commissioner shall examine the work completed by other investigations in other jurisdictions into similar activities or alleged activities.”

A New York-based journalist who wrote an article about the Republican-produced report was surprised Alberta is paying attention to its claims of Russian intrigue.

“That is unexpected,” said John Timmer, senior science editor for the media outlet Ars Technica. The report “didn’t pick up very wide coverage perhaps because it was rather strange to begin with… It just didn’t really hold up to a critical analysis very well.”

“It’s just a bizarre compilation of allegations that feeds a conspiracy theory,” said Devon Page, the executive director of Ecojustice, about the report’s inclusion in the Alberta inquiry’s terms of reference.

…click on the above link to read the rest of the article…

There is no such thing as a business as usual scenario

There is no such thing as a business as usual scenario

The discussions about how much it will cost to mitigate climate change is a smokescreen. What constitutes a cost is not an objective fact, but laden with assumptions and subjective values.  

How much does it cost to stop climate change, to keep within the target of the Paris agreement? 

The answer depends on who asks and what is meant by costs. In the normal case we would say that something costs when we have to pay for something that we buy or possibly that we make ourselves, counting our work as a cost. In the mainstream discussion of climate change mitigation, cost can also mean loss of income or a lower GDP compared to a business as usual scenario. There are very small costs for the Brazilian government in protecting the Amazon. But the contribution of a protected Amazon forest to the Brazilian economy is small compared to the timber that could be sold, the hydroelectricity and minerals that could be extracted, the soy or beef that could be produced. 

There are many pits to fall into when discussing the cost of climate change mitigation. 

First, to compare mitigation measures with business as usual scenarios that omit the increasing cost of climate change is simply misleading. The costs of inaction are certainly bigger than the costs of action. 

Second, the business as usual scenario is based on that existing goods and services are desirable and that not doing certain things incur a loss of sorts. But there is no such relationship. If the US cuts spending on its military in half it would be just fine. If I skip a trip to Bangkok nobody will suffer.

 …click on the above link to read the rest of the article…

Olduvai IV: Courage
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Olduvai II: Exodus
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