Anticipating the Peak of World Oil Production

These are indeed good times to be a Peak Oiler. All the  peak oil deniers are dancing with wild exuberance, pointing to that spike of US shale oil production that they believe drives the final nail in the “Peak Oil Theory” coffin. And it is all happening right before reality slaps them in the face.

There is no doubt that world Crude + Condensate production, without that tight oil spike, has been on a ten year bumpy plateau.

World Less USA A

But, you may ask, when the shale bubble burst, won’t that only mean we will still stay on that bumpy plateau? No for several reasons. First the bursting of the shale bubble will likely cause a decline in US production of perhaps half a million barrels per day per year for three to four years. Second Russia, whose production increase of over 1.5 million barrels per day over the past ten years has kept us on this bumpy plateau, is now in decline.

And third, five nations that have shown considerable increase over the past few years now seem to have peaked.

China et al

These five nations, who’s 2 million barrel per day increase since mid 2004, have also kept us on that plateau. Their combined production plateaued a year and a half ago. I don’t expect them to decline very fast but they will not add anything to world production in the next few years.

The only nations that are not at or near their peak are Canada, Kazakhstan and Iraq. Kazakhstan hopes to bring the much delayed and way over budget Kashagan field on line in 2016. The once hoped for 1.5 million barrels per day output from Kashagan now appears to be greatly downgraded. Downgraded perhaps to well under .5 million barrels per day.

Iraq, in light of the ongoing conflict there, is unlikely to increase very much if any at all in the next five years or so. In fact Iraq’s production will very likely fall in the near future. Canada will likely continue to increase tar sands production at a slower rate.

But back to Russia!

Russia CDU TEK

Jodi has Russia peaking in November 2013 at 10,127,000 bp/d. The EIA has them also peaking in November at 10,209,000 bp/d. The Russian web site CDU TEK has them peaking at 1,458,000 tons per day. Figuring 7.27 barrels per ton that comes to 10,602,000 barrels per day. I think the EIA figures are the closest but anyway….

Russia CDU TEK

This is a daily chart of 2014 using 7.27 barrels per ton. Both this and the monthly chart are through July 24th. The spikes down in July are an anomaly, most likely caused by pipeline shutdowns due to Siberian wildfires. However I expect the August numbers to be considerably lower than the June production numbers.

Bottom line, there is no doubt that Russia is now in decline and with the political problems there now the problem is likely to get worse, perhaps a lot worse. Here is what Ambrose Evans-Pritchard writing in The Telegraph says, bold mine:

The proposed sanctions will target both the debt and equity of Russia’s major banks, effectively severing access to global capital markets. It also targets the technology for drilling in the Arctic and for opening up the Bazhenov shale basin, both needed to replace Russia’s depleting oil reserves.

Russia has a lot of gas, but gas trades at an oil-equivalent price of $60bn a barrel in Europe. It is not very profitable. Analysts suspect that Gazprom’s pipeline deal with China is at or below the break-even cost of production, assuming it ever happens.

The International Energy Agency says Russia needs $750bn of fresh investment over the next 20 years just to stop oil and gas output declining. This has already become unthinkable. Who is going to wager so much money, for such questionable returns, in the face of so much political risk?

Unthinkable indeed, and then this: Russia Oil Exports by Sea to Reach 6-Year Low

Seaborne crude shipments from the world’s biggest energy exporter via the state-run pipeline system in August will fall 9.2 percent from this month to 2.215 million barrels a day, according to loading programs obtained by Bloomberg News. That’s the lowest since Bloomberg began tracking the data in 2008. Russia’s two biggest crude terminals, Primorsk and Novorossiysk, will both export the least on record.

I don’t understand why these Russian oil production and export problems are not all over the news? They should be headlines but using google news “Russian Oil Production” you get almost nothing.

Okay we have discussed Russia, the USA, Kazakhstan, Canada and Iraq, and the five countries in the second chart up top, China, Colombia, Oman, Kuwait and the UAE, but what about the rest of the world? What can we expect from them?

Rest of the World

We can expect them to keep doing what they have done for since peaking in 2005, they will continue to decline. Combined they have declined 6 million barrels per day in the past nine years. I don’t expect that decline rate to slow.

I will close this post with one of Gail Tverberg’s charts from her latest post:
World Oil Production at 3/31/2014–Where are We Headed?

Gail's Graph

See that little green spike on the very right of the chart? That is what the peak oil deniers are all cheering about. That little spike is responsible for the death of peak oil, or so they think. Boy are they in for a shock.

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207 Responses to Anticipating the Peak of World Oil Production

  1. Coolreit says:

    Excellent work as usual!

  2. NW Peaker says:

    Thanks for the great ‘world’ overview. I wish I could say that I was as well-informed on the stats and trends as you but, for this ‘peaker’ the information you convey is succint and valued. The graphs, as always, are great and I really enjoy your commentaries. Keep up the great work, Ron, and thanks again.

  3. yiedyie says:

    I was not able to find how the decline curve looks for EOR fields.
    Does someone have at hand some cases?
    BTW. Is it known how much of Saudi Arabia extraction uses EOR?

  4. Byron Walter says:

    Great work. Makes me feel like the member of the Secret Squirrel Society. I bet that virtually no one in NA is aware of that TASS report regarding Russian oil production. I’ve been hunkered down, waiting for it… just never expected that TASS would actually report it (and that almost nobody would notice). It seems unlikely that SA can increase production to compensate for Russian decline and tight oil in the US is unlikely to be sustainable beyond a few years (hope I’m wrong). I think that we could give the Canadian tar sands a little tough love:)

    • Watcher says:

      A decrease in Russian oil production is nationalistic positive. Saving it for the grandchildren and raising the price for their enemies.

      • Watcher, it is not decreasing because they are saving it. It is decreasing because it’s gone. One cannot save what is already gone.

        • Old farmer mac says:

          Hi Ron (and Watcher),

          I will rephrase both your and arguments a bit to suit my perspective. You are right imo in the short to medium term. Watcher is imo right in the long term. The easy or relatively easy oil that can be gotten to market at current prices is no doubt peaking and will soon be declining.

          BUT the stuff that stays in the ground because of sanctions and extraction costs in my opinion will likely be brought to market in coming decades. Higher prices will make it possible.

          Sanctions are not likely to last in the face of declining world production and the Russians will figure out a way out of their current income or borrow the money from countries increasingly desperate for oil later on.

          Lets not forget that the Russians are extremely capable engineers and that they build stuff as good as any in the world when it comes to heavy duty weapons and industrial machinery and spacecraft and such.

          They can very easily steal data and eventually duplicate any machinery used in oil fields without even having to do the trial and error work of inventing it.

          I do agree that any substantial near term increase in the price of oil will bring the world economy to it’s knees.

          BUT over the longer term – unless things go to hell so fast the world has no time to adapt- we will learn to get by with ever more expensive oil for the simple reason that the less we use the higher the marginal utility of the last barrel.

          Commuting in six thousand pound pickup trucks is soon going to be over and done with but commuting in sixty mpg cars can continue for a while and plowing with twenty dollar a gallon diesel will always be cheaper than plowing with horses.

          Basically what I am saying is that I believe supplies will decline FASTER than demand in the sense that oil will keep selling at ever higher prices. I just cannot see any long term significant decline in the price of the nasty stuff.

          This is not to say that oil might not come down dramatically for a few months or even a year in the event of an economic crash but I don’t think the price can stay down very long. The easy stuff is mostly gone and what is left is in the hands of sovereign governments that can negotiate good prices for it as the higher cost producers shut in their production.All the newer oil fields I hear about need prices upwards of a hundred bucks a barrel to be economically feasible.

          Depletion never sleeps.People and governments will pay what they have to for oil in order to survive.

          Lawyers will drive Volts if they have to. People such as yours will ride scooters if they have to. I am dickering on one right now that will return over a hundred miles per gallon if ridden gently.I will use it only in the quiet neighborhood where I live though being afraid to ride it in heavy traffic.

          A drunk will drink rotgut rather than ” good stuff” in order to get to work.

          People will give up a hell of a lot- cable tv and vacations for example -before they give up the house in suburbia for a non existent place downtown. But down town is coming back no doubt- given time of course.

          Hundred mpg cars are coming and battery electric cars are coming. The only thing that will prevent their coming is a fast crash.The tech is off the shelf today.

          The possibility of a fast crash scares the hell out of me because in that event we will have no time window to adopt new ways. I recognize that the crash might be fast. I do not dispute that it is inevitably coming.

          I have set aside an older four by four truck with a granny gear stick shift and humongous engine just in case the crash is fast. I can convert her to run on wood gas and hook on a hay wagon and take twenty people to town on a couple of wheelbarrows full of wood chips until the ruts in the road get too deep for that old truck. That would be about knee deep if the weather is dry.

          This project is going to be mostly for the fun of it of course since I expect to always be able to buy SOME gasoline for the remainder of my life. BUT there are no guarantees.

          • Doug Leighton says:

            “They can very easily steal data and eventually duplicate any machinery used in oil fields without even having to do the trial and error work of inventing it.”

            Not true, you don’t have to steal anything. I spent 35 years working in the oil patch, on three continents, with engineers from every race and we all had equal access to exactly the same stuff. Maybe the Brazilians will come up with some deep water “tricks” but within a few months it won’t be new anymore. And, Chinese Engineers are no better or worse that Russian Engineers or Norwegian or American Engineers. It’s true that Russian geoscientists settled on different methodology for reserve (reservoir) calculations — not better, not worse, just different.

            • Old farmer mac says:

              Hi Doug,

              In general I agree with you. There is a saying in military security circles to the effect that the only real secret that matters in terms of a new weapon is the fact of its existence becoming known. The old soviets for instance knew absolutely for sure that building an atomic bomb was possible once we used one and could thus spend the resources on building their own with confidence.

              I was thinking more in terms of actual drawings and specifications of machinery and the precise composition of materials such as fracking chemicals.Beyond drawings they will no doubt be able to easily put their hands on actual examples of such exotic ( to a layman) items as down hole pumps and drills and all sorts of stuff as fast as the newer models become available.

              People manage to put their hands on things as tightly controlled as antiaircraft rockets.

              My intent was to point out that sanctions would not prevent them from building their own advanced equipment assuming they can find the capital to do so.

              If I am right about a continuing long term rise in oil prices the choice will be easy.They will be able to recoup the cost of that new machinery in fairly short order.They might even be able to buy it in a one good condition on the used market without cash. Barter still works in a situation such as this one.

              Give me your ( to you ) useless drill rig since you have found no oil and I will in turn give you some oil.

              BUT all such discussions as this one make little or no sense without specifying a time frame.

              Ron and the hard core dormers are going to be proven right in the end.I just happen to think that rich countries such as the US are going to have an opportunity to weather the peak oil storm via efficiency and forced conservation and belt tightening of the most drastic sort.

              I am not kidding about the next generation of kids riding scooters and bicycles rather than driving Mustangs and Camaros.

              There is only a couple of hundred bucks left to negotiate in the purchase on my part of a used fuel injected water cooled Honda hundred mpg plus scooter.If the owner doesn’t come down I will pay his price.

              If any mechanically inclined types here are looking for a business opportunity associated with panicked motorists when peak oil hits with a vengeance modifying existing cars to improve fuel economy might be worth looking into.

          • Mac, you got almost everything right except this line:

            People and governments will pay what they have to for oil in order to survive.

            Well, no they won’t. People cannot pay if they don’t have the money to pay with. There is a limit to the price of anything…. and everything. If the last hamburger was priced at ten thousand dollars and all you have is two cents, you are very likely to starve. And anyway as the supply declines the oil will always go to the highest bidder. And as always in such cases, some bids will not be high enough and those people will be left with no oil.

            And I think you guys are missing the point about Russian oil. Their old field started depleting very rapidly a few years ago. But they, the Russians, started spending massive amounts of money on infill drilling, drilling 5,000 to 6,000 new wells per year in the old fields. From 5 years ago:
            Russian Oil and Gas Industry Surprises Analysts

            There are plenty of projects in Russia, both, new projects and existing brownfield projects. Russia is a very mature producer. If you exclude all the drilling activity taking place every year, then Russian organic decline in production is close to 19%. To compensate for that organic decline, Russia drills somewhere between 5,000 and 6,000 wells every year.

            But drilling 5 to 6 thousand infill wells per year does not create any more oil. All it does is suck the oil out a lot faster. Of course there are a lot of new fields. But most of these are very small. The only one of any size, Vankor, is now at full production. New oil from Vankor was the only thing that kept the decline from starting last year. Now that it is at full production, there is no way to go but down.

            So don’t talk about saving oil for future generations. Russia might do that but if they do then their production will fall at 10% instead of 3 to 3.5% per year.

            • Old farmer mac says:

              I did not mean to imply that any oil left in the ground in Russia would be left there deliberately for future generations- although I do think there is a possibility a few countries may take such an approach to conserving their oil in a minor way.

              I meant to say that it would still be there to be extracted at a future time when the price is high enough to justify the expense.

              I do not doubt you are right about Russian production declining at a pretty fast pace in the not so distant future.

              I certainly agree that if people have no money they cannot buy oil even at ten dollars a barrel never mind a hundred fifty and then two hundred-which is in the ballpark of what it will be selling for in a decade or two in my estimation.

              I am just saying that so long as the economy does not simply crash like a sand castle in front of a large wave we will adjust to higher prices because we ain’t got no stinking choice except mad max and starvation and murder in the streets and death by disease and exposure.

              People for instance involved in earning their living in businesses relating to air travel are all going to be in a hell of a fix in a decade. More than half of them will be out of work in my opinion.But in this country they will get a government issued charity food and shelter ration sufficient to keep body and soul together and many or most of them will be provided some sort of hopefully useful make work.

              I expect living standards to decline dramatically but not widespread starvation in a country such as this one – especially not in this one.

              Now in a country such as Egypt- I shudder to think how bad it is going to be there in twenty years- maybe in less than ten when they are no longer able to borrow to pay for imported food and energy.

              I am hoping and assuming things don’t go to hell at a very fast pace of course.In that case we are in for some very interesting times.

              Got Ammo ?

              I am personally prepared to fort up and live without grid juice and on what I can raise myself.

              But if it comes to that somebody will no doubt murder me sooner rather than later unless I can become part of a very well coordinated and determined local militia.

              There is enough fertilizer and diesel fuel on the place to for me to live as a subsistence farmer for a very long time- and a damned good thing too because I do not have any draft animals and would not be able to buy or trade for any in the event of a sudden fast collapse.

              I guess I could eventually train a cow to pull a plow. At least one of my great grandfathers plowed with steers but I don’t know for sure if he trained them himself.

              I could fabricate collars and yokes and that sort of stuff myself, good enough to get by.

              For that matter I could spade up enough ground to grow my own food on the best ground on my place but it would take weeks to do so given my age.

              A subsistence farmer expects to work long hard hours for his food and rough shelter and die when he is no longer able to work unless he has children to look after him.I would not last very long without either help or draft animals.

              • Doug Leighton says:

                Mac, you normally have practical common sense ideas but there are times you seem to live in the Hollywood world of Roy Rogers and Hopalong Cassidy. Do you think some leather clad motorcycle gang (armed to the teeth) who haven’t had a square meal for three days are going to drive by your green oasis sending your smiling crew friendly waves of encouragement? I’d bet that it becomes impossible to survive, the way you describe, with anarchy reining around you.

                • TechGuy says:

                  “Do you think some leather clad motorcycle gang (armed to the teeth) who haven’t had a square meal for three days are going to drive by your green oasis”

                  That depends on where he lives. If OFM lives in the boonies away from any cites or big towns than its very likely that the roving gangs are not coming. All OFM has to do is deal with his neighbors. Perhaps paying them off with food or setting up some sort of co-op.

                  I very much doubt the anyone will travel down miles of rural country roads in seeking of the off-chance of finding an operational off-grid farm (needle in a haystack). People are lazy and in my opinion, stupid. The will scavenge from areas that are nearby to them rather than travel hundreds of miles to farm country. Before they get anywhere near farm country they will have exhausted all of their fuel. FWIW: The fuel will run out well before their food does. Most farms would become unoperatable with out electricity and fuel. Most farms are monocrops or livestock (importing feed) as its much easier to operate a simplified farm instead of a multicrop/seed preservation/self-reliant system. After one season probably 98% of all farms will be inoperable so traveling to farm country in search of food is going to be pointless.

                  Perhaps OFM efforts will fail, but at least its a plan worth trying as the alternative is starvation and death. In my opinion is better to try a plan than simply give up hope and wait for disaster.

                  FWIW: I am with OFM on this strategy and I am working on a simular plan. As I see it I have two choices:
                  1. Live the next few years spending my savings traveling the world living in luxury and suffer the consequences as they unfold
                  2. Relocate to a rural region and adapt a self-reliance plan. Hope that one day I can contribute to reconstruction after the crisis has run its course. That said, this may be a fools errand since I am certain civilization will go do with a nuclear bang. At least if I am busy and working on a plan I can avoid depressions and I won’t feel guilt about the life choices I’ve made.

                • Old farmer mac says:

                  I realize that the chances of my being murdered personally for a few bags of fertilizer and a couple of drums of diesel are sort of high in the event of a mad max collapse.

                  But I am prepared to work with my neighbors- a good many of them have ” seen the elephant” in Vietnam and the Gulf Wars and a lot more of them are peace time veterans. I can still get a deer at long range myself if it will stand still long enough.People in these southern hills have always had a well deserved reputation for violence and just about everybody local owns a personal arsenal.We may not last but we are still small farm guys gun toting church going guys who know how to raise more than just corn and soybeans.

                  We have a better shot at survival in my estimation than most people in the event of a sudden collapse.

                  If we get invaded by the Hells Angels we will in the words of one of Twains immortal characters ”lay for them” .This expression is still commonly used in the mountains of the south and it means that the speaker will ambush the victim so as to kill him safely.

                  We have only ever had one occasion to my knowledge where a motorcycle gang or similar characters of the organized sort tried to take up residence locally. This was a good many years ago, maybe in the sixties or even farther back. I have heard the story often but it is so old not people who knew about it personally are mostly dead.

                  Somebody – presumably a victim of one of them- ”laid for ” them and shot a couple from ambush. The rest of them packed up and left here pronto seeing as they could not identify the shooter and had no desire to take on the community as whole. The sheriff at the time most certainly didn’t waste any county money looking for the perp.

                  But we may have a developing organized crime problem now. We have lots of immigrants and they are now numerous enough to have communities of their own that will sometimes protect the bad element.This could be a real problem locally in a few years.

                  The good local people have a lot to lose when they take up a firearm but a young punk has nothing to lose except his life which he is usually perfectly willing to put on the line for money and status.

                  As the saying goes it is better to yield the right of way to a mad dog that to get bitten.Even killing the dog will not cure the bite.

                  It cost me two thousand dollars and a good bit of worry to get an arrest expunged for confronting- with my double barreled shotgun- a punk who was threatening to kill me with a mattock handle.

                  I lost the two thousand but he got the message- if he ever sets foot on my place again I will need that lawyer a lot more urgently, and not just to get the records expunged. The charges were dismissed with prejudice in my favor but I still lost big time. The punk and his lying friends lost nothing at all except the time which was actually just on the job training for them. They brought the charges purely for spite knowing that doing so would cause me considerable grief- more grief for a person like me than thirty days in jail would be to them.

                  He is now pulling fifteen years for various offenses including threatening to burn out his ex wife and possession of a weapon as a convicted felon.I may never actually see him again considering my own age.Good riddance.

                  I was in the final running for a very good job about that time but the hr person who was making the decision wasn’t interested in the details. She just said no thanks and to hell with you for wasting my time when my paper work made it to her desk. That is why I spent the extra two grand on expunging the record. Too late but I used to work in nuclear plants and other sensitive places such as public schools and needed the perfectly clean criminal record in case I needed to work again.

              • wimbi says:

                puzzle to me that you folks didn’t say anything about solar.

                I spent about the same as a bottom of line small car and got 10kW of PV. Yesterday I took 3 kW-hrs from the grid and gave them back 39, while running everything in my house on the rest of it. Plus the trips to town in the Leaf, which is way too fancy for my uses, but all I could get.

                Electricity is easy to use, and the junk yards are packed with the makin’s of lots of electric stuff.

                And, sure, batteries and inverters can crap out, but direct unmodified DC from PV can to most anything if properly handled.

                • Patrick R says:

                  Yes our future is electrical. And will be generated, distributed, and consumed more locally. Right down to personal generation and consumption; in our clothes for example, both by PV and kinetically.

                • Stephen Hren says:

                  Wimbi,

                  Agreed. I have been living primarily on solar since 2006, including transportation, in downtown Durham (where I mostly walk or bike). I live a great middle class life with my family. I used to live way out in the country which meant I had to drive all the time, but since I gave that up I don’t miss it AT ALL! More time, healthier, less headaches about the car breaking down (still have one but rarely used – 1997 Saturn that sees about 2500 miles a year). And the money saved is tremendous.

                  The PV system and solar water heater cost me about $30K but the average person spends almost $9K on gas and car repairs every year. Since we were able to give up one car by moving into the city, this is no big deal. Still have a small yard with chickens and lots of veggies growing. Here’s a question:

                  What if peak oil happened and it was No Big Deal? Fundamentally, I believe we will choose by our willingness (or lack of) to change whether this is so or not.

                  • wimbi says:

                    “we choose by our willingness to change”
                    Right!

                    OK, all you smart people. What’s your answer to Stephen’s question?

                    OFM, I await your wisdom.

      • Ilambiquated says:

        I agree in the general case. For example Libya isn’t losing anything by not exporting oil. It is just saving it up for when it is more expensive. In the nineties they pumped out all the North Sea oil and sold it for $20. Smart.

        • Patrick R says:

          It is what is happening, as before, but it isn’t a decision to conserve oil, but a ‘decision’ to have a failed state; and that can hardly be called smart.

          • Watcher says:

            Libya doesn’t produce because there is no Libya.

            In contrast, Russia and KSA surely have had conversations internally about how their customers backstab them with efforts to develop oil alternatives.

  5. Dennis Coyne says:

    Hi Ron,

    The rest of the world chart shows about 44 Mb/d in 2005 and 38 Mb/d in 2014. The decline rate is:
    ln(38/44) divided by 9 times 100 = -1.6%. For the world the decline rate will be a little lower due to Russia, Iraq, Canada, and the US, once LTO in the US peaks (which depends in part on oil prices and other factors and is difficult to predict) in the 2016 to 2020 time frame, the decline in C+C output will be quite obvious.

    • For the world the decline rate will be a little lower due to Russia,….

      Errrr… don’t you mean the world decline rate will be a little higher due to Russia? 😉

      Seriously, just guessing, and we are all just guessing, but I believe the decline rate the first year after peak will be around 1%, increasing to 1.5 to 2% the second year and increasing a few tenths of a percentage point after that until it hits 3 to 4%. Then all hell will break loose due to high oil prices, or collapsed economies or political insurrection.

      But politics and chaos are two things that are extremely hard to predict. None of us really knows what is likely to happen five to ten years after the peak. The only thing I am confident of is that it won’t be pretty.

      Edit: I expect the Russian natural decline rate, beginning in 2015, to be around 3.5% per year. But political problems could double that decline rate. So seriously, the decline rate will be higher because of Russia.

      The decline rate in 2014, from year end 2013 to year end 2014, will also be around 3.5 percent. But production in the first half of 2013 was quite low. So if you are averaging 2013 production versus 2014 production, then the decline rate will not be nearly that much.

      • Dennis Coyne says:

        Hi Ron,

        Yes these are all guesses, and mostly I agree with your guesses. I believe that you have pointed out before that the decline rate will depend on depletion rates and that as depletion rates go up decline rates might decrease over the short term. However there is a tradeoff where we get lower decline rates short term in exchange for higher decline rates in the long term.

        It would be better if there is not a big push to increase the rate of depletion in order to keep decline rates low, but it is more likely that depletion rates will be pushed as high as possible to keep output high.

        I created two alternative oil shock models based on a crude minus extra heavy (oil sands and Orinoco belt oil) URR of 2500 Gb with an extra heavy URR of 500 Gb, for a total C+C URR of 3000 Gb. The first assumes depletion rates remain close to present average levels worldwide (approximately 5% using an oil shock model with fallow, build, and maturation average time periods of 10 years, previously I had used 8 years).
        The second scenario assumes depletion rates rise in a parabolic (x squared) fashion until reaching 93% of 1973 levels (the high point since 1960) by 2050. Chart below with scenarios described above:

      • BW Hill says:

        Ron said:

        Seriously, just guessing, and we are all just guessing, but I believe the decline rate the first year after peak will be around 1%, increasing to 1.5 to 2% the second year and increasing a few tenths of a percentage point after that until it hits 3 to 4%. Then all hell will break loose due to high oil prices, or collapsed economies or political insurrection.

        To substantiate your guess here is the computer output from our model using the skewed logistic function that we developed:

        Year Total Decline %

        2015 0.97
        2016 1.99
        2017 3.06
        2018 4.20
        2019 5.39
        2020 6.63
        2021 7.91
        2022 9.23
        2023 10.59
        2024 11.99
        2025 13.41

        The skewed logistic function, unlike the normal logistic function, gives a long plateau after the peak (a very, very slow decline) which the model shows occurred in 2005 (year end, 2006 start of year).

        Our model, because it is an energy based model , considers only conventional crude with 3% condensate. That has probably been the historic average production of condensate from conventional. It also indicates that “all hell will break loose due to high oil prices” around 2020, or at an accumulated decline of about 6 to 7%. Our model, and your guesses give eerily similar projections.

        Other factors could hold down oil prices for some time (CB intervention, declining economic activity, and etc.) but when it does eventually break loose, and it has to at some point, the impact will be crushing to the world’s economy.

        http://www.thehillsgroup.org/

        • Dennis Coyne says:

          Hi BW Hill,

          What URR are you using for Crude plus condensate? Your skewed logistic gives surprisingly high decline rates. Do you assume that output from oil sands and the Orinoco belt will be close to zero? For comparison Jean Laherrere estimates a C+C URR of 2700 Gb, 500 Gb is extra heavy oil from the Orinoco and oil sands combined.

  6. ChiefFinancialEngineering says:

    Well there goes my hopes for a new BigAss SUV

    Point being, we should feel fortunate for this opportunity to transition our assets to low consumption vehicles and life styles. It’s all going to be about doing more with less.

    Bikes are great cardio exercise and our world isn’t coming to an end (yet).

    Thanks Ron

  7. Andy Hamilton says:

    Good stuff. Just a question from the AEP piece you quote:

    ”but gas trades at an oil-equivalent price of $60bn a barrel in Europe”

    Is it me or is that one expensive amount of gas?

    • I have no idea but the guy’s a Brit so I must assume he knows what he is talking about gas prices in Europe, or the UK anyway.

      That is quite high compared to the US. But remember natural gas is dirt cheap here. But then when you are selling “BOE” but getting only 60% of the oil equivalent price then you still have a serious problem even if it is still a lot higher than in the USA.

  8. KLR says:

    Reuters UK had a good piece on The Big One: Russia’s Bazhenov shale.

    The attractions of the Bazhenov for Western oil companies and their Russian counterparts are obvious: an enormous world-class onshore oil resource that would benefit from Western expertise in hydraulic fracturing, horizontal drilling and seismic surveying.

    The obstacles are mostly above rather than below ground. Russia has proved a difficult financial and business operating environment for Western oil firms, with abrupt changes in royalties and taxation, regulations, and asset ownership rules.

    According to the article the USSR did some of its experimentation with peaceful use of nukes for well stimulation in parts of the Bazhenov. The ridiculously huge size of this formation could in theory offset almost any kind of conventional production decline in Russia, from the sounds of things. About the biggest caveats I’ve read about are related to above ground concerns as mentioned by Reuters, and the formation being underneath rather more rugged topography than is found in the US examples – but given that we’re talking about a patch of land the size of the Gulf of Mexico, even a half hearted extraction of 5% of its potential could draw up an awful lot of oil.

    • Watcher says:

      Sniffing around, there doesn’t seem to be a proppant source anywhere near mid Russia other than black cat ceramics. Pricey stuff.

      A couple of years ago it was presumed that China was going to dominate proppant sales because they were generating a LOT of ceramics. But pricey. The price tag may have driven the US to Northern White sand, which means quietly that output per stage is significantly less than it could be with ceramic.

      So in addition to any other reasons to doubt the pricing of this big Russian shale effort, tack on ceramics.

      OFM guy with his confidence of higher prices regardless of GDP smash gets some more ammo in this.

    • canabuck says:

      Russia is not a backward nation in terms of oil production. I suspect that if their older fields decline a bit, there will be a whole lot of investment into their Bazhenov oil shale. Their economy is approx. $3000 Billion, and so putting $75 Billion (2.5%) of this into oil shale is not unreasonable at all.

      I think for the world as a whole, we can put 4 or 5% of GNP into oil production, and for a petro-state, I’m sure it is two or three times this number. So, for Russia, 10 – 15% of their economy could be oil, and they would be better for it.

      • Their economy is approx. $3000 Billion, and so putting $75 Billion (2.5%) of this into oil shale is not unreasonable at all.

        Russian GDP was, in 2013, 2,096 Billion, not 3,000 billion. But that is the total amount of goods and services produced, not profit for the state or oil companies. That figure, their GDP, means nothing when you are talking about spare investment capital.

        The Bazhenov oil shale may or may not be a profitable venture, and they may raise the capital. But quoting their GDP, and exaggerating it by almost one third, is no indication as to whether or not this adventure may be undertaken. Saying: “They can afford it because their GDP is such and such”, is a red herring and is no indication whatsoever of whether they can raise the money or not.

        Russia GDP

        • Watcher says:

          But this is not the right perspective.

          Whether or not they can afford to develop the shale . . . why does that matter?

          They are consuming 3-4 mbpd and exporting 7. So they export 4. Just cut back. It can be before they are forced to cut back, or even if they are forced to cut back.

          The point is victory. Not cash flow. They can crush their enemies because the day they cut back, they become the swing producer.

          • Jeffrey J. Brown says:

            Some EIA production and net export numbers for Russia are down the thread.

          • Bandits says:

            You and OFM have the same mental blocks. If you assume that an economy can be sustained by using less energy, you can claim any wild eyed outcome you like.

        • canabuck says:

          Point taken. One has to consider that this $75 Billion/year is *extra* investment beyond what they are doing right now. And then, it only serves to maintain oil output or maybe increase it a bit.
          However, I did look at Wikipedia for the Russian GDP here and quickly chose a median number.

          • canabuck says:

            During WWII a good percentage of the allied economy went into the war machine. I wonder what is the maximum percentage of an economy that can be put into capital investment?

        • Dennis Coyne says:

          Hi Ron,

          At Wikipedia, the 2013 GDP PPP estimate by the World Bank is 3461 billion dollars, the IMF 2013 GDP PPP estimate is 2556 billion dollars. The average of the two is about $3000 billion for the GDP PPP estimate, which most international economists would argue is the better measure.

          http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)

          For nominal GDP, your number of around $2000 billion is correct see

          http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)

          World Bank 2013 estimate is 2097 billion dollars (nominal).

          Generally it is the case that a country with a higher GDP will be capable of higher investment levels.

          Note that the GDP in PPP terms is what you yourself used when talking about the size of the Chinese economy in an earlier comment (previous post), so one would have thought that this was your preferred measure for GDP.

    • Anon says:

      There are two issues with the Russian shale.

      (1) Geopolitical. This Ukraine mess has led to much tougher sanctions than anyone was expecting. Sanctions on the oil and financial sector will both impair Russia’s general economic performance (they have stagflation breaking out) and make it very difficult to finance this. At an extreme level, the US companies would not be able to do any business with the Russians, which would set them back years.

      (2) Logistical costs. Many US shale wells aren’t particularly profitable at ~ $100. Siberia has logistical challenges that make the US projects look tame. No local infrastructure, no good water supplies, no local frack sand, it just goes on. That could lead to the break-even point on Russian shale being north of $150 or even $200 in constant 2010 dollars. As a replacement for low-cost production that is depleting, that leaves a lot to be desired, especially if the breaking point for general global economic growth is, say, $140.

  9. KLR says:

    Checking for news on the Trans-Alaska Pipeline I found this interesting item, which I posted at peakoil.com but thought I’d repeat here, this is quite a bit of news in my opinion: Sliding mass threatens pipeline, Dalton Highway – Fairbanks Daily News-Miner: Local News

    At this point it’s difficult to predict the exact amount of time it will take for the debris lobe to hit the highway, but estimates range from as far out as 10 years to as soon as three years. When it does hit the highway, and it will hit the highway, Darrow said, it will do so with significant destructive force. After reaching the highway, the debris lobe would strike the roadway with a 50 tons of material per day, according to Darrow.
    Not only would the situation become a headache for DOT as well as oil companies driving up and down the highway, but the roadway’s position could also create a serious problem for the pipeline that runs just to the west. Instead of slowing the debris lobe, hitting the edge of the road could actually speed the mass up.

    Known as “Frozen Debris Lobe A,” the offending mass of earth first came to the attention of transportation crews in the 1970s during the construction of the Dalton Highway, though it would not receive a name for another 30 or 40 years. When they first noticed the debris lobes coming down out of the mountains, crews thought the masses of earth were dormant, no-longer moving leftovers of some past geologic event.
    For years that was the accepted narrative.

    Interesting margin of error there regarding when they gave the thing a name. $68 million to move the highway, that’ll happen without question, but what about TAPS? And they’ve only recently began to study these things in the first place!

    Check out the links in the comments – you can really see the slide coming down the mountains, especially on LIDAR. TAPS runs just west of the Dalton highway according to the story, although on the Google Street View you don’t really get a clear view of it; but there are various access roads leading over to it. Actually I don’t see how moving the highway would buy them much of any time here – to permanently get out the slide’s way they’d have to reroute to the other side of the river west of the highway/TAPS, which I’m guessing is the Middle Fork of the Koyukuk. But is there room there in the first place?

    This could mean the overnight end of North Slope oil – even with the pipeline in place the highway is a critical artery for workers/materials to the NS. That would be wholly deleterious for the residents of PADD 5, we’d have to find some 450 kb/d on the world market almost overnight – the news of that would be quite an shock to oil markets way in advance of the actual destruction, too.

    • Jeffrey J. Brown says:

      A major earthquake might speed things up quite a bit.

      • Old farmer mac says:

        An earthquake would probably close the road for a good long while maybe months.

        BUT if that fifty tons per day figure is accurate keeping the road cleared will be a trivial problem in relation to the revenues associated with it. Fifty tons is only about four dump truck loads of the size commonly allowed on public highways.A crew of half a dozen men and machines would be more than ample to take care of this amount working a day a week.

        Now if the climate continues to warm up the movement of the debris will probably speed up substantially…. but that would probably take decades to become a short term problem in terms of hauling it away.

        • KLR says:

          The story describes moving the highway at a $68 million, not carting away the slope as it approaches; I take that to mean that the engineers and geologists observing this phenomenon have concluded that dealing with the slope itself is unfeasible for whatever reason. Although, again, I’m not sure how moving the highway will do anything but delay the inevitable.

  10. manybytes says:

    It looks like another shale play in the US is beginning to get noticed and drilled somewhat more. I have seen an estimate from Encana of potentially 50K BOPD for the field. They have only drilled about 30 wells but have 176K acres leased there. They anticipate spending 350M in 2014.

    http://www.bizjournals.com/dallas/news/2014/04/10/could-the-mancos-shale-be-the-next-big-thing.html

    http://www.daily-times.com/four_corners-news/ci_25719557/mancos-shale-oil-exploration-dominates-conversation-at-four

    • Watcher says:

      Here’s my read on all this serial sequence of the next big shale.

      You only have about 80 companies who know they didn’t get in on EOG and CLR’s Bakken land. Shell et all left the building because they didn’t have good leases. The good ones are gone.

      If there were truly other blockbusters out there then those 80 companies who got cut out would have already bought them up — assuming CLR and EOG are just sitting on their hands and not using their knowledge of what makes a blockbuster to inform their own new buys.

      If someone is pitching this stuff to the public, it’s because a bank turned them down. If they truly knew they had blockbuster leases, they’d borrow the money, not dilute it via private placement.

      • Anon says:

        Exactly. Be very, very wary of small oil companies talking their book. They’re after dollars for marginal or phantom projects that smarter insiders have turned down.

  11. Paulo says:

    Ron,

    Terrific job. In particular I really appreciated the overlay of 25 day average on the Russian production graph. It really brought it into perspective and displayed trend.

    Paulo

  12. Simon says:

    “These are indeed good times to be a Peak Oiler. ”

    This aligns with what the Cornucopians like to say – “Peak Oilers are upset when production goes up”.

    But personally, I don’t want production to go down, I only expect it to go down. It will be no victory to see the world struggle to adjust to declining oil production.

    Admittedly, there will be some satisfaction in seeing these folks who either fraudulently (lie) or foolishly think that a finite depletable resource has been proven not to peak, by a short term increase in shale oil, shown to be wrong. But it is still an issue in which I would actually be happier to see them smugly right all the way to my grave as it would be better for the world for their wishful thinking to be correct.

    The graph also shows something that makes me wonder about all the pronouncements about shale oil costs. People will talk about high oil prices allowing shale oil to work, and yet you can see here and elsewhere, that shale oil was being developed in 2001, when prices of oil were very low.

    • dolph9 says:

      I disagree. Peak oil is corrective. It is the only thing that can expose the lies of governments and banks and put an end to the hubris of humanity in the 21st century that collectively has come to believe in the delusion of infinite life and infinite dollars, a delusion that all manner of evidence suggests is now threatening the biosphere itself.

      I do indeed celebrate peak oil and hope that every cornucopian knows it. I look forward to this unstoppable freight train with a clear mind and a joyful heart. But I’ll try not to be too smug.

      • Watcher says:

        We’ll be the first in history to starve to death in glee!!!

        • Old farmer mac says:

          Nominated for Watcher’s all time best comment!!

        • Simon says:

          It seems that peakoil.com has a number of commentators who feel that the world is going to hell in a handbasket – nothing can be done. Population growth cannot be controlled and nothing can be done to adjust to declining oil. Billions will die off and the economy will crash. And yet, they also appear to feel that they will survive it all just fine.

  13. Patrick R says:

    Russian decline is likely to enter consciousness once it breaks south of 10mbd. Unless that is, there is a narrative around western sanctions to conceal it. The industry is always at great pains to dress all supply drops as having above ground factors only, most recently and preposterously in the idea that the UK tax regime is the cause of the North Sea decline!

    • Doug Leighton says:

      Exactly. And Russia production will decline owing to the fact that their best oil reservoirs have been exploited for more than half a century and they are starting to run dry. Those remaining are smaller, poorer quality and/or difficult (expensive) to develop.

      • Watcher says:

        Look. Putin is a patriot. Everyone other than a “globally cooperative” central banker is a patriot.

        He will do what advances Russian triumph. I have no doubt that he faces an array of Russian industry figures, oil industry figures, that are not going to embrace the “let’s just leave it in the ground” concept.

        It doesn’t really matter if he goes to 8 mbpd because he had to or because he wants to. All that matters is raising the price on his enemies and providing them less GDP fuel, while providing his own people more than they are using now.

        I have been quite surprised at the US maneuvers that overthrew the Ukraine government in February and the hardline taken since a US puppet was installed. The IMF then took their own hardline on tranche scheduling. We sort of presume the NSA can hear every conversation that takes place anywhere, and Russian conversations about “leaving it in the ground” aren’t really the sort that would need protection anyway — but if that concept is under consideration and the NSA knew it, that would answer the why question in February and since. Oil has been north of $100 for most of this year and it won’t get any better if Russia is going to take that action to damage its enemies.

        They hold a very powerful hand of cards.

        • Patrick R says:

          Just not credible that Putin is deciding to leave anything in the ground. Yes he is a patriot, and that means taking a great deal of pride in having the highest production in the world. But more mundanely they have no other means of keep ing the ship afloat than resource extraction. It is just unbelievable that there is any ‘save it for later’ going on at all.

          • yiedyie says:

            Add to that that he cannot assume the political risks of leaving it in the ground, Putin is a nationalist but he is also a political animal and wouldn’t risk his seat just to leave oil to a future Yeltsin. And currently there is a good price on the market for oil, and that is not incentive to leave it in the ground whatsoever.

          • Old farmer mac says:

            Putin and his sort are not the kind who expect to be turning the reins of power over to the opposition. They are military and military security types used to thinking in terms of the long game- ten twenty thirty forty years or more. When you are in charge to a substantial extent of work such as bringing a new generation of weapons from the think tank to the laboratory to the prototype stage to production and deployment- a process that can take two or three decades easily- you think long term.

            I am not saying that he and his team are thinking about saving oil for the future in humanitarian terms or out of concern for their own grandchildren even.BUT Watcher is right or could be right.The Russians could be seriously contemplating withholding oil from the world markets in terms of making lemonade out of the depletion lemon.

            Generals with brains always hold a substantial portion of their troops in reserve. Ditto their materials. Oil is now and has been an essential war material since the day Churchill took the English navy off of coal and put it to burning oil.Before that actually but harder to get the point across.I believe the all time highest price ever was during the American Civil War.

            Putin could be planning on holding back some oil – conserving it – as a strategic move in the geopolitical long game.Likewise he could be working behind the scenes with the express intent of disrupting production in other countries which would have the effect of weakening his enemies.

            • yiedyie says:

              They could do other things than crippling their own source of revenue, i.e. by using proxy wars. Even if they would cut their own production they would do it short-term not over 7-8 months.

              “Of course, the whole point of a Doomsday Machine is lost, if you *keep* it a *secret*! Why didn’t you tell the world, EH?”

        • I have been quite surprised at the US maneuvers that overthrew the Ukraine government in February and the hardline taken since a US puppet was installed.

          I was not aware that it was US maneuvers that overthrew the Ukraine government in February. And I was not aware that it was a US puppet that was installed.

          We sort of presume the NSA can hear every conversation that takes place anywhere,

          No you presume that, “we” do not. NSA is not omnipotent. They may be able to tap any cell phone in the USA but tapping private conversations in the Kremlin is a totally different matter.

          and Russian conversations about “leaving it in the ground” aren’t really the sort that would need protection anyway…

          Another presumption on your part. Putin has a lot to lose Russia’s export income goes down.

          but if that concept is under consideration and the NSA knew it, that would answer the why question in February and since.

          I doubt that very seriously. But the biggest thing I doubt is that Putin is doing this purposefully. Russia has been doing everything they possibly can to squeeze every ounce of oil they can out of the ground. Analysts have been predicting for years that Russian oil production was due to decline. But by drilling 5,000 to 6,000 new wells every year, most of them infill wells, Russia has fooled the analysts and kept production slightly increasing.

          But now that Russian production is starting to decline, way overdue in most analysts eyes, you see it as Putin deciding to leave it in the ground to hurt his enemies. Well I just don’t buy it.

          You are, in my opinion, way too incline to believe in conspiracy theories. And it is a conspiracy theory that the US overthrew the Ukraine government and installed their own Puppet. And this whole thing about Putin deciding to “leave it in the ground” just fits right in with another conspiracy theory. And the next move is up to the US, just as soon as the NSA tells the President what Putin has been discussing with his aids in the Kremlin.

          Really Watcher!

          • Watcher says:

            Well, a choice to reduce production will reduce export revenue, though maybe not by much, given a presumed price increase.

            The whole concept of withholding oil at some level rejects money as compelling. If they have enough food and food transport and can get along without imports of whatever, the only folks it hurts are oil executives aka oligarchs. But they aren’t reduced to zero. They just make less than last year.

            And it’s not a 100% rejection of imports. Just a gentle gradual reduction. They get 2 LCD big screen TVs instead of 3. They have to drive Russian cars rather than BMWs. There is already talk of moving away from Microsoft and Intel to Russian software and chips, so there’s no real new development there that isn’t happening anyway.

            In general, it’s a very effective tactic to damage enemies and fracture alliances.

            • There has been little to no price rise in world oil prices since Russia peaked late last year. The only economy that stands to be harmed if Russia did deliberately cut production would be Russia’s.

              And not counting the spike down in July which was likely caused by a pipeline shutdown, Russian production is only down about 1.5%. Not enough to cause anyone to start weaving conspiracy theories. Except Watcher of course.

              • Watcher says:

                But 1.5% is nothing. Why not 20%?

                This would not be a conspiracy. This is just a choice to pursue victory.

      • Synapsid says:

        Doug,

        How many rigs are required for Russian infill drilling of 5000 to 6000 wells a year?

        • About 450 rigs, give or take. Or about one fourth as many as are operating in the USA.

        • Doug Leighton says:

          Sorry, I’ve been retired for ten years and drilling efficiency has always increased at an amazing rate. I can even remember sitting around “drill shacks” waiting for core to log and the drill crew coming up with less than an inch of core for an entire shift (very bad day true). Then nightmares as crews produced multiple 10s of feet per shift then 100s became the norm. So I honestly cannot even guess what an average drilling rate would look like today. But it’s a lot! Of course an increasing percentage of drilling is done at shallow angles for various reasons which is a different metric altogether. What I can do is ask around and can likely come up with something realistic or someone with current knowledge might choose to chime in.

          • Doug Leighton says:

            Thanks Ron

            • Actually that’s just a wild ass guess. It takes about a month, I am told, do drill a horizontal well, a lot shorter for a vertical well. But I may be wrong. Mike or some other oilman may chime in and tell me how wrong I am. I found this so it looks I was pretty close.

              Costs for Drilling The Eagle Ford

              While there have been instances when wells were drilled in as little as 15 days, a reasonable expectation for the time required to drill a well in the Eagle Ford is around one month.

              And this concerning the Marcellus:Marcellus Shale FAQs

              How long does it take to drill a well and begin producing natural gas?
              Horizontal drilling currently takes approximately 18-25 days from start to finish. Then, the well needs to be fracture stimulated in order to release the gas. It is then connected to a pipeline, which transports the gas to the market. From drilling to marketplace, the entire process can take up to 3-4 months.

              • Doug Leighton says:

                I suppose we ought differentiate between exploration, appraisal and production wells. The first, of course, are small in diameter and just used to gather information.

                My experience was almost always exploration stage which is a totally different kettle of fish to production wells that are typically large, up to a meter in diameter.

              • Mike says:

                Mr. Patterson, I enjoyed this post and sent it immediately to my employees and my family with a beware or be square header; I can’t give you a bigger compliment than that. I hope it gets attention outside the peak community.

                A typical 14,000 ft. TMD well in unconventional shale takes about 3 weeks, spud to TD, you are correct. They can blow them down these days because there are no intermediate casing strings to set, or logging or evaluating to do going down, and the top drives they use now, instead of rotary tables, makes the radius and lateral a piece of cake. To reach some economy of scale, as we now know, they drill multiple wells on long pads simply being able to walk the rig from well to well; that is where the 2 1/2 to 3 weeks per well number comes from, IMO. It takes a good week to tear down a big rig, load it out (35-50 loads), get it down the highway, unload it, put it all back together again and ready to turn to the right. In that case, 4 weeks, plus.

                I think we can’t use unconventional shale data for well time or costs in Russia, however. That’s all typical conventional reservoirs, many of which are under pressured, and over pressured, require several casing strings and everything in Russia happens in very slow motion. Many big fields in Russia range greatly in depth too.

                While I am on, I always get a kick out of the notion that other shale resources throughout the rest of the world will save the day. The maps sure look perddy. But no other country in the world will have the ability to develop its shale resources as efficiently, and cheaply, as N. America can, IMO. And by the by, here in the US all we can hope for from shale is internal rates of return of 70-80% of total CAPEX, over 20 years, so the shale industry hopes. Can the rest of the world find the money to get on the shale treadmill, for only those kinds of returns? No way, Jose. I always like to remind folks who look forward to abundant shale production from the rest of the world…of Poland.

                Mike

              • Synapsid says:

                Thanks Ron, Doug, Mike.

    • Jeffrey J. Brown says:

      Russian net oil exports (so far, through 2012) stopped increasing in 2007. Here are 2002 to 2012 Russian net oil exports and their ECI ratios (ratio of total petroleum liquids production + other liquids to liquids consumption). At an ECI of 1.0 a country is no longer a net exporter.

      Russian Net Exports & ECI Ratios (EIA):

      2002: 5.0 mbpd & 2.9
      2003: 5.8 & 3.2
      2004: 6.5 & 3.4
      2005: 6.7 & 3.4
      2006: 6.9 & 3.5
      2007: 7.2 & 3.7
      2008: 6.9 & 3.4
      2009: 7.0 & 3.4
      2010: 7.1 & 3.4
      2011: 7.1 & 3.3
      2012: 7.2 & 3.3

      Production in 2007 was 9.9 mbpd, with consumption of 2.7 mbpd, and thus net exports of 7.2 mbpd (total petroleum liquids + other liquids), with an ECI Ratio of 3.7.

      Production in 2012 was 10.4 mbpd, with consumption of 3.2 mbpd, and thus net exports of 7.2 mpbd, with an ECI Ratio of 3.3.

      Based on a simple mathematical model and based on the empirical Six Country Case History, a declining ECI ratio correlated with a rapid rate of depletion in remaining CNE (Cumulative Net Exports).

      Based on the 2007 to 2012 rate of decline in the Russian ECI ratio, I estimate that post-2007 Russian CNE are about 72 Gb (billion barrels), with 13 Gb having been shipped from 2008 to 2012 inclusive, implying that Russia shipped about 18% of post-2007 CNE in only five years (through 2012).

      The extrapolation of the observed 2007 to 2012 rate of decline in the ECI Ratio could be the result of a continued increase in production (unlikely, IMO) + a continued increase in consumption, or a combination of declining production + at least a slowdown in the rate of increase in consumption or a decline in consumption. The 2007 to 2012 rate of decline in the ECI ratio would put it at about 2.6 in 2022.

      As a scenario, if consumption continued to increase* for 10 years at the 2007 to 2012 rate of increase (3.4%/year), Russian consumption would be up to 4.5 mbpd in 2022. If we assume a modest 2%/year decline rate in production, Russian production would be down to 8.5 mbpd in 2022, resulting in net exports of only 4.0 mbpd in 2022, with an ECI Ratio of 1.9. An extrapolation of a decline in the ECI Ratio from 3.3 in 2012 to 1.9 in 2022 would put Russia in the vicinity of zero net exports around the year 2034.

      *BP shows a 3%/year rate of increase in Russian liquids consumption from 2012 to 2013

      • Jeffrey J. Brown says:

        Based on EIA production data and BP consumption data for Russia, for 2013 we have production of 10.5 mbpd, consumption of 3.3 mbpd, and net exports of 7.2 mbpd, with an ECI Ratio of 3.2.

        • Watcher says:

          That number plus GAZPROM’s contribution drains about 500 billion dollars a year from their enemies. Actually, might want to shave that some, maybe 400 billion because some is to Belarus and some other somewhat non enemy countries, but in general seriously big numbers drained from people who think Putin is evil.

          And there’s not much they can do about it. They are being bled.

          Which is why the integrity of “money” gets shaky. One does wonder if Super Mario Draghi is inhibited from direct QE by the Bundesbank . . . or maybe by the Kremlin. “If you print, we index the price.”

  14. Jeffrey J. Brown says:

    Fascinating NYT Magazine article about China moving toward a cold food storage and delivery system:

    http://www.nytimes.com/2014/07/27/magazine/what-do-chinese-dumplings-have-to-do-with-global-warming.html?hpw&action=click&pgtype=Homepage&version=HpHedThumbWell&module=well-region&region=bottom-well&WT.nav=bottom-well&_r=0

    A very interesting excerpt:

    To make matters worse, it’s not even clear that refrigeration reduces food waste over the long term. Logically, it would seem that a refrigerator should result in less food waste at home, slowing down the rate at which vegetables rot and milk sours, as well as allowing families to save leftovers. But Susanne Freidberg, a geography professor at Dartmouth College and author of “Fresh: A Perishable History,” says that refrigeration in the United States has tended to merely change when the waste occurs. Americans, too, throw away 40 percent of their food, but nearly half of that waste occurs at the consumer level, meaning in retail locations and at home. “Food waste is a justification for refrigeration,” Freidberg said. “But at the same time, there are studies that show that, over the longer time frame, the cold chain encourages consumers to buy more than they’re going to eat.” Tara Garnett, who runs the Food Climate Research Network at Oxford University, says there is a “safety net” syndrome of refrigerated storage. In the refrigerator, she writes, “the food can always keep longer, goes the thinking, except that suddenly one finds it has gone off.”

    In U.S. homes, the size of the average domestic refrigerator has increased by almost 20 percent since 1975, leading the food-waste expert Jonathan Bloom to identify what he calls the “full-cupboard effect,” over and above Garnett’s safety-net syndrome. “So many people these days have these massive refrigerators, and there is this sense that we need to keep them well stocked,” he said. “But there’s no way you can eat all that food before it goes bad.” A four-year observational study of Los Angeles-area families carried out by U.C.L.A. social scientists confirmed this tendency to stockpile food in not just one but in multiple refrigerators. Unsurprisingly, given the clutter, parents in the study complained of “losing food,” as heads of lettuce rotted out of sight in the crisper and pots of yogurt in the back languished past their sell-by dates. For most of these families, as for most Americans, Bloom says, home refrigerators simply “serve as cleaner, colder trash bins.”

  15. Sol Roth says:

    All,

    Nate Silver’s 538.com is supposed to be a site where issues are analyzed logically, using mathematics to the extent feasible.

    Some time ago I sent an email to the site asking the staff post articles discussing Peak Oil. I am sure many other people did the same. I referred the site’s staff to the Peak Oil Barrel and also to Our Finite World.

    Here is the first Peak Oil article I have seen on 538.com:

    http://fivethirtyeight.com/features/north-dakotas-oil-bonanza-is-unsustainable/

    Ron, Gail (I figure you read POB), Jeffrey, et al, you may wish to engage with Nate Silver and other people such as him to increase the visibility of the Limits To Growth predicaments.

    Very Respectfully,

    Sol

    • Sol, it’s “fivethirtyeight.com”, not the number 538.com. That is a Japanese site.

      It is interesting that this site started out as a Democratic polling site that posted mostly democratic political articles. They must have been bought out by ESPN and are now near the middle of the road on politics plus posting a lot of other sports articles and stuff. 538 is the number of votes in the electoral college that elects the president. 270, or one more than half, is the number required to elect the President.

      Thanks a million for the link to the article. I did not know about it.

      • Sol Roth says:

        Ron,

        Thank you very much for the correction…I am familiar with Nate Silver’s site, and the origin of his site’s title ‘538’…my sloppy error of writing ‘538.com’ was due to the great pain meds I am on as I am recovering from from a painful surgery a few days ago. I am glad you corrected the error for the benefit of all of your readers, and I apologize for my slipshod writing..I will focus more to get my writing accurate in the future.

        In case other people reading this dialog between us were to come to the hasty and inaccurate conclusion that Nate Silver is a Democratic Part shill or partisan, I invite everyone to read Mr. Silver’s book ‘The Signal in the Noise.’

        Mr. Silver details his use of his knowledge of statistics in various pastimes such as predicting baseball team and player performance (‘Moneyball type stuff), online poker, and politics, as well as other fields. He is commonly perceived to be a Democratic Party partisan because of his spot-on election predictions, when in reality this was simply him using his skills to call things as he saw them…as opposed to the complete desperate fictions being spun from the right-wind sound machine. Lately he has been predicting Republican gains in the House and Senate…

        At any rate, I enjoyed his book, since his methods appeal to my reality-based, data-driven, non-hyperbolic approach to understanding the World. That is also why I enjoy your site.

        I think it is very significant that people such as Mr. Silver write about LTG…I am disheartened over how many intelligent people, even non-right-wing partisans, are in thrall to the idea that there is no problem that technological innovations coming just around the corner cannot ‘fix’.

        All that being said, even I lean towards OFM’s somewhat ‘optimistic’ view that we (humanity) will make some adjustments and that there may not be a /global/ fast crash…however, I mourn our species inability to long-tern plan and our hugely deleterious effects on our ecosystem.

        I salute you for you fine work with your site, and I hope you continue on. I can only hope that other media will start realistic, accurate reporting on our various predicaments, vice the endless bread and circuses and obfuscation, denial, and flat-out lies that have been offered to-date. President Carter had the truth of it, but we couldn’t handle truth, so we opted to hear about ‘morning in America’ since then…we squandered so much time…I hope we have time left yet to take some useful measures to mitigate the inevitable changes at leasts in some small ways.

        V/r

        Sol

        • Old farmer mac says:

          I believe there will be a global crash and that once it gets well underway it will be pretty damned fast in many parts of the world.

          You could not get me on the ground in Egypt for instance ten years from today except as a soldier surrounded by other soldiers.

          But given our resources and the amount of waste we tolerate at present I also believe a few countries such as the US and Canada can pull thru the next fifty to one hundred years without going all the way to hell in a hand basket.

          I make it a point to say can and might and with a little luck and good management often.

          There is a substantial difference between long term austerity and forced rationing and permanent energy poverty and vastly lowered living standards and so forth when we consider that in large portions of the world starvation and death from exposure and violence will be the new norm.

          I am well educated in the physical sciences by virtue of being an professional farmer- trained at Va Tech in what is now referred to as Ag and Life Sciences and have a thorough grasp of the limits imposed on us by physical realities such as peak oil and peak phosphorus and runaway population.

          But I have also studied some history- military history in particular- and understand that while the world economy is highly integrated it is not necessary for the US and Canada to participate in it. We have enough of everything that is ESSENTIAL to get by here just fine in terms of survival if we husband what we have and use it wisely.

          I do not anticipate that we will be living ”high on the hog” but it seems likely to me that most of us will still be able to afford chicken most of the time and that people out of work will be supported by the government and put to work on make work jobs- some of which will actually be useful work.

          But this hopeful scenario is based on our avoiding WWIII and the environment and climate not going all the way to hell before the larger part of humanity perishes.

          Anybody who has a good understanding of basic biology , physics, chemistry, geology, geography and so forth has to recognize that our species is in overshoot and that there is going to be a die off.

          But the die off will not likely be silmantaneous in all the various parts of the world and it need not necessarily happen at all in North America if we play our cards right- at least not in the next century or so.Beyond that there are so many unknowns it would be foolish to even express an opinion without saying in no uncertain terms one is only guessing.

          Playing our cards right is going to mean going on a wartime like economic footing- the enemy being climate change and resource depletion and pollution for the most part but also other countries that would like to take our resources if they could.

          Fortunately we are except for the Mexican border the best situated country in the world in terms of being geographically well situated and closing the Mexican border will be a piece of cake once the job is turned over to the regular armed forces rather than the border patrol which has neither the resources nor the legal authority to do what is going to be necessary- build a Berlin Wall type of border and put armed guards on the towers with orders to shoot.If this sounds harsh so be it. It is not going to be as harsh as reality in the parts of the world dependent on imported food and energy for survival.The people in those places are going to murder each other over a drink of water and a loaf of bread.

          I am a doomer but I have not given up hope.

          ”God looks after drunks, little kids and the USA.”

          • Hickory7 says:

            The biggest threat to a stable life in the USA after ‘peak global oil export’ will not be a lack of energy, but a rather lack of social good will. It only takes a few with guns to destroy the hard work of hundreds of hard working people, or a few with too much power and not enough brains , for that matter. Whether it be anarchy, or its flipside of authoritarianism, your carefully tended crop of beans and potatoes can be co-opted in minutes.
            Many people in the world have to pay local thugs for ‘protection’. I’m seeing a future where that kind of economy and culture becomes more common, and much more painful.

            • Old farmer mac says:

              I very often mention martial law and a police state as part of our potential future.

              Martial law is the solution to anarchy and a police state is potential result of an authoritarian government growing too fond of it’s power.

              There may well be places in the US that sink into anarchy for extended periods of time.

              There are places in this country right now where people are already paying protection money to gangsters. Some of the gangsters have dual careers as cops and are burning the candle from both ends.

              I have been in need of cops that took their good sweet time showing up on one occasion that could easily have cost me my life.It did cost me a trip to the hospital.

              IT surprises the hell out of most people but the law and law enforcement are not legally obligated to protect individuals or the property of individuals.

              From that day forward I have generally gone armed and plan on doing so for the duration of my natural life.We do have the occasional murder in my part of the country but armed robbery and forcible entry- home invasions- and that sort of crime are almost unheard of.

              ”God made us big and small but ” Colonel Colt” equalized us all”.

        • Watcher says:

          Inevitable is inevitable. No value to consciousness raising.

  16. Hickory7 says:

    When the decline in global oil production does indeed occur, and oil becomes less affordable, it seems that coal will be resorted too on a more massive and frantic scale as an attempt at replacement for as many uses as feasible. Top 5 country reserves-
    USA, Russia, China, India, Australia
    For these countries, and one or two dozen others who have considerable reserves/capita, escalation of coal use will be a stop-gap measure to buffer the decline in affordable oil.
    And if indeed CO2 related climate change is an escalating phenomena, how will countries react to this conflicting set of forces?
    Where I live (coastal mid Calif), escalating drought feels more immediate than oil depletion, but that sense could change with a few years big rain.

    I appreciate Old Framer mac’s comments because I think it is very important for individuals and families to think through the personal ramifications of these issues. What can/will you do to adapt, short of saying goodbye?

    • TechGuy says:

      Hickory7 Wrote:
      “it seems that coal will be resorted too on a more massive and frantic scale as an attempt at replacement”

      Unlikely since Coal isn’t used as a transportation fuel. Coal mining and transport is dependent on Oil. There should be a reduction in coal consumption since demand for metallurgical coal will also decline as industrial demand for Metal falls.

      The only issue I see, if nations opt to go in situ coal gasification where they ignite coal steams to make producer gas to run Gas turbines for electricity. I recall reading articles about tapping inaccessible coal steams (ie under the north atlantic) to replace depleted Nat Gas fields. Once these are ignited there won’t be any means to put out the fires. In Pennsylvania, There is a coal steam fire that been burning for 40 years.

      • Old farmer mac says:

        Putting out an underground fire in an area riddled with old mining excavations and natural faults and caves is tough to impossible because shutting off all the air getting to the coal may be impossible.

        I don’t see any problem putting out a fire under the sea bed though.Keeping out excess water is apt to be the tough part. Beyond that it will be necessary to pump down a good bit of air to keep the process up and running because the water is almost sure to get out of hand from time to time.

        I know the coal gas reaction does not require free oxygen but it still cannot withstand being flooded with cold water sufficient to lower the temperature below the reactions requirements. IF the CO can get out excess water can get in.

        I am not willing to bet that underwater coal gasification will not work but it is going to be a while imo before the process is perfected to the extent it will produce significant amounts of energy.

        Now coal to liquids is a proven technology that is not widely used for only two reasons that I know of.It is expensive compared to crude – at least it has been in the past compared to crude- and it is highly polluting.

        BUT crude prices have been rising much faster than coal prices and while I am not sure about my figures to the best of my recollection most estimates of the price of synthetic gasoline and diesel fuel manufactured from coal put the cost of it at no more than double the current cost of the ” real ” stuff.

        I expect to see some coal based gasoline and diesel fuel at local stores before I get recycled myself if my luck holds.Countries with coal but little else to export to pay for imported oil will be the first ones to bite the coal to liquids bullet.

        • TechGuy says:

          “I am not willing to bet that underwater coal gasification will not work but it is going to be a while imo before the process is perfected to the extent it will produce significant amounts of energy.”

          The undersea coal was an example since they were considering when NatGas Prices spiked back in 2004-2007 and it was the only way to access the coal.
          I would think that if Oil shortages occurred they may consider in situ coal combustion, since they could transport Producer gas in existing pipelines instead of hauling coal on trains to save fuel consumption. The Producer gas wouldn’t need any Oil to get it delivered to Power plants. I think they would mostly use land base coal beds.

          “Now coal to liquids is a proven technology that is not widely used for only two reasons that I know of.It is expensive compared to crude”

          Very difficult to scale up. It fairly easy to build a plant that produces a couple of dozen bbl’s of Syncrude per day, but it it becomes a logistical and cost nightmare to scale up to mbpd. Shell did a GTL (natGas to Liquid Plant) in Qatar that ended up costing about ~24 Billion USD (4 to 5 times the original estimate) and GTL is a lot easier than CTL. I believe the Pearl Plant produces 120K, but most of its Naptha and Ethylene, not transport fuels.

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

          “I expect to see some coal based gasoline and diesel fuel at local stores before I get recycled myself if my luck holds… my recollection most estimates of the price of synthetic gasoline and diesel fuel manufactured from coal put the cost of it at no more than double the current cost”

          I won’t hold my breath. The price of GTL diesel is probably $15 gallon. A gallon if CTL will probably be double that. Rentech in Colorado set up a pilot CTL plant for testing CTL jetfuel (diesel) for the US Airforce about 8 years ago. the cost was $23 per gallon. Unfortunately CTL is a process that does not achieve lower costs when scaled up. The only way you get CTL fuels is if you build your own plant.

          FYI: No “practical” gasoline from CTL. Only DME and Diesel. STG (Syngas to Gasoline) consumes way to much energy in the conversion process. DME provides the best EROEI. Diesel is much less EROEI efficient than DME, and gasoline is absolutely abysmal. Methanol is another option but is difficult on engines since it a powerful solvent which would attack plastics and rubber materials (ie gaskets, housings, flex hoses, etc).

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

          I had done extensive research into CTL to understand how to build myself a small plant capable of producing a gallon or two per day. The idea was to burn coal/biomass to produce Syngas for diesel, and use the waste heat to generate electricity (ie small scale steam turbine) and for domestic hot water and heating to wring every last joule from the combustion process.

  17. Sol Roth says:

    All,

    I figure that some people who read and post on this site may appreciate some internet sites which attempt to be a little more intelligent than average, so I offer these fivethirtyeight.com-like sites for consideration:

    http://www.nytimes.com/upshot/?_r=0

    http://www.vox.com/

    and this site:

    http://www.theepochtimes.com/

    Today the Epoch Times has a couple of energy articles leading:

    http://www.theepochtimes.com/n3/816130-the-secret-world-of-oil/?sidebar=related-below

    http://www.theepochtimes.com/n3/817311-35-years-later-jimmy-carters-energy-warning/

    If anyone else reading this has recommendations for good, reality-based, data-driven news/information sites, I would be glad to add them to my favorites list.

    Cheers,

    Sol

  18. Hickory7 says:

    Thanks for your work Ron,
    Maybe I missed it, but it seems like data and charts related to global oil export would be a key measure of concern.
    This would reflect individual country production, internal consumption, as well as the ability of consuming countries to pay.
    Have we already passed “peak oil export”?

    • Yes world exports peaked in 2007 at 42,993,000 barrels per day. In 2013 world exports stood at 39,830,000 barrels per day or 2,469,000 barrels per day below the peak. The chart below is Crude oil with last data point 2013.

      Sorry, I was wrong about the lease condensate. The following notice was on the spreadsheet and I just overlooked it.

      Notes: Data may include exports of lease condensates,
      re-exports, changes in the quantity of oil in transit.

      OPEC Annual Statistical Bulletin 2014

  19. Andy Hamilton says:

    With all the attention on Gaza, Libya has slipped out of the headlines, but it is in serious trouble (again):
    http://www.theguardian.com/world/2014/jul/27/libya-western-citizens-leave-civil-war

    A wee while ago oil markets were being ‘ re-assured’ because Libyan production was rapidly coming back on stream supposidly. One imagines that cant be happening now.

  20. Jeffrey J. Brown says:

    Looks like KMZ may be following a downward trend like Cantarell:

    Mexico raises view of peak oil from Ku Maloob Zaap (January, 2011)
    http://af.reuters.com/article/energyOilNews/idAFN2418388420110124

    The latest forecast assumes output from the KMZ area will start to slowly decline in 2014.
    As in previous forecasts the ministry expects oil production to rise from approximately 2.55 million bpd to more than 3 million bpd in the medium term although the projections rely heavily on new production from as-yet undiscovered fields.

    Analysts have dismissed Mexican official oil production forecasts as unrealistic in recent years because of their optimistic view of decline rates at existing oil fields and heavy reliance on new discoveries.

    Sliding Mexican oil production and limited political will for dealing with the problem, which threatens the long-term sustainability of government revenues, prompted two ratings agencies to downgrade Mexican debt in 2009.

    The forecast also slashes the long-term view for output from the controversial Chicontepec project to 377,000 bpd by 2025.

    The government had previously estimated Chicontepec, which was harshly criticized by regulators last year, could produce 737,000 bpd by 2017. Output at Chicontepec is currently 45,000 bpd.

    Pemex Predicts Lowest Production in More Than Two Decades (July, 2014)
    http://www.bloomberg.com/news/print/2014-07-25/pemex-posts-7th-straight-quarterly-loss-on-lower-output.html

    Petroleos Mexicanos cut its output forecast to the lowest in at least 24 years as mature fields are shrinking faster than it had previously expected.

    The forecast was lowered to 2.41 million barrels of oil a day from a prior projection of 2.5 million, said Gustavo Hernandez, Pemex’s head of exploration and production. This will be the Mexico City-based company’s lowest annual output since at least 1990, when it produced 2.55 million barrels a day, according to the oldest available government output data.

    “We have been working to review the declines of each of our fields that contribute to national production,” Hernandez said today on an earnings call. “In the recent review, we obtained a better idea of the declines of the fields and have adjusted the production expectation downward.”

    • Watcher says:

      Looks like the US is going to be importing more from elsewhere.

      • Old farmer mac says:

        And when we do we are going to be paying for it by exporting some democracy and electrons on balance sheets.

  21. CDN says:

    Well, lookie there, it’s now official: 2014 is the Coldest Summer on Record in the United States.

    No word yet on what the ‘scientists’ funded by the governmental grant gravy train or climate truther algore have to say about this ‘inconvenient truth’ that pokes another hole into the ‘global warming’ theory that is increasingly having to be propped up by deceit and manipulation anyway. lol.

    • Allan H says:

      Arizona is experiencing record highs and record high lows right now. Half the nation is hot while the other half is cool. Right now it’s in the 90’s here but is expected to cool again tomorrow and the rest of the week. Last summer and much of the winter had very cool temperatures. It’s local though due to jet stream stagnation and truncation. The ROW is heating up nicely on average.
      Some info on the weird weather:
      http://www.washingtonpost.com/blogs/capital-weather-gang/wp/2014/07/10/poor-mans-polar-vortex-to-make-shocking-summer-return-in-eastern-u-s-next-week/

      Whenever a system has increased energy it will have increased variance, plain and simple.
      By the way, that graph is not definitive. The average line will have a very low r-squared and is probably not valid. I was an analyst for decades and would not accept that analysis.

      Here is some info on climate in the northeast:
      http://www.epa.gov/climatechange/impacts-adaptation/northeast.html

    • Patrick R says:

      Hey genius, you do understand that ‘United States’ is not the whole world, or even most of it, right? And do you also understand what the word ‘Global’ means? Is it really so hard to understand that something happening somewhere may not be happening everywhere else?

      The United States is a big country, and those of us in other parts of the globe find much to admire there, but this kind of mind numbingly ignorant self-regard just makes us laugh at your hokum hillbilly side.

    • Lurker says:

      Did anybody else read the comments at that link? Yikes… 😯

    • wharf rat says:

      That’s climate quackery.

      “2014 has had the lowest frequency of 90 degree days through July 23 on record”

      We don’t measure average temperature by counting 90 degree days. June was ranked as the 33rd warmest June in the 120-year period of record. We’ll have to wait for July, Aug, and part of Sept to find out where this summer ranked, but it won’t be the coldest.

      http://www.ncdc.noaa.gov/sotc/national/2014/6

      • Ted Robekopf says:

        One word…fraud. NOAA has already been exposed for fudging temperature data and cooking the books, they pretty much have no credibility left at this point…. http://www.breitbart.com/Breitbart-London/2014/06/23/Global-warming-Fabricated-by-NASA-and-NOAA

        • Dave Ranning says:

          Yep, one great site, except the racism, Holocaust Denial, and science illiteracy:

          And here is the man himself!

        • wharf rat says:

          Yes, the very dead Breitbart and Goddard are both total frauds.

        • Fred Magyar says:

          “NOAA has already been exposed for fudging temperature data and cooking the books, they pretty much have no credibility left at this point….”

          Good thing too! At least because they are cooking the books they have money to spend on things like hurricane forecasting

          I live in South Florida in the path of hurricanes and NOAA has a hell of a lot of credibility amongst most of the people who live around here. Especially this time of year.

          Hey Ron, it’s one thing to permit open discourse and contrarian views but there seems to be a rather large gathering of climate change denialist Trolls around here lately. Can’t you politely ask them to find another site?

          • Yes, this is not a place to spread political propaganda. This is not a denial site. Some objection can be tolerated but let’s not get ridiculous.

          • islandboy says:

            Hey Fred, nice to be hearing from you again! Are you back in Florida now?

            While I sit here under my concrete slab roof, in the sweltering heat (my roof hit 37.9 C, 100.2 F last Thursday evening), it really annoys me to read this denialist crap. In my neck of the woods, we are experiencing what is being described as the worst drought conditions in living memory. Homo pyromanius has been busy lighting fires as is customary here but, far more of them have been getting out of control and burning acres. There is going to be massive erosion when the rains do come.

            Then, I catch myself and remember one of the rules of the internet. DO NOT FEED THE TROLLS!

            • Ilambiquated says:

              When I lived in Taiwan and didn’t have air conditioning, we used to take a hose and squirt water on the concrete slab roof. Works really well.

              • islandboy says:

                No can do, Hosepipe ban in effect due to low levels in reservoirs. I did stretch a white plastic tarp over a metal frame that I had fabricated for the purpose of shading the slab. Didn’t do the whole roof since solar panels are to be mounted on the remaining section. Once they go up I plan to install an a/c unit to use the excess electricity that I would otherwise be selling to the grid at half the retail rate.

                • wimbi says:

                  Nice thing about solar AC is that it works when you want it most. I have a wonderful small Mitsubishi split heat pump that does a really great job on my living room/kitchen.

                  Quiet, efficient, small, not expensive, very easy to install.

                  Never had AC before because of my antipathy to coal.

                  Another big benefit, solar AC kills the profit margin of the power companies, since it cuts off their big booty from surcharge at peak hours.

                  Ahhh! Cool schadenfreude.

            • Dave Ranning says:

              I lived in Guam, electricity free, back in the 70’s.
              I have compassion.

            • Fred Magyar says:

              Hey there Islandboy, Yes I’ve been back a few months. I’t has been pretty darn hot around here as well… but that’s to be expected in July and August around these parts. BTW, have you tried painting your roof white or shading it with solar panels >;-)

              Cheers,
              Fred

    • Simon says:

      I instantly dismiss any comments made about climate change that include a reference to Al Gore. You people on the “hate Al Gore” bandwagon are a special breed of right wing crazy. Al Gore is not a climate scientist. Those of us who accept the Climate Change theory don’t mention Al Gore.

      BTW, here is a definition of Scientific Theory, which Anthropogenic climate Change is:

      A scientific theory is a well-substantiated explanation of some aspect of the natural world that is acquired through the scientific method, and repeatedly confirmed through observation and experimentation.

      • Drk Horse says:

        Al Gore is the one who turned global warming into a huge political issue. Not only that, but he is a pure hypocrite who refuses to practice what he preaches. He still lives in large, energy wasting mansions, drives a car, flies in airplanes, uses electricity, and so on. When you have politicians who harp on and on about how we need to reduce use of fossil fuels, go “green” and do whatever else they consider environmentally appropriate, but refuse to make any changes to their own lifestyles, it just makes it all seem like the real goal is to selfishly control the lives of the “commoners” by needlessly taking away their money and jobs, does it not? Plain and simple, it shouldn’t be any wonder that people like Al Gore are almost singlehandedly responsible for making so many of us deeply distrustful of the whole global warming movement.

        • That’s a crock of shit. Deniers of science would deny science even if angels came down from heaven and told them it was so.

          Al Gore just makes a good target just because he lives in a big house and occasionally flies on planes. Some people just like a scapegoat and Gore makes a good one. But if it was not him you would find someone else.

          • Old farmer mac says:

            Hey guys , it is altogether possible to detest ALGOR and still understand and believe in current day science. I am a firm believer in human overshoot in general, forced climate change involving excess warming in particular and ocean acidification in particular, peak natural resources in general and peak oil in particular. I even believe in such things as socialized medicine since the so called free market has failed to provide decent health care for those of us who are less than rich or employed by a big business or government.

            I detest ALGOR at a personal level because he is indeed a hypocrite of the first order.He even has he gall to claim he spent his summers WORKING on his Dad’s million dollar horse farm back when he was a kid. RIIIIGGGHHT! He might have joined in for a few minutes here and there for the fun of it but actually WORKED like a farm hand under the gimlet eye of a foreman? I will believe it when Jesus himself comes down and tells me.

            Now I respect him for his role in the environmental movement.

            And just to make my self clear- I don’t know for sure of any big time politicians who aren’t hypocrites no matter the party or wing.But campaigners of any sort who are asking people to make sacrifices should walk the walk as well as talk the talk. He talks but he doesn’t walk to my knowledge. To me that puts him in the same personal category as preachers who live high on the hog at the expense of poor church goers donations.

            So far – for what it is worth- my vote for hypocrite of the year goes to Micheal Moore for producing anti capitalist movies and documentaries etc while accumulating a personal fortune of over fifty million bucks according to court documents made public during his divorce.

            Now the real reason I am typing this rant is that we cannot ever afford to forget that people – with the rare exception of individuals such as the ones who frequent this forum- are not RATIONAL for the most part. We are just hairless apes that depend on each other as members of our own troupe for mutual support. Group solidarity is everything in the world of the naked ape.Not only that but most of us tend to think when we think at all at an elementary level.WE NEED our enemies because without them we don’t have criteria to use in judging who our friends are.

            If you want to understand why so many people hate Al Gore it is as simple as pie. He represents a THREAT to them. The average man on the street who hates Gore believes that Gore is out to raise his cost of living and take away his job.Facts have very little to do with such matters.

            Little kids are afraid of and hate the doctors and dentists who threaten them with needles and drills; they do not understand that a vaccination is for their own benefit or that the temporary pain of the needle and drill is far less than the pain of a future toothache.

            Believe it or not you can graduate from Ivy League universities without taking a real course in a physical science. The vast majority of people are scientifically illiterate in terms of actually understanding any science at all.Knowing the Earth is round and orbits the sun is not a reliable sign of scientific literacy.I know people who cannot write their own names who know that much.

            When you get right down to brass tacks most of us take the word of people we perceive as reliable and well informed about most matters because we are mostly too ignorant to have serious opinions of our own and too busy to investigate most issues sufficiently to have a serious opinion.

            I am able to say that I have serious and informed opinion concerning peak oil because I have spent a couple of thousand hours at least just reading about this subject not to mention hundreds of hours more posting comments here and at the old TOD site.

            BUT I could spend the rest of the night listing issues that I know little about but about which I still have an opinion anyway.So – how did I come by these opinions? I just naturally have followed the lead of people I consider reliable and have accepted their opinions as my own.Hence I trust my doctor when he tells me smoking is a health hazard. I have never personally examined the statistics and thus must take his word for it.

            It is often said that getting mad at an inanimate object is a reliable sign of madness or at least stupidity.I firmly hold to the truth of this argument.

            My point is that feeling contempt for or getting mad at people who are ignorant is a waste of time and energy.Worse, getting mad at them or holding them in contempt is a dead sure way to make sure they will never change their minds about any issue you bring up.

            Such people may be ignorant of the true facts about peak oil and global warming but they are generally very good at recognizing condension and contempt. Most people are good at such tasks.

            • wimbi says:

              Most of my friends have advanced degrees in this or that, but not any science. So when I talk about such things as global warming, oil depletion and so on, they draw down that curtain real quick and start to talk about which woodpecker it is at the moment on the bird feeder.

              I think that is a rational move, given that they can’t think of a thing they can either contribute to the discussion or personally do anything about it. And learning anything about it is way too much work, and besides, there are more fun things to do, like woodpeckers.

              They don’t, however, make any stupid denials or such; they have the wits to just stand aside and do no harm.

              But when I tell them they are in fact doing harm by gobbling fossil fuels, especially in scooting around in jet liners, then the problems start, since that’s their favorite sport.

              Fortunately, they will all soon be dead. So, if one is going to work on the problem, best to go after the young folks, those old ones ain’t worth the powder and shot.

    • Brian Rose says:

      Good thing it’s called global warming and not regional warming.

      May and June were the hottest May and June on record GLOBALLY. The data is available for anyone to investigate.

      There has not been a single below average month since 1984 globally.

      • Hickory7 says:

        So true.
        We are having this really intense local regional heating this summer (except at nights), but they are forecasting a cooling trend heading into this winter.
        Each night when it gets dark, I think “hah- there is no warming!”
        But then in the morning I start to believe again.
        [insert homer simpson grunt here]

        Despite global warming, when humans get cold and hungry they will burn whatever coal and wood then can get their hands on.

    • PeterEV says:

      Hey CDN,

      Please show me that you are capable of replying to some critical questions such as:

      “Is there some place that is offsetting the cool record temperatures in the middle of the USA?”
      “Where would that be?”

      “What causes the earth to warm?”

      “What causes the earth to cool?”

      “What is the status of those factors?”

      “What is effecting the change in sea ice volume in the Arctic?”

      Please write something constructive addressing the above instead of letting me think of you as a two-bit troll who’s name calling would have sent you to a “time-out” corner by my kindergarten teacher or get flunked by any one of my elementary school science teachers. Make me proud of you.

      To help you out, here is a graph showing the volume of ice in the Arctic over time:
      (ref: http://psc.apl.washington.edu/wordpress/wp-content/uploads/schweiger/ice_volume/BPIOMASIceVolumeAnomalyCurrentV2.1.png)

  22. robert wilson says:

    George Zuckerman discussed his book The Frackers on C-Span 2 today. There was a long Question Answer session. http://www.c-span.org/video/?319320-1/book-discussion-frackers

  23. travelin_rn says:

    Is there a site or source for the amount of oil discovered world wide per year since 2000, and the largest oil field and size found in each of those year. Believe or not, it’s not for a research project but to shut down the cornucopic views of my wife and in-laws who believe the BS that we are awash in oil on federal lands.

    • Watcher says:

      It doesn’t really matter if they think that or not.

      No, there’s nothing to add to that.

    • Perk Earl says:

      “Believe or not, it’s not for a research project but to shut down the cornucopic views of my wife and in-laws who believe the BS that we are awash in oil on federal lands.”

      I run into the same thing travelin_rn. I gave up on trying to convince my wife who can only function she says if everything is rosey, meaning tainted with cornucopianism. If there is any hint of something being out of sorts in the near or far future she gets a pained look and begins whining, so I say, “It’s ok, I won’t say another word on the subject.” I find it fascinating that someone with a master degree who belonged to mensa would need to have her entire outlook perfected to function properly. I think that says something about the predominance of the population as a whole being cornucopians. Maybe they would just fall apart if they were convinced otherwise. So maybe it’s good thing we leave them in their whimsy state.

      • Earl, I completely agree. Sometimes really smart people can get totally off track and hold some really dumb opinions. I was once in a Toastmasters group with a member of the Mensa. She called herself a UFOologist. She believed that UFOs are real, often visits Earth. She believed the Alien Autopsy was authentic. She believed there was a government conspiracy to cover it all up.

        Then there is Tom Whipple, obviously a genus in my opinion, but is hung up on a “free energy” kick and is always posting about cold fusion or some other free energy scheme.

        Being really smart is no guarantee against cookie opinions or hangups on impossible things.

        • Mike, Sydney says:

          Isn’t this the essence of our problem? The human mind is willfully blind to our predicament. We make up the fantasy of plenty or the illusion of alternatives without regard to facts. We congratulate ourselves on our intelligence and fail to see that the house of cards is about to collapse.

          The Indian population grows by some 42,000 each and every day. That is the world record for any country. They add some 27,000 motor vehicles every day. India is a bit over one third the size of the lower 48s and they have already four times the population of all of the US. The air in most of India is unbreathable for someone like me who lives in Australia. You might say that this is an obvious bubble waiting to burst.

          Yet India has super power delusions, the population seem to believe in the economic growth paradigm and absolutely no one seems to talk about a population or pollution problem. I do not hear any environmentalists cite India as the world’s greatest environmental disaster.

          I found few people in India who concern themselves with resource supply. There are hardly any peak oil books in the bookstores. In fairness, there are none in Australia.

          Now add tho this the rest of Asia, Africa and South America and you have a raging bubble going on world-wide. It has gone on since that drill in 1859 in Titusville, Pensylvania.

          If you bring this up in conversation with your average fat dumb and happy SUV driving suburbian there is no hint of a sense of alarm. What is alarming is how determined they are not to even try to understand the facts, not to show any interest.

          So Ron is right. Collapse will happen. The guests of the Titanic will continue to play their class games and argue over the best deckchair while the entire ship is headed for doom.

        • Brian Rose says:

          To be fair, out of all the pseudoscience theories that exist – ESP, ghosts, Big Foot, UFOs, etc – the idea of there being intelligent life out there capable of analyzing the atmospheric composition of planets for signs of life is the most likely to be true.

          Humans are by no means that technologically advanced and we are already getting data on the atmospheric composition of exoplanets. There has been life on Earth for ~ 3.8 billion years, and the only way an atmosphere can remain as oxygen rich as ours is if a biological process is continually excreeting it.

          Life is basically defined by an open system that uses outside energy to produce an island of decreasing entropy. The result is an accumulation of highly electronegative atoms in the atmosphere (oxygen).

          It’s not really very difficult to discover which planets have this chemical signature.

          The ridiculous part is the assumption that intelligent life knowing life exists on Earth is capable of traveling here. People are often ignorant of the absurd distances between star systems and how long it takes to travel between them, even with near speed of light travel.

      • Philip Backus says:

        Earl, The very thing that you and Travelin speak of interests me greatly. I also feel at this point that it is pointless and even perhaps counterproductive to “evangelize” or even discuss seriously our very obvious (to some) energy dilemma with those of this view. I do believe that there are those who truly cannot function well without a well defined narrative that includes the idea of steadily improving conditions. What aware humans face today is at best the steady decline of our standard of living, at worst apocalypse and the possibility of anything and everything in between. The unknown seems to be the most fearsome narrative of the human race by far and judging by the lack of positive change in society a negative familiar seems better to most than the dreaded……UNKNOWN. If the ramifications of what is discussed here and elsewhere were understood by the general public and fully internalized and acted upon, panic, would be the likely result.

        • Dennis Coyne says:

          Hi Philip,

          Panic is one possible response, another is that people will work together to attempt to find solutions to our predicament.

          I think the second choice is better than ignoring the clear and present danger that the world is facing.

          Many have the opinion that nothing can or will be done to improve the situation. I am often interpreted as thinking that things will definitely work out for the best, which is incorrect, I believe that things look very bleak. I also think that we can take some actions that will improve the outcome and others that will make matters worse. Clearly nobody knows what actions will be taken by human societies in the future, but I think it highly unlikely that the best action will be to continue doing what we are doing, to infinity and beyond 😉 .

          Under the best of circumstances, when peak oil becomes blatantly obvious to most people, the ensuing crisis will result a World War 2 type of response (all hands on deck) where people make sacrifices for the common good and the government responds appropriately to the crisis.

          Was the war time effort of the Allies in World War 2 perfect? Absolutely not, plenty of bad decisions were made. However in a World paralyzed by crisis, laissez faire does not get the job done. The sooner the decline begins the better because then we can get to work on transitioning to a more sustainable society.

          Will we get there? Maybe, but unless we are sure that the attempt will fail, it makes sense to try IMO.

          • Doug Leighton says:

            Well said Dennis; appropriate comment. While I disagree with you on many issues, throwing hands in the air and running helter-skelter like a bunch of terrified chickens while a hawk flies over our roost certainly isn’t going to accomplish anything useful.

            • Watcher says:

              OTOH the chickens aren’t going to shoot the hawk down.

              Maybe if they gather together using congenial chicken cooperation and construct an egg catapult out of feathers,they’ll feel good about their efforts. But they will discover the eggs are not achieving more than 0.112 inches of altitude, at which point a particular bunch of hens will note that their eggs are being broken during testing more than other eggs and express outrage at their disproportionate loss of chicks.

              This uproar affects the group of chickens that were working on targeting algorithms for the eggs. Their work unravels when the Principal Investigator on the project announces that he, being a part of the group of egg genocide victims, will no longer have anything to do with the project.

            • Dennis Coyne says:

              Hi Doug,

              Thanks. I do not expect everyone to agree with me, sometimes I do a very poor job of conveying my point of view.

              Even in the comment above where I tried to explicitly say that I do not think that things will work out for the best, (nor do I think that collapse is inevitable) I am called optimistic.

              I prefer realistic, which is somewhere in the middle between Henny Penny and Pollyanna. We do not know how the future will play out, we can only guess.

              I try to use models with explicit assumptions to inform my guesses, but they are guesses all the same.

              Input from others about the realism of my assumptions is great as it improves the models, so I really do appreciate the criticisms.

          • Philip Backus says:

            Hi Dennis, I thank you for your reply and I hope that you are correct in your optimistic assessment of the situation. I feel that today, our nation lacks much of the intestinal fortitude that made the sacrifices of the WW2 era possible. I do feel however that some will be resourceful enough to keep at least some semblance of low tech civilization alive. I sense that the learning curve of life without oil will be far too steep for many and that many others will succumb to despair via alcohol or suicide. I think the skill set of third world people causes them to be better prepared than the average European or American both mentally and physically simply because many of them still do not have total reliance on modern conveniences. I share at least some of Old Farmer Mac’s ideas and likely sound far doomier than I actually am. I would venture a guess that I am also the only other person on this site with a very extensive amount of time behind draft animals. Six head of sixteen hand mules, two bottom plow for countless hours in the early seventies in Lanc. Co., Pa. Mac is correct that it is very hard work and I was not using a walking plow. He likely was!

            • donn Hewes says:

              Just finished my haying for this year. 2200 bales mowed, raked, tedded, baled, and hauled to the barn with four horses and mules and 10 gallons of gas to run the baler. Horses and mules are no more a cure for peak oil than they were the cause. They can however help us build healthy local communities, ecosystems, and relationships. I personally will retire from farming and end my days walking the streets of some repurposed city leading a donkey selling anything folks will want. Horses, mules, and oxen are finding there way on to more farms everyday. Check out: draftanimalpower.com
              Sorry don’t know how to make a link!

              • Donn, to make a link you just copy and paste it. It is as simple as that.

              • Robert Honeybourne says:

                Draft animal power is a good link. When I read the more extreme doom, and more extreme techno-solve comments, I am always charmed by this kind of hybrid

                My favourite hybrid
                http://en.wikipedia.org/wiki/InterCity_125

                From my childhood. The diesel electric train that allowed the UK to have the most high speed rail in the world (>100mph) at least for a time

                I rattle on. The point is, I think ‘hybrid’ solutions such as using the internet to spread info on draft animals, the use of the draft animals, and the use of lightweight modern farm tools pulled by the them, are the way forward

                There’s too much saviour thinking. What we need is a mixture of ideas. Especially if we head down a gradual energy slope. I think we could gain from the loss in some ways – a few less machines and more animals, a bit less telly and a more few games. A bit more community and a bit less corporations

                Is that mule mp3 ready :))

          • orbit7er says:

            Like Dennis and also like Pete Seeger, I am a realist but also an optimist.
            As Dennis points out in WW II the US elite finally took leadership and did some things that are absolutely relevant to the Green Transition we need:
            stopped producing cars, and with the power of public persuasion from 1942-45 amazingly increased intercity train, bus and local transit ridership by 4 times! We COULD do that again, a Brookings study in 2011
            found that even with US anemic public transit that 70% of Americans in 100 US Metro areas already live only 3/4 ths mile from a transit stop!
            The problem is we simply do not run the trains or buses, use local/express service or provide the last mile shuttles, bikepaths or sidewalks to destinations. This is before even restoring the 233,000 miles of Rail in the US or doing obvious things like converting roads to Rails. Like the lower deck in the George Washington Bridge from NJ to New York which was originally designed for trains.
            Other good things from WW II to be emulated – “Victory Gardens”, recycling aluminum and metals, etc
            Of course the biggest nut of all is stopping the endless Wars costing $1 trillion per year with the Pentagon the world’s biggest oil consumer and greenhouse emitter! If those funds were redirected towards the Green Transition it would be huge….
            Some good things ARE happening – Washington, DC is rebuilding the streetcars my mother used to ride all over the city from the age of 12.
            Orlando has Sunrail – limited service but a start. Cincinnati is building its first streetcar, California is serious about both High Speed Rail but also reviving transit in LA.

          • Brian Rose says:

            Oil prices have spiked and manifested severe recessions on several occassions. In no instance was there a coming together to solve the problem like in WW2.

            I certainly admit (and hope) I may be wrong, but my guess is the next time a 2008 type situation unfolds half of the U.S. voters will be swayed by the “we just need to produce our way out of the problem, open federal lands, ANWR, de-regulate, etc.”

            I can already see the convincing talking point that “we produced our way out of high oil prices in 2008 and we can do it again if only we allow the free market to work.” Totally erroneous reasoning, but it will convince the base of a certain political party in the U.S.

            If shale oil does indeed peak before the end of Obama’s presidency and prices spike it will be an easy narrative that big government, not geology and physics, caused the crisis.

            There will be strong opposition to the idea of the government imposing rationing and investing trillions in renewables, public transit, and subsidies for electric vehicles.

            The end result will, in my mind, be gridlock where essentially the chips are allowed to fall as they may. I can already

          • clifman says:

            “when peak oil becomes blatantly obvious to most people” – I, too, used to believe this would happen. But years of talking with people, watching people be willfully ignorant, reading ideas on how we are wired such as by Nate Hagens, etc. has disabused me of this belief. Leanan used to post pretty firmly on it at TOD also. The general population will never ‘awaken’ to the reality of resource limits. They will just be lead to blame someone or something else for the problems descending upon all of us, which are really, as Greer writes, a predicament.

      • The Wet One says:

        Well, I have to concede that it took me a few years to get back on kilter after learning about Peak Oil 5 or so years ago. I can understand why one would want to remain ignorant now. That was a rough 5 years.

        I think my eyes are a bit more open, but I’m not and will probably never be a full on doomer. Things will happen, TSWHTF, disruption and some chaos are headed our way. Of this, there is no doubt. However, it took some years before I gathered the necessary intellectual and intestinal fortitude to hold to the view that things won’t completely fall apart instantly and it won’t be hell on earth in short order.

        I guess some folks just want to avoid going through that exercise. Which is understandable I suppose.

        Plus, this stuff is as depressing as all hell. Do you know how devastating it is to realize that no, we’re never going to get off this rock for entirely understandable reasons (i.e. not enough energy to maintain a complex enough society to ever have a hope of reaching the stars)? For a huge fan of Star Trek as a guide to the future in some vague prophetic sort of way, this was a blow. I have friends who still refuse to believe that we will NEVER GET OFF THIS ROCK for this very reason, even though the U.S. seems to have given up on space for reasons likely related to Peak Oil (and it’s attendant economic pressures).

        Socrates’ name meant something like “sure strength.” One needs sure strength to deal with some of the truths around Peak Oil and what it means for the world of advanced economies. The reason being is that that picture going forward doesn’t look good. Once you take in human behavioural proclivities and our political systems, well, it looks downright hopeless. Notwithstanding this appearance, and no matter how bad things get, more likely than not, we’re not going the way of the Easter Islanders. It’s just not that bad and need not get that bad. If we collectively lose our minds, it may be that bad, but this isn’t likely in my view.

        • Hickory7 says:

          I’ve got no interest in other “rocks”.
          If this one ain’t good enough, then I suspect there will never be human contentment.
          And destroying one should be enough, even for us.

        • travelin_rn says:

          Thanks for the replies. I understand that the bumpy plateau should be the age of transition, but we are doing a terrible job as a society and as a society, pay the price with the decimation of the population in the future. The family keeps preaching that with technology, that we are finding more and more oil and able to extract more from the older oil patches. I discovered peak oil three years ago watching “End of Suburbia” in my quest to figure out why the housing crisis occurred (credit bubble) and how a strong economy popped (end of cheap oil). I used to hold the scifi cornucorpic view like my family but changed my perspective to a dystopic future after seeking for “The Answer.”

          • Watcher says:

            Just saw preliminary advertising for local county fair.

            They’re gonna have Backhoe Rodeo competition. haha This is great! Every drop burned is a drop China doesn’t get.

      • islandboy says:

        I became aware of Peak Oil about seven years ago after it was mentioned on a couple of “green” vehicle sites that I visit daily. Since then, I have learned to hold my tongue since it is very rare that I encounter anyone that thinks it is worth discussing. My sister who lives in the UK did not want to hear about it and despite events in the UK that support what I have been saying, still does not want to hear about it.
        I have also formed the opinion that events will unfold over years and decades rather than days and weeks and that we have been living through Peak Oil. It’s just that things are happening so slowly, it is only those of us that have more than a passing interest in Peak Oil that associate events with the failure of world oil production growth to keep pace with the growth in demand (Peak Oil).
        I am curious as to why I bought Peak Oil (and AGW as presented in Al Gore’s Inconvenient Truth) hook line and sinker, while other equally intelligent individuals have ended up in the denier camps. What is it about us?

        • dolph9 says:

          For the vast majority of human history, pessimists and optimists were in rough balance, with only a slight evolutionary advantage to optimists. However with the industrial revolution the optimists basically took over, with victory after victory.

          So people think now the population is going to expand forever, economic growth expands forever, there is infinite energy in the universe, we will colonize the solar system, the galaxy and the entire universe, there is no limit to human ingenuity, all the peoples in the world will live in harmony, etc. etc. They are incapable of thinking otherwise and thus react violently to any suggestion of decline.

          Interestingly, this has also meant a complete corruption of areas which were at one time largely pessimist, such as science, art, religion, etc. Science tells us we are apes groping around an insignificant speck in the universe. Religion tells us that it is only death that we can look forward to. Both of these are fundamentally pessimistic views, and the mainstream global consensus of industrial techno-optimism is the complete opposite: that we are special, important, can live forever and dominate everything.

      • Desertrat says:

        Or my situation: “well, desert is as green as, like, 3 people, so he’s taking care of it all for us and we can keep on with happy motoring cause we can’t possibly move kids or other large/heavy objects around on a bike in the heat/cold…that’s for cavemen, and we might lose weight!”

  24. Doug Leighton says:

    Meanwhile, in newly liberated Libya. (BBC News)

    “Libya has requested international assistance to put out a fire at a large fuel storage site in Tripoli that was hit by a rocket during militia clashes. The huge blaze could cause a “humanitarian and environmental disaster,” the government has warned. It is the largest facility in Tripoli, containing 6.6 million litres of fuel.”

  25. Jeffrey J. Brown says:

    Interesting article about major oil companies focusing on OECD countries, partly out of concerns over political unrest and tough concession terms and/or concerns about nationalization of oil fields. The article focuses on conventional offshore production and discusses the high operating costs in New Zealand. Of course, as activity increases and as the local infrastructure is built up, presumably costs will fall.

    However, they would see similar cost impediments to onshore tight/shale oil plays becoming commercial in much higher operating cost areas.

    Basically, a global industry geared to wells producing thousands of barrels per day would have to adjust to something like the Bakken model, i.e., an average production rate of a little over 100 bpd, with a median production rate of less than 100 bpd (while total production is still increasing), with a very high per well decline rate.

    In addition, as the Monterey Shale Play illustrates, not all US shale oil plays will be commercial in meaningful quantities, and most shale plays in the US that are commercial tend to be gas prone.

    Oil Prospectors Shift Back to Wealthy Lands
    Firms Find Developed World’s Stability, New Incentives Yield More-Predictable Returns
    http://online.wsj.com/articles/oil-prospectors-shift-back-to-wealthy-lands-1406516236?mod=WSJ_hp_RightTopStories

    New Zealand illustrates the trend well. It offers a rarity in a well-prospected world: millions of unexplored offshore acres. But exploration ships must sail from Australia or Asia, the closest places such boats are based. An offshore well can cost more than $100 million, double the cost in some areas.

    Until recently, getting an exploration permit required a long process. Tough geology, storms and environmentalists delayed prospecting. “There’s good reason why it hasn’t been explored,” says Shell’s New Zealand chairman, Rob Jager.

    • Dennis Coyne says:

      Hi Jeff,

      You said:

      “In addition, as the Monterey Shale Play illustrates, not all US shale oil plays will be commercial in meaningful quantities, and most shale plays in the US that are commercial tend to be gas prone. ”

      I agree that most of the US shale plays are gas prone. The Monterey Shale enthusiasm was based in part on a poorly written report published by the EIA (farmed out to an engineering firm that basically took investor presentations and cut and pasted to create a report.)

      The lesson in my mind is that resource projections by the EIA should be ignored, the USGS is far from perfect, but in the case of the Monterrey shale the USGS predicted zero undiscovered resources.

      http://certmapper.cr.usgs.gov/data/noga00/natl/graphic/2013/mean_cont_oil_2013_large.png

      Notice that the map from the USGS at the link above shows no shale resources (undiscovered technically recoverable) in California.

    • Patrick R says:

      Don’t pin your hopes on shaky little NZ…. Current government believes they can make oil appear by not only giving away the royalties but even outlawing environmental protest. Outrageously.

      This most extractive industry friendly government have been rewarded with nothing but declines from existing production and dry holes in new places for the entirety of their first two terms.

      Furthermore in our ‘Energy Province’, Taranaki, where the current oil and gas industry has long been based, turns out to have no higher average incomes than anywhere else in the nation. Trickle-down, doesn’t. Oh yes and we are very much a net importer of liquid fuels.

      Happily electricity is a better story, being 80% renewable and heading to 100 [the rest local gas], although new generation has stalled because of a flatlining of demand.

      Also NZ is a good example of improving energy and oil intensity, as GDP growth is strong even though we are using less or similar amounts of both these essential inputs…. glimmer of hope there.

      Also the only city of scale, Auckland, is currently rolling out shiny new Spanish built state of the art
      electric trains, which will help us still function through the next oil re-pricing. And yes we are already driving less, like the rest of the OECD.

      • Fred Magyar says:

        But you have lots and lots of sheep >;-)

        Baa, baa, black sheep,
        Have you any wool?
        Yes, sir, yes, sir,
        Three bags full;
        One for the master,
        And one for the dame,
        And one for the little boy
        Who lives down the lane

    • Patrick R says:

      I should add the minister mentioned in the ASJ article above is a spectacular ‘drill, baby, drill’ idiot.
      And like his government a climate change ignorer.

  26. Doug Leighton says:

    Huge blaze spreads at fuel storage depot in Tripoli (continued from above) BBC News

    “A huge blaze engulfing Libya’s biggest fuel storage facility in the capital, Tripoli, has spread to a second tank. Libya’s National Oil Company (NOC) has described the fire as “out of control”. It comes hours after the authorities appealed for international assistance. The government blames clashes between rival militias for starting the fire, which it says may cause a humanitarian and environmental disaster. At least 97 people have been killed in fighting between rival militia groups battling for control of Tripoli’s main airport in the past week. Firefighters almost managed to put out the blaze when it took hold of a first tank but had to withdraw after fighting resumed in the area, Libyan oil company spokesman Mohamed Al-Harrai told the BBC. He said shrapnel hit the second fuel tank, igniting it, and the fuel compound was still being hit. Residents within 3-5km (2-3 miles) of the area have been urged to evacuate, amid fears of a massive explosion.”

  27. Dennis Coyne says:

    Ron said on page one ( http://peakoilbarrel.com/anticipating-peak-world-oil-production/comment-page-1/#comment-49320 ):

    “Seriously, just guessing, and we are all just guessing, but I believe the decline rate the first year after peak will be around 1%, increasing to 1.5 to 2% the second year and increasing a few tenths of a percentage point after that until it hits 3 to 4%. Then all hell will break loose due to high oil prices, or collapsed economies or political insurrection.”

    Note that Ron did not say when he thought the peak would happen, but let’s assume that C+C decline will begin by 2020 at the latest. I tried to create a scenario which roughly matches Ron’s guess above using the oil shock model and a C+C URR of 3000 Gb (about 10% higher than Jean Laherrere’s 2700 Gb estimate).

    In order for decline rates to be this high starting in 2020, depletion rates must decrease because a model with depletion rates remaining around 5% (presently the depletion rate is about 4.9%) has decline rates which are much lower than Ron thinks they will be.

    The low depletion rate scenario has depletion rates falling from 4.95% in 2020 by 2.5% each year (that is, this year’s depletion rate times 0.975 is next year’s depletion rate). The depletion rate falls to 2% by 2056 and then remains at 2% thereafter.

    Note that the long term world average depletion rate has been about 5% and the historical lowest depletion rate was 4.7% in 2009 (data only available 1960 to 2013.)

    The model uses a 5% depletion rate from 1870 to 1950 and rising from 1950 to 1960. The low scenario has a maximum decline rate of 2.6% in 2022 and the decline rate then gradually decreases to 2.2% by 2050. When the depletion rate stops decreasing in 2056 the decline rate drops to less than 0.5% and then rises slowly to 1.2% by 2100.

    Below I present high, medium, and low depletion rate models with both the depletion rate % and decline rate % charted on the right axis and oil output in millions of barrels per year (Mb/a) on the left axis.

  28. Watcher says:

    Petrobras (PBR) said to be divesting fields in Austral Basin

    Ransqawk blurb. I think that’s south of the Falklands.

    • Dave Ranning says:

      OT:
      I’ve always wanted to fly fish the Falklands .
      That will probably be in the rear view mirror soon?

  29. Watcher says:

    Bakken curiosity item for me.

    Truck mileage 4 miles/gallon of diesel on gravel roads. 2000 truck trips year 1 per well per the pipeline pitch.

    Call it 10 miles each way. 40,000 miles per well. 10,000 gallons/year.

    /42 = 238 barrels/year. Year 1 well does 400 bpd on avg X 365 = 146000 barrels that year. 0.2% of oil coming out is burned by the trucks. Ain’t much.

    • Watcher says:

      If we call diesel oil. Maybe a X 10 is appropriate to get the diesel.

    • Dennis Coyne says:

      Hi Watcher,

      It is 400 b/d for the first month, the average first year output is about 250 b/d or about 90 kb, it still works out to 0.25% if your 238 barrels/year is correct.

      • Watcher says:

        Nod. Ain’t much. But worth knowing.

      • Mike says:

        Dennis, you should have this: http://fuelfix.com/blog/2014/06/30/rising-costs-eat-into-returns-even-with-high-oil-prices-ihs-says/. For the purpose of this article an average incremental lift cost per barrel was determined using very high, and rising production rates from unconventional sources. Imagine how high those lift costs will become when the bloom is off the shale bush. Mine are actually closer to 25-28 dollars. When I scratch my head over shale economics I often forget the cost of interest on borrowed money, then scratch even harder.

        Mike

        • Dennis Coyne says:

          Thanks Mike,

          I found 2009 average US lift costs from the EIA

          http://www.eia.gov/tools/faqs/faq.cfm?id=367&t=5

          They claim about $13/barrel for onshore and $10/barrel offshore with a US average of about $12/barrel, I don’t know what they are in 2013. These are nominal costs so inflation at 3% would bring average lifting costs to $13.50/barrel.

          I assume that your costs are much higher because your wells produce a fairly high amount of water, relative to the US average well, also if we assume another 7% increase in real lift costs each year (on top of inflation so a 10% nominal increase) the 2013 US average lift costs would be up to $17.60 per barrel in 2013 $.

          I found a link that suggested that transport costs and royalties are in lifting costs (link below), is that correct, and are taxes also included in lifting costs?

          http://definitions.uslegal.com/l/lifting-costs/

  30. TechGuy says:

    Some very Disturbing words from Putin, from the Yukos ruling

    Yukos shareholders face battle to claim $50bn
    http://www.ft.com/intl/cms/s/0/b01cfb72-1669-11e4-8210-00144feabdc0.html#axzz38nrs7LRK

    [At the bottom of the article]
    One person close to Mr Putin said the Yukos ruling was insignificant in light of the bigger geopolitical stand-off over Ukraine. “There is a war coming in Europe,” he said. “Do you really think this matters?”

    Is Europe heading for a repeat of Anti-Semitism and Fascism?

    Protesters in France over Gaza Perform Nazi Salute:
    http://www.haaretz.com/news/world/1.607300?

    Swastikas Posters in Rome (Italy)
    http://www.ibtimes.co.uk/gaza-crisis-romes-historic-jewish-quarter-daubed-swastikas-anti-semitic-posters-1458682

    Anti-Sematism in UK:
    http://www.dailymail.co.uk/news/article-2707421/Rising-tide-anti-semitism-Britain-Jewish-people-face-backlash-bloodshed-Gaza.html

    It seems that there is a rising number of very unhappy people in Europe. I fear the poor economy in Europe is going to morph into another wave of socialist nationalism which lead to fascism and ethic cleaning. Instead of the Balkans, it will begin in the Middle East or perhaps the Ukraine.

    • Jeffrey J. Brown says:

      One slight clarification regarding the FT article. The way I read it, the “Person close to Mt. Putin,” talked about a war coming. Of course, I assume that this is analogous to a “Senior adviser in the White House.”

    • Doug Leighton says:

      TechGuy,

      Are you the new self appointed Angel of Doom? I thought that was Steve’s role.

      And, “One person close to Mr Putin said the Yukos ruling was insignificant in light of the bigger geopolitical stand-off over Ukraine. “There is a war coming in Europe,” he said. “Do you really think this matters?”

      Let’s hope this is just a grown up version of the classic schoolboy’s pissing contest. Disturbing indeed!

      • Watcher says:

        ZH lives on sensational headlines, which makes them right before others, and wrong more often than others. But be that as it may be, it’s seriously old normal thinking.

        Russia is draining $500 billion per year from its enemies. Why would they want a war? Just keep bleeding them. Relentlessly. That is the path to victory — and the west knows it.

        But if you’re being bled, you may want to have the confrontation before anemia does its thing.

        • TechGuy says:

          “Russia is draining $500 billion per year from its enemies. Why would they want a war?”

          I don’t think they want war. Its the US that pushing for War. The US is terrible and extremely belligerent. So far the US is invaded or destabilized more than half dozen countries in the Middle East and Africa in the past 12 years. It was not Russia that invaded Iraq or overthrow Libya, Egypt, etc. It was not Russia that started a Civil War in Syria and Ukraine. I believe Russia is just trying to prevent war but does not see it efforts effective.The US is now trying to destabilized Russia’s Boarders in an attempt to break Russia. This is all just bunch of Madness cause by the US. I am no fan of Russia, but at least they aren’t acting like a drunk bunch of sailors looking to pick a fight, I really wish the US public would wake up and vote all the nut-jobs out of Washington ASAP before they start WW3.

      • SRSrocco says:

        Doug,

        Yeah… I had to cut back on the Doom & Gloom comments. My wife told me to get outside and start doing something useful like cut’n the grass.

        By the way… NOAA climate scientist ELMER FUDD told me from data taken from “cooked books” that TUNDRA FARTS will be the death of us.

        Steve

        • clifman says:

          Steve – Instead of endlessly cutting grass, perhaps plant some fruit & nut trees out there. Then you can spend your time picking & eating…

  31. Doug Leighton says:

    Global warming amplifier: Rising water vapor in upper troposphere to intensify climate change

    http://www.sciencedaily.com/releases/2014/07/140728153933.htm

    A new study from scientists at the University of Miami Rosenstiel School of Marine and Atmospheric Science and colleagues confirms rising levels of water vapor in the upper troposphere — a key amplifier of global warming — will intensify climate change impacts over the next decades. The new study is the first to show that increased water vapor concentrations in the atmosphere are a direct result of human activities.

  32. B says:

    Is $100 oil here to stay?

    “The world of energy may have changed forever,” according to Professor James Hamilton of the University of California. “Hundred dollar oil is here to stay.”

    Hamilton, who is one of the most respected economists writing about oil, made his bold prediction in a paper on The Changing Face of World Oil Markets, published on July 20….

    The problem with Hamilton’s analysis is that it largely ignores the impact of the shale revolution on the economics of oil production and understates the tremendous variability in real oil prices in response to changes in technology.

    The professor devotes just 400 words out of almost 4,000 to discussing the production of crude oil and gas from shale formations.

    Most of that discussion focuses on the high cost of drilling and fracturing shale wells; the rapid decline in production; the alleged unprofitability of shale wells; and question of whether the conditions that produced the shale revolution in North American can be replicated in other parts of the world.

    But this part of the paper is also the weakest, and it highlights the fundamental limitations with Hamilton’s entire argument about the increasing difficulty and costs of producing crude oil….

    If oil wells were not extremely profitable, North Dakota and Texas would not be experiencing a drilling boom, with demand for both rigs and petroleum engineers at the highest level for three decades.

    In focusing on decline rates, Hamilton ignores the ultimate amount of oil and gas recovered from
    shale wells, which in many cases is higher than from conventional wells.

    The second section of the paper suggests that much of the increase in oil output since 2005 has in fact been “low quality” natural gas liquids rather than true crude, but then the fifth section acknowledges production from shale has increased U.S. crude output by a net 2.3 million barrels per day.

    In fact, statistics from the U.S. Energy Information Administration show the shale boom has produced a dramatic increase in both natural gas liquids and true crudes. It is simply not true to imply that the oil industry is finding only “low quality” hydrocarbons.

    One of the biggest problems of the paper is that it confuses the period between 2005 and 2008, when output was struggling to meet demand, with the more recent period from 2009 through 2014, when output from shale has grown quite quickly and global oil demand growth has slowed.

    • Watcher says:

      Do we have a read on 2nd derivative of global consumption?

      Don’t recall seeing that. Besides which, if shale production grows from 1 mbpd to 1.2 mbpd over 2 yrs, for a mighty 10%/yr, a slowed (allegedly) 0.5% growth per year in global consumption would be what, 375K bpd? And in two years 750K bpd? Well more than what shale adds.

      That argument about fast growth vs slowing growth doesn’t work.

    • Strummer says:

      @B: “If oil wells were not extremely profitable, North Dakota and Texas would not be experiencing a drilling boom”

      Let me rephrase that for you: “If houses were not extremely profitable, the US would not be experiencing a housing boom” – how did that turn out in 2008?

    • Patrick R says:

      B, really? You’re complaining that ‘only 10% of discussion about global oil was about shale’? What proportion of global production do think shale oil is?

      • TechGuy says:

        I am pretty Sure the B doesn’t agree with the article and is just sharing so you can see whats getting published by the media.

  33. B says:

    When it comes to energy, Alabama’s future is now

    America is currently in the middle of an energy renaissance. Who would have thought just 10 years ago that we would be discussing the notion of an energy independent nation? With the advent of newer and cleaner technologies such as hydraulic fracturing, and the discovery of large deposits of shale gas and bituminous coal in northern and western states, America is set to become not only energy independent, but a net energy exporter – if we allow businesses and entrepreneurs to safely develop our resources and the infrastructure to transport energy products.

    This is where Alabama comes in: We have a chance to play a critical role in the area of energy production and the transportation of these resources to the rest of the world.

    Alabama can help lead the way to our country’s energy independence.

    Right now Alabama is 13th in the nation for energy production but that ranking may rise if we can develop shale deposits that exist in the northern third of our state. According to the Geologic Survey of Alabama, oil sands in Alabama may contain up to 7.5 billion barrels of hydrocarbons. This is why last year Gov. Bentley and Mississippi Gov. Phil Bryant entered into a memorandum of understanding to explore this potential resource.

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