EIA Short Term Energy Outlook (STEO) and IEA Oil Market Report

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The IEA Oil Market Report was published in mid April, data from the report can be found here.

 

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The EIA’s STEO was published on May 9, 2017.

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I assume in the chart above that OPEC crude output is 32 Mb/d in the last three quarters of 2017.

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The chart above assumes World commercial petroleum stocks are 5200 million barrels in Dec 2011, days of demand is total stock divided by the current month’s actual or forecasted demand (after Jan 2017). We don’t have good data on World petroleum stock levels, I used the OECD commercial stock levels in early 2012 as a guide and assumed World days of forward supply was similar to OECD levels at that time (about 59 days), then the supply and demand balance from the EIA data was used to find the World stock level from 2012 to 2018.

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The chart above shows the average of the EIA and IEA scenarios I have presented (assuming OPEC crude output averages 32 Mb/d for the final three quarters of 2017 for the IEA scenario.) The demand scenarios are very close from 2015 to 2018, the supply scenarios diverge after the first quarter of 2017, with the EIA supply scenario matching demand and the IEA scenario falling short by about 1.3 Mb/d in the third and fourth quarters of 2017.

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244 Responses to EIA Short Term Energy Outlook (STEO) and IEA Oil Market Report

  1. Petro says:

    Hi Dennis,
    back when I was an active reader and commentator on this forum, we had a few intellectually spirited exchanges in relation to your future projections regarding petroleum (among other things).
    Your famous ~ 2020-2025 Bakken 2+ mega barrels/day and ~ 2017-2018 $80+/barrel come to mind…..
    I even remember vividly a lovely chart discussion we had… (your Bakken future production chart… or charts, for there were many, many…and very colourful)

    How is that working out?

    Be well,

    Petro

    P.S.: Shallow, still trusting the ol’ faithful “supply-demand” thingie and hoping for a big rebound?

    • HuntingtonBeach says:

      “still trusting the ol’ faithful “supply-demand” thingie”

      Economics is the science of the study of the scarcity of resources. Don’t tell your a flat earthier.

      • Petro says:

        My ancestry is half Helen:
        economy = oiko + nomia = maniging of the household (roughly).

        You are not a nubby @ peakoilbarrel, Hunty.
        I am a bit disappointed you forgotten me…..
        I would kindly suggest you re-visited my early posts before you question my energy-economics knowledge (let alone challenge it … with all do respect!).

        Anyway, be well

        Petro

        • HuntingtonBeach says:

          Can’t say I remember any of your past electrifying economic posts. Not much demand for Petro these days. The clean silence you hear between your ears is the sound of EV’s powering past the gas station and falling price of oil.

          Best wishes

          • Petro says:

            ..it’s clean, isn’t it?
            But the difference between you and I my friend is that, unlike you (and most/many), I DO understand (in detail!) that the falling price is NOT the derivative of shiny mirrors, spinning windmill blades and Lithium-Ion chemical concoctions.
            I am certain I was not simple enough to convince you, but at this point in the game – it makes no difference.
            So: what the heck!

            Be well,

            Petro

            P.S.: unlike you, I DO remember you amusing over my “… DemocLicans / RepubliCrats…” comment a while ago.
            Apparently you did not understand it.
            Once/IF you do, you will understand that the “silence” is not on my court.

            • HuntingtonBeach says:

              Good morning Dirty Energy,

              You must be a vegetarian, because with your preceding post including the comment like the one below. I ask the question, “Where’s the beef?”

              “unlike you (and most/many), I DO understand (in detail!)”

              When a price is established that just clears the market, economist call it an “equilibrium price”. The amount offered just equals the amount demanded at that price. Price is in equilibrium when it stays put at that level(with given demand and supply curves). At any other level, price will not be in equilibrium, because there will be excess supply or excess demand. That will drive price up or down toward a level that will eliminate the excess supply or excess demand.

              When an equilibrium price has been reached with given demand and supply curves. The market is in equilibrium. At the prevailing price, there is neither excess supply nor excess demand. Unless either demand or supply changes. Price will remain unchanged.

              Petro, you haven’t proven anything except that you have a large ego and some dream that everyone should remember your past so called economic genius.

              • Caelan MacIntyre says:

                HB Sauce Without a Cause

                The thing about the anonymous HuntingtonBeach is that they can squeeze out whatever crap they want and not be held accountable, at least not in the way that their ‘favorite’, and relatively-unanonymous, Gail Tverberg is. 💋‍

                The beef will not be found in the oversized whitebread milquetoast buns HB serves up until which time as we know where and from whom to get it. (Cold day in hell?)

                oiko nomia –> Google Translate –> house law

              • Petro says:

                You are correct!
                I am a vegetarian.
                Akin to my dear friend Hannibal Lecter, I prefer my liver with some fava beans and a nice Chianti.

                Be well,

                Petro

            • hole in head says:

              Petro,
              Nice to have you back

        • Fred Magyar says:

          But the difference between you and I my friend is that, unlike you (and most/many), I DO understand (in detail!) that the falling price is NOT the derivative of shiny mirrors, spinning windmill blades and Lithium-Ion chemical concoctions.

          It would be nice if conventional economists understood that their attempts at managing the ‘Oikos’ requires a much deeper level of knowledge and study than they often give themselves credit for…

          Ecology = oikos + logos

          ‘Oikos’ can also be taken to mean, a place to live, in a much broader sense than merely a household. As in ecosystems… to understand and manage those, requires a deeper level of knowledge that depends on a word with Latin roots; Scientia.

          BTW, most stable ecosystems depend on solar ‘Energia’, and not fossil fuels, which unfortunately need to be combusted to produce a form of energy, namely heat.

          Our current fossil fuel based economies are only very poorly run subsidiaries of Ecosystems Inc. They are badly in need of an upgrade to a more stable sustainable and circular Economy 2.0.

          Maybe that could be a topic for discussion here on this blog.
          How to accelerate the transition away from fossil fuels while at the same time exploring the idea of a Circular Economy.

          https://www.ellenmacarthurfoundation.org/circular-economy

          CIRCULAR ECONOMY OVERVIEW

          Looking beyond the current “take, make and dispose” extractive industrial model, the circular economy is restorative and regenerative by design. Relying on system-wide innovation, it aims to redefine products and services to design waste out, while minimising negative impacts. Underpinned by a transition to renewable energy sources, the circular model builds economic, natural and social capital.

          Bold mine.

          Cheers!

          • Boomer II says:

            When some of us talk about an economy based on less use of fossil fuels, we are told that it won’t support business-as-usual.

            And that is the point. We don’t see business-as-usual as particularly desirable. Eliminating some of the excesses and pollution that come from fossil fuels will change economies, but will bring about some desirable changes.

            When we talk about the consequences of decline in gas and oil, we are looking at a scale that runs from disruption to collapse to extinction. Given the natural disasters, wars, and diseases that homo sapiens have survived during the course of their history, extinction seems unlikely in the immediate future. We may go back to caveman days, but homo sapiens have survived much worst than not having gas and oil to power their machines.

            So we’re looking at something that falls between disruption (a given) and collapse (could happen, but the institutions that collapse may have outlived their usefulness in a changing world anyway — it’s more a matter of whether the transition to something new is thoughtful or abrupt).

            So the threats of a world without oil don’t trouble those of us who see economies built on oil as unsustainable anyway.

          • Petro says:

            Hi Fred,
            good to hear from you!

            – I am not sure if I mentioned this, but my postgraduate thesis was System Energy Physics – not Economics.
            I have worked for a long time in energy investment banking and I had to study economics because of that (not to mention I like it).

            – As I mentioned above, I am half greek (Petros).
            While I appreciate the linguistic narrative, I think I know my language well enough.
            As a friendly reminder along that line:
            I do understand the broader meaning and parallel you are trying to draw with the word “oiko”, even though in “ecology” the correct word is “ecos” – not “oiko”.
            However, the “logy” in Ecology is “logia” – NOT “logos”.
            “Logos” means language/tongue which would make the word ecology non-logical the way you tried to explain it.
            “Logia” means science/study, of course.
            Again, not to be pedantic, but just for accuracy.

            Finally, and this is for you:
            complex systems can either grow, or collapse.
            The “circular, steady” status in a complex system (which our solar powered “ecos” is, of course) – whether is “circular economy, or other – is the twin sibling of “perpetum mobile” in thermodynamics.
            It cannot be! It does not exist!
            Whoever truly believes it, knows very little of physics and the little he/she/zhe knows, knows it wrong.

            Just a thought, just a thought…

            Be well,

            Petro

            • Fred Magyar says:

              Thank you for the lesson in Greek etymology, it is much appreciated. Admittedly my Hungarian is a lot better than my Greek so point taken.

              Now as for perpetual motion machines, which are indeed not permitted by the laws of thermodynamics… but comparing that to ‘The idea of a circular economy and ecosystems, is akin to comparing a solar powered sterling engine stuck under a snow drift in the middle of blizzard, to a network of finely tuned heliostats in the Mojave desert controlled by a deep learning AI algorithm and used to melt steel.

              My point being, that while perpetual motion machines do not work, ecosystems do and they are quite ubiquitous throughout nature. It is possible to study them, see them in action and learn from them.

              The idea of a circular economy is much more like an ecosystem that a perpetual motion machine!

              http://ec.europa.eu/environment/circular-economy/index_en.htm

              Circular Economy

              Implementation of the Circular Economy Action Plan

              One year after adopting its Circular Economy Package, the Commission reports on the delivery and progress of key initiatives of its 2015 Action Plan: Report on the implementation of the Circular Economy Action Plan and annex.
              Together with the report, the Commission also:
              took further measures by establishing a Circular Economy Finance Support Platform with the European Investment Bank (EIB) bringing together investors and innovators
              issued guidance to Member States on converting waste to energy: Communication on the role of waste-to-energy
              proposed a targeted improvement of legislation on certain hazardous substances in electrical and electronic equipment: Proposal for amending RoHS Directive, impact assessment and executive summary of the impact assessment.
              For more information: press release and questions and answers.

              • Petro says:

                Fred,
                point taken, but agree to disagree.

                On a serious note and at the risk of being redundant, I really miss the days when this site was a “fierce” scientific battleground of ideas and you and I (and a handful others – of course Ron, Wimbi r.i.p ) would “charge” at each other with solid and rational arguments and disagree without being insultive/ing and/or be mad at each other.
                What happened?!
                What is this hostile, binary, simpleton (Bushism)thinking: with me or against….?!
                … you are against EVs, so you must be an oil, “dirty energy” troll….
                … you said something bad for Hitlery, so you are a Drumpf right wing idiot…., etc, etc…

                Not to mention the idiots who think are experts…
                they used to be few and apart on this respected forum. Now they are pervasive, it seems…
                What happened?!

                That is the reason why I am not here anymore….

                Be well,

                Petro

                P.S.: I was recently in Budapest….my oh, my! Breathtaking!
                That city, St. Petersburgh (Leningrad) and Prague make Paris and London run… I mean really run for their money….!

                • Fred Magyar says:

                  Yeah, I too much prefer a real discourse based on solid ideas and admit to having been guilty of less than exemplary behavior on occasion.

                  To be fair in my case at least I’m a product of three cultures. Hungarian, Brazilian and USian, I refuse to call it American.

                  Hungary, and BTW, Budapest is beautiful, but current the government is neo nazi, Brazil is profoundly corrupt and for all practical purposes has experienced a coup and in the US we now have Trump et al. So I feel that I have lost my connection to all of my roots simultaneously.

                  As a consequence I’m feeling very frustrated and angry and my patience is at an all time low. As I look out at the world at large it seems that things are generally heading to hell in a hand basket, due mostly to human greed and stupidity.

                  Anyways I bear no one here any ill will, well maybe an exception in the case of the trolls that show up here.

                  I suspect I am not alone in feeling the way I do.

                  Peace!

                • Dennis Coyne says:

                  Hi Petro,

                  Not very clear why you disagree with Fred.

                  The Earth receives a lot of energy from the Sun and over time the problem will be an excess of energy as solar output will gradually increase over the next billion years or so. So nobody needs to argue for perpetual motion machines, which most high school students are well aware do not exist.

                  Clearly there cannot be perpetual economic growth as resources are not unlimited. Recognizing this fact and utilizing resources carefully and recycling them (as ecosystems do) may, along with a peak and decline in human population allow humans to exist without destroying most life on the planet (and in the process reduce dramatically the probability of long term human survival.)

                  • Nick G says:

                    I agree, with a small quibble.

                    Clearly there cannot be perpetual economic growth as resources are not unlimited.

                    Yes, resource consumption can’t grow forever. But…”resource consumption” isn’t the same as the economy. Goods can improve in quality and features, and services can grow without more resources.

                    For example: the US car industry has grown quite a lot since 1970 in value, while the number of vehicles sold has essentially stayed flat.

                    A lawyer or programmer can work wonders with a 15W laptop.

                  • Dennis Coyne says:

                    Hi Nick

                    Can the cars be made without resources?

                    I believe it will be challenging. 😉

                  • Nick G says:

                    Dennis,

                    I didn’t say that ” the cars (could) be made without resources”. I said “resource consumption can’t grow forever. “.

                    That’s very different.

                    So…I do agree that we need to be careful with resources, and aggressively recycle. My quibble is with the “infinite economic growth is impossible” meme. It’s misleading: growth in resource consumption has already stopped in the OECD, and can stop for the whole world without economic growth stopping.

                  • Boomer II says:

                    Here’s a good article from two months ago on economic growth and resource consumption. Seems to cover many of the points that have been brought up here.

                    The decoupling delusion: rethinking growth and sustainability

                  • George Kaplan says:

                    Another five years of the trends below and growth will be gone, at least in the OECD countries. The chart is from a paper prompted by Brexit concerning globalisation and recent trends in income distribution and changes, mainly from a UK perspective. It is interesting that 1) underlying it all is an assumption that we just need to get the right policies and the right sort of growth and everything will be fine; 2) no mention at all of resource limits or climate change.

                    http://www.resolutionfoundation.org/app/uploads/2016/09/Examining-an-elephant.pdf

                  • Dennis Coyne says:

                    Hi Nick

                    I would disagree if you are asserting that economic growth can continue forever. The OECD imports a lot of goods. One has to look at World levels of resource consumption to account for resource use in imports and exports.

                    Resource use will peak and decline as they run short. The supply has limits and 100% recycling is a goal unlikely to be achieved.

                  • Nick G says:

                    I would disagree if you are asserting that economic growth can continue forever. The OECD imports a lot of goods.

                    I think I haven’t managed to convey my point.

                    My point is that economic growth, as measured by consumption of “goods”, has *already* stopped in the OECD. The same thing can be expected to happen in developing countries in the very foreseeable future. So, to argue about whether it *can* grow forever is misleading. It’s arguing about a “straw man” – an argument that distracts from the key questions.

                    Even if physical net imports to the OECD weren’t a small percentage (which I believe they are), it wouldn’t matter because consumption has leveled off, so production of goods (wherever it’s located) intended for OECD consumption has leveled off.

                    Let me put it another way: do you feel that you have enough stuff? Enough cars, phones, and square feet of living space? I do, and I think most people in the OECD feel the same way. They may want cleaner, safer cars, but not more. They may want the latest phone with more features, but do they want to have a greater number than they have now? I suspect not – who want to carry more than one phone?

                    And, in fact car sales in the OECD have been flat for decades. That’s just one example.

                  • Boomer II says:

                    I think it is important to make a distinction between economic growth and consumption. Economic growth is just a number and can be based on a variety of factors. So you can show “growth” without increased consumption.

                    Whether we even need “growth” as is currently defined is debatable. But there are plenty of ways to show economic “growth” that require minimal resource consumption.

                    I support the “no growth” or even de-growth movements, but by that I mean less consumption. If people want to use financial services, health care, etc. to show “growth,” I am less concerned with that. Or we can measure “growth” by calculating the value of improved health, less pollution, more energy efficiency. etc. We have “growth” in those areas and yet consume fewer resources and less energy.

                  • Dennis Coyne says:

                    Hi Nick,

                    I suppose growth could stop, when population does. There is still the problem of resource depletion so even maintaining a plateau of resource use may be difficult even with flat population. Eventually population will fall, so perhaps it will not be a problem.

                    I am not arguing this in necessarily a problem in the short term, it will depend on how fast resources deplete and how fast population declines and what recycling rate can be achieved.

                    All estimates are highly speculative.

                    More than half of the World’s population has a long way to go to reach average OECD levels of income.

                  • Dennis Coyne says:

                    Hi Boomer,

                    Usually these things are measured in constant dollars (say 2016$). Otherwise how one adds it all up is a problem.

                    Healthcare does not happen in a vacuum, it requires resources as well, as do many services such as meals at a restaurant or a cleaning service or lawn service.

                    I agree less consumption would be good in the wealthier OECD nations, and more equitable income distribution. I don’t think a lack of economic growth in the poorer nations of Africa or Asia is a good idea as it tends to lead to higher population growth.

                  • Boomer II says:

                    I’m not saying that services result in no consumption. But many of them require less resource utilization than manufacturing.

                    In developed countries most of us already have more things than we need and can easily store. Buying fewer things might actually be preferable because it allows for more organization and more flexibility.

                    I just think there is considerable room to cut back on consumption without compromising quality of life. In fact, I think by shifting priorities, we will likely improve quality of life for those in developed countries.

                    In developing countries, I would think the immediate goal would be to provide more for basic needs, which wouldn’t necessarily require more resource and energy use.

                    The world wastes resources and energy because it can. What many people here have been talking about is a future where we will no longer be in a position to waste much of anything.

                  • Nick G says:

                    services such as meals at a restaurant

                    That’s counted as a “good”, not a service.

            • Caelan MacIntyre says:

              Petro,
              FWIW, Permaea is being billed as a safety-net, or more of one, (rather than as some kind of steady-state or circular economy or whatever) even though it borrows from permaculture, such as with regard to ‘care of people and planet’.

              Insofar as we may not be able to have some kind of absolute or literal steady-state or circular economy– whatever they are exactly– some of us may still be able to catch and cushion some of our falls within those and other frameworks.

              BTW, if there is a perpetual motion machine to be found, maybe it’s the universe, itself, if maybe also that which can perpetually ‘surf’ its perpetual motion, (effectively becoming one with the universe I guess).

              • Petro says:

                Cae,
                I do not want to engage in a lengthy discourse, but I will say a couple of things and I wish you do not take them as insults.
                I certainly mean them with a good heart.

                1.) For a guy who loathes BAU, you certainly do seem to take advantage of its fruits (i.e: computers, internet and electricity, etc.) too much … more than the next fella, I’ve noticed.
                I would kindly remind you here of the definition of hypocrisy, but I love you too much to be that cynical.

                2.) With all do respect, the bounty of your comments and their assertiveness is far from being commensurate to/with the knowledge you exhibit in relation to the topics you entertain.

                3.) I utterly envy your “free” time!
                Enjoy it while computers and electricity are there for you to use….. but in the mean time, be a sport and do not hate them too much.
                That is not very….eh…, shall we say “christian” of you.

                Be well,

                Petro

                • Caelan MacIntyre says:

                  “I do not want to engage in a lengthy discourse…” ~ Petro

                  No of course not.
                  You just want to drop in and take empty and/or apparently-blind pot-shots, yes? And then speed off, maybe a little like those who ostensibly drive-by or change their monikers just to ‘deny’ anthropogenic climate change?

                  If so, how would you know that I have often maintained, such as now again– often with support/references (see the issue of value/ethics here and in previous threads for examples)– both explicitly and implicitly, that I’m not opposed to technology per se?

                  Possible answer; you wouldn’t know.

                  If you or others are trapped in the The Matrix, in order to get you out, some of us may have to jack back in, using all that tech buried deep within our skulls, to do so.

                  “…the bounty of your comments and their assertiveness is far from being commensurate to/with the knowledge you exhibit in relation to the topics you entertain.” ~ Petro

                  ‘Knowledge exhibited’? Careful with that one, Petro…
                  Forests and many of their inhabitants (save for the ones we’ve wiped out) have been around for quite awhile longer than we– all without the broad and willful myopia of humans’ specialist graduate work/degrees.

                  “If we lose all the universities, then we would lose nothing, but if we lose the forest, we lose everything.” ~ Bill Mollison

                  Time’s luxury is what we would seem to need far more of while we’re far too busy paying through the noses for pseudotechnology, and the status-quo in general, that we’ve become slaves to and prisoners of.

                  “…Time to free the prisoners…”: It’s in the manifesto.
                  (rough draft)

                  Speaking of so-called ‘hypocrisy’, here’s a quote, which is also in the manifesto, from someone practicing law:

                  “I think as the years roll on, more and more people will understand that we actually need to change the DNA of this country to have any chance. I think that as the ball starts rolling faster, more and more people will clearly see how the structure of law operates and the necessity of changing it.” ~ Thomas Linzey, Esq.

            • alimbiquated says:

              >It cannot be! It does not exist!

              This is pretty much nonsense because there’s this big shiny thing up in the sky to keep the ball rolling. Go out some day and look up. You’ll see it.

              Oops, guess I shouldn’t be feeding the trolls.

              • Petro says:

                “…This is pretty much nonsense…”

                I agree!
                To you, this is indeed nonsense.

                “…Oops, guess I shouldn’t be feeding the trolls….”

                Oops, I concur!

                Be well,

                Petro

    • shallow sand says:

      Nope, I have seen enough money burned drilling shale, making solar panels, windmills, electric cars and trying to get to Mars to know things are screwed up.

      Demographics aren’t favorable.

      • Petro says:

        …attaboy!
        …better late then never …. as they say…
        … but I digress.

        https://www.youtube.com/watch?v=GHBB3WWhxr4

        Be well,

        Petro

        • shallow sand says:

          I don’t know that we are in complete agreement.

          I guess it just boggles my mind that there is apparently an unlimited supply of money out there to throw into this stuff, which generally loses more money quarter after quarter, or at best generally has earned less return generating energy than we have in a soon to be 112 year old oilfield.

          Shouldn’t all of this stuff alternative stuff have a better ROI than company which operates a lot of oil wells drilled with teams of horses?

          Maybe it will someday, but we have looked into solar power to operate our wells and have been told it is not feasible. So if not feasible for us, why is it generally?

          • texas tea says:

            SS, while my experience may not be reflective of each and every LTO play across the USA to say you do not understand how there is “money out there to throw into this stuff” defies what the current facts on the ground are. We now have 22 months of production for our earliest woodford “OIL” well. Using PHDWIN a independent, active, experiences reservoir engineer with over 30 years experience reviewed our production data and concluded that, “The economics of this well are very favorable” for this project and future development wells using $50 WTI and $3 nat gas held flat for the life of the wells, yielding a internal rate of return of 50.51% with a $10,000,000 well cost. He also ask if there was any room for him to participate 😜

            • Reno Hightower says:

              Glad it is working out for you but looking at these companies who are spread out over multiple plays, they outspend their cash flow and never seem to pay down debt. You would think after drilling and completing hundreds of wells a year that at some point you would be able to fund your CapEx through cash flow, not debt.

              My experience in the shales is limited but in my corner of the world it is a money loser.

            • shallow sand says:

              TT. You say “this well”.

              There have been tremendous wells in every shale play. I agree.

              I am talking on the whole.

              I’d like to see WTI at $55-65 so these shale companies could at least make some decent returns. Maybe natural gas rebounding will get them in better shape too?

              Will be interesting to see how long it takes for US shale oil to peak.

              • Dennis Coyne says:

                Hi shallow sand,

                To make decent returns (7% real annual ROI) only the Permian will have decent returns at $62/b (2016$), the other big plays will need at least $70/b.

            • Dennis Coyne says:

              Hi Texas Tea,

              And what was the average selling price of the oil and natural gas produced over those 22 months. You may have been lucky on your hedges, but the spot price of the WTI over the past 22 months has been about $45.70/b and for the NYMEX Henry Hub spot price it has been $2.60/MMCF, so your ROI might have been a little lower as most of the output (60% or more) would be over those first 22 months.

              A 50% ROI is not very good in the oil and gas business.

              • texas tea says:

                Dennis there may be a lot you can teach me, but what good economics in the oil and gas business is not one of them. Risk weighted this area will be in the very top tier of our production portfolio which covers 5 states and numerous plays. The point of my post was at the current commodity price and well cost, some plays are indeed profitable. What is not reflected in the numbers presented are the tremendous increase up to 100% of early month production yielding payout in under one year of wells drilled and completed since our very first well. What is also not reflected is the BTU content of our gas which will yield a net well head price of 33% higher then Henry Hub. What is not reflected in the numbers is any INCREASE in commodity price over the 20 economic life of the wells. If you are half right with regard to your own oil price forecast we will be in tall cotton🎉

                The point here which is so obvious to anyone with any grease under their fingernails, is that we collectively know a bit more of what the hell we are doing then many of those here who get their info second or third hand and years behind those of us who do this for a living. Something to think about.

                • Dennis Coyne says:

                  Hi Texas Tea,

                  There are some who are intimately involved in the oil business who tell me that an ROI of less than 300% over the life of the well doesn’t really cut it.

                  As 50% is one sixth of 300%, I would take the 300.

                  So what is the DCF of your well over it’s life and what discount rate do you use?

                  • GoneFishing says:

                    Don’t let him fool you, the system weeds out the losers over time and the winners, no matter how small the winnings, are very happy with themselves. The vulture capitalists are buying up wells thinking the price will rise in the future. So the overall picture looks better than it is.
                    Look long and hard at the number of abandoned wells. Pennsylvania had almost 9000 abandoned wells in 2014.
                    Canada is riddled with abandoned and derelict wells (almost 100,000) that need remediation.
                    As of the end of 2015 the US oil industry had 17 billion in bankruptcy debt with 8 billion unsecured.
                    Luckily, North Dakota takes a hard line on wells. If it does not produce for 12 months the owner must produce or plug the well. If the owner does not respond, they are fined and the state will come in to plug the well.
                    BTW, as interest rates rise expect many oil companies to become technically bankrupt as they are running very near the edge.

            • hole in head says:

              TT,
              Blah,blah,blah . Why are all the balance sheets f*****up ? As Tom Cruise says ” Show me the money” .
              P.S . Yr personal balance sheet is of no interest ,the balance sheet of the whole shale industry is what we are looking for .

          • Dennis Coyne says:

            Hi Shallow sand,

            You may live in an area where electricity prices are low. In some places in the US residential rates are 16 cents per kWhr or higher (where I live).

            In others they offer variable rates based on demand and often the highest demand is when the solar output is highest (mid day in mid summer) so the rates are probably 20 cents per kWhr or more at those times.

            A second thing that makes solar feasible in some places, but not others is the size of the solar resource. In the Southwest US the resource is much larger in many places than it is in the Midwest or the plains, wind on the other hand is very good in many of the plains states.

            Over time it is expected that solar costs will fall and it will be more competitive in more places, likewise natural gas will eventually peak and natural gas prices will rise and drive up electricity prices (in those places where natural gas is used to produce electricity).

            A final point on feasibility is that large utility scale projects can be installed more cheaply so especially in places like the Southwest US Solar is very competitive.

            See

            http://newscenter.lbl.gov/2016/08/24/median-installed-price-solar-united-states-fell-5-12-2015/

            As shown in the figure below, most PPAs in the 2015 sample are priced at or below $50/MWh (levelized, in real 2015 dollars), with a few priced as aggressively as ~$30/MWh. According to Berkeley Lab’s Mark Bolinger, “Falling PPA prices have enabled the utility-scale market to expand beyond the traditional strongholds of California and the Southwest into up-and-coming regions like Texas, the Southeast, and even the Midwest.”

            • shallow sand says:

              Dennis.

              Electric bill appears to show .1078 per KWH, but there are also state taxes of .0032 per KWH and a $25 facility charge per meter.

              • Dennis Coyne says:

                Hi Shallow sand,

                well you can easily figure your cost per kWhr by dividing the $25/ month fee by your average number of kWhrs used per month and then add that to taxes and electricity price, it is probably less than 13 cents per kWhr, utility scale solar is about 5 cents per kWhr. Note that is the energy supply only, where I live that is about 8 cents per kWhr with the other half being transmission and distribution costs. If transmission and distribution is about the same where you live then the supply portion of your bill is about the same as the 2015 average utility scale PV cost. Clearly PV needs backup by wind, hydro, nuclear and natural gas because the sun doesn’t always shine, with widely dispersed wind solar, hydro, and nuclear facilities interconnected by the existing grid, very little natural gas backup will be needed (maybe 10% of load hours) if wind and solar are built out to about 3 times average load hours. If some battery, electric vehicle to grid, and fuel cell capacity is also built, the load hours provided by natural gas and nuclear can be reduced to 1% of load hours. Clearly this does not happen overnight, there will be a gradual transition over 30 or 40 years as natural gas depletes and prices rise.

      • Nick G says:

        money burned…making solar panels, windmills, electric cars

        You’re just joking, and you really know those are very cost effective, right?

        • Petro says:

          … cost effective?!?!
          -May I suggest Colorado?
          They have better weed than the one you are currently sold….

          Joking of course, but on a serious note, you and I consult different dictionaries …
          … and most definitely – we had different physics and mathematics teachers …
          …with all do respect!

          Be well,

          Petro

          • Nick G says:

            Could you be a bit more specific??

            I’ll start: wind and solar are high EROEI, and cheap and getting cheaper.

            EVs are cheaper to own and operate than comparable ICEs, especially Tesla, which SS probably had in mind.

            • Petro says:

              … oh, we have tried this before Nick and, with all do respect,
              it will take a bit more than “a bit”.

              If you recall, I told you a while ago that your intentions are noble, but you are 40-50 years late….. and you must consult a different math and physics teacher before I could be ” a bit more specific”.

              Be well,

              Petro

              • Nick G says:

                40-50 years late…

                How odd. That’s exactly what could be said of people who think that wind and solar don’t work – that their information is decades out of date.

                • Petro says:

                  Nick, relax.
                  I am not trying to insult you.
                  I hope you are correct and I am wrong – I told you this countless times before.
                  I just think that for what we want them (PV, wind, etc) to do for our civilization, we should have had your mindset regarding solar, wind etc, a long time ago.
                  It is simply too late now.

                  And is NOT about being out of date – is about physics and math.
                  You (and most) fundamentally misunderstand dollars and cents regarding PV, etc.
                  You count ONLY the mirror cost and think:
                  “…the dingdong in Shanghai produced it for 0.1 c/kwh (or whatever), so EROEI must be good….”

                  IT DOES NOT WORK THAT WAY, my friend!

                  When one calculates ALL costs involved including, but not limited to maintain a perfect supply chain and global scale replacement for what we have now, as well as repair/damage/replacement cost for the next 50-100 years and many, many other factors (not to mention we are almost out of rare materials needed to produce them)- IT DOES NOT WORK!

                  I am not against them.
                  I use PVs at home and drive a LEAF (among other).
                  I just understand the numbers better.

                  Be well,

                  Petro

                  • Nick G says:

                    No, the numbers work out just fine.

                    Review the CURRENT literature (ignoring the goofy stuff Hall & Prieto are putting out, which use money to energy conversions!). You’ll find that wind and solar EROEI is more than high enough.

                    Rare materials? Sure, things like silver, cadmium, tellurium and indium are used now, but they’re not essential- they’re just slightly better than their competing substitutes. There are no realistic raw material supply limitations for PV or wind power.

                  • Petro says:

                    “…There are no… supply limitations……”

                    Right there!
                    That is the reason you and many akin to you will NEVER understand the physics and math involved … and therefore never understand our predicament.
                    You believe that on a finite planet you are going to go to the Apple store and replace your gadgets with a new one while high-fiveing the clerk on the way out the door …. forever!
                    Dumb!
                    Laws by which mother nature operates (which you and your technocrat brainiacs do not understand but arrogantly believe can circumvent!) will wipe its derriere with our technology…. and soon after, with all of us.
                    That’s the reason I do not engage people like you anymore, for it’s like teaching ballroom manners to a monkey – with all do respect!
                    “…the biggest shortcoming of humankind is not understanding the exponential function….”

                    Be well,

                    Petro

                  • Dennis Coyne says:

                    Hi Petro,

                    You can think of the smiley face as a shorthand for “with all due respect”, which as you use it shows very little respect at all and seems to imply the reverse.

                    There is this new invention called birth control which has dramatically reduced total fertility ratios(TFR) in the World from 5 births per woman to about 2.5 births per woman over the past 50 years. That combined with better access to education is likely to result in a peak in global population by 2070, there is no reason to assume as the UN does that TFR will stop at 2.1, it may fall to 1.5 or lower as it has already in many nations and World population will decline. That combined with recycling will take some pressure off of scarce resources and the price mechanism will lead to substitutes being found for scarce resources as well as more efficient use of existing resources.

                    You are not the only one who has studied physics math and economics.

                  • GoneFishing says:

                    Nick G, your strings are being pulled.

                  • Petro says:

                    Dennis,
                    I most certainly am not the only one who has studied physics, etc.

                    I however, studied them better than you and Nick’s mentors above here – Hall&Prieto who think that is possible to convert money into energy.
                    Contrary to you and many others, I know that is IMPOSSIBLE to convert money to energy.
                    One can convert energy into “money”, but NOT vice-versa.
                    Energy is THE fundamental ingredient of nature which can ONLY be transformed into different forms and exist INDEPENDENTLY of us (in all meanings of the word “us”).
                    Money on the other hand, is a relatively new MAN MADE concept that has evolved throughout time from sea shells and cows, to bits and screen pixels more recently.

                    Is this thorough understanding of science that separates us – not me being the “only one” studying science.
                    And is this lack of understanding on your part ( and otherwise smart people, i.e. Nick, Hall, Prieto, et al.) which causes you to arrive to inaccurate ( and sometimes) laughable “conclusions” – not your excellent chart building skills.

                    Be well,

                    Petro

                  • Nick G says:

                    GF,

                    Thanks. Maybe you’re right, and “Petro” is just trolling us. But, I’m just making sure no one is misinformed by him.

                    He seems to be mostly trolling himself…

                  • Dennis Coyne says:

                    Hi Petro,

                    You really are brilliant.

                    You came up with that by yourself, that there is conservation of mass and energy. Amazing!

                    The Earth receives quite a bit of energy from a nearby star. It is only a matter of utilizing it.

                    Can you find for me where I have ever asserted that money can be converted into energy. I don’t ever remember making that claim.

                    Although it does seem that you like to take things out of context.

                    On the Hall and Prieto paper that Nick refers to (and that I have not read recently), Nick said that they use conversions of money to energy which he thinks is absurd and if Nick’s interpretation of Hall et al is correct, I would agree.

                    They do attempt to calculate the EROEI of solar power.

                    A good paper on solar EROEI
                    at link below

                    http://astro1.panet.utoledo.edu/~relling2/PDF/pubs/life_cycle_assesment_ellingson_apul_(2015)_ren_and_sustain._energy_revs.pdf

                    and a blog post at link below

                    http://rameznaam.com/2015/06/04/whats-the-eroi-of-solar/

                    Also a comment by Hall with a follow up by Ugo Bardi

                    http://www.resilience.org/stories/2016-05-27/the-real-eroi-of-photovoltaic-systems-professor-hall-weighs-in/

                  • Petro says:

                    “…Hi Petro,
                    You really are brilliant…” ~ D. Coyne

                    Thanks for noticing, Dennis! It’s about time.
                    Well, you know what they say?
                    Better late than never….

                    “…Can you find for me where I have ever asserted that money can be converted into energy. I don’t ever remember making that claim….” ~ D. Coyne

                    Gosh Dennis, Narcissus would have had a brilliant friend in you…! Is almost like he is looking at a mirror…
                    My comment was not about you, dear Dennis.
                    It was about otherwise smart and educated people making ignorantly naive errors in judgement….. akin to you.

                    Be well,

                    Petro

                  • Dennis Coyne says:

                    Hi Petro,

                    I was responding to the comment linked below:

                    http://peakoilbarrel.com/eia-short-term-energy-outlook-steo-and-iea-oil-market-report/#comment-602513

                    Where you say:

                    Dennis,
                    ….
                    Contrary to you and many others, I know that is IMPOSSIBLE to convert money to energy.
                    One can convert energy into “money”, but NOT vice-versa.
                    Energy is THE fundamental ingredient of nature which can ONLY be transformed into different forms and exist INDEPENDENTLY of us (in all meanings of the word “us”).
                    Money on the other hand, is a relatively new MAN MADE concept that has evolved throughout time from sea shells and cows, to bits and screen pixels more recently.
                    Is this thorough understanding of science that separates us – not me being the “only one” studying science.
                    And is this lack of understanding on your part ( and otherwise smart people, i.e. Nick, Hall, Prieto, et al.) which causes you to arrive to inaccurate ( and sometimes) laughable “conclusions”

                    It seems pretty clear when the comment is addressed to “Dennis” , that “you” refers to Dennis.

                    Perhaps you have a different understanding of what you wrote.

                    As to energy being the fundamental ingredient of nature, you are certainly correct, though at low velocities relevant to most processes on the macro scale, conservation of mass and energy usually gets us pretty close to the correct result, though in general it is energy which is conserved (or relativistic mass which is proportional to energy).

                    You of course understand this, but you are not correct to think you are unique in this regard.

              • hole in head says:

                +1

        • Mike Sutherland says:

          Nick G was always dead wrong about the economics of renewables, and comically so. Just this year alone a number of major Chinese and North American solar panel manufacturers have gone bankrupt. This oft repeated desire to live in a fantasy world despite the reality of the situation is, as they say, indicative of severe cognitive dissonance.

          The plain fact is this: nothing but nothing can come close to the energy density of a hydrocarbon fuel. To deny that is just plain nuts.

          • JN2 says:

            >> nothing can come close to the energy density of a hydrocarbon fuel <<

            True Mike S, but then it doesn't need to. The average US car goes 0.74 miles on a kWh of gasoline. An AWD Tesla Model S (70D) goes 3.4 miles per kWh. So you only need 22% of the energy density of gasoline to go the same range. Just need some more exponential price decline of batteries and we're in good shape 🙂

            • Caelan MacIntyre says:

              The Curious Case of Trump and Bedbugs

              The problem with a lot of this discourse is that it is very limited in its scope, its systems analyses, and so has equally-limited, perhaps even nearly-irrelevant relevance.

              OTOH, electric cars might very well prove among the ‘taps’– the emergent properties– that the system evolves to extract/mine/self-cannibalize some of the leftover fat of itself, the so-called economy– the elite upper-20%’s money, the ‘energy’/’credit’ still sloshing around above-ground, created and stored over the period of growth…

              Sell EV’s/PV’s, get taxes, refund programs like pensions…

              The obese system tapping its fat reserves…

              Fat is an energy source, maybe similar to oil…

              Might make a good article, Dennis…
              See if we can catch/define all the ‘fat’ of the system as the working metaphor, and make educated guesses as to how and when attempts will be, or are being, made to extract and burn it.

              You know we’re in trouble when the so-called rich start to get plundered and pillaged for their ‘reserves’, but we appear just about there…

              Trump might be in an advantageous position for the system’s probosis…

          • HuntingtonBeach says:

            Woe in the oilfield: 213 companies have now declared bankruptcy(Oct 25, 2016)

            But it’s been an especially tough few months for service companies. As crude prices began crashing in 2014, drillers started idling rigs. That led to fewer jobs for the companies that make their money helping producers pump oil and gas. Moreover, when producers did hire service companies, they often forced them to heavily discount their rates.

            Eight service companies filed this month. Seven filed last month, and eight again the month before. Almost 50 have filed in the last six months, half of the 108 over two years.

            In total, 213 North American oil and gas companies have now filed for bankruptcy since the start of 2015, listing more than $85 billion in debt.

            http://fuelfix.com/blog/2016/10/25/213-oil-companies-have-declared-bankruptcy-how-hard-it-is-to-be-an-oilfield-service-company/

          • Caelan MacIntyre says:

            New Hosts

            Nick G, for example, without realizing it, may be advocating for ‘bedbugs’ for the rich and kind-of-rich.

            I imagine ticks, lice and mites are also being cloned up for them.

            Gigafactory is kind of like a giant egg-laying/hatching nest.

            Sinking one’s riches into land is only as good as there’s a government to enforce the legal concept of property (Chicago’s increasingly knocking off cops– enforcement agents– as we write, though.). So if one is going to get sucked for their blood and fat, etc., one might as well have something to roll around in (an EV), at least for a short while.

            Microphoby

          • Dennis Coyne says:

            Hi Mike,

            For producing electricity, energy density is not very important. Those dense fuels typically waste a lost of energy as unused heat when electricity is produced (usually 65%, but the best natural gas fired plants the losses are only 40%.)

            Yes the energy density of gasoline and diesel are very high, what matters is the cost of the transportation and for ICE vehicles this will increase as oil becomes scarce (because prices will rise), while the price of EVs will fall as the cost of batteries and electricity falls as solar power becomes cheaper and cheaper.

            You do realize that a lot of automobile companies have also gone bankrupt, along with oil and gas companies, coal companies and all other types of businesses.

            • Boomer II says:

              Also, even if renewables can’t replace all fossil fuel uses, whatever they can replace will slow down how rapidly we deplete fossil fuels.

              As oil and gas get scarcer, more people will welcome alternatives to stretch out what we have left. Right now we are pissing away valuable oil supplies. Why not replace what we can with renewables and save the valuable stuff for higher priorities?

          • “nothing but nothing can come close to the energy density of a hydrocarbon fuel.”

            This is why nothing will be done (on a meaningful scale) about “transition” from oil & gas over to renewables until such time as the post-peak oil decline (unconventional + conventional) is well underway. Until we are far down the downward side of the slope.

            What will happen at that time, given the USA’s conversion into a complete oligarchy, or corporative state, is that the oil and gas corporations which remain will place the demand upon the banks for unlimited debt funding of their conversion into primarily renewable-energy providers.

            There will most likely be a decade or two of economic paralysis and degeneration until the “transition” is made, but when you’re in charge of the corporations which run the state, you do not concern yourself with the pain and suffering you’re doling out to the masses.

            All this will entail creations of unbelievable amounts of “fiat money,” but that’s a topic for a different message board I think.

          • Fred Magyar says:

            Just this year alone a number of major Chinese and North American solar panel manufacturers have gone bankrupt. This oft repeated desire to live in a fantasy world despite the reality of the situation is, as they say, indicative of severe cognitive dissonance.

            The exact same same can be said of oil companies producing that infinite supply of those super energy dense hydrocarbons…
            http://fuelfix.com/blog/2016/09/12/135-oil-companies-are-on-the-edge-of-bankruptcy-so-why-is-that-good-news/

            Now, for some good news: Sure, a lot of the companies on Debtwire’s tracker are going to wind up in bankruptcy. But that list is already shorter than it was in January, when it stood at more than 180.

            Oil prices have recovered from their lows around $26 and are now hovering under $50 a barrel, which has helped some companies stabilize, Hynes said. And, of course, more than 170 oil and gas companies have already gone bankrupt.

            “Even if oil stays where it is now, we’re not going to see a ton of new companies in trouble,” he said. “They’re already in trouble. People know when they need to pay their debts back, so there isn’t going to be a wave of unexpected bankruptcies.”

            Moreover, most of the companies on Debtwire’s list have already cut jobs and closed plants, Hynes said. The industry, he thinks, has hit bottom.

            Hahahahaha! They call that the GOOD NEWS!!… Talk about severe cognitive dissonance!

      • Ves says:

        Shallow Sand: “wasting resources..and trying to get to Mars ..”

        Yeah :). If someone is drinking beer and smoke cigarettes on Earth what are they are going to do differently on Mars? 🙂
        Ego is measured in distance. Huge ego requires huge distance. Someone projecting trip to Mars only means huge ego and that requires him to have very miserable life on Earth. Otherwise that person would be perfectly content with Earth.

        • GoneFishing says:

          The amount of resources used to do some Mars missions is very small compared to the waste that goes on doing everyday important things. There are two upsides to Mars missions (beyond the entertainment factor). First, the missions will probably have failures and failures at that distance are most likely deadly. Second, the push in technologies may produce some technology that can be useful back here on earth.
          If only people would realize that the real challenges are right here, right now and will take far more heroic efforts with far more reward than any mission to Mars. But Mars makes good media copy. Producing a food plant more tolerant to heat or drought or disease does not make much interesting media copy. Accurately predicting changes in monsoon patterns does not make much news, but will affect the lives of billions.

          • Boomer II says:

            I don’t mind use putting aside some money to get someone on Mars. And the engineering might result in some useful technologies on Earth, but in terms of what we can learn about the universe, unmanned spacecraft that can be sent cheaper, farther, and for longer time periods seem to have more knowledge value.

            Getting a man on Mars seems comparable to climbing Everest. Yes, there is some gee whiz value, but in the greater scheme of things doesn’t mean a lot.

            • GoneFishing says:

              True, but in the greater scheme of things it allow more territory to fight over, disperse war instead of concentrate it. Of course kinetic weapons can look a lot like meteorites. One rock, one city. One rock, one military base. One rock, one tsunami. First one to have launchers on the Moon controls the globe. Until the missiles start hitting the launcher bases.
              Same old same old, different tech.

      • alimbiquated says:

        Thanks for noticing how stupid it is to try to put a man on Mars.

        http://www.technoccult.net/wp-content/uploads/2007/06/war-214.gif

    • Dennis Coyne says:

      Hi Petro,

      You are correct there have been many scenarios of future Bakken output. If you can point me to a date, I can pull up a chart. There have been very few scenarios with Bakken output at 2 Mb/d,though sometimes in response to those who believe oil resources are very large I create scenarios which show how many wells would be needed to be completed to result in very high output levels.

      I have created such a scenario below which I doubt will be what the future looks like. Note that the number of wells completed per month rapidly increases to 210 wells completed per month by December 2018 in this scenario (this level was also reached in May 2014), this completion rate is maintained until Dec 2021 when economics requires fewer wells to be completed. Under the assumed oil price scenario (see right axis) the discounted cash flow is positive for all wells completed (7% annual real discount rate) after May 2018. Currently the average Bakken well loses money and this has been the case since 2015, wells are completed anyway. The Brent spot price reaches $80/b in 2016$ in June 2021 in this scenario.

      I think if OPEC and Russia continue their cuts through Dec 2017, that $80/b (in 2016$) by June 2018 may be about right +/- $5/b for the monthly average Brent spot price.

    • Dennis Coyne says:

      Hi Petro,

      I found a couple of “unrealistic” scenarios at the link below

      http://peakoilbarrel.com/bakken-update-april-2016-little-decline-far/#comment-566445

      One has a peak of 3500 kb/d and assumes new well EUR never decreases (a highly unrealistic assumption) and the other assumes new well EUR does decrease, but that new wells added per month quickly rise to 300 new wells per month (peak is 2 Mb/d in this case). For the higher case I say the following:

      In 2031 the annual field decline for the Bakken is 18% (the maximum rate when new wells are no longer completed after 2030), by 2034 the annual decline rate falls to about 9.5%. Chart below shows scenario to 2040, note the TRR is 21 Gb to 2040, the F5 estimate for the USGS(April 2013) is about 14 Gb for the North Dakota Bakken/Three Forks, my estimate is that this scenario has close to zero probability of happening. Bold was not in original comment.

      For the lower “still unrealistic scenario”, I said (“It” refers to the scenario):

      It is still not realistic because the number of new wells added ramps very quickly to 300 new wells per month by 2018 and also assumes oil prices increase much faster than is realistic, so this is still a very optimistic/unrealistic scenario, but a little more realistic than the first scenario presented.

      In hindsight I should have said it was much more realistic than the 3500 kb/d peak scenario,
      but the fact remains that it is still highly unrealistic.

      Only those who cannot read or do not understand English might miss this. 🙂

      • Petro says:

        Dennis, thanks!

        Please do not insult my intelligence.
        I have NEVER questioned your data reading and comprehension, and mathematical ability and chart building skills.
        You are far, far better than I at that and certainly better than most.
        I disagree with you regarding your analysis and big picture thinking…

        Again, thank you for the links!

        Be well,

        Petro

        • Dennis Coyne says:

          Hi Petro,

          You insult me at every turn. Do you understand what the smiley face means?

          I will assume you do, but then we would have to assume you cannot take a joke.

          Yes I am well aware you do not agree with my analysis, but have never given any cogent reasoning to explain why.

          So if you are going to ask why scenarios that I have presented showing why 3500 kb/d or 2000 kb/d are not likely to be produced have not come to pass, I will question your understanding of English.

          Otherwise find an instance of where I have claimed that 2000 kb/d of output from the North Dakota Bakken/Three Forks is a likely scenario.

          You will not find it.

          • Petro says:

            -No I do not insult you!
            I may come forward as strong and assertive, but not insulting.

            -I can take any joke and/or insult you toss my way.
            Any, no problem!
            I do hope that we’d be civil and refrain from insults, though.

            -English understanding – now that is easy.
            Anyone who reads my comments here can judge by themselves if I do, or don’t understand it and how my understanding of it compares to yours and others.

            – I have exhaustively presented you with reasonable, rational and scientific arguments and evidence regarding your flawed analysis throughout the past 3 years (or so).
            However, you (and many here) belong with the crowd that no matter how many facts one can present to/at them showing that what Nixon did is school yard prank compared to what Hitlery did, they still are going to think of her as great and that russians stole her election.

            And that is the reason I do not comment here anymore…
            Life is short spending it reading idiotic EV/permea/climate/etc, etc by the same handful of “experts” who know very little regarding the matter.
            And for the nubbies here:
            no, I am not anti EV;
            no, I did not vote for Drump;
            no, I am not for oil/dirty energy;
            I am not brainwashed like most and use logic better than most (among other)

            -Finally, I noticed that since I left a few months back (when this blog ceased to be what it once was), the comments need quite a few days to reach triple digits and the Non Petroleum part always gets double or triple the amount of comments compared to the Petroleum part…… except this post!
            I wander what changed?!

            ……………………………………………………….. you are welcome!

            Be well,

            Petro

            • Caelan MacIntyre says:

              Petro,
              By your mention of ‘permea’, I assume you mean Permaea? If so, were you just taking empty pot-shots or what?

              In any case, among other pots on the stove, you can find a simple example of some recent experimental effort regarding it, here, with a quote from it that seems pertinent:

              “Now, while I have no illusions that this will work before collapse of global industrial crony-capitalist plutarchy civilization, [if at all] I would be remiss in my responsibilities if nothing was done about it.

              At least I will die with a clear conscience. How about you?”

            • HuntingtonBeach says:

              Hello again Petro,

              Now that you have come back out of retirement for a few quick pick up games here. I hope you have enjoyed yourself. I notice you like to throw a few elbows around under the basket. That’s all fun and good. I, for sure, wouldn’t want it any other way.

              Here’s a thought, maybe some of your fellow team mates don’t view the world exactly as you perceive. Humanity is a lot like life. None of us are getting out of here alive. But we still go to the doctor, take our meds, try to control our weight and get our daily cardio. I don’t think there is anybody here who thinks EV’s and solar panels are going to save humanity alone. It’s about doing the right thing. I know you understand that.

              I’ll remember your personality next time,

              Be well

              • Boomer II says:

                The doctor analogy is a good one. We’re all going to die. But we still take steps to extend our lives as much as possible and to stay healthy enough to have a good life.

                Predicting the end of business-as-usual doesn’t mean we have to give up in the meantime.

                And some of us think the trade-offs for switching to more renewables will be worth the losses that less fossil fuels will mean. In the US there is so much non-essential use of oil that we can eliminate it with little economic impact. In fact, discouraging driving and encouraging more walking and bike riding would actually have benefits in terms of healthier people.

                Discouraging cigarette smoking may have been a hassle for tobacco companies, but there were rewards for society as a whole.

            • Dennis Coyne says:

              Hi Petro,

              Before the threads were divided between Petroleum and non-Petroleum all comment would go into a single thread and we would not have been able to distinguish between petroleum and non-petroleum discussion comment counts.

              At the request of people mostly interested in a Petroleum focused discussion, the two thread format was introduced.

              Kind of an apples to oranges comparison that you have made.

              I would love for Ron to post more and he chooses not to.

              The choice was between shutting the blog altogether or me continuing as best that I have time for.

              If you would like to enlighten us, feel free to send me a post at peakoilbarrel@gmail.com

              Unfortunately there are very few who are willing to post and my thanks to all who have chosen to do so.

          • hole in head says:

            Denise,
            First let me appreciate the work that you are doing . Running this blog I am sure is a killing job ,but I am with Petro that you are too optimistic with your scenarios and calculations and that is why you always have to revise them . Please let us get real . No, I am not a pessimist just a disappointed optimist .

            • Dennis Coyne says:

              Hi Hole in head,

              I adjust the scenarios based on new information.

              below is an early guess from Oct 2012, and indeed it was too optimistic. The only change I have made is adding the Data through Feb 2017.

            • Dennis Coyne says:

              Hi hole in head,

              Again leaving the Oct 2012 model unchanged except for a change in the wells added through Feb 2017 to the actual number of wells added from Sept 2012 to Feb 2017, we get the chart below.

              What we can see is that my early model from 2012 was actually too pessimistic. I have adjusted the model over time to correct for my tendency to both underestimate well productivity and overestimate the number of new wells added in the future.

              It is difficult to predict the future.

  2. Longtimber says:

    Of Interest — FullCircle WayBack to 2010, Matt Simmons and Rust never sleeps.
    “let’s talk about the future of oil. But from a much different perspective”
    “Now the industry must face decommissioning liabilities for assets no longer commercially profitable to operate. Except they don’t have the cash. And they won’t be able to get the money from debt or equity investors”
    http://www.zerohedge.com/news/2017-05-09/sobering-look-future-oil
    same here
    https://pgjonline.com/2017/05/09/a-sobering-look-at-the-future-of-oil

  3. George Kaplan says:

    Dennis – it would be interesting to see what happens to stocks starting with current OECD levels and following the predicted supply and demand curves for, mainly, IEA but also EIA (and possibly extending the trends into 2018, or keep supply flat and extend the demand trend linearly) – e.g. when do we reach 5 year average (as barrels and/or days of supply) , and when do we go as far below it as we were above it at the maximum.

    • Mike Sutherland says:

      I don’t know if anyone has bothered to discuss what appears to me to be a real elephant in the room.. That being the fact that only about 10 billion barrels of new resource had been found in 2017, far short of what it needs to be.

      • George Kaplan says:

        Discoveries, or lack thereof, has been a frequent theme over the past eighteen months. Conventional oil discoveries have been declining since 2010 at something between 10 and 20% per year, which means, if continued and based on sum of geometric series, there’s only about 15 to 30 Gb left to find. Oil and gas combined has also been falling (see below) but gas slightly less fast. Success rates for frontier areas have fallen from one in five wells to between one in twelve and one in twenty (see recent HSBC report). Several drilling companies have gone bust or had to merge (Sea Drill is the latest this week).

        The industry thought seems to be that once the oil price picks up everything will get better, but in reality the number of wells drilled has only about halved – i.e. the discoveries could double – but that would just mean the available resource is found in half the time. More drilling will not increase the success rate; it more likely will make it worse. There are fewer attractive areas left, the best of what is available always gets leased and drilled first, drilling costs have dropped but are still high and will rise again if activity picks up; the current risks are more than most firms want to take. Lease sales have been continually poor over the last few years. Opening moratoria areas might help, but they are not huge in global terms and more likely to be gas prone than oil, and the Arctic is likely to continue to disappoint for both.

        I don’t know what you are counting in the 10 Gb (OOIP, oil and gas?) but for oil 2P recoverable undeveloped I think there has only been the big find in Alaska (estimated above 1 Gb, but likely with more downside than upside), another at 200 mmbbls (from memory) in Alaska, the Eni find in Mexico (200 mmbbls recoverable), and a couple of small ones in GoM and very small in the North Sea, probably totaling less than 100. So no more than 1. 5 to 2 Gb I think. There have been a couple of big gas finds announced this week, but I think they may both count as appraisal wells and go against previous years’ discoveries. Against that appraisal wells for Antelope, Shenandoah and Gohta have been dry so taken a few hundred million off of previous expectations.

        • daniel says:

          interesting that there are no discoveries in middle east at all for the last 3 years…considering the impiortance of the region, this is worrying. Also that most of the discvoeries in the last years are in potentially not the most stable regions gives food for thought

          • George Kaplan says:

            Middle East resources are mostly in big onshore fields, therefore relatively easy to explore and delineate, not requiring advanced technology, and therefore found quickly as each basin was opened up. 2009 and 2010 finds were mostly offshore Iran and a bit of Iraq I think.

      • Schinzy says:

        http://www.iea.org/newsroom/news/2017/april/global-oil-discoveries-and-new-projects-fell-to-historic-lows-in-2016.html

        Oil discoveries declined to 2.4 billion barrels in 2016, compared with an average of 9 billion barrels per year over the past 15 years. Meanwhile, the volume of conventional resources sanctioned for development last year fell to 4.7 billion barrels, 30% lower than the previous year as the number of projects that received a final investment decision dropped to the lowest level since the 1940s.

        • George Kaplan says:

          There’s a report from Westwood Group out:
          WELL NUMBERS AND DISCOVERED VOLUMES FELL TO A NINE-YEAR LOW IN 2016, BUT SUCCESS RATES INCREASED BY 35% AND FURTHER GROWTH IS EXPECTED THIS YEAR, A NEW REPORT SAID.
          It probably costs a lot of money, but discussed here:

          https://www.energyvoice.com/oilandgas/138887/well-numbers-sink-9-year-low-2016-success-rates-pick/
          Drillers will have to make up for a slow start to the year, however. The number of wells drilled in the first quarter of 2017 was down 35% on the same period in 2016.
          Despite fewer wells being drilled, a high average commercial success rate of 60% was achieved.
          Sixty-two high impact wells are planned globally for 2017, targeting 19.5billion barrels of oil equivalent (boe) unrisked, 37% of which is oil.
          Twenty four of those wells target frontier plays, 11 of which are in the Atlantic margins and the Norwegian Barents Sea.
          The report showed industry is still struggling to shorten the timeframe between discovery and production.
          Of the gross 17.4billion boe discovered by the 40 companies tracked by WGEG since the start of 2013, 88% is still at an appraisal stage, reflecting a marked slowdown in progression to production due to the oil price fall.

          I think the only reason success rates went up was because the proportion of wildcat and appraisal wells dropped in proportion to development wells.

          Also the statement “The report showed industry is still struggling to shorten the timeframe between discovery and production.” is meaningless in a low investment period.

          The chart below is, I think, from TransOcean originally, and shows the big boost in activity in 2012 through 2014, and despite that discoveries continued to fall. If the drop off in discoveries was due only to reduced drilling there would not be a geometric decline for 2010 – we’d be seeing something like a plateau at half previous rates.

        • Dennis Coyne says:

          Hi Schinzy,

          Thanks. I read the discoveries from the chart and get the following.

          If we fit a linear trend then discoveries are falling by 0.42 Gb per year from 2000 to 2016.

          • Dennis Coyne says:

            Hi Schinzy,

            A better method may be to fit a linear trend line to the natural log of oil discoveries. If we then project this trend line to 2200 we get about 81 Gb of future discoveries from 2017 to 2200. This assumes the decline in future discoveries will follow an exponential trend rather than a linear trend. There were about 149 Gb of oil discovered from 2000 to 2016, and based on this very simple model, about 230 Gb of oil discovery from 2000-2200.

    • Dennis Coyne says:

      Hi George,

      I agree, feel free to create the scenarios you wish. When current OECD levels of days of forward demand are assumed for the World, then the levels for 2012 using the EIA data are about 70 days of forward demand in Jan 2012 (the OECD levels were about 59 days at that time). Basically the entire curve would be shifted up by 11 days, if we use today’s level as the basis for the curve. The shape would not be changed that much. Using the IEA scenario would clearly result in a downward slope from 2017 to 2018, rather than the relatively flat projection of the EIA scenario.

      • George Kaplan says:

        For what it’s worth, possible projection is attached. The rise in stocks versus demand/supply balance gives that the OECD took 38% of the excess, so I used the same number for the decline. I only used 1.3 mmbpd increase per year (compared with the linear fit gradient above of 1.64). Supply is held constant as shown. I have no rationale for that other than it fits on the curve better and meant the stocks didn’t go negative before the end of 2021. The 5 year max, min, average and standard deviations are taken up to the beginning of 2017 and then left constant. It takes the rest of the year to draw the stocks below the average, but after that there’d be full on panic stations if that projection was followed. I used 7.3 Te per barrel for everything, crude, gasoline, diesel, NGL, which is wrong but doesn’t much matter for a rough trend. Sorry for the mix of SI and field units (and should be Te not MT).

        By TWIP US stocks dropped 8 mmbbls last week – almost 1%, so might be balancing faster then shown here.

        • Dennis Coyne says:

          Hi George,

          Thanks, nice model.

          Did you use OECD supply and demand to cause the change in OECD stock levels?

          Clearly there must be stocks in the non-OECD nations, if we assume the proportion is the same as in the OECD we would take the days of forward demand for the OECD and multiply by World demand to get World stock levels, or that is how I would do it. In any case, I would expect that as stock levels fall below the 5 year average we will see oil prices increase and oil supply is likely to increase at least through 2020 and maybe until 2025. In addition the high oil prices will also lead to demand destruction so that demand will rise by less than 1.3 Mb/d once that occurs. In fact when oil peaks and as stocks approach critically low levels (70% of 5 year average in terms of days of forward demand) oil demand will have to decrease as supplies decrease, either high oil prices or slower economic growth (probably some of both) will be the means by which this is accomplished.

          The transition to alternative means of powering transport will go into overdrive in response to oil prices which may be north of $120/b in 2020 (until GFC 2 occurs).

          • George Kaplan says:

            I didn’t use OECD supply and demand, I think that would not account for imports / exports? As I said I used 38% of supply imbalance going to OECD stocks (that was the proportion in the run up in 2015); there may be some changes either way – e.g. because of whatever China does – but it’s just a rough projection and I don’t know that there is enough data freely available to do better, and too many possible variables (as Saudi has been finding out).

            Why is 70% considered a critical stock level?

            • Jeff says:

              “there may be some changes either way – e.g. because of whatever China does – but it’s just a rough projection and I don’t know that there is enough data freely available to do better, and too many possible variables (as Saudi has been finding out).”

              Agree, lots of unknowns.

              Is there any estimate on how much oil is held in stocks in China and which proportion of it is strategic and commercial?

              It’s widely assumed that China has been filling their stocks in the last couple of years. Some of these stocks are probably strategic stocks, similar to US SPR, and the Chinese are unlikely to tap these as a response to slightly higher oil prices (rebalancing will go faster than you project). On the other hand, if the price goes up then China will probably not increase their stocks (rebalancing will not go as fast as you project).

            • Dennis Coyne says:

              Hi George,

              70% was simply a guess on my part. If stocks fall below 70% of the 5 year average level, there might be kinks in the system where refineries run short of crude and where gas stations can’t get supplies, etc. It might be 50%, I don’t know, call it X%, below which the stock levels are so low the system no longer functions smoothly.

              Note on your chart that 70% of the 5 year average stock level would be about 371,000 kMT, it would be off the bottom of the chart, it remains a WAG on my part.

            • Dennis Coyne says:

              Hi George,

              The demand is the total liquids demand, and commercial stocks include crude and products so the imports and exports are just part of the total supply system.

              Anyway your model is as good as any. I think supply is unlikely to remain at 97 Mb/d, unless oil prices were fixed at $60/b (2016$) and could not rise higher even if stocks fell to zero in 2021.

              I find such a scenario implausible, as stocks fall below the 5 year minimum in the second quarter of 2018 Brent oil prices are likely to approach at least $80/b in 2016$ in my opinion. At that point supply may start to increase, but it will peak at 102-105 Mb/d (total liquids supply) in the 2020-2025 time frame.

              Then things get very interesting (2022-2030) as oil prices may rise to $140/b (2016$) as oil supply runs short.

    • Watcher says:

      What you’ll find with storage and consumption is a revision to whatever their claimed measurements (not projections, measurements) are when the price doesn’t do what they say it will.

      • Dennis Coyne says:

        Hi Watcher,

        The measurements are not very good and on stocks we only have decent data on OECD stock levels which accounts for a little less than half of total liquids demand.

        One could just take the OECD stock levels and multiply by 2 as an approximation of World stock levels. This all has very little to do with oil prices.

        The price of oil tends to respond to the changes in stock levels, but I doubt anyone tries to adjust their measurement of the stock levels in response to price.

  4. George Kaplan says:

    It looks like they have Canada, Kazakhstan and Brazil each peaking in September / October 2018 (difficult to tell exactly with Brazil because of the seasonality, which presumably is to do with ethanol). For all the effort, money and environmental issues the Canadian growth doesn’t look particularly great, so decline might be relatively fast. Kazakhstan might be slower growth and later peak given how poor their previous performance history has been, and phase II for Kashegan is a big, complicated project (and already late). After that they will likely decline as well until start-up of Tenghiz in 2020 (no news on phase III Kashegan that I’ve seen). After this no other big growth opportunities outside Iran, Iraq and LTO I think, and almost every other country in decline at some rate up to 10%.

  5. EIA reports are always the most optimistic things about the petrofuture, aren’t they? The agency seems to have been captured by the Industry into being primarily lead cheerleader for Industry views of the petrofuture.

    Now that the Reddit site’s “peakoil” sub-reddit has been completely taken over by an EIA cheerleader as well, it’s getting hard to find actual “peak oil” as a “thing” on the ‘net.

    Instead of peak oil seizing up the global economy, nowadays it looks more like deflationary scenario is the mechanism–owing to the glut of energy commodities and the debt defaults that follow these (remember the red ink gusher of a year ago in the Industry)?

    I hear the shale fields will be pumping 7 Million barrel a day before long. Sounds like over-supply to me.

    Cheers

    • Boomer II says:

      Optimistic predictions also tend to work against the industry by encouraging lower prices.

      • Dennis Coyne says:

        Hi Boomer,

        Too much optimism can also lead to oil price volatility as the market players start to realize that the hype is just that.

    • Dennis Coyne says:

      Hi Green People’s Media,

      Remember that demand continues to grow at about 1.4 to 1.5 Mb/d each year (the average rate from Jan 2012 to Jan 2017). The EIA and IEA both are forecasting about a 500 kb/d increase in average LTO output from 2016 to 2017 (average annual rates for the respective years).

      The EIA estimates LTO output was 4.25 Mb/d in 2016 (annual average), it is unlikely we will see 7 Mb/d of LTO output before 2020 (and possibly never). The EIA’s Annual Energy Outlook (AEO) 2016 reference case (most likely scenario in the EIA’s view) has 7 Mb/d of LTO output in 2040.

      This 3 Mb/d increase in output over 23 years when demand might grow by much more than this does not sound like over supply at all. A much more reasonable view is that World oil output will peak by 2025 at the latest (2020-2025 would be my estimate) and oil prices will rise to very high levels (possibly as high as $150/b for an annual average Brent price in 2016$ in 2025) until a severe recession destroys demand (this I expect will occur by 2030 at the latest with 2025-2030 as my estimate). Good economic and energy policy might reduce the severity of such a recession, but with current politics in the US we will need to look to Europe, China, and India for leadership.

      • Nick G says:

        So, you’d make a very strong recommendation to policy makers for demand side policies:

        Dramatically increase vehicle, shipping and aviation fuel efficiency requirements;
        Deploy EVs as quickly as possible;
        Deploy heat pumps for HVAC;
        PV & LED lighting to replace developing country kerosene for onsite generation and lighting;
        Push fast transitions for industrial alternatives: low CO2 concrete, bunker fuel substitutes;
        Etc., etc.,…..

        Yes?

        • Caelan MacIntyre says:

          Push fast transitions for industrial alternatives: low CO2 concrete, bunker fuel substitutes;
          Etc., etc.,…..
          Yes?” ~ Nick G

          What is to be done is for all those involved to ask people what they want after having explained options to them, honestly and diligently, regarding what is possible– and always with a paramount view toward environmental protection– even if it is somehow inconvenient for you, your government or your industry. What do you think?

          That’s just plain good manners, policy, and ethics, and stuff like that, right?
          No need to be pushy, shady, deceptive, obstinate, officious or aggressive, etc..

          This therefore goes beyond just electric vehicles of course, but also includes their downsides– all of them– as well as admitting uncertainties where they and other things are concerned.

          People have a right to know and to make and be a part of informed decisions that affect their lives.

          Yes?

          • Dennis Coyne says:

            Hi Caelan,

            Have you ever used a car? Uncertainty is a given.

            Push is shorthand for advocacy.

            Can you tell us what you would substitute for existing transportation?

            How do we get from where we are today to what you envision as a better future?

            You would need to advocate for your view, as it will only become a reality if the view is shared by many.

            • Caelan MacIntyre says:

              Hi Dennis,

              I am simply suggesting an honest and straightforward appraisal, critique, analysis, etcetera, of whatever might be suggested, along with other, possibly-competing, options/suggestions, and how and from whom, where and what, including the very system that might be doing the ‘advocating’, and whether, to use your example, it is even accurate, fair or honest to describe it using that term.

              Do you mannerfully ‘advocate’ something to someone with a gun to their head? That might make for a humorous nouveau gangster film though…

              “Hi Heathcliff,

              How are the wife and kids? Great, great…
              How do you like my new gun?
              Say, listen, how about I advocate you giving me your wallet right now… Take your time… No false moves, ay?
              I like your new EV by the way… must have cost you a pretty penny…
              Perfect… Your government thanks you heheh. Is that all? Ok… Pleasure doing business with you…
              Bye for now.”

              It would seem rather along the lines of how you (although someone such as Jeffrey Brown might beg to differ) may approach and graph predictions of FF-depletion, taking all variables and maybe a few ‘known unknowns’ into account, yes?

              • Dennis Coyne says:

                Hi Caelan,

                Nowhere in Nick’s comment was it suggested or implied that guns or any sort of violence should be used to “push” society towards a more environmentally responsible set of choices.

                I think in general he advocates that all options be looked at and all known consequences of any choices be considered and then the choices with the largest marginal social benefits and the smallest marginal social costs will be chosen by a rational democratic society.

                Your view may differ (as may Nick’s, as I am interpreting his comments and may not be doing so correctly).

                • Caelan MacIntyre says:

                  Hi Dennis,

                  No guns then? Hey great. So then the US military, for example, can just close up shop overseas and go home? That savings, alone, might put a real dent in the cost and length of time of whatever smooth transition is properly agreed upon– which might involve going against some of Tesla’s ideas– and make some parts of the world, like the places that got bombed, or might get bombed, very happy.

        • Dennis Coyne says:

          Hi Nick,

          All of that would help and might (probability less than 20%) be enough to avoid an economic catastrophe (Great Depression 2 or worse). The current political situation in the US is not encouraging and it is difficult to imagine the policies you outlined would be followed over the next 4 years in the US.

          Europe, Japan, India, and China will need to lead.

  6. AlexS says:

    Solarworld to file for insolvency

    German solar panel maker Solarworld has said it’s forced to file for insolvency any time soon. The Bonn-based company has been in the red for a long time, fighting predominantly Asian competition.
    Once the flagship of Germany’s solar industry, Solarworld announced Wednesday the company could not be rescued in its current form, meaning it had to file for insolvency “without further delay.”
    The firm’s board said the company’s outlook was far too bleak to keep on trying, pointing to a big mountain of debt.
    Solarworld has been fighting an uphill battle against rapidly sinking prices for solar panels on global markets caused by overcapacities in China and elsewhere.

    No future

    Last year, the Bonn-based firm logged some 92 million euros ($100 million) in losses. But earlier this year, Solarworld executives nurtured the hope that a turnaround could still be achieved through a massive cost-cutting program.
    The scheme involved the slashing of 400 jobs and a raft of streamlining measures, while a plan to cushion the impact on workers had already been drawn up at Arnstadt and Freiberg in Germany.
    Cheap competition from China has not been the only headache for the company. Solarworld may eventually have to pay a huge sum in compensation, should a regional court in the US side with domestic components part supplier Hemlock, who had charged Solarworld with violating its long-term supply contracts.

    http://www.dw.com/en/solarworld-to-file-for-insolvency/a-38791309

    • AlexS says:

      SolarWorld Files for Insolvency, Citing ‘Ongoing Price Erosion’
      “Given current module price trends, this isn’t surprising.”

      May 10, 2017
      https://www.greentechmedia.com/articles/read/solarworld-files-for-insolvency-citing-ongoing-price-erosion

      SolarWorld AG, parent of the largest U.S. crystalline-silicon solar manufacturer, announced today it has filed for insolvency.
      In a brief statement, management said it concluded, following a diligent review, “that due to the ongoing price erosion and the development of the business, the Company no longer has a positive going concern prognosis, is therefore over-indebted and thus obliged to file for insolvency proceedings.”
      SolarWorld AG is headquartered in Bonn, Germany and operates a large manufacturing facility in Hillsboro, Oregon. The statement said the company is currently evaluating if its subsidiaries, which includes SolarWorld Americas, must also file for insolvency. The U.S. branch did not immediately respond to a request for comment.
      SolarWorld has led several trade cases against Chinese solar manufacturers for allegedly dumping solar modules in the U.S. and Europe. The U.S. Commerce Department set anti-subsidy rates on most Chinese solar imports in 2012, and revises them annually. Tariffs, which vary by supplier, averaged 29.5 percent for 2016.
      The woes of Western solar manufacturers have persisted, however. Prices across the upstream solar value chain started to decline in the second half of 2016 and have continued to nosedive. In March, SolarWorld issued a statement claiming that China’s trade aggression continues to trigger bankruptcies and layoffs, and called on the Trump administration to address solar trade during President Xi’s U.S. visit in April.
      Georgia-based solar manufacturer Suniva, which recently filed for Chapter 11 bankruptcy protection, has also blamed China for “flooding the U.S. market” with cheap solar equipment. Suniva filed a petition under the Trade Act of 1974 last month that could spark another solar trade war.
      “The case of Suniva dramatically demonstrates that the U.S. solar manufacturing industry still suffers from unfair trade. In particular, highly subsidized Chinese companies as well as other producers are globally dumping their products, forcing competitors to take losses, lay off workers and exit the market,” Juergen Stein, U.S. president of SolarWorld, said in a statement responding to the latest trade action.
      “SolarWorld has fought decisively against this kind of unfair competition for many years,” he continued. “China now has managed to circumvent and violate existing trade defense measures in several ways and again incited a ruinous price race to the bottom, destroying U.S. manufacturing jobs.”
      The company said it would “assess” the Suniva case, but did not declare any further action.
      “Given current module price trends, this isn’t surprising,” said Jade Jones, solar analyst at GTM Research. “Even suppliers with best-in-class production costs are under margin pressure right now. This was abrupt and follows news of quarter-over-quarter shipment and consolidated revenue growth.”
      “It should be noted that in the last downturn, SolarWorld avoided shuttering by restructuring and by petitioning for trade barriers in its two largest markets, the EU and the U.S.,” she added. “It’s interesting that SolarWorld is filing for insolvency and has not announced plans to revive itself.”
      SolarWorld AG employs 3,292 people and operates facilities in Freiberg and Arnstadt, Germany, in addition to Hillsboro. Frank Asbeck, SolarWorld’s founder and CEO, issued a statement that management would “do everything we can to maintain as many jobs as possible,” PV Magazine reports.

      • AlexS says:

        I wouldn’t be surprised if Chinese solar panel manufacturers are loss-making as well, but probably they are subsidized by the government.

        • Dennis Coyne says:

          Hi AlexS,

          There is definitely an over capacity problem in the solar industry which is driving prices to levels that are unprofitable. I agree, without various subsidies from the government, the Chinese companies might also be unprofitable.

          Three of the largest four coal companies in the US have also filed for bankruptcy in 2015 and 2016.

          http://www.businessinsider.com/us-coal-bankruptcy-trump-2016-12

          The report linked below has 123 oil and gas producers with $80 billion in debt that have filed for bankruptcy from 2015 to 2017.

          http://www.haynesboone.com/~/media/files/energy_bankruptcy_reports/2017/2017_oil_patch_monitor_20170427_new.ashx

          The report linked below covers oilfield service companies with 127 companies with $26 billion in debt that filed for bankruptcy from 2015 to April 27, 2017.

          http://www.haynesboone.com/~/media/files/energy_bankruptcy_reports/2017/2017_ofs_bankruptcy_tracker_20170427.ashx

          The midstream sector has seen only 19 bankruptcies from 2015 to Feb 2017 with about $19 billion in debt.

          http://www.haynesboone.com/~/media/files/energy_bankruptcy_reports/2017/2017_midstream_report_20170220.ashx

          So the grand total is 259 companies in the oil industry with about $125 billion in debt for the 2015 to 2017 period.

          • AlexS says:

            Dennis,

            Thanks for the links.

            Interesting situation: several ideologically opposite segments of the energy sector:
            1) coal industry – a symbol of the old fossil fuel industry;
            2) shale industry – a symbol of the new fossil fuel industry;
            and 3) solar panel producers – a symbol of green energy
            – have something in common: they operate at loss.

            • Boomer II says:

              A great concise way to summarize the state of energy today. The system is going to financially subsidize something. Those of us concerned about environmental damage want to see renewables get the subsidies because we feel the environment and people’s health will be better off than subsidizing coal and gas and oil.

              • Dennis Coyne says:

                Hi Boomer II,

                I agree, but a possible compromise would be to eliminate all tax subsidies, but institute pollution taxes that attempt to equate marginal social cost with marginal social benefit.

                Unfortunately that is a sticky measurement problem where there is little agreement among experts.

                • Boomer II says:

                  Yes, I think many renewable folks would settle for eliminating all subsidizes so that oil and gas have no tax advantages over renewables.

                  But if you are going to favor industries, the ones that do the least damage seem to be worth promoting over those that do inflict levels of damage.

                  • Dennis Coyne says:

                    Agreed. I am just looking for a compromise that might be enacted in the current political climate.

            • Dennis Coyne says:

              Hi AlexS,

              Often, “newer” industries will operate a loss, there have been many periods where the oil and gas industry as a whole has not done well, as is also true of the auto industry, steel industry, etc.

              Business in general is cyclical with periods of overinvestment and underinvestment as demand shifts and as the economy cycles.

              As with most things an analysis quickly becomes very complex.

              The interesting thing about social phenomena is that an understanding of how the system works, if it becomes widely accepted, tends to change the system as individuals try to game the system with this knowledge and the theory becomes obsolete.

              Without a “social” lab, experimentation is impossible and theory suffers.

              • Nick G says:

                The interesting thing about social phenomena is that an understanding of how the system works, if it becomes widely accepted, tends to change the system as individuals try to game the system with this knowledge and the theory becomes obsolete.

                It’s a key problem with economic forecasts: they make themselves self-fulfilling, or they make themselves impossible. Forecasts of recession are examples of the former, and forecasts of PO are examples of the latter.

  7. Watcher says:

    Bible due out 13 June. BP webcast scheduled for then.

  8. Watcher says:

    Item:

    Recently noted natgas power plants are 35ish% efficient. Gotta look up coal. Vast combined majority of US power. Any tax nudges they get thus conduit EVs. Additional EV subsidy properly zero.

  9. George Kaplan says:

    On a previous post there was discussion concerning Kaskida in GoM. Rystad has this as a possible development with 545 Gb resources (I think the biggest possible undeveloped find in GoM). In fact by the latest BOEM lease data BP allowed this lease to expire in February this year, which means they consider it pretty much uncommercial at any reasonable oil price. At one time Kaskida was considered a huge find and was the next well to be drilled after Mocando by Deep Horizon, one reason they may have been rushing a bit (at least according to the film). I don’t know if BP had booked reserves for this, probably not, but if they had it will show up as a big negative revision for the GoM next year.

    SouthLaGeo – if you read this: look’s like you have better info. or insight than Rystad.

    It is the only lease to expire so far this year, last year there were 16, 3 were for unproduced areas like Kaskida, the biggest of these was Moccasin, the others were at their end of life.

    Moccasin, Kaskida and (I think) Hadrian North (a cancelled ExxonMobil field) are in the Keathley Canyon area, which is fairly new to exploration (I think Lower Tertiary formation). The have now been as many cancelled leases as there are producing. Lucius has three leases producing, from what I can see they have early water break through and extremely rapid decline. Probably not good news for future prospectively there.

    • SouthLaGeo says:

      George,
      As far as I know you’re right on Kaskida. Wasn’t aware BP had allowed the lease to expire, but that is consistent with everything else, and is the final nail in the coffin. That’s not to say someone couldn’t come along and reaquire the lease and try to make something happen, but for now Kaskida is dead.

      Lucius, Moccasin and Hadrian North are in the outer part of the Lower Tertiary (Wilcox) trend. Lucius is an anomaly with the productive interval being Plio-Miocene – thought to possibly be a breached Wilcox accumulation that migrated in to the younger reservoirs. Not sure what the reservoir age at Hadrian North was, but Moccasin is Wilcox.

      I suspect both Rystad and the EIA have a lot of good number crunchers, but have no “feet on the ground”. They follow the press releases, company reports, etc, and keep up with all the discoveries, but sometimes, when projects “die on the vine” there are no press releases. That news comes out as street talk and unless you’re in the business, you don’t hear about it.

      • George Kaplan says:

        Thanks (should have been mmbbls not Gb for resource number).

        What do you think of the Shenandoah downgrade? Possibly smaller, repurposed FPSO (60 kbps or less) or tie-back? And where would that live the other, smaller fields in the area, Yucatan and Coronado (and others?).

        • SouthLaGeo says:

          Was thinking of commenting on Shenandoah above, but wasn’t sure if I had anything much to say. I think your comment above is as reasonable as anything. On the other hand, they may repeat their spar design that they used at Heidelberg and Lucius – where they used the “design once-fabricate twice” model, so they can “design once – fabricate thrice”. I think Yucatan and Coronado are still likely to be tied back, or at least one of them.
          Regarding the big negative GOM reserve revision you mention above due to the cancellation of Kaskida – those reserves could likely be offset by Mad Dog 2.

          • Greenbub says:

            George Kaplan and and SouthLaGeo, just wanted to say I very much appreciate your knowledge of the GOM. It doesn’t get as much attention as shale, but it should.

            • George Kaplan says:

              It doesn’t get much attention probably because most recent news has generally been bad. They announce new production records, but these are due to discoveries before 2014 and FIDs in the high price years. EIA just make up future projections for increase flow and then continually switch which fields they think the production will come from (almost all of which they get wrong).

              What doesn’t get much publicity is: moribund lease sales; low and falling exploration success rates; downgrades of Shenandoah and Hopkins; write offs of Hadrian North, Kaskida, Moccasin (all in the play that got huge attention when the first Jack wildcat hit oil – ‘the next great ultra-deep frontier’); some dreadful availability numbers; looks like bad start up on Stones and maybe Delta House; and, more than anything, 20 to 25% depletion rates.

              • I was asked to review a deep water Eocene discovery about 7 years ago. Seemed to me the pressure was very dangerous, and the oil had a bit of asphaltines, which made it very touchy to operate the wells. I didn’t like it, and that’s what I put in my memo. I think those deep water Eocene fields will disappoint them.

                • SouthLaGeo says:

                  Thanks for the kudos, Greenbub, and double that for George as well. Always appreciate the deepwater perspective Fernando brings, as well as the data mining skills of AlexS and others.
                  Regarding the Eocene/Wilcox that Fernando and George mentioned – in my view, Jack-St.Malo and Julia have been successes so far. Cascade and Chinook have been disappointments. I’m going to say it is too early to say regarding Stones, but, the ramp up has for sure been slow, and it may truly be due to crummy geology ( bad rocks, poor oil quality, poor connectivity, whatever).

                  While I can’t argue with George’s comments above, I’d like to counter the bad news with BP’s recent press releases about the value that Full Waveform Inversion (resulting in a step change in subsalt seismic imaging) has had in their ability to claim up to 200 additional MMBO of resource add at Atlantis, and up to 1 billion barrels of resource add around their core GOM assets. This could be a technology that, if utilized widely, could unveil many of the remaining areas in the deepwater GOM – this is not to say that big discoveries will follow, but, at least industry will be better able to see where future prospects are.

                  • SouthLaGeo says:

                    Just came across a press release saying that Anadarko is shelving Shenandoah – not even still considering the smaller development we were discussing, but “shelving” it – telling the contractors to stop work. Primarily due to a recent unsuccessful appraisal well.

  10. Jason says:

    Some reality. Tesla car cost 69,000 dollars. Tesla 2016 profit -675 million.
    Toyota camry cost 26,000 dollars.
    Toyota profit 2016 19 billion.
    E.V. have a very long way to go to compete with i.c.e.

    • SRSrocco says:

      Jason,

      To understand the fate of Tesla, we have to look at another once high flying Solar-Renewable stock, called Sun Edison.

      At one point, Sun Edison had 7,000 employees and was trading at a peak of $30 a share. Unfortunately, after posted several years of horrible losses. Investors began to realize they were the BAG HOLDERS of a real piece of SHITE company.

      At the end of 2015, the company filed for bankruptcy and the stock is now trading for less than peanuts at 9 cents a share, or something pathetically close to that.

      Tesla’s stock price continues towards the moon as the company reports year after year of losses.

      While Tesla’s stock may continue to defy gravity for a while longer, it is destined to be flushed down the toilet.

      GOD HATH A SENSE OF HUMOR….

      steve

      • Boomer II says:

        I wouldn’t invest in Tesla (I am risk adverse) but Amazon racked up years of losses. So you can’t use that as your only gauge.

    • Nick G says:

      Tesla car cost 69,000 dollars…Toyota camry cost 26,000 dollars.

      That’s hallucinatory. A Tesla offers performance that can only be matched by cars that cost several times as much.

      Tesla is sold out for several years out. Tesla cars are clearly out-competing ICE cars.

      • Boomer II says:

        Good point. Tesla isn’t competing with Toyota Camrys. So there’s no reason to buy a luxury car when you can get from place to place in something that costs much less money?

      • Survivalist says:

        You’re living in an alternate reality.

        http://www.nasdaq.com/symbol/tsla/pe-ratio

        Tesla doesn’t have a P/E because it has negative earnings and isn’t profitable. And to measure P/E you must have positive earnings and be profitable.

        A few more big winners like Tesla and all our problems will be solved. Lay off on the hopium pipe.

        What do you think the word ‘competing’ means?

        • Boomer II says:

          Here’s a 2013 article.

          Amazon: Nearly 20 Years In Business And It Still Doesn’t Make Money, But Investors Don’t Seem To Care

          A 2014 article.

          Why Amazon Has No Profits (And Why It Works) — Benedict Evans

          A 2015 article.

          Amazon.com, Inc. Just Admitted It's Losing Billions — The Motley Fool

          2016

          Amazon, once a big spender, is now a profit machine – The Verge: “Until last year, Amazon was known as much for its ubiquity in online retail as it was for the bold and expensive visions of CEO Jeff Bezos. The company would spend mightily, only to assuage investor fears with promises of a bright future. Many of those investments, like cloud computing, have become huge and profitable businesses. Some — like the failed Fire Phone —have fallen flat on their face. Now, however, Amazon appears to have hit its stride as Bezos’ long-term visions for the future begin paying off big time. For the fifth straight quarter, Amazon has earned a profit. This time around, that profit is bigger than it’s ever been before, and by a large margin.”

        • Nick G says:

          Hmmm…..

          Have you ever driven an EV?

          • Survivalist says:

            Do I seem like the kinda guy that has that much money to drive my ass from point A to point B?
            Nick G endlessly presents endless ‘what if’ scenarios because he refuses to acknowledge the distressing reality of ‘what is’, and that is; Tesla is unaffordable to most and it still can’t turn a profit. Perhaps they need to raise the prices further? That is his hope. An unaffordable product made by a profitless corporation. If that’s your great hope I suggest it is you who is hallucinating.

            • Boomer II says:

              Your arguments against Tesla aren’t particularly good. You’ve cited that it hasn’t turned a profit and its cars are expensive.

              You could be complaining about Amazon and about Rolls Royce.

              There may be good arguments against Tesla, but lack of profitability and the cost of its cars are kind of weak.

              • Survivalist says:

                That Tesla is an unprofitable corporation is not an argument. It is a fact.
                FYI- Fact vs Opinion vs Argument
                http://www.writingforresults.net/Acro_3/2_cntnt/4_argue.pdf

                Amazon P/E
                http://www.nasdaq.com/symbol/amzn/pe-ratio

                Is the existence of other unprofitable companies evidence in your mind that Tesla is a winner?
                A premise is a statement that an argument claims will justify a conclusion. Is it your argument that Tesla is a competitive winner destined for greatness because Rolls Royce losses money?
                Yeah, a few more winners like that and we’ll all be saved!
                Talk about a Hopium overdose!

                http://fortune.com/2016/12/02/tesla-model-3-stock-elon-musk/

                https://seekingalpha.com/article/4056331-tesla-bankruptcy-chances-increased-exponentially-capital-raise

                • Boomer II says:

                  What I am saying is that we have investors willing to put money into companies that won’t show a profit for years.

                  So saying that a lack of profits will doom Tesla is not a good argument.

                  Again, you’d have a stronger argument against Tesla if you came up with reasons other than it isn’t currently profitable and it sells expensive cars.

                  • Boomer II says:

                    If you want to criticize Wall Street as a whole as an exercise in making money on speculation, I won’t dispute that.

                    But you keep bringing up profitably as a problem with Tesla. Investors tend to look at growth more than profitability. If they see that a company is growing, they are often content to wait for profitability. Or they plan to sell soon enough that profitability doesn’t matter to them.

                    I lived through and wrote about the dotcom boom and bust days. I think Tesla has a better business model than many of the companies that went public in those days. They were selling eyeballs and could easily be replaced by other companies selling eyeballs.

                    Tesla has, at least, some barriers of entry which will limit competition. And given that Musk WANTS other EV companies in the market, he’s not concerned that other companies will produce EVs cheaper than his.

                  • Boomer II says:

                    Also, consider the case of Apple. It has never offered the cheapest product on the market. Not the cheapest desktop, not the cheapest tablet, not the cheapest phone.

                    But it has had many devoted buyers because they like the design, they like the features, they like being seen with the brand.

                    Tesla hasn’t, so far, positioned itself as a mass market product. It may never try to do that. But if it leads the field in new design and brand loyalty, then it has accomplished something.

                  • Boomer II says:

                    I can’t say I’m a fan of Musk’s , nor was I a fan of Jobs.

                    However, I think Tesla’s lack of profits is not a concern at this point.

                    This is a thoughtful look at the future of the auto market and Tesla’s possible role in it.

                    Will Tesla Do to Cars What Apple Did to Smartphones? – The Atlantic: “The company’s fate rides on the answers to three unresolved questions about the auto industry’s future: driven or self-driving? Electric or gas? Private or shared?”

                    “Tesla’s valuation isn’t nuts if, as some investors surely hope, cars are the new smartphones and Musk is the next Steve Jobs. In 2007, when the iPhone debuted, it was in a position much like Tesla, selling just 4 million units in a year when Nokia sold more than 400 million, as Vox’s Tim Lee writes. But 10 years later, Apple is the world’s most valuable company—with 20 percent of the world’s smartphones sales, and the vast majority of the industry’s profits—while Nokia has sold off its cell phone business.”

            • Nick G says:

              Jeez, calm down. Maybe that would help you read and understand what people are writing. For instance:

              Do I seem like the kinda guy that has that much money to drive my ass from point A to point B?

              I didn’t ask if you’d tried a Tesla, I asked if you’d tried an *EV*. You can get a used Leaf or Volt for $10 to $15k. That’s mighty cheap, given that you can save $20k over the life of the vehicle in reduced fuel consumption and maintenance.

              So. You’ve had a lot to say about EVs. And, test drives are free.
              Have you driven one to see for yourself??

            • Dennis Coyne says:

              Hi Survivalist,

              Perhaps you have heard of the Tesla Model 3, it is expected to cost about $35k (before any rebates) for the base model?

              It will be equipped better than the Camry XLE V6 (MSRP $31k) and will also perform better. It is expected to be sold by December 2017 (production expected to ramp to 5000 cars per week by the end of 2017), with production expected to ramp to 10,000 cars per week by the end of 2018. Roughly 390,000 cars might be produced in 2018 (7500*52), with 520,000 expected in 2019.

              There are many EVs on the horizon between now and 2020, see link below:

              https://electrek.co/2016/12/26/10-electric-cars/

              You are correct that Tesla is not currently profitable.

        • Caelan MacIntyre says:

          Over here, despite the insane daily rush to ‘jobs’ that, in the bigger picture, don’t do much of anything toward a better global society for all, except line the pockets of the upper ~20%, and maintain the equally-insane consumption-patterns of the globe’s and humanity’s remaining precious fossil fuel heritage, we still see one person per internal combustion engine (ICE) car as the overwhelming majority.

          So why do we need EV’s again?

          So the point of the EV, for example, seems to be less about ‘transportation’ or ‘getting off of fossil fuels’– although that’s the convenient excuse, brainwash, mantra and/or rationalization– so much as supporting and perpetuating a certain kind of pseudoeconomic game for the upper ~20%, whether the game runs on ‘other forms of energy’ or not.

          If we really wanted to ‘get off of fossil fuels’, much of it could be done practically overnight, no PV’s, EV’s or pain required, and the remaining FF’s and transportation systems would probably last a very long time.

          As it would appear, however, the globe is going to continue to frantically burn fossil fuels, and the upper ~20% that can get away with it are going to continue to attempt to create new polluting industries and markets for their dreams, alone, and under the white and green washes of ‘getting off of oil’ and/or ‘we need transportation’.

          • Caelan MacIntyre says:

            Burning Down The House

            “Hold tight wait till the party’s over
            Hold tight We’re in for nasty weather
            There has got to be a way
            Burning down the house

            Here’s your ticket pack your bag
            Time for jumpin’ overboard
            The transportation is here…”

      • Fred Magyar says:

        That’s hallucinatory. A Tesla offers performance that can only be matched by cars that cost several times as much.

        Not to mention that Tesla is NOT exclusively an automobile manufacturing company, it is a technology platform/energy company with a focus on highly disruptive technology such as what they are doing in their Giga factory, they have four more of those already in the planning stages. So comparing it to conventional automobile manufacturers is an apples to sour lemons comparison.

        BTW in a car to car drag race …
        https://www.youtube.com/watch?v=NdLIeXUgrBE
        Tesla Model S P100D Ludicrous Drag Race vs Lamborghini
        Lamborghini Huracan as tested : $278,000 .
        Tesla Model S P100D as tested $148,000
        Tesla eeks out a win, even though the Lamborghini ends the race with a slightly higher top speed and a lot of noise and fumes…

        Comparing those to a Toyota Camry is well, Ludicrous! 😉

      • So you think a Tesla can out race my Seat Altea one way from Stockholm to Trömso in January?

        • Fred Magyar says:

          To be honest, I have no idea but I’m sure it can take you in the quarter mile on a drag strip and I suspect it might even do so as well, on your one way trip from Stockholm to Trömso in January….

          Since this video was made things have improved, both in the Teslas and the available charging stations.

          https://www.youtube.com/watch?v=pdNjSZWe21U
          Published on Apr 28, 2015
          1,300 miles in an electric car in two and a bit days.
          In February 2015 I drove a Tesla Model S P85 from Oslo, Norway, to London, England. This is what happened.

          So good luck with your Seat Altea, I doubt it would beat a new Tesla.

          Cheers!

          • Jason says:

            My original point was that we shouldn’t get too excited about electric vehicles just yet. They are a niche market and not for everyday Joe that makes world run. Comparing 60000 car to 600 dollar phone is more out of whack than my comparison to Camry. Also do the leaf and volt make profits or do companies loose money in order to keep market share

            • Boomer II says:

              I think anticipating the future is primarily a matter for those who will make or lose money as a result.

              If you are an auto company, an oil or gas company, or a utility, you might want to plan for a future which might include more EVs.

              There are ways to move into the market without totally giving up what you are doing now. The use of golf carts in retirement villages is an interesting process to watch. In a lot of communities people take as much pride in their custom electric golf carts as they would in a car or a bicycle.

              I think one issue with the predictions is how rapidly a change might happen. Uber and Lyft caught on quicker than many might have predicted.

              Because of the investment, people switching from ICE vehicles to EVs will take time. On the other hand, with so many people leasing cars, change-overs can happen as soon as three years. We don’t have to wait for cars to die before people replace them.

              I am less focused on EV adoption as I am on decreased gasoline use, whether that means more EVs, more use of ride services, more walking and biking, less need for commuting, etc. Collectively they could make an impact on gasoline demand.

  11. George Kaplan says:

    This may have been discussed before (but always new data available and new ways to see it): I was looking at Enno Peters site and noticed that the older Bakken wells from 2005 to 2007 (maybe 2008 and 2009 as well) look like they water out and die at about 25 to 40 bpd – after 8 years for 2007 but getting earlier for newer ones if the trend continues. Chart below is water cut.

    • George Kaplan says:

      This shows how the oil flow dies once water breakthrough happens – no data for 2005 and 2006 though.

      • FreddyW says:

        The last 11 months in Enno´s curves does not contain complete data and should be ignored. But that if of course hard to know if you don´t create the graphs yourself. In my graphs I instead plot the average well production independent of age but grouped by year. That way the first 11 months of data should be ignored instead of the last 11. You can see my graph bellow.

        I don´t agree with Art Berman that increasing water cuts is a problem. As you can see in the graph bellow, the water cut increases seem to slow down at around 50%. The real reason for the fast water cut increase seen for some curves, which I suspected some time ago and which was confirmed in a NDIC webinar a few months ago, is that the water content is higher the further down you go in the shale. So when they use more water and proppand then the cracks will be longer and therefore reach further down. I believe older wells see increased water cut (from a lower level) either because of refracking or communication with new wells (which use more proppant and water).

        The GOR levels however, I belive is a real concern. If increasing GOR is bad, then decreasing GOR is even worse. In March though, it increased a bit again. So lets see what happens there.

        • George Kaplan says:

          Aren’t the last 11 months the interesting ones that everybody does look at and comment on, really to the exclusion of everything else?

        • George Kaplan says:

          If you are averaging over a year and water break through happens over a couple of months, and then the well is killed off (so no more oil or water), then would your method maybe not pick up the fast transients that Enno shows – you would just be seeing lower oil and water averages over the year, and not much change in the ratio?

          • FreddyW says:

            Yes exactly, the last 11 months are the interesting ones. That´s why I use this method. That is also why Enno should not include those last 11 months in is data. People will only make the wrong conclusions.

            I don´t average the wells over the year. Its monthly data just like in Enno´s graphs. But in Enno´s data point the wells are of the same age. In my data points they are not. They are just from the same year.

            Based on my and Enno´s graph I can see that the wells from early 2007 produces a lot of water. I could not have drawn that conclusion from Enno´s graph alone (it could have been that water cut increased a lot) and of course also not from my graph alone.

            • George Kaplan says:

              Thanks – I’m afraid my ageing and befuddled mind is no wiser.
              1) How can something be grouped by year but independent of age?
              2) How can something grouped by year not effectively be an average?
              3) You say “I could not have drawn that conclusion from Enno´s graph alone” – but that’s the conclusion that first came to my mind, looking only at Enno’s charts.
              4) Your explanation for where the water comes from seems to be for newer wells with more fracking – but I was only looking at 2008 and before. To me it doesn’t matter where the water comes from so much as whether it causes the well to die prematurely.
              5) Enno’s graphs show a tailing off in the last year reflecting that he includes wells by month (I think) – in fact the number of new wells are shown. As long as he includes/excludes the same wells when counting water and oil then it doesn’t matter so much if some wells are completely excluded – or does it?
              6) And are you agreeing that your graphs would not show a sudden water increase if the well affected was quickly shut down?

              • FreddyW says:

                Ok I will try to make a more thorough explanation. Lets say you have data up until February 2009 and you want to look at average production for 2008 wells.

                Enno´s graph (production profile):
                In the first datapoint you take the average for all 2008 wells for the month they started production. So for the January wells you use January 2008 data, for February wells you use February 2008 data and so on. For the next data point you use the data for when the wells were one month old. So for January wells you use February 2008 data, February wells use March 2008 data and so on. When you come to the 4th data point you get a problem. You need to use the data for when the wells were three months old, but for the December wells that would mean you should use March 2009 data. But you only have data until February 2009, so what do you do? You can exclude the December wells and only take the average for the first 11 months. In data point five you also exclude the November wells and so on until data point 14 where only the January 2008 wells remain. But does it make any sence to compare the production of the last data point, where only January wells are included, with data point three where all the wells from 2008 are included? No, so the last 11 data points should be excluded. But doing so you also exclude a lot of data with new information.

                My graph:
                I instead include the production data as soon as it becomes available. So the first data point has the average production of the January 2008 wells the first month they started production (January 2008 data). The next data point shows the average production of the January 2008 wells when they were one month old (February 2008 data) together with the average production for the February 2008 wells when they started production (February 2008 data) and so on. So for the first 12 data points new wells keep being added which makes the first 11 data points unusable. But after that every data point includes exactly the same wells and are therefore comparable and you don’t have to exclude a lot of new data.

                I think if you understand above explanation, then I think you have the answers to your questions. If not, ask again.

                • coffeeguyzz says:

                  Mr. Kaplan

                  The GOR metric is indeed an important one and an area where a lot of resources are being applied to maximize long term liquid output.
                  While the more frequent recent targeting of the deeper, Three Forks formation – which contains a higher proportion of gas – can throw some historical parameters off a bit, the ongoing ratio plays a critical role in the functional life of these low permeable wells.
                  Several approaches are being implemented.
                  Up in the Viewfiekd Bakken in Canada, Granite Oil has been successfully re-injecting field gas to successfully maintain oil output.
                  Their website contains excellent data on this.
                  EOG caused a stir last year with their announcement of gas injected EOR efforts in a few Eagle Ford wells.
                  This program has been expanded to 33 EF wells and the EOG folks are highly optimistic about the concept.

                  Taking a different tack, the Canadian company Crescent Point is using water injection, not primarily for its sweeping characteristics but for formation re-pressurization.
                  They, also, feel it is effective and want to expand the program into its North Dakota operations (Bakken), but unitization over a wide area may be necessary.
                  EOG, also, just applied for permits in North Dakota to try water injection in the Parshall, I think, to evaluate its results.

                  These low permeable formations need pressure to drive the liquids into the wellbore.
                  As the existing gas declines, the operators will have some ‘issue’s.

    • George Kaplan says:

      Also the newer wells seem to be progressively hitting dead oil (i.e. maximum GOR) earlier in their life: for conventional wells that would often mean the oil flow gets cut off earlier – i.e. it’s more difficult to flow as the multiphase density is higher, as there is less gas, and also may mean earlier and greater impact from water (but I have no LTO experience and in these horizontal wells with pumps and possibility for recompilations may be different). However if the newer wells do follow the 2007 pattern and die at 30 bpd (and possibly higher numbers) I think the economics are going to be a disaster.

      • John Keller says:

        It tells me that reserves for the shalies are overstated by 100% or so, as they booked their wells projecting 30 years of production. Experience in the Barnett should have foretold this fact. Most of those wells didn’t see 10yrs. Because of this, assets on the balance sheet are overstated as well due to underreporting of depletion expense though many companies just have perennial write downs which might adjust there asset values somewhat. With underestimated depletion expense, many of these companies continue to tout positive net income which is also false. The shalies are disasters. Unfortunately, many investors are fooled by shalie hype and distorted financial accounting.

      • coffeeguyzz says:

        Mr.Kaplan

        I always appreciate your input, especially in the offshore areas as I seldom keep track of them.

        Your graphs and analysis above from Enno’s great site may be highly instructive, but in a slightly contrary fashion than you may suspect.

        If you take 2005 to 2009 wells and get the Production Map (?) and see the actual locations of these early wells, immediately the vast ‘spread’ should be apparent, that is, these wells used in your charts include those from the outlying counties such as Divide, Burke, Renville, McLean, Mercer and others, even western McKenzie as that was a continuation from the earlier Montana focus.

        Should you do the charts – GOR and Water Cut – with only the more productive Dunn and Mountrail wells, the results are quite different.

        Now, use of this discrimination may understandably prompt claims of ‘cherry picking’ because it is, in fact, just that.
        I more prefer to think of it as ‘real world’ evaluation as all those early wells, drilled in near wildcat mode, weigh down (skew?) what is being done in later years.

        One of the strengths and potential vulnerabilities in Enno’s method is the fact that all data from every single well is presented wherein the true ‘dogs’ carry equal statistical weight with the superstars.

        Burke, Renville, McLean and other counties are virtually abandoned (although specific, niche operations are, in fact, still conducted), and a more accurate overall appraisal may be gotten from areas that have proven productive.

        • coffeeguyzz says:

          …Just went back to Enno’s site and the 2005/2009 wells again.
          With this new tablet I am able to interact much more effectively than prior.

          Did you see/include the inactive and or plugged wells in your graphs, Mr. Kaplan?
          There seems to be a bunch of them, along with the Producers.

        • Watcher says:

          None of that matters.
          2005 pre fracking.

        • George Kaplan says:

          I’m afraid I can’t follow what you are talking about – what I see is that the only wells we have long term data for are suddenly showing high water cut (on average). The curves show averages – the good wells are balanced by the bad. Are you saying all wells will now be good, despite there being very little history on late operation? If as we get more data that is the case then that will be interesting and noteworthy too. The GOR indicator to me would suggest that if there is a water issue it will hit earlier, if not then maybe there’ll be an indication why.

          If you have selected charts that better indicate what you are suggesting I’d be interested to see. Your plugged well argument I can’t follow at all – wells would be plugged as they water out and become uneconomic.

          • coffeeguyzz says:

            Mr. Kaplan

            Pretty late here … brief followup.
            Horizontal wells in Renville, Bottineau and Bowman counties most likely are not Bakken.
            Madison, Spearfish, Red River could be targets and these formations have very, say again, VERY different profiles than typical Bakken/ Three Forks wells.

            Next few days I will try to get/give more info.

            • George Kaplan says:

              Fair enough – but I’d say from my experience of conventional horizontal wells the performance before water breaks through doesn’t tell you much about the timing or what will happen afterwards. To some extent you could argue that the perfect horizontal well design would produce 100% oil until the day it cuts water, at which point it goes to 100% water – all the oil that could be produced has been, and in the shortest time and least expense (no such wells exist).

              • coffeeguyzz says:

                Mr. Kaplan

                I’ve randomly selected a dozen or so wells from Bottineau, Bowman and Mountrail counties, circa 2005 – 2008, to gauge WOR.
                Essentially, all the Bowman wells target the Red River formation and have 6 barrels of water to each of oil, common oil output 2,000 bbls/month or so. Recent (2015) vintage about the same. Some older show 20 or more to one.
                These are all horizontal wellbore.

                Bottineau county seems to target Madison/Spearfish formations with also high WOR.
                These are horizontal wells.

                More relevantly, perhaps, are some 2008/2010 Sanish field wells (Mountrail county) that consistently show 2 to 6 barrels of oil for every bbl of water.
                Most of these wells produce under 500 barrels of water per month.

                This entire water cut issue can be somewhat problematic and ‘off the point’ in LTO for many reasons.
                Recent completions use 200,000/300,000 barrels of water regularly with a fair amount resurfacing over a few years’ time.
                Unlike conventional work, the impermeable nature of LTO inhibits much production of water, but, as is always the case, high variability exists.

                GOR, however, is a MUCH different matter which I’ll expand upon in a bit down below.

            • Enno Peters says:

              Gerard, George,

              Good to see my work referenced here.

              I agree that it makes good sense for certain analyses to only focus on a subset of wells, and to be aware of the differences. As Gerard has stated, there are some areas in North Dakota that contain conventional wells (I’ve noticed this especially in Bowman county), and these wells behave quite differently, including a far higher WOR.

              • SouthLaGeo says:

                May be a stupid question – but in unconventional reservoirs, where does the water come from? I know where water comes from in conventional reservoirs, but I envision unconventional reservoirs as having very little water available. I would expect most unconventional wells to just pressure deplete over time, not water out.

                • coffeeguyzz says:

                  SLGeo

                  No stupid questions possible when sincerely posed, right?
                  I thank you also for your input as this site benefits greatly when industry people contribute.

                  Few years back, on another site, an engineer, intimately familiar with the Bakken, would regularly take questions – including your specific one – and explain as best he could.
                  Regarding produced water in the Williston Basin in a nutshell …
                  The lower Three Forks Formation (quite distinct from the Bakken) – all four benches – are sourced from the Lower Bakken bench and consist of thinly laminated mudstone, sandstone, shale, and other materials with very low permeability.
                  There is water in the formations, but very little with very low flow rate.
                  A fair amount of the produced water for the first few years is the residual flowback from the increasingly large (200k/300k barrels) of water frac jobs.
                  As for the Bakken formation itself, 100% of the target is the middle bench, about 60′ thick of sandstone, mudstone and other low permeable rock.
                  Above the MB is the 10’/50′ thick upper bench – all organic rich shale – and below the MB is the 40’/100’+ Lower Bench – also organic rich shale.
                  The upper and lower benches are the source rock.
                  After 10 years online, these core area Bakken wells still produce less than 500 barrels a month of water, a!ong with 1,500/2,500 bbl/month oil.
                  Big variation depending upon many factors, location being primary.
                  So, water is present in this formation.
                  Very little of it.
                  And, this plays into the perceived long term favorable economics … according to the operators, naturally.

      • George Kaplan says:

        Niobrara has some years with sudden gas break through …

    • George Kaplan says:

      On a similar theme looks like some EF wells might just stop producing oil after 6 or seven years and go to gas.

  12. coffeeguyzz says:

    Director’s Cut for March is out.

    Daily production down a little. Output still a bit over one million barrels a day.

    • George Kaplan says:

      Looks like they are back on 10% yearly decline rates. DUCs went down 110 but there were 59 completions and 89 spuds (i.e. should have increase by 30), so where did the 140 go to – temporarily abandoned or something to do with confidential wells? Net permits are still declining at about 10 to 20 a month by my rough count of cancelled against new issues and spuds. Completion rates don’t seem to be changing much despite the increased number of rigs.

  13. Enno Peters says:

    I just published a new post on the latest production data from North Dakota, which you’ll find here.

    • Dennis Coyne says:

      Thanks Enno,

      So with 56 wells added in March 2017 and assuming well completion rate increases by 2 per month until reaching 150 over the next 75 months we get the scenario below. Cumulative output from 1951 through 2050 is 8 Gb and 31,000 total wells are completed from 1951 to June 2035 after which no more wells are completed.

      For those who think my models are too optimistic note that the model prediction has been too low every month except one since March 2015.

      • Dennis Coyne says:

        To Jan 2025 the scenario looks like this.

        Clearly the number of future well completions is unknown, along with future well profiles the rate of decrease in new well EUR, etc.

        If the well profiles follow the assumed trajectory and the well completions also follow this trajectory, then the scenario might be close.

        This scenario is likely too conservative if oil prices rise quickly.

  14. George Kaplan says:

    To understand how bonkers the over investment orgy for oil firms and service companies was:

    Rig market recovery some way off yet – Maersk Drilling:

    The firm says there is still “significant excess capacity,” with about 135 floaters and 225 jackup rigs stacked, and some 40 newbuild floaters and 90 new build jackup scheduled for delivery – the vast majority of which do not have contracts.

    http://www.oedigital.com/component/k2/item/15368-rig-market-recovery-some-way-off-yet-maersk-drilling

  15. Guym says:

    Thanks for the evaluation of the GOM, guys. EIA is obviously off base. Just a pencil pusher, and try to grasp the big picture out off primary data, mostly. It does appear to me that EIA, IEA and, now, OPEC, are far off base about the amount of increase in shale for 2017. OPEC now has it up to over 900,000 barrels for 2017. Heck, completions were lower in Texas for April. Better get a move on, or it won’t even catch up with EIA’s current numbers.
    Oil completions through April 2016 were a little over 3500. Oil completions through April of 2017 are 1976. Things are really booming, aren’t they? From the MWD reports through the first of the year, I see some probable buildup of DUCs. DUCs are not production. There doesn’t seem to be that many of them, so are the rigs drilling less than one a month, just to keep the potential?

    • Boomer II says:

      I would think the industry does know what is happening but doesn’t want to publicly acknowledge it yet. Now one would assume that prices might go up if there was more emphasis on scarcity, but as long as companies are trying to put more product on the market right now, then scarcity isn’t a factor for current prices.

      I’m inclined to think everyone is trying to sell what they can right now with some sort of exit plan in mind: a fire sale before companies run for the door.

      I’m not so sure that there will be more oil production if prices rise high enough. I don’t see the major oil companies acting like that. They are investing in the Permian because it is relatively cheap, immediate, and makes them look good to investors. But the fact that are declining discoveries seems to suggest that they aren’t planning on a future with lots of oil. Higher prices might encourage them to squeeze out a bit more from where they are already drilling, but I wonder just how much there is left to squeeze, no matter what the price.

      • Guym says:

        By far the biggest innovation is EOG’s successful gas injection to improve the recovery of wells that have had several years of good production. Their test of over 33 wells last year, yielded 30 to 70% more out of the well. They say. Not sure how you could verify that with less than a year’s production. Even that would be limited to those good wells, and assuming that gas does not approximate $6 a mcf, as some estimate it will soon be. Oops! Sorry, I see, now, that you were responding to George’s comment.

  16. TechGuy says:

    Art Berman: Don’t Get Used To Today’s Low Oil Prices
    https://www.youtube.com/watch?v=I7kgD0s2zaY

    • Petro says:

      Art Berman is one of the finest and most knowledgeable petroleum analysts.
      However, while being such, he had difficulties comprehending the macro picture and always thought and still thinks within the known and established, “tried and true”, “supply-demand”system.
      That is why he has been wrong during the past 3 years and that is why he will be incorrect in the future.
      Akin to some fine numbers’ and charts’ people here (Enno, Alex come to mind), he is convinced that adding the new Bakken/Ten Forks (or is it eleven?)/North Dakota data to colourful charts – and thus completing a new post on the website, is a big thing and makes a difference:
      “… ohh.., 10 rigs were added this month…..; ….uhhh, the rig count dropped by 5 according to BP bible….. blah, lah, la…la…la….”.

      As I wrote many times on this forum before, over the past 3 years:
      price will oscillate between $30-$55 (or so) pointing downwards.
      At the end of our BAU and before the “kaboom”, it will spike.
      So far I have been right.
      Hopefully for all of us, in the future, Art is right and I dead wrong!

      Be well,

      Petro

      • Guym says:

        BAU? Meaning? Thanks. Ok, never mind. Physics.

      • Nick G says:

        That is why he has been wrong during the past 3 years

        Could you give some specific examples? If you have time, original text and URLs would be helpful.

        • Petro says:

          No need Nick.
          You can go to his site firstlast.com, or listen to ANY interview of his.
          He has changed somewhat tune in the past 6-9 months and is beginning to learn that we are not in the ’70-’80-’90s anymore and this is NOT a normal “glut” and “oversupply” price fall.
          But the general meme is: “… when supply-demand takes over…. when production declines…. prices will go to $200brl… etc etc etc… ”

          As I said, lately he is starting to change the tune and think outside the “system”… somewhat.
          You certainly do not want to hear this, for you want the oil industry to go away.
          However, I hope he is right and I am wrong! (you should, as well)
          Hopefully prices rebound again, for that means that we are in normal times and market is functioning as it always has…

          Unfortunately, numbers tell a different story…

          Be well,

          Petro

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  18. Watcher says:

    KSA and Russia want to extend the cuts to next yr.

    No word from Iran.

    • Ves says:

      Iran production is not an issue anymore, even for KSA. Iran production was an issue 1-2 years ago but many things changed in the meantime. That KSA & Russia, together, announced plans for further cuts at presser at the most important geo-economic summit in the last 50 years in China is very telling. US absence from the conference means only that US/Canada/Norway/UK oil industry are put in comatose state by their political elite in a desperate attempt to save financial system just for little longer.

      • Watcher says:

        The reports of shale production making a profit at these prices and defying the Saudis are many this morning.

        It’s amazing how even Wall Street can say these things despite seeing that all those companies are losing money in huge quantities. The narrative is overwhelming the facts. They can keep drilling and producing at a loss because they are getting funded to do that.

        Somewhat useful to note Russia is only agreeing to about 500K bpd in cut and the rest is OPEC. That may be noise to them. Or unmeasurable in what they send to China.

        • Boomer II says:

          I understand how Wall Street is accepting and promoting false numbers. They have stuff to sell and as long as they can sell this story to investors and lenders they will do so.

          But it seems so damaging to the industry itself. Claims of abundance keep oil prices down, and if we fund money into keeping the oil flowing now, it will just come back to bite us when it becomes scarce.

          It’s like the worst possible world in terms of financing decline. Or to paraphrase an often quoted phrase: it’s like selling rope to people to hang themselves.

        • coffeeguyzz says:

          Watcher

          The first quarter, 2017 seems to have been a turning point, financially, for several of these companies.
          You undoubtedly track the money end more than I, but the reports from many companies showed positive cash flow – in some cases to a significant degree.

          One company that caught my eye was Cabot that reported positive revenues way over $100 million for the quarter,
          A large portion of the conference call revolved around future options with the expected quarter billion dollar profit for 2017.

          Side observation regarding Permian productivity … EOG just reported record shattering output from the 4 well pad Whirling Wind in Lea county.
          First months’ output exceeded 420,000 barrels oil, over half billion cubic feet of gas, and almost 100,000 barrels NGLs.

          This is why these companies are investing tens of billions of dollars in this area.

          • Watcher says:

            Dood, you have been told before that borrowed money is an increase in cash. Cash flow includes it. You can borrow your way to positive cash flow.

            Why do you quote this stuff that has already been addressed.

        • Ves says:

          Watcher: “It’s amazing how even Wall Street can say these things despite seeing that all those companies are losing money in huge quantities. The narrative is overwhelming the facts. ”

          Yeah, I can see. Do you remember Juncker and “saving” Greece episode, when in probably very rare moments of honesty for a politician, he said “When it gets difficult, you got to lie” 🙂
          It is very human to lie. So Wall St. lies too when it gets difficult. By telling lies it is Wall St. that get’s deceived first and foremost.

          • Watcher says:

            Greece burned 300K bpd 2015. We’ll have their new number in a few weeks. It was up 3% for that 300K number.

            For them, like others, a central bank is printing their oil.

  19. Forbin says:

    As of January 2017, Mitsubishi claims a LHV efficiency of greater than 63% for some members of its J Series turbines

    Forbin

    • HVACman says:

      The turbine itself is about 41% LHV. When used in a combined-cycle gas/steam turbine system, the system can achieve 62-63%.

      CCGT plant system efficiency has been fluttering around 60% for quite a few years now. CCGT technology is another reason why coal is dead – NG means cheaper fuel + lower emission treatment costs + lower plant heat rate + smaller plant investment + better load-tracking.

      https://www.mhps.com/en/products/thermal_power_plant/gas_turbin/lineup/m501j.html

      • coffeeguyzz says:

        There is almost 20 billion dollars worth of CCGT plants either under construction or in the planning stages in Ohio and Pennsylvania – all to be fueled with locally sourced gas.
        Cabot is going to supply a few power plants with gas direct from the wellhead to ensure a long term customer having low fuel prices.

        Manufacturers are looking to locate in this area with perceived low heating costs (distribution pipelines are not so vigorously opposed) and possibly the lowest electricity prices in the country.

        Appalachia Rising.

        • Boomer II says:

          Yes. Appalachian gas makes more sense in most cases than Appalachian coal. I wish more Trump supporters understood that. The decline of coal has been, in many cases, because of the rise in natural gas.

  20. HuntingtonBeach says:

    Why The Right Price For Oil Is Between $60 And $70

    Before we get into this topic, let me remind readers that crude oil prices are determined on the global market and natural gas & natural gas liquids (“NGLs”) trade on regional markets. The vast majority of upstream oil & gas companies produce a mixture of these three commodities.

    Crude oil is one of the most actively traded commodities in the world. Crude oil prices are actually set by speculators that trade oil on the futures market. The oil price you see quoted in the business news each day is the front month NYMEX contract for West Texas Intermediate (“WTI”). If you live in Europe, it is the front month contract for Brent. Supply/Demand fundamentals eventually determine the price of oil, but all energy sector investors know that “eventually” can take a long time to arrive.

    Today, the “Right Price” for oil is somewhere in the ……………

    http://oilprice.com/Energy/Energy-General/Why-The-Right-Price-For-Oil-Is-Between-60-And-70.html

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  23. Watcher says:

    Question GOM guys.

    Is a new assay done for each new region drilled? Or maybe better phrased as project. Some lease 150 miles from another.

    If so, does it vary? Not in the context of merely API and sulphur, but rather in product yield. %diesel, naptha, kerosene. Is there variance?

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