469 Responses to Bakken – Has The Bubble Burst?

  1. My latest take on how investments in oil will be impacted by low oil prices, including a graph by the EIA on tight oil and oil prices

    15/2/2015
    Free oil! Next stop free oil crunch
    http://crudeoilpeak.info/free-oil-next-stop-free-oil-crunch

  2. Jeffrey J. Brown says:

    Anyone have average and median Bakken Play production numbers by year?

    In other words, average and median production rates for all wells producing in the Bakken in 2014, and the same numbers for 2013, 2012, etc.

  3. SRSrocco says:

    Ciaran,

    Nice charts. I see you presented 4 Scenarios. I would like to know which one you believe is more likely.

    steve

    • Ciaran Nolan says:

      Steve. Upon reflection – scenario 2 is probably a bit drastic – a 75% drop in the 2015 number of new producers. Perhaps a 40% drop is more realistic and this would keep production flat in 2015 with a slight increase thereafter. See chart below for 91 producers a month in 2015.

      • Dennis Coyne says:

        This looks more realistic to me.

      • SRSrocco says:

        Ciaran,

        Thanks for your reply. However, I may disagree with your chart showing higher production until at least 2022. It will depend upon price, low interest rates and continued BAMBOOZLING of the investing public.

        I see a crash of the Dollar circa 2016 (give or take a year). I don’t think the lousy Shale Oil Economics will be able to weather what’s coming.

        steve

  4. Dennis Coyne says:

    39 new wells per month is very low. It is unlikely to fall below 100 new wells per month. 120 new wells per month will keep output flat.

    • Ciaran Nolan says:

      Agreed. 39 is very low and not realistic in the short term. My model predicts that 91 producers a month will keep production flat i.e. 1093 for the year which is 40% down on 2015. So you need the net number of new producers to be 40% or more lower than 2014 for a production drop by year end 2015.

      The bigger question is how long can producers afford to bring online their best productivity wells when oil prices are at sub-economic one levels. Sustained low oil prices through 2015 will have an impact in 2016 Bakken production and beyond.

      A PDF copy of the presentation can be downloaded at;
      http://www.slideshare.net/CiaranNolan/bakken-production-cjn-feb-2015

  5. Rick Munroe says:

    “Overall average Bakken well rates are now declining/flat at c 100 bopd.”

    Yes, DMR data show a decline in average daily production per well since peak in mid-2012.
    But the decline is from 144 to around 130, not 100 bpd:
    https://www.dmr.nd.gov/oilgas/stats/historicalbakkenoilstats.pdf

    • Jeffrey J. Brown says:

      Last numbers I saw were for an average Bakken production rate of a little over 100 bpd, with a median production rate of less than 100 bpd.

      And that’s the problem I see with tight/shale oil plays working in much higher operating cost areas around the world–median production rates of less than 100 bpd, with a very high decline rate.

      • Rick Munroe says:

        Then I’m puzzled, Jeffrey.

        The DMR stats are very current (to only 6 weeks ago) and go all the way back to 1953.
        The last time DMR shows production under 100 bpd was in 2008.

        Where do you and Ciaran see average/median (ie. total production volume divided by number of producing wells) daily Bakken production now down around 100 bpd?

        • Jeffrey J. Brown says:

          I’m calling an average rate of 130 mbpd a little over 100 bpd.

          My point is that I don’t think it’s realistic to expect that we will be able replace hugely productive conventional wells globally with thousands of quickly declining oil wells with a median production rate of less than 100 bpd.

          • Sam Taylor says:

            What would be the difference between in meadian/mean production figures between tight shale wells and say historical conventional sandstone reservoirs in onshore USA?

            • Are you trying to compare reserves per well for the life of the well, including injectors?

              • Sam Taylor says:

                More flow rates than reserves.

              • I see. But flow rates are highly variable. We must also have to consider the way flow rates were restricted by State agencies in the past. I worked in the USA early in my career, and we had high potential wells producing 10 % of their actual capacity. Sand production and similar problems were also quite serious in some areas, but we didn´t have today´s technology, which meant we kept the wells on choke.

                I haven´t commented much about these topics, but it seems to me gas wells in particular must be getting choked back.

                This usually happens when the gas gathering and treating system can´t handle the full well capacity. My experience also shows it´s inefficient to design for full well capacity in high decline rate gas wells.

                This means one estimates an optimized capacity and then drills and produces wells to fill the treating plant capacity. Or at least that´s what has been done when I was around.

          • Old farmer mac says:

            ”My point is that I don’t think it’s realistic to expect that we will be able replace hugely productive conventional wells globally with thousands of quickly declining oil wells with a median production rate of less than 100 bpd.”

            Doing it might be possible on paper – technically possible – but the cost of it in skilled manpower concrete sand pipe drill rigs housing roads etc etc staggers the imagination.

            The economy is not up to the job.

            But maybe the industry can bring on enough tight oil to string out the bottom dregs of conventional oil a few years and give us a little more time to change our ways.

            IF – and this is the biggest word in the language even if it is only two letters long- oil prices go way up but not so far up as to CRIPPLE the economy – and stay there – long enough for the world to get the message -THEN we would get our asses in gear and start buying subcompact conventional cars and electric cars and quit buying pickup trucks to run errands ..

            My guess though is that oil prices are going to spike and put the economy in the hospital within the next five years or so unless the economy is ALREADY in the hospital for other reasons.

            My five years or so is a SWAG but an oil price spike is as certain as sunrise tomorrow. WHEN is the only question.

    • Ciaran Nolan says:

      Rick – good observation.

      That should have been North Dakota rather than Bakken rates. North Dakota numbers include some legacy conventional wells (5% of production) which when included explain the 140 v 100 bopd difference. The trends are similar / arguably more pronounced if you break out just the Bakken wells. See chart below averages rates peaking in 2012 and declining since then. This is due to a combination of factors; initial rates, overall average age of wells, geology v well completion technology. I see average well age and geology as the dominant factors.

    • Carl Martin says:

      YIKES!!!!!

      No wonder everyone here believes in PO!!! GAWD!

      When in the hell are you people going to learn the difference between ND oil production figures and Bakken oil production figures ???

      Bakken wells are presently producing at 130 bpd. All of ND’s wells are producing at 105 bpd. December, 2014. END OF STORY!

      The article is highly misleading, Many of the facts are indeed correct, but it is filled with mistakes that only an amateur could make. Most of the fear in the article is already (temporarily) out of date. However, I personally believe that oil prices are highly likely to crash again, WTI below $30, for at least a day or two to wake up all the dreamers out there. Therefore, the fear might indeed come back. But, no major company is in any kind of economic distress. They are all hurting, and they are hurting badly, but sorry, there are no serious economic problems reported as yet. A few very small, new companies were once reported to be on the ropes, but all have “apparently” recovered.

      The Bakken discount is a moving target, not a stable figure. The author has revealed that he knows nothing about the economics of this shale play. While almost all individual wells, and therefore most companies are very hard pressed to be able to explain how they can make money at such prices, to say that 100% of all wells are uneconomic at some given price speaks of an unfathomable ignorance of the nature of shale oil production.

      Sorry, Ron, but good attempt. You got a lot of (mostly correct) info out there, but overall the article just doesn’t make it. No one in the investment community would pay any attention to it. Would you like me to write an informative Bakken article for this site? It is already half written.

      • Old farmer mac says:

        I can’t speak for Ron.It’s his blog.

        But you are certainly free to post your article as a COMMENT.

        No doubt all the regulars here will be holding their breath waiting for it.

        • Carl Martin says:

          OFM,

          If you can’t speak for Ron, then pray tell, why are you speaking for Ron? I am quite certain he can handle this offer on his own. He is, after all, a rather capable fellow. But, just curious. Why would you suggest posting an article as a comment? I am a bit tempted to believe that, that is perhaps exactly what you are trying to do with many of your rather long winded comments.

          Why not post your comments as articles, instead? Oh yeah, I just remembered. Perhaps, Ron does not consider your comments to quite be of article status. This is, after all, supposed to be a PO website.

          You might just find a casual aquaintance with a Cognitive Dissonance Song to be beneficial to your well being. If this particular shoe shoe fits you, perhaps you should humbly wear it. http://youtu.be/bp39qSdyTc4

          • Futilitist says:

            Dear Carl,

            I don’t want to speak for Old farmer mac, but you are an ass.

      • Sorry, Ron, but good attempt. You got a lot of (mostly correct) info out there, but overall the article just doesn’t make it.

        What article are you talking about? You are not responding to a comment I wrote and I did not write the post, Ciaran Nolan wrote that. But we need to understand one thing. I really don’t give a flying fuck what the investment community thinks.

        If you want to write a post then give me a copy of it at DarwinianOne@gmail.com. But I post nothing that is aimed at the investment community.

        • Carl Martin says:

          Ron,

          I am very well aware of who wrote that article, and I know it was not you, even though one of your many items was referenced in it. My point was that you posted it, and it is therefore your responsibility, as editor, to be reasonably sure of what was posted was also not blatantly mistrue or greatly misleading to the general public. That said, I believe it is more likely just a case of well known basic Bakken beginner mistakes. Easily avoidable with just a modicum of research.

          Your attitudes towards the investment community are well known here by an insightful and correct analysis of your comments, and do not need to be elaborated upon further. But, it is your bias towards such a community that may just be what keeps you from operating with a completely open mind. Sorry, but I don’t see how any kind of bigotry towards any oil related entity could possibly result in a better understanding of PO for the readers here.

          Thanks for the link. I will consider it. But, I would perhaps rather have a better understanding in place between us before embarking upon anything too ambitious.

          But, my article would likely be titeled, “Towards A Better Understanding Of The Bakken.” It would be expressely written for this site and mostly cover all unknown and misunderstood aspects of the Bakken, that I have observed over the years at various PO sites. It would be specifically directed at filling in all the many holes in the minds of PO enthusiasts to assist in a process of establishing a better form of communication between believers and non believers. As I source most of my information from company websites, it would be very company orientated, but not investor specific. As this would certainly be the last place on earth to push stocks or anything like that, I can assure you that I would have no interest in attempting to do so. I would expect you to assist by editing it to your satisfaction, but then sending it back for my agreement to the editing. No agreement. No posting. Back to square one.

          Here is another video by my favorite atheist, Qualia Soup. Here he tackles the dynamics of closed mindedness. Very insightful. It all comes down to whether one has been operating with an evidence filter, or not. If not, then the truth simply will not penetrate a truly closed mind. That is why it is recommended to “Feed Your Head, Wisely”. Kind Regards http://youtu.be/T69TOuqaqXI

          • Boomer II says:

            As I source most of my information from company websites, it would be very company orientated, but not investor specific.

            There are people here who are actively working in the oil industry and, as I recall, at least one person on the ground in the Bakken.

            Why do you assume that your information, which comes from company websites and is primarily directed to investors and the market, would be better than people who have industry sources?

          • Post it to me and I will have a look.

            DarwinianOne at Gmail.com

  6. Marcus says:

    Great post particularly interested in the stress test hedging profiles of the companies involving.

    Slightly OT, but paging watcher wonder what he makes of the following:

    DOJ requests additional information related to Halliburton acquisition of Baker Hughes:
    http://www.worldoil.com/news/2015/2/10/doj-requests-additional-information-related-to-halliburton-acquisition-of-baker-hughes

  7. Cave Bio says:

    Hello everyone,

    So I am bringing a conversation that I was having with Dennis, Ron, Jeff and Doug forward from the last post. If you want to read the article that began the conversation see the link here:

    This Chart Shows Why the Number of Oil Rigs May Not Matter Anymore
    http://www.bloomberg.com/news/articles/2015-02-13/this-chart-shows-why-the-number-of-oil-rigs-may-not-matter-anymore

    We’ve seen this before, in natural gas. The chart below shows a striking separation between natural gas production, in orange, and natural gas rigs, in blue. The massive increase in efficiency this represents helped fuel the U.S. fracking boom and has led to some of the world’s lowest prices in natural gas, in gray.

    I am sure most here are familiar with the data in the following links. What I am interested in is the graph in the upper right hand side of each page–new well gas production per rig and rig count.

    The assertion made in the article above was that rig production per well was increasing (individual wells are becoming more productive). If true, this may provide an explanation for the fact that companies are still drilling for gas at fairly high rates in the face of very low prices. If you look at the noted graphs in each of these links you will see just that. Rig production flat to declining but production per well going up or staying even. Either way, production per rig is increasing. I don’ have time right now to look at the raw data, but it would be interesting to see just how much more productive each rig actually is.

    Best,
    Tom

    Bakken Region Drilling Productivity Report
    http://www.eia.gov/petroleum/drilling/pdf/bakken.pdf

    Eagle Ford Region Drilling Productivity Report
    http://www.eia.gov/petroleum/drilling/pdf/eagleford.pdf

    Haynesfille Region Drilling Productivity Report
    http://www.eia.gov/petroleum/drilling/pdf/haynesville.pdf

    Marcellus Region Drilling Productivity Report
    http://www.eia.gov/petroleum/drilling/pdf/marcellus.pdf

    Niobrara Region Drilling Productivity Report
    http://www.eia.gov/petroleum/drilling/pdf/niobrara.pdf

    Permian Region Drilling Productivity Report
    http://www.eia.gov/petroleum/drilling/pdf/permian.pdf

    Utica Region Drilling Productivity Report
    http://www.eia.gov/petroleum/drilling/pdf/utica.pdf

    • SRSrocco says:

      Cave Bio,

      And I would like to republish the chart of the exponential increase in LEGACY DECLINE at the Marcellus. In the OCT 2013 EIA Report, the Marcellus brought on 579 Mcf/day of new gas production, while it’s legacy decline was 171 Mcf/day. This was a 29% monthly legacy decline rate.

      According to the EIA’s most recent productivity report issued FEB 2015, new production increased to 792 Mcf/day… a 37% INCREASE. However, the monthly legacy decline is now 621 Mcf/day… or a 263% INCREASE. Now the Marcellus has a monthly legacy decline rate of 78%.

      It doesn’t really matter how efficient they become with their drill rigs, (even though Art Berman tends to believe the efficiencies aren’t that great), when we have these sorts of massive LEGACY DECLINE RATES.

      steve

      • Ken says:

        More completely unnecessary tragedies like the one yesterday in WV and the Exxon facility in CA are the rule rather than the exception because our captains of industry insist on dancing with that disease riddled fossil fuel corpse. Well, ponder this . . . What if Geothermal Assist were made part of the public commons ??? Those trillions of dollars earmarked for additional OM bailout’s to prop them up TEMPORARILY might better be used to start migrating away from fossil fuel infrastructure !!! Every home that has a red banded NG furnace might be better served with real incentives to develop their own Geothermal Assist infrastructure for the long haul rather than replace it with a hard to maintain high efficiency NG furnace with a highly questionable supply !!! You have to have something waiting on the other side of a successful struggle against these fossil fuel Psychopaths.
        Note: Geothermal Assist is not the same as Geothermal. The latter is a High Tech solution that is employed in Iceland that converts volcanic heat into electricity. It’s hyped here as a way to promote our sick and parasitic trickle-up Monetary/Market Economy. It’s at least feasible to require homes to use Geothermal Assist here which is low tech simply harvests naturally occurring heat from about 150′ underground with no burning of anything. Compressors, which have been around for quite a while, are used to squeeze heat out of the water that’s been heated to 57 degrees underground so that you wind up with two tanks of water. One contains super hot water and the other super cold water. Use the super hot water to heat up air and force it into your home with a big fan in the winter. Use the super cold water in the summer to cool your home the same way. I was able to turn off my natural gas service, so they have absolutely no reason from me to sacrifice the 2nd largest forest on earth for that awful tar sands project, and poison our water with that awful fracking, and complete that awful Keystone pipeline that has utter failure written all over it no matter what kind of obfuscation they use to hide that FACT.

        • Old farmer mac says:

          Your geothermal assist sounds a little bit like a souped up heat pump. A system such as you propose would probably cost a million bucks and even then it would not be likely to work much better than a conventional heat pump.
          How about enlightening us with some details ? LOL

          Who builds the tanks to hold the ” super hot ” and ”super cold ”water for instance and how big are the ones at your house? Are they bigger than your house ?

    • Dennis Coyne says:

      Hi Cavebio,

      Eventually the output per rig levels off as the play matures and as the sweet spots run out the number of rigs and number of new wells drilled each month will decrease. As this happens the legacy decline will also become smaller in absolute value. Look closely at the Haynesville to see how this will play out. It is difficult to say in advance when his will occur for the Marecellus, but David Hughes estimates in 2018 or 2019 the Marcellus play will be at its peak and by 2025 it will be in steep decline. There has also been a lot of output from the Utica, but Hughes did not analyze that play in detail.

      • Cave Bio says:

        Hi Dennis,

        I am starting to get the feeling that we are looking at different data. To my mind the Haynesville proves the point. From 2012 to late 2013 there is a big decline in production in response to a decline in rig count that started in mid to late 2010. But during 2014 production starts a small uptick even though rig count stays flat. The difference is the productivity per well. If productivity goes up you can afford to drill those wells even with low prices and, according to the data, hold back decline rates quite well.

        Secondly, the productivity is going up even after a heck of a lot of wells have been drilled! I find it hard to believe that the productivity increase and uptick in production over the past year has anything to do with finally hitting the Haynesville sweet spot.

        Finally, the exact same pattern is seen in every single play–productivity is going up everywhere. That cannot be coincidence.

        Best,
        Tom

        • SRSrocco says:

          CaveBio,

          I believe you are giving way too much credit for the increase of production at the Haynesville due to rig efficency.

          Take a look at those EIA Productivity Reports and you will notice the Haynesville legacy decline rate reduced considerably over the past few years.

          So… it wasn’t so much due to rig dynamics as it was a much lower monthly legacy decline rate.

          Steve

        • Dennis Coyne says:

          Hi Tom,

          Keep in mind this is oil production per rig. Two things happen, as the wells are drilled to hold the lease, rigs need to be moved a lot which makes the rig less productive (a lot of time is spent moving in and putting the rig up (MIRU) and then taking the rig down and moving to a new location early in the plays development. Then they start doing the pad drilling where many wells are drilled on a single lease and the rigs get more productive. In addition as the play gets developed knowledge increases about where exactly the sweet spots lie, so a second effect is that well productivity can increase. These effects together account for rig productivity increases. Note that the EIA’s models tend to overstate the rig productivity increase, at least for the Bakken. Part of this is the failure to account for wells which are waiting to be fracked in the modelling by the EIA.

          From 2008 to 2013 well productivity was fairly steady in the Bakken (North Dakota only), the number of wells completed per rig increased in 2014 and well productivity also increased from May to December of 2014.

          I assume that you see that the Haynesville output per rig flattened around 2011 to 2012 as rig count was decreasing, then output per rig rose more after the number of rigs levelled out and they were focussing on the best remaining areas of the play.

          If your point is that rig count can fall while output can level off for some period (probably 2 to 3 years at most), I agree. At some point the sweet spots run out and the output will decline, but it takes some time for this to happen.

          The key metric is how many wells it takes to keep output flat. In the Bakken it is about 120 new wells per month, possibly only 115 new wells if new well productivity remains at Dec 2014 levels. So a 30% reduction in well completions will lead to almost no decrease in output. The number of rigs can decrease even farther because there are 750 wells waiting to be fracked, even if no new wells were drilled this would be enough for 6 months of 120 new wells per month, if 80 wells were drilled per month during those 6 months, that would be enough for 4 months more of 120 new wells per month, at that point more drilling would be needed or output would fall.

          You are correct that output rises a little with the rig count flat, this could be increased rig efficiency or increased well productivity or a little of both.

          I agree that output can remain flat for a time or even increase a little as it has in the Haynesville (the down arrow on production confused me).

          In part the comment should have been aimed at Steve, because part of my point is that legacy decline will peak for the Marcellus just as it did in the Haynesville.

          I expect at the point output will level off for a bit. How long this lasts depends on drilling rate. For the Haynesville the new “plateau” could last for a while because they are only running 50 rigs rather than 250 rigs (maybe 35% of the number of new wells compared to peak) so the sweet spots could hold out longer( probably about 3 times longer because they are drilling wells only 1/3 as fast).

          • Carl Martin says:

            Very well said and explained, Dennis. There is much unnecessary confusion in this very area. Too much mis-information has been circulating around this site for far too long. It will be a daunting task to get everyone here up to speed. A lot of people here should only be asking questions, as they really do not know anything at all.

            • Boomer II says:

              Too much mis-information has been circulating around this site for far too long. It will be a daunting task to get everyone here up to speed.

              So you’ll be posting lots of technical info to get everyone up to speed?

              • Carl Martin says:

                I mostly post comments here, that are based upon information gleaned from company websites. So, any arguments you might have with such should be directed to the companies themselves. After all, it is them you are ultimately in disagreement with, not I. This is why no one here can ever prove me wrong. I merely source the best possible source of correct information, company websites. I don’t think much of it is very technical, but it is possible that I have simply become more accustomed to technicalities over the years, and no longer even consider them as such.

            • Cracker says:

              Carl,

              I enjoy your comments, but the snarky nature generally leaves me wondering what you are trying to communicate, other than perhaps you think you are smarter than everyone else?

              I think you should finish your article on the Bakken (mentioned above) and ask Ron to publish it here. Please share your superior intellect and knowledge with the rest of us fascinated observers. Thanks in advance. Oh, if it involves investment advice, you’re probably wasting your time here, and I hope Ron rejects it.

              I’m always interested in learning, albeit preferably without an overbearing, superior attitude from the teacher. You’ll catch more flies with honey than with vinegar. Snark just makes people dismiss you without considering your messages. Please, be nice, and share your message. I’ll read it, and reserve the right to make my own interpretations.

              • Old farmer mac says:

                Ron has a sense of humor and I am pretty sure he will allow Carl to post his article as a comment or series of comments.

                I for one eagerly await enlightenment. LOL

              • Carl Martin says:

                Cracker,

                That was all perhaps very well said, but I think you should try some reverse psychology to better determine exactly WHO is acting superior here. I do hope you are aware of the fact that one of the primary reasons why an otherwise generally ignorant person would become interested in pursuing PO theories in the first place is the very promise intrinsic to PO, that by simply believing in it, one automatically becomes “smarter” than the CEO of Exxon, because he doesn’t yet realize that PO is upon us, but the true believer does.

                I think you need to also consider the fact that PO is a belief system, a religion, and a cult, simply by definition. It is in direct opposition to science. It is considered to be nescience. For the record, I do not merely think that I am smarter than everyone else here, I KNOW IT!!!

                While surely that must sound extremely arrogant to you, keep in mind that this is a debate between science and religion. I am on the side of science, not religion. That is what makes me smarter than any others here. I simply know that science ALWAYS trumps religion, and not the other way around.

                Everything to do with PO is in fact future related. It is paraded about with great gusto by people who are absolutely convinced that they are 100% right, simply by the fact that they cannot ever be wrong. That, my friend, is extreme arrogance, which is not what I practice here.

                As to my general tone, you do also need to consider the thickness of the very heads I am trying to crack. If I can only get a response at this site by using ugly tones, what does that tell you of the general level of intelligence of the participants?

                At a previous PO website, TOD, a considerable part of the problem was too many bullies ganged up together to make life so unpleasant for any reasonably minded fellow like yourself, to cause a brain drain of great proportions. This greatly contributed to the demise of TOD, and I do not want the same to occur here.

                And, finally you need to simply consider the possibility, that I am indeed right in all that I say, and that all who oppose me are therefore in the wrong. What then? As power issues are always getting pursued by those who feel they are losing their power, exactly who do you feel is losing their power here? It is anyone and everyone who is losing these debate.

                PO is getting destroyed by oil so cheap and easy to get these days, that prices between $40-$55 aren’t enough to strangle over production as yet. The problem, as always, is that reality is just having an increasingly difficult time keeping up with ongoing PO fantasies.

                • Boomer II says:

                  I think you need to also consider the fact that PO is a belief system, a religion, and a cult, simply by definition. It is in direct opposition to science. It is considered to be nescience. For the record, I do not merely think that I am smarter than everyone else here, I KNOW IT!!!

                  I think you are heading into troll territory here. You haven’t posted anything to back up your claims about knowing so much about the future of oil.

                • Futilitist says:

                  Dear Carl,

                  WTF!? You haven’t even presented anything yet, except your massive arrogance.

                  Blowhard.

                  • Boomer II says:

                    Can we start treating Carl as a troll? If not actually banning him, at least ignoring him?

                    He hasn’t say anything of value. All he’s done are make provocative statements and they seem to be more extreme as he goes along.

            • Mr Martín, I can give you constructive feed back if you wish, after you write something.

              • Carl Martin says:

                Fernando,

                You are a PERFECT example of all that I write about here.

                You have just written essentially NOTHING, yet expect others to honor you for this, so you can in turn dishonor anyone else who then does exactly what you, youself, just did.

                I offer your behavior as PROOF of the coming demise of all PO fallicies. This is what the forum degenerates into when you are left with absolutely NOTHING of value to say. It is all because, YOU SIMPLY CANNOT PROVE ME WRONG SIMPLY BECAUSE I AM RIGHT; AND YOU ARE WRONG, AND YOU KNOW IT!!!

                So now that I have written something,…. your constructive feedback please? Of course, everyone here believes you that you simply didn’t notice the recent deluge of comments here by me.

                It might be high time to just get a wee bit real. Wouldn’t you say? You do not seem to be in touch with yourself at all.

                • Futilitist says:

                  Dear Carl,

                  “YOU SIMPLY CANNOT PROVE ME WRONG SIMPLY BECAUSE I AM RIGHT; AND YOU ARE WRONG, AND YOU KNOW IT!!!”

                  No one can prove you wrong simply because you haven’t actually said anything yet.

  8. Jeffrey J. Brown says:

    From my previous posts:

    Some interesting exponential rate of change numbers for the Marcellus.

    Total production increased at 23%/year from 10/13 to 2/15 (estimated), while the volume of the legacy decline increased at almost 100%/year from 10/13 to 2/15 (estimated). Basically, the volume of the legacy decline is estimated to be increasing at about four times the rate of increase in the volume of total production.

    And as I have periodically noted, based on the Citi Research estimate* of a gross underlying (legacy) decline rate of about 24%/year from existing US gas production, in round numbers the industry has to put on line the current productive equivalent of the Marcellus Play, every single year, just to maintain current production.

    *Supported by the observed net decline (net after new wells) in Louisiana’s gas production from 2012 to 2013 (21%). At the 2009 to 2012 rate of increase in Louisiana’s shale gas production, it would have equivalent to total US gas consumption by 2017, and total global gas consumption by the year 2020.

    • Cave Bio says:

      Hi Jeff,

      You have been pointing out these data for a number of years, and your posts are one very big reason why I have been convinced that we would see obvious declines in natural gas by now.

      But my point at the moment is that I am only interested in empirically verifiable data. See my post to Dennis above. Haynesville production began a slight increase in 2014, even though rig counts stayed flat. Productivity per well went up, and I don’t think anyone could make a reasonable case that the reason is that the drillers finally found the Haynesville sweet spot. This same pattern of increased productivity per well is seen in each play. That can’t be coincidence and must to some degree explain why gas prices are so low and why drillers can afford to continue to drill at these low prices.

      Best,
      Tom

      • SRSrocco says:

        CaveBio,

        See my comment above.

        Steve

      • Jeffrey J. Brown says:

        Excluding the Marcellus, I believe that the balance of US gas production would be in decline, and as noted above, we need to put on line the current productive equivalent of Marcellus production, every year, just to maintain current production.

        And based on EIA data, operators need to put on line about 7.4 BCF per day per year of new gas production in the Marcellus, just to maintain current Marcellus production. Or, Marcellus operators need to put on line about 10% of current US total dry gas production, just to maintain current Marcellus production.

        • shallow sand says:

          To see what happens when drilling stops in a gas field, take a look at the Hugoton Gas Field production in Kansas. Kansas has easily accessible public data.

          Drilling virtually stopped there about 15 years ago and production is off by 2/3. And this from a shallow, conventional gas field noted for low decline rates.

          • shallow sand says:

            Would also note the top 100 Marcellus gas wells have all produced over one million boe. How many “shale” oil wells have produced over one million boe. Might make for an interesting comparison. (using 6:1 ratio).

            • To compare their cash flow it’s better to use 16.

              That yields about 375+ kboe. They aren’t really different if we compare using earning potential.

              • shallow sand says:

                That is probably a better ratio to use, gas prices in the US have been very low for quite awhile, such that the common 6:1 ratio may be obsolete.

                I have little experience with gas production, so I will definitely defer to others. I note the stat I quoted re 1 million boe is not EUR, but production to date.

            • coffeeguyzz says:

              Hey, shallow, you just hit upon something I’ve only very recently come across as I’ve just starting checking out the Marcellus/Utica play more closely … namely the absolutely incredible productivity of these wells! Several companies are claiming EUR’s of 2.1-2.5MMBOE!! And these are with 5,000′ laterals!!
              I have NEVER seen projected returns even remotely resembling these figures. And people wonder how they can keep drilling with such low prices? Check out the companies’ presentations and after filtering out all the “no ugly babies in the maternity ward’ atmosphere, these guys have an off the chart resource up there in PA/WV/OH.

              • shallow sand says:

                coffee. That is why I suddenly became so interested in the EFS, Williston Basin, etc. I saw the Marcellus put the hammer to most conventional natural gas production. Having conventional oil production, my concern is whether the shale oil will do the same.

                Much remains to be seen, but at this point it appears the oil basins are not as prolific as the Marcellus.

                However, even the Marcellus is largely not profitable with its gas fetching between .58 and 1.30 recently. Not surprisingly the rig count there has dropped.

                One thing about US production has not changed since the civil war. Companies will never take a measured approach to a major discovery. Instead, there is a drilling frenzy which crashes the price, lowering profit potential substantially. That fact is good for oil consumers.

                Many times those who drill the wells do not make the money, it is those who come in and buy the settled production and undertake the “boring” task of operating it.

                However, not so sure shale will be the same. Too soon to know where the wells will settle out. If those Bakken wells settle out around 50-75 and decline 2-4% thereafter, they will be money makers. If not, many may be plugged 2025-2030. Will depend on crude price, which will depend on many factors.

                • coffeeguyzz says:

                  Shallow, yes, and as always, I wish the best for you.
                  To respond to your original query ’bout Bakken (or any other shale oil well having an EUR of 1MMBOE, no way. Closest is some Parshall wells and – possibly – some Springer wells getting near that output decades down the road.
                  The Marcellus/Utica production is almost unbelievably huge.

                • Shallow, as you know, gas will flow better in lousy rocks and hydraulic fractures. A medium rich gas condensate (say 30 bbl per mm) is probably optimum. A very light oil with a lot of solution gas is second best. This means the best candidates, if we exclude well cost considerations, are over pressured, hot, filled with gassy low molecular weight fluids. This is why some tight zones never pan out, the oil is too viscous to flow in a very tight reservoir, and water saturation is too high.

          • 15 years at 0.074 decline rate, that’s lower than average.

            • shallow sand says:

              Yes, Hugoton is the only gas area I have experience with, and that experience is minimal. Just pointing out that if we are looking to get production of oil up to 100 million bbl by 2025, will need a ton of drilling and completion CAPEX.

              • The industry won’t reach 100 mmbopd by 2025. The information agencies will hide the fact by including NGL, biofuels, and synthetics from gas and coal. If I were an oil company I would secure a contract to buy a long term coal supply in Colombia, build a coal to liquids plant on the coast near Santa Marta. By then it will be badly needed.

        • Toolpush says:

          Jeff,

          “Excluding the Marcellus, I believe that the balance of US gas production would be in decline”

          If we excluded Marcellus, I believe the price of nat gas would be a hell of a lot higher than it is today, and therefore the sudden drop drilling activity that occurred in Haynesville and like, would not have happened. I can’t say if US gas production would be growing today or not, but the market price would would be a lot higher, and the older shale plays that are currently in decline due to lack of drilling, would be producing a hell of a lot more gas than they are currently.

          • Jeffrey J. Brown says:

            The EIA put Louisiana’s shale gas production (gross withdrawals, presumably mostly from Haynesville Shale Play) at about 6 BCF/day in 2012.

            At the 2009 to 2012 rate of increase in Louisiana’s shale gas production, they would have been at about the following production levels by year:

            2013: 10 BCF/day
            2014: 17
            2015 : 29
            2016: 83

            Current US dry gas production is at about 73 BCF/day.

          • Dennis Coyne says:

            Hi Toolpush,

            You assume that there is more natural gas in the shale plays than there is. If there has been more drilling in the other shale gas plays due to higher prices, they would have stayed at there peak level a little longer, but they would have run out of room in the sweet spots more quickly and the decline in new well EUR when they moved out of the sweet spots would be very fast maybe 15% per year. Field decline would be very steep.

            Along with David Hughes analysis, there is the following from Bureau of Economic Geology at UT

            http://www.beg.utexas.edu/shale/docs/OGJ_SFSGAS_pt2.pdf

              • toolpush says:

                Hello Dennis,

                I have not had a chance to read your links as yet, but I will. But my basic premise is, there is a lot more gold at $2000 an ounce, then there is at $500 an ounce. At $10,000 and ounce there will be a lot more than at the current $2000 an ounce.
                The early gas shale plays started life at $10 to $13 mcf. There were approx 1500 rig drilling for gas. Marcellus comes along, supply out strips demand, price drops to 20% of what is was and the rig count drops to less than 500. The early gas shales are pushed out of the market, with Marcellus production is only being limited by takeaway capacity, while continuing to increase production in a local price environment of $1 to $2 mcf.
                Once Marcellus production rate is challenged, the price will rise. Don’t you think with a rising price the earlier shales plays will come back to life? Credit availability not with standing.
                The early shale plays did not stop producing because they ran out of $10 gas, they just ran out of $2 to $3 gas.

                Now if the Shale oil companies can increase production at $45/b like the gas plays did with low Nat price, then I may have to change my opinion of them as well, but I doubt it, and unless we get a sudden increase in the price of oil I see their production falling. The opposite happen with gas and that is why it is different.
                With your time frame of Marcellus production falling in the next year or two, we will not have long to wait to find out.

            • toolpush says:

              Dennis,

              I had a read. It surprises me how inelastic they believe gas is to a rising price. They have only about 20% more $10 gas, than $3 gas. It reads as though they believe the rig count from 2011 dropped from 80 to 10 due to running out of places to drill, and the fact the price dropped from $10 to $3, had nothing to do with it?
              We will have to wait and see the result, if the gas price heads north again, which you seem to be predicting, with the demise of the Marcellus in the next year or two. In a way I hope you are correct, as it will help my Aussie LNG shares, but I will not be holding my breath.
              It is interesting comparing Barnett and Fayetteville, to Haynesville. Barnett had the rig count drop of 80 to 10, Fayetteville went from 30 to 10, but both have basically had a very slow steady decline. Meanwhile Haynesville went from 159 down to 40 rigs drilling but production has dropped by nearly half. Maybe Haynesville had more of the gold rush mentality, or is it just the geology that allows Haynesville such a sugar high? 40 rigs drilling does seem to be its stable drilling rate for 4 bcf/d in Haynesville, while Barnett is stable at the similar amount, with only 10 rigs drilling?

              I know economist live in a fantasy world, and believe the invisible hand will cure everything. On the other hand geologists have to learn to allow for the human effect to come into their calculations. The two camps need to work together, and not just throw insults and reports at each other from 20 paces.

              • Dennis Coyne says:

                The Bureau of Economic Geology sounds likeit would have both economists and geologists, but I am not sure that is the case.

                You are correct that a balance between pessimism and optimism needs to be struck. In my opinion the BEG (Bureau of Economic Geology) and David Hughes strike that balance nicely.

                Economists will often make unrealistic assumptions, such as “suppose the oil price rises to $1000/b or natural gas prices rise to $100/MCf”, then we will recover x barrels of oil and y CF of natural gas.

                Higher prices will make some wells profitable that were not before, but those wells are not very productive, and they are not unlimited. There are diminishing returns to technological improvements, they are not magic, though sometimes economists assume the reverse.

                • Striking a balance for the sake of striking a balance makes no sense whatsoever. If you are firmly convinced of one position or another, and have the evidence to back it up, then backing off that position for the sake of striking a balance… Jesus, are you serious?

                  • Dennis Coyne says:

                    Hi Ron,

                    Did I imply that a balance should be looked for, just for its own sake? That was not what I meant.

                    Let’s just say that there are some parts of economic analyses which are sensible and some parts of the geologist’s perspective which are reasonable. When we take these “reasonable” sections of analysis and put them together, we get something like David Hughes work (Drilling Deeper) which I thought was an excellent (and balanced) analysis. Possibly you disagree.

                    The future is uncertain. There are pessimistic scenarios of what the future will look like and there are more optimistic scenarios of the future. In my view a realistic analysis looks at both the pessimistic and optimistic scenarios and considers that some of the pessimistic stuff may occur and that some of the optimistic stuff may also occur and that reality may well lie somewhere between the optimistic and pessimistic visions of the future. Bottom line, nobody knows, or not me anyway.

                  • Futilitist says:

                    Dennis,

                    You have a strong optimism bias that is very evident in all of your posts. When you arbitrarily designate a scenario as “pessimistic” or “optimistic”, you are just applying that bias. Thus, when you decide to weigh the relative merits of various scenarios based on this bias, you are not being “realistic”. You just think you are.

                • MBP (ManBearPig) says:

                  The BEG has geologists, engineers, economists, as well as a large number of grad students providing data for study. For those interested in the oil bearing geology of the Permian Basin, the BEG has published a substantial number of papers on the subject. I have a couple of the Reports of Investigations on my desk right now, it’s good stuff.

              • Dennis Coyne says:

                Hi Toolpush,

                My guess on the Marcellus is the same as Hughes, a peak in 2018 or 2019, so 3 to 4 years from now. I also think high natural gas prices may keep Marcellus output on a plateau for a couple of years, maybe until 2021 or even later.

                I expect World Natural Gas to peak in 2035 or so and US natural gas prices will rise to the World level after 2016 or 2017.

        • Carl Martin says:

          Sorry, but I don’t know how anyone can possibly be talking about Marcellus/Utica shale gas going in decline anytime soon. Try going to the following company websites to see who is doing what and why. The main sweet spot is located in the SW corner of Pennsylvania, and stretches from there down through northern and western West Virginia, and slightly over into Ohio. At that point the Utica sweet spot starts showing up a bit towards the west. This is the oil window of the Utica. There is also a semi sweet gas only spot stretching from Pittsburg up through central and northern Pennsylvania.

          Expect heavy downward pressure on NG prices for at least one year, even though most operators are strongly holding BACK production. Peak Marcellus? You have to be kidding!!! The problem is a general lack of takeaway capacity, not geological restraints. It will be boom time for at least the next five years. To locate and understand this play, you will need to go to the following company websites. AR, EQT, RICE, SWN, ECR, CNX, COG, GPOR, MHR, and CRZO. I have recently begun to invest in some of them, and intend to invest in all of them by the end of 2015. It is just the Bakken all over again, except that it’s mostly gas, but the focus is more and more upon liquids. It is a stacked play just like all other shale plays. The party has really only just begun. Like the Bakken, it is still in it’s infancy, and the future production cannot be predicted at present. There are just too many wild cards. Dream on, but try doing some actual homework first. It’s not that difficult.

      • Dennis Coyne says:

        Hi Tom,

        Some of the “data” in the drilling productivity report is not really data, it is a model based on the assumptions of the EIA. I have looked closely at the “data” from these reports and they do not match well with the “data” from the NDIC. I choose to believe the NDIC data and am not convinced that the Drilling productivity report is empirically verifiable.

        Also, nobody is claiming that they have just found the sweet spots in the Haynesville. The point is that they know where the best places to drill are, and those are the only places they are drilling due to low prices, this makes the average well productivity increase. As a logical proposition I am sure you realize that will not go on forever, in fact there are other shale plays that are declining (Fayetteville and Woodford). When the decline will occur, I do not know. Have you read Drilling Deeper? David Hughes thinks the Shale plays will peak around 2016 to 2018 (accounting for other plays Hughes did not analyse such as Utica). I do not follow natural gas very closely, Steve Mohr thinks World natural gas will peak by 2035.

      • TechGuy says:

        “But my point at the moment is that I am only interested in empirically verifiable data. See my post to Dennis above. Haynesville production began a slight increase in 2014, even though rig counts stayed flat.”

        Wells may have been drilled many moons ago, but fracked and connected to Pipelines well after the rigs have left. The uptick could be that there were large number of well drilled in 2013, but not completed for production until 2014.

        • coffeeguyzz says:

          Tech guy, all this info is usually readily available for free with a few clicks of a mouse …
          Haynesville well status from Feb. 2014 to Jan. 2015 …
          Total wells 2,521/2,695
          Producing wells 2,308/2,402
          Drilling 36/29
          Waiting on Frac/Test/Other 135/167

          There are over 2,000 spacing units in this play with 4/6 wells projected per unit as per the potential resource recovery.
          These wells are about 11,000′ vertical depth. When operators in the Marcellus/Utica drill 11,000′ deep(vertical depth), they are likely to access THREE productive zones … the Upper Devonian, as well as the Marcellus and Utica.
          As toolpush (as well as shallow) was pointing out up above, the Mighty Marcellus is ‘assing out’ just about every gas producing play in the USA.

          • Mike says:

            Mr. Coffee, you must work for Ultra, or the Benevolent Society of Utica Gas Producers.

            What exactly is “assing out” just about every gas producing play in the US getting you guys up there in that part of the world anyway, besides 75 cents per MCF I mean? The Marcellus and Utica is essentially hundreds of miles from the most populated areas of the country, most of which is freezing its collective ass off at the moment, yet there are over a thousand “Mighty Marcellus” wells shut in because there is no take away capacity for the gas. The only meters that are running up there are the ones counting the accrued interest on all that borrowed money it took to drill those “monster” wells that, I am told, decline at the rate of 1% per 24 hour period. Popcorn farts come to mind.

            It does not make a whole lot of business sense to me to borrow money to drill wells, then shut those wells in. That seems really, really stupid to me, actually. Big IP’s aside, down here in Texas we think the oil and gas business works only when the mullah is good. If there is no mullah, it no worky at all.

            At some point the shale gas industry needs to admit to itself, however painful that might be (Dr. Phil can help with that), that’s it’s of control spending spree has actually driven the price of gas down and now made ALL gas uneconomic to drill for, everywhere in America. In other words, it kind of shot itself in the foot.

            Kind of like the shale oil industry.

            Mike

            • shallow sand says:

              I’m not going to be too hard on coffee because I think his comments focus more on technological aspects than other matters, such as economics. I assume he agrees that Marcellus wells will never pay out at $1.00 gas, just like Bakken wells will never pay out at $40 oil.

              I don’t know what it costs to drill and complete a Marcellus well, nor am I aware of the operating expenses. However, 2 million boe EUR over say 20 years grosses $12 million, which is not going to cut it IMO.

              If the shale companies were all private companies, how many wells would be drilled in either the oil or gas shale areas right now? Could someone point out private companies that have drilled or are drilling the “shales”? I am sure there could be some, but not too many.

              In addition to the shale wells costing big bucks, which limits private company participation, it has largely been developed with the idea of enhancing share price, not generating distributable cash flow. At what point will the pure shale companies be in a position to pay dividends?

              I wonder what the long term plans of these companies are? When do they stop borrowing and start paying down debt? Or is the long term business model to never pay debt principal and hope to just keep growing production? What happens to them when the locations are drilled up?

              They have focused on pretty narrow areas. This is ok when you are small, private and have low decline production. Doesn’t seem like a good long term business plan when you are a public company with billions of debt, none of which you plan on paying in the next ten years. They have divested of some solid low cost low decline production to throw it all at shale. They better hope someone figures out some secondary and tertiary recovery methods that are economic.

              One would think that maybe something has been learned from the gas bust. Or maybe not. The business model of public companies is more concerned about quarter to quarter and growth above all else, so the fact that they drill wells at the worst possible time should not be a surprise.

              • Does exxon project finance their Bakken investment?

                • shallow sand says:

                  I do not know how Exxon and other major integrated companies finance shale. There are many companies that have multi-billion dollar market caps, owe multi-billion in long term debt, and are exclusively or almost exclusively in US shales. I was referring more to them and should have been more specific.

                  One that I look at quite a bit is Continental Resources. It was a private company for many years, and has grown tremendously. I cannot argue with the success Continental has had in increasing market cap. They sold all conventional production and from my reading are developing shale reserves in three areas, Bakken, SCOOP and Cana. They are considered to be one of the strongest “shale” companies. They have went from one hundred forty million to 6 billion in long term debt in less than ten years.

                  It will be interesting to see where they and the others end up. I am not going to pretend I know the answer, because I don’t.

                  • Shallow sand, I used to work for a very large multinational. I think their strategy was fairly orthodox: the idea is to keep debt low enough to keep top rated bonds. For simplicity’s sake, say 30 % debt to equity. The stockholders are said to target 8 % return between dividends and price appreciation. If bonds pay 6 % then we can set PV7.5 as the RISKED hurdle rate. Management doesn’t trust the ranks to risk properly, so they hike the hurdle to 10%. To keep it simple, it’s as if we impose a 10 % interest on internal “loans” .

            • coffeeguyzz says:

              Mike, I’m glad to see you post on this board and hope you are doing okay.
              To briefly address some of your points …
              I am now and have been for the past several decades self employed. Prior to that, I worked for a decade as a commercial diver, with three of those years spent on offshore oil rigs – mostly exploration, some production.
              The Marcellus/Utica output has taken virtually everyone by surprise, increasing from about 2 BCF/day in 2009 to 16+ BCF/day last year. With over 30,000 square miles in Pennsylvania currently permitted for drilling, the operators have had to drill extensively to hold their leases. There has been nowhere near the pipeline capacity built to take away the production due, in no small part, fraudulent drama being passed off as science to frighten the now freezing masses. Tough shit.
              The decline in output from existing Marcellus wells is significantly less than other shale plays. According to an analysis from some outfit, Morningstar, that analyzed 6,000 wells, three counties, Greene, Susquehanna, and Wyoming, actually INCREASED output 6 months out from their initial IP (by 10%/30%). One of the so-called monster wells, Rice Energy’s Bigfoot 9H -24hr IP of 42MMCF – produced over 2 billion cu. ft. in its first five months. Wouldn’t recommend lighting a match downwind from that popcorn fart.
              Top ten most productive Pennsylvania wells, producing between 10 and 13BCF, earned about $350 million combined, and paid out almost $50 million in royalties.
              This most disruptive of all these unconventional plays is affecting many, many people in many ways, frequently adversely.
              Somewhere along the way I heard a guy say “Adversity doesn’t build character … it reveals it”. Hang in there, Mike.

              Gerard

              • Mike says:

                Gerard, I

                • Mike says:

                  Gerard, I….got started then hit the wrong thingy on the keyboard.

                  I understand that you have an oil and gas background and I respect that. I worked with divers occasionally in the well control business and they are a hardy lot. Big huevos.

                  I find it curious that anybody would chose a peak oil blog to tout the merits of shale oil, or shale gas, particularly now, when it has its pants down around its knees, its hands overs its privates, but so be it. I don’t think you’ll change too many folk’s opinions around here with big IP numbers, however. Its a pretty savvy bunch. You are definitely passionate about your beliefs, sir.

                  The real oil and gas business, not to be confused with the internet oil business, is very difficult at the moment; we are all working 24/7, confused about the direction of prices, and having to watch every penny we spend, right down to washing poka dot gloves every evening to wear them again the next day. I am contouring structure maps one day and digging ditches the next. I have had 50 good men ask me for work the past 3 weeks, all coming out of the stinking shale business, with little hope for the future. It breaks my heart. The iron down in Texas is stacking up. But I have been thru this numerous times the past 50 years; we’ll make it. Thank you.

                  As you can clearly (lol) tell, I am not a fan of the stinking shale business. Somebody told me a few months ago that was actually two words; I am trying. I think the stinking shale business has mismanaged my countries limited hydrocarbon resources in a very bad way. It took advantage of cheap money, little risk, absolutely no regard for conservation practices, and drilled itself into a 9 line bind, in my learned opinion. It lied to the American public, misled its work force, borrowed money it cannot pay back and helped drive the price of both oil and natural gas down to levels that will ultimately hurt, not help Americans. Now its all unraveling, I think for good, as anybody that would continue to loan money to the shale industry is as dumb as an elevator bail.

                  If that wasn’t enough, to sustain itself the “Mighty Marcellus,” needs to ship all of its gas to Louisiana for LNG exports. Dickheads in the Bakken and Eagle Ford want to export condensate to stay on their drilling hamster wheels; how does selling American resources, cheap, to buy them back tomorrow, from people that hate our guts and want to kill us, help America? It doesn’t. It is stupid. Harold, are you listening, bro?

                  I am reminded of numerous times in the history of oil and gas in the United States where an unregulated industry drilled itself literally into oblivion. The development of East Texas Field, comes to mind. More recently, the shale gas industry imploded from over drilling and the corresponding collapse of gas prices. My industry cannot seem to keep from making the same mistakes again, over and over. It gets caught up in it own bullshit far too often. The shale industry needs to be regulated, truthfully. Some form of proration allowable, like the old days.

                  I have backhoe work to do, that’s my OP ED for the week.

                  Mike

                  • Boomer II says:

                    Thank you.

                    I am warily eying shale drilling in my location and the reasons you have given are why I hope my state goes slow. I don’t want to see the disruption to populated communities for what may end up being a fly-by-night operation.

              • I wonder if the have looked into drilling wells with tie backs to allow multiple horizontal wells from the same vertical hole?

                • Mike says:

                  Already doing lots of that, sir. Opposing laterals in big intermediate strings, stacked laterals also.

                  M.

                • Mime, why does the Marcellus gas have to ship South to Lousiana? I don’t get it.

                  • Mike says:

                    It’s Mike and you should probably ask the ranking adult. I am quite certain he will know the exact answer.

                    I suspect, however, its because the NE is fully supplied with Canadian gas and the only place to send this shale gas stuff is to the Gulf Coast where numerous LNG projects are under way. That will require some significant take away capacity, yet to be built. Right now, there’s lots of wells shut in. Its kind of like jumping off a diving board without making sure there’s water in the pool, IMRO.

                    M.

                  • Sorry, I have a multilingual spell checker.

                    I suspect you would see a company with Marcellus gas swap volumes to enter the available market, and gas from offshore and onshore near the LNG liquefaction facility will be exported.

                    If the Marcellus gas develops a long term track record the pipelines will be built. I have experience plannng large developments and I would be more worried about the gas plants and the NGL shipping lines. Shipping NGL can be dangerous.

            • Puffalar (Your Five-Alarm Puff) says:

              “Popcorn farts come to mind.” ~ Mike

              You could flare them and call them snap dragons. ^u^

              • Carl Martin says:

                Certainly sounds like there is a lot of discontent out there, not to mention disagreement. But when two or more people cannot agree about whether shale gas is presently, or for that matter once was, a boom or a bust, then perhaps some actual communication would be in order. But, I notice the same general grouping of individuals into believers and disbelievers in the allegeded shale gas boom, either now, or even once upon a time. Surely the past can be agreed upon. Can it not?

                This is only a typical peakoilbarrel commentary between one group of people who get their info directly from the horses mouth, and another group who seem to prefer the other end. The only way to get this new/old shale gas thing straightened out is for the ignorant to simply educate themselves by going to the company websites to read what the people with their boots and money on the ground are actually saying. I give you all my written guarantee, that you will not ever be quite the same once you realize what is actual going on with Eastern shale gas production. It actually puts all western shale OIL production to shame, so it’s hardly even worth comparing it to western/southern shale gas production.

                Homework time boys. Your bluff and bluster is extremely silly and so easily seen through, as usual. This is supposed to be a web site for adults.

                • Boomer II says:

                  The only way to get this new/old shale gas thing straightened out is for the ignorant to simply educate themselves by going to the company websites to read what the people with their boots and money on the ground are actually saying.

                  People here do go to the company websites, but info that is put out to investors is not necessarily what the non-investor numbers says.

                  While some investors may be expecting boom times ahead, many people here expect that the investor money won’t be flowing like it was in the past.

                  There is far more research going on by the people who post here than you realize. The reason they aren’t citing the same sources you are is that they don’t believe them.

                  • Carl Martin says:

                    BOOMER II,

                    “The reason they aren’t citing the same sources you are is that they don’t believe them.”

                    There you go again. Key word, BELIEVE. You have just inadvertantly proven my point that PO is a belief based system.

                    Notice that you did not use the scientific word PROVE. When you PROVE these companies wrong, then I will readily accept your proof. I do not accept your belief, or lack of, in anything!

                    Get a grip! Lighten up! I am not your enemy. The truth is!

                • Caelan MacIntyre says:

                  Carl, the human species is drowning in a sea of complexity of their own collective making. If they can’t rely on their specialist/expert/crock-of-crony game-players for the real dirt, then we have no game… or at least nothing worth playing. Just a collective snap-dragonning and flopping over each other with some trying to make it look like they know what they are doing. And that we should all be in that game that scores against itself.

                  • Carl Martin says:

                    Gee Caelan,

                    Does all your empty verbosity happen to have anything to do with the fact that US oil production is rapidly increasing, when according to PO theory it is in terminal decline? Please elaborate a little clearer. I can only speak English. Many here are using their second language. How about some consideration?

                  • Futilitist says:

                    Dear Carl,

                    You are way out of line here. I am pretty sure I would punch you for that if we weren’t on the internet. You are a total asshole.

                • shallow sand says:

                  Carl, I have opinions regarding shale but I try to keep an open mind. My goal has been to try to get to the truth regarding shale oil production, as I am trying to figure out if it renders my conventional production worthless, or nearly so. I have not paid as much attention to shale gas, but I do pay attention because I realize it can displace some oil.

                  I’d welcome your facts and views. Just try to avoid the personal stuff. In another life I’ve had to deal with cocky people, and it is big turnoff.

                  You said above the shale companies are not in trouble. This may be true if this commodity crash is short term. However, if this is a 1986-1999 slump, I think they are.

                  I have tried to compare shale oil wells to the small stuff I am familiar with. I have made the point that shale oil wells are roughly 100 times the cost to drill and complete as our stuff in an old depleted field, but yet most do not appear to have an EUR 100 times our stuff. I realize the scale is a big deal, as is the fact these are primarily resource plays that are somewhat more predictable.

                  I just know we aren’t interested in drilling $70,000 wells that will produce 1,500 to 4,000 barrels of oil in five years at less than $50 wellhead, let alone with borrowed funds. So that is why I wondered why others would spend $7 million to drill five year of 150-400 thousand barrels at the current prices.

                  Based on rig count numbers, maybe they aren’t. In any event, let us know what info you have.

                  • shallow sand says:

                    Just read EOG not interested in growing production in a low price environment.

                  • toolpush says:

                    Shallow,

                    I see EOG are only planning on completing 25 wells this year in the Bakken. They currently have 6 rigs listed on the ND drilling page, of which they are very tardy in updating as moct spud dayes are still dated 2014. Either they plan to cut back to 1 or 2 rigs, or plan to drill but not complete a heap.
                    It seems a few companies are saying it is better to drill and wait rather than cancel the rig contracts and not drill.
                    It will be interesting to see how it all pans out, but by ND rules, they only have 12 months to sit on a drilled non completed well. It seems a fair bit of money is being placed a short down turn?

                  • Carl Martin says:

                    SS,

                    CLR has moved their whole Bakken show from the periphery to the core of the core, and only drill +800,000 boe EUR wells. Costs are going down, but not greatly so yet. They are using almost exclusively coiled tubing fracks now. These greatly increase the fracking efficiencies. Up to 100 fracks per 10,000 ft lateral are now being done. They have vastly downspaced fracking intervals. EUR’s are skyrocketing.

                    I don’t know enough about small scale operations to help you, and do not have any oil field experience either. But, I presume that any conventional stuff like you are doing will have great difficulty keeping up, after oil prices rise above $75. It must be very tough going in the oil patch these days.

                  • gwalke says:

                    Harold Hamm’s investor presentation shows that he expects the average CLR well to have initial 30 day production of 855 bbl in 2015.

                    Since 2007, only 5% of their wells at most have achieved this, according to North Dakota DMR data. Last year, it was 3.5% and their average initial production figure declined to below 400 – again, according to the ND DMR. Yet this year, according to Harold, the average IP figure will double.

                    Company figures are all very well, but to say they are the most reliable source is arrant nonsense.

                • I don’t visit company websites to download presentations to analysts. Could you give us a link to one you really like?

                  • Carl Martin says:

                    I’m not too good at the linking tricks, but if you simply go to clr.com and click a bit you will easily get there. They give out the best info on the Bakken. Go to the February Investor Presentation. Perhaps someone else would be of better help. I have my limits. LOL

  9. Paulo says:

    It was interesting to see that if all taxes were forgiven, projects are still dodgy at today’s prices. If one added in a hefty haircut for labour/production costs, and taking into account the loss of payroll and spending/purchase taxation from employee payroll, Bakken would still be a poor bet. Price differential % increases with every drop in WTI. Considering the wear and tear on roads, more flights, policing, whatever Society provides to under-write projects such as these, it seems to be pretty much a hamster on a wheel going nowhere.

    Smart hedging changes this for some, but investors will remember what happened to their bets in the future.

    • Caelan MacIntyre says:

      I don’t see how prices for anything matter much if the environment/nature/even labor is being drawn-down/depleted/non-replenished. It’s a fool’s errand, this oil production, this economy. All these pretty graphs and charts and words are merely describing a fool’s errand. When do we see the bumping up against climate contraints, incidentally? I guess when ‘It’s the economy, stupid. Just play the game.’, yes? Silly me…

  10. SRSrocco says:

    One more thing… the EIA just came out with this nifty chart comparing Oil & Gas production from 4 countries. I gather the EIA is presenting this info for BRAGGING RIGHTS showing just how much of our oil and gas production is from tight oil & gas.

    More than half of U.S. gas production is from shale-tight and a little less than 50% of our oil production comes from Shale-tight. Before the United States starts SLAPPING ITSELF ON THE BACK with this mighty accomplishment, we need to add the annual decline rates to that 50% oil and gas production chart.

    I would imagine its safe to state that both Tight Oil & Gas have an overall annual decline rate at or about 50%. While the rest of the world continues to drill and extract oil in a more conventional and profitable manner (of course at higher prices), the U.S. pulls its oil and gas out of the ground at a near COMPLETE LOSS.

    Again, as Art Berman has stated several times… THE U.S. SHALE GAS INDUSTRY IS A COMMERCIAL FAILURE.

    steve

    • Steve, the decline rates drop as the well ages. The key is to have them reach a fairly exponential decline at say 50-60 BOPd.

    • Caelan MacIntyre says:

      KISS. Keep it simple, stupid. A little late for Valenday, but what the hell…

      “THE U.S. SHALE GAS INDUSTRY IS A COMMERCIAL FAILURE.” ~ Art Berman, by way of steve/SRSrocco

      Crony-capitalist plutarchy ‘commerce’ is a baked-in failure and worse. Failures only go so far. This one seems to be ensuring failure in the far future. Nothing like that kind of long-term unthinking ay?

      Capitalism and Artificial Scarcity

      “It is no secret that capitalism thrives off exploitation. It needs a large majority of people to be completely reliant on their labor power. It needs private property to be accessible to only a few, so that they may utilize it as a social relationship where the rented majority can labor and create value. It needs capital to be accessible to only a few, so that they may regenerate and reinvest said capital in a perpetual manner. And it needs a considerable population of the impoverished and unemployed – ‘a reserve army of labor’, as Marx put it – in order to create a ‘demand’ for labor and thus make such exploitative positions ‘competitive’ to those who need to partake in them to merely survive. It needs these things in order to stay intact – something that is desirable to the 85 richest people in the world who own more than half of the world’s entire population (3.6 billion people).

      But wealth accumulation through alienation and exploitation is not enough in itself. The system also needs to create scarcity where it does not already exist. Even Marx admitted that capitalism has given us the productive capacity to provide all that is needed for the global population. In other words, capitalism has proven that scarcity does not exist. And, over the years, technology has confirmed this. But, in order for capitalism to survive, scarcity must exist, even if through artificial means. This is a necessary component on multiple fronts, including the pricing of commodities, the enhancement of wealth, and the need to inject a high degree of competition among people (who are naturally inclined to cooperation).

      Since capitalism is based in the buying and selling of commodities, its lifeblood is production. And since production in a capitalist system is not based on need, but rather on demand, it has the tendency to produce more than it can sell. This is called overproduction.”

      • We could shift to socialism, produce shoddy goods and Marx busts, and parade barefoot in front of the party bigwigs as theorists in state universities blame the people because they don’t enjoy living in the workers’ paradise.

        • Fred Magyar says:

          http://www.n55.dk/MANUALS/DISCUSSIONS/N55_TEXTS/AB_ideologies.html

          Ideologies and religions

          Ideologies and religions are systems of thought that shape and decide the way persons and groups of persons think and act.
          Ideologies and religions don’t necessarily first and foremost respect conditions for description, and hereby logical relations and facts, but are also often the expression of subjective opinions, social conventions and habitual conceptions. Because subjective opinions, social conventions and habitual conceptions are not necessarily in compliance with conditions for description, religious and ideological assertions are often a mixture of right assertions and wrong assertions.
          This is a fundamental problem that is shared by for example ideologies like representative democracy, anarchism, neo-liberalism, communism, capitalism, nazism, and religions like christianity, hinduism, judaism, islam, etc.
          Experience tells us that religions and ideologies usually don’t first and foremost aim to respect conditions for description and hereby the logical relation between persons and persons’ rights.
          Persons might have personal reasons to believe in ideologies or religions, but ideologies and religions that don’t first and foremost aim to respect persons’ rights, should never be used as the basis of political action, because the fundamental purpose of politics is to protect the rights of persons.
          Instead of using ideologies and religions as the basis of political action, persons ought to use conditions for description as the basis of politics and thereby first and foremost try to respect persons’ rights.

          • Old farmer mac says:

            Anybody who is attempting to understand society and people as individuals and groups is way off the track to success unless he takes into account the basics of Darwinian evolution in general and evolutionary psychology in particular.

            Failure to do this is an error about equivalent to trying to understand a chemical reaction without knowing and utilizing the laws of conservation of mass and energy and the rules or laws of basic mathematics.

            Nature or evolution has created religions and political parties thru the mechanism of evolution. Nature DOES NOT DEAL IN VALUES.

            Nature deals in results.

            “Mother ”does not give a damn about how many of her ” experiments” fail. “She ” is not even alive except in the sense that all life is a giant super colony in the sense of an ant colony being alive. Nature does not take into account ” values” or ” morality”.

            IF anybody is interested in the BEST explanation of the changing relationship between the physical and the soft sciences the one key book to read is E O Wilson’s Consilience.

            In my estimation this is one of the most important books ever written although not many people other than professional biologists in general and evolutionary psychologists have yet read it.

            I personally guarantee the regulars here will find it to be an extraordinarily readable book – a book that is a JOY to read -by one of the greatest scientists of the last couple of generations.

            Couple it with Stephen Pinker’s ” The Blank Slate” and you have the abcs of the modern understanding of behavior at your command.

            • Fred Magyar says:

              IF anybody is interested in the BEST explanation of the changing relationship between the physical and the soft sciences the one key book to read is E O Wilson’s Consilience.

              One of my all time favorites as well, highly recommend it!

              • Futilitist says:

                Mine too.

                I really like the way consilience works. Economists may never understand or accept any limits to growth, but they can certainly do a fine job documenting them.

                The consilience around collapse is becoming deafening.

          • Fred: I’m agnostic. I love to respect others’ rights. At this point in the 21st century, I’m worried about the loss of personal freedom we see in modern life. I’m afraid this isn’t going to turn out well.

            • Boomer II says:

              I’m worried about the loss of personal freedom we see in modern life.

              The paraphrase some history, people will willingly give up some personal freedom to make sure the trains run on time.

              If a future solution to saving the world requires people working together as a unit, like a beehive, then perhaps they will collectively decide that a group effort is more important than individual freedoms. That is the basis of all armies. Individuals may be sacrificed for the greater good.

              • wimbi says:

                Funny that the guy who demands personal freedom the loudest is also, around here, anyhow, the same one who is all enthusiastic about armies and football teams.

                And knows full well that the winner in those two sports is the one best organized to work as a TEAM, not the one with the superstar performer.

                Football- Brazil v Germany.

              • Futilitist says:

                Boomer,

                You said:
                “If a future solution to saving the world requires people working together as a unit, like a beehive, then perhaps they will collectively decide that a group effort is more important than individual freedoms.”

                We are not bugs! We are anthropoid apes. The modern world currently requires an unrealistic and highly stressful level of insect like behavior from us all. And this is a very recent development that runs counter to most of our evolutionary history. When resources become scarce, we humans are hard wired to fight over the scraps.

                We have past peak hive. There is no future solution to saving the world.

                • Boomer II says:

                  When resources become scarce, we humans are hard wired to fight over the scraps.

                  But we do it as tribes. Humans didn’t survive as a species by having individuals, or even individual families, strike out on their own.

                  Working together, at least in tribal-sized groups, is the norm for people if we look at evolutionary history.

                  Will the tribes end up fighting each other? Most likely. But there will be cooperation within tribes, even if that means having a leader tell everyone else what to do and then they do it.

                  • Futilitist says:

                    Boomer,

                    You said:
                    “Humans didn’t survive as a species by having individuals, or even individual families, strike out on their own.”

                    That is not true. Humans, like other anthropoid apes, have evolved as fission-fusion groups.

                    Every time a civilization has failed in the past, small groups of individuals have struck out on their own to help assure the survival of our species.

                    The advantage of large group participation has to outweigh the cost, otherwise instinct will drive small groups of individuals to strike out on their own. But modern industrial civilization is so pervasive that there is no where for them to go. As civilization fails, this will cause tension which can only increase. Enhanced cooperation will not be the result.

            • Fred Magyar says:

              I’m afraid this isn’t going to turn out well.

              I’m afraid I have to agree with you on this one…

              However I don’t think any of the so called ‘ISMS’ that we are familiar with, seem to offer any paths forward at this time.

              I really think at some point in the not too distant future humanity will be forced to return to the drawing board and will have to invent a completely new type of civilization.

              And good luck with that!
              Cheers!

        • Caelan MacIntyre says:

          Or we could shift to our natural state (relatively-simple, small-scale & small-in-number) by a boot to the ass by mother nature.

          And then any insistent big-wig-wannabe left can just get some personal calls to their mud huts for some lessons on lateral hierarchy and how to play fair.

          I am unsure the big-wig style will do well during and after collapse because for one, some sociopoliticultural niches can also collapse along with collapse.

    • Carl Martin says:

      SRSrocco,

      Just curious, but what in the hell do decline rates have to do with thr fact that US oil PRODUCTION rates are still steadily going up??? I don’t think you need to be a rocket scientist to figure out that the INCREASE in monthly US oil production is arrived at AFTER the decline rates (legacy decline) has been factored in. Oh yes! All kinds of terrible things happen when all production immediately stops, but what in the world makes you think that is going to happen any time soon, let alone some unknown point in an unknown future? How about US oil production figures are putting YOU, spelled Y-O-U in one hell of an uncomfortable position. Trust me. We can all feel your pain. But, the last thing we all need here is one more red herring fallacy. http://youtu.be/exdK7Lirngg Please get serious.

  11. Watcher says:

    This guy is just the latest lower breakeven point.

    • shallow sand says:

      The title of the article with the statement “number of rigs don’t matter” is not too great IMO. If that were true, zero rigs drilling for the rest of the year would not matter.

      I do understand the point being made. What I do not understand is why companies would drill any oil or gas wells at current prices given the big IP and 90 day rates will be wasted on cheap oil and gas. Actually, I do understand some of the reasons why they keep going. Ah, the joys of wall street.

      • shallow sand says:

        Also, break even should not be the goal of any company. Wait till we see Q1 15. Watcher, what tricks will be used to cover up that mess??

        • Watcher says:

          Pretty much things depend on Greece, oddly. A smashed Euro will take the dollar up and oil down.

          That’s how things get interesting. In fact, so much so that Exxon and RDS would be wise to inquire if Greece would like some money.

          • shallow sand says:

            Good point, much of the decline in crude oil is the result of $ strength.

            • shallow sand says:

              I can also see a scenario where Brent WTI spread widens to $20-30 this summer. KSA gets $80 per bbl, US consumers go back to $3.00+ gasoline and US producers are stuck with $50-$60 WTI, which is $35-$45 in the Bakken.

              • Watcher says:

                Now that would be amusing, because Russia would also get the higher price.

                • clueless says:

                  I am probably the only person who thinks Russia gets too much criticism. I know that they have done many things wrong – what country has not? But, under Catherine the Great and some treaty they got the ports in Crimea in 1774. Then annexed it totally in 1783. About the time we took the US from England. So, in the early 1950’s, Khrushchev “gives” governance of the Crimea to one of its states, the Ukraine because of their bravery in WWII. No United Nations approval and no vote of anyone. Then Ukraine secedes from Russia. [When states in the US tried that, we took them back by way of the Civil War]. So Russia is without the warm water ports that it had since 1774. Suppose a US president, by executive order [no vote of by anyone], gave California to Arizona and then Arizona seceded. Would we be pissed if the world said that by International Law, Arizona gets to keep California? And, what if Canada had invaded the US 4 times in 150 years resulting in 50 million dead Americans. I wonder if we would have occupied Canada if we defeated them in 1945. Those Eastern European nations basically built freeways from Germany [France] to Russia and said – we do not want to fight, go sic em. I do not like Russia, and I hate Communism. But, I try to view their actions realistically [recognizing that I am in a minority and most think that I am totally wrong].

                  • Your analysis is spot on. But today Russian isn’t really communist. They have a mixed system closer to fascism. I think that’s where China is headed, and Cuba is trying to copy it as well. The end point for communism seems to be a full circle switch. Interesting, isn’t it?

                  • Old farmer mac says:

                    With some reservations I am with Clueless and Fernando.

                    Modern western nations want to stop the game of empire in it’s tracks given that right now these are the nations that are the last big winners.

                    Being a hard core believer in evolutionary theory I see no reason at all not to accept it when it comes to explaining the behavior of people as individuals tribes and nations.

                    AGGRESSION is as natural a part of our behavior as screwing. Anybody who fails to understand this has his head so far up his backside he has zero hope of understanding reality.When we feel threatened we Yankees are as prone to fight as anybody else. Witness our occupying Sand Country for the last three decades or so.

                    I will go so far as to say that the USA and modern western countries have in recent years refrained from pure and unadulterated aggression when we /they were powerful enough to get away with it.

                    We all want to play by rules that we think give us an advantage. Thus the doctors son who grows up in his dad’s house with all the advantages thinks it is fair that he take the same exam to get into med school that a farm laborer’s son or daughter takes- or that he gets in with a substantially lower score..

                  • Caelan MacIntyre says:

                    “here’s something I wrote today” ~ Fernando Leanme

                    I highly recommend that book to all birds out there, not just pigeons.

                    Last night, I got asked to leave, rather forcefully, a knitting meetup group composed entirely of young women– late 20’s, 30’s I’m guessing, and one who was I think just turning 40– when I questioned feminism’s apparent achievements with regard to women having the ‘opportunity’ to wage-slave outside the home; for ‘the vote’ (for their governpimps); or to outsource the raising of their kids to strangers, day-cares and institutions while they wage slaved for ‘the man’.
                    Wow, did some of them ever work up quite the indignant lather. I imagine some of it was emotion-worked (IOW, not quite really indignant, just put on for show).

                    …Well, I had already started to get weary of the kind of conversational topics that included– at length and detail– how their pet dog eats coffee-snow and gets all wired (watch me imitate it) and just doesn’t want to, or has a hard time, crapping outside on cue when it’s too cold.
                    I will now have to look into if this city has a harder-core knitting guild. They are usually composed more of the older women apparently.
                    So you see Futilitist, it is possible to get banned from real places and groups too. ‘u^

                    “The reward for conformity was that everyone liked you except yourself.”
                    ~ Rita Mae Brown

      • They don’t expect prices to stay low. Did you notice the price is already firming up?

        • Old farmer mac says:

          Fernando is quite a skillful satirist and has excellent insight into the reality of power politics.

          You can read his blog link up above for both laughs and insight.

  12. Ciaran, plot #22 where you use my first 24 hour production numbers. It turns out that the first 24 hour numbers really don’t mean anything. I was simply mistaken. Production per well is actually increasing, albeit it very slightly, as the well number increases.

    • canabuck says:

      Do you mean that the first “24 hour” data sample, may be for a random number of hours between 1 and 24? And therefore any drift in this number is more due to the random sampling rather than a production increase/decrease?

      • Canabuck, I’ve been a test engineer and also have been in charge of reporting initial rates. Depending on what we did to it, when we open the well it can flow to a low pressure vessel and from the vessel everything is routed to an open tank or to a lined pit (depends on the location, offshore it can be routed to the burners).

        When the well unloads and starts producing hydrocarbons, and water cut is lower than a set value, we put the well in a vessel with metered outlets and start the “official test”. Quite often this test isn’t 24 hours long (without getting too technical I prefer to have downhole gauges, do a short flow, shut in, buildup, then do a standard test to do a pressure analysis, but sometimes that’s not possible). I’m not sure about that 24 hour statistic, but when a well starts up its undergoing a transient, so this data has a lot of value if rate and pressure are measured minute by minute. However, when I was a test engineer I tried to keep everything homogeneous and have the test be as representative of what was expected. Management doesn’t have the patience to wait for a full analysis, they want a number they multiply by a factor, and then they pass this number up the line.

        I remember one morning I was sitting in for my boss, and the country president called me for the well test for a well we had completed the day before. I told him I didn’t have it and he chewed my behind, and explained HIS boss in Houston expected to get the number. I thought they were a bit stupid, but that’s company tradition, I guess.

        As far as I’m concerned by the tine a well gets tested the general manager really has nothing to worry about, he needs to focus on the wells being drilled and keep the guys picking locations really happy and motivated.

  13. Longtimber says:

    ND Production by Company ( 2nd Graph ) Y Axis should be something like “Percent of Bakken Exposure”

  14. Anon says:

    Let’s just lay the cards out on the table here.

    Since 2004, the world’s oil production, without the United States, has more or less plateaued. And this is with oil prices over $100 for a bit over 3 years.

    The shale boom is as far as we know going to be limited to only the United States. The unique combination of geography, infrastructure, and financial capital ( near-zero interest loans from the Fed) made shale oil a profitable investment above $75~ or so. However, the bottom may have fallen out. Many shale oil companies are over leveraged, and are drilling just to pay off the interest on their debts.

    Saudi Arabia has lost the ability to lower prices by pumping more, and in its desire to hurt whatever combination of Russia/ISIS/shale producers or what have you it lacks the political will to lower production.

    Venezuela is facing revolution. Libya is in the midst of a second civil war within 5 years.

    The world is going to add 1 to 2 million barrels of consumption per year for the near future. China, for all the talk of slowing down, will add more cumulative goods and services than ever before this year. Within the decade, China will probably be consuming more fuel than the United States.

    With shale oil peaking and plateauing, and oil discovery historically low, who can pick up the slack?

    • John B says:

      Electric cars.

      And BTW, the bottom fell out of gas prices, and that didn’t stop fracking for gas.

      • thrig says:

        Curious, the word from Davos was for car-free cities, not free-car cities. They must not have gotten the memo? Human-centric cities are regadless a bigger target to collapse back towards, anyways, being a rather old design, while the electric car is a quite narrow target of only a few decades around 1900, and would leave various issues unresolved, like folks twiddling their thumbs in traffic (have you seen their faces? Heh!), the costs of maintaining the road network (ASCE ask: $2.2 trillion, or a nice ~$7000 per person, ouch!), the cult of free parking (Donald C. Shoup), etc.

    • Dave P says:

      Pre-salt? Iraq could also produce significantly more oil if it keeps it together somehow.

  15. Political Economist says:

    Continue with China’s electricity generating cost. I posted several comments on China’s general electricity statistics, fossil fuels generating costs, nuclear generating costs, and wind abandonment ratios under Ron’s previous post on “Bakken December Production Numbers.” (Dennis, you may find the post on wind abandonment ratios I posted last night interesting)

    I will continue the discussion here to complete with hydro generating costs, wind generating costs, and solar generating costs. The general purpose of this discussion is to find out how grid investment impacts the economic viability of renewables.

    In 2014, China made a total investment of 96 billion Yuan on hydro generating capacity, and 22 gigawatts (GW) of new hydro capacity were installed. The implied investment cost per GW of hydro capacity was 4.4 billion Yuan. When 4 billion Yuan of matching grid investment was included, the total capital cost per GW of hydro capacity was 8.4 billion Yuan or about 1.4 billion US dollars. By comparison, in the US, it now takes about 3 billion dollars to build 1 GW of new nuclear power plant. (China’s total grid investment in 2014 was 412 billion Yuan and 104 GW of new generating capacity was installed; grid investment per GW amounted to 4 billion Yuan)

    To calculate the annual fixed cost, I simply assume that the annual fixed cost is 10% of the capital cost. 10% is assumed to include 5% for interest rate (or minimum rate of return on capital), 2.5% for depreciation rate, and 2.5% for operation and maintenance. Thus, the annual fixed cost for 1 GW of hydro power plant is estimated to be 840 million Yuan.

    Hydro power plant has an average capacity utilization rate of about 40 percent. So 1 GW of hydro power plant can generate 1 GW * 8760 * 0.4 = 3504 GWH = 3.5 TWH.

    Hydro electric power does not require fuel cost.

    The annual total cost is the same as the annual fixed cost. Thus, the average generation cost = 840 million Yuan / 3.5 TWH = 0.84 billion Yuan / 3.5 billion KWH = 0.24 Yuan / KWH. This is lower than the fossil fuels generating cost (0.365 Yuan/KWH) by about one-third, comparable to the nuclear generating cost (0.21 Yuan / KWH).

    But the nuclear cost does not include cost of decommissioning and dismantling and cost of nuclear waste disposal. The hydro cost does not include relates social cost such as settling the population migration.

    China is estimated to have a technical hydro potential of about 500 GW. In 2014, China’s total installation of hydro electric power reached 302 GW. Thus, about 60 percent of China’s hydro technical potential has already been used. China currently install about 20 GW of hydro power each year. At this year, China’s hydro technical potential will be exhausted in about ten years.

    • Political Economist says:

      There are a couple typos. The last sentence should be: “At this RATE, China’s hydro technical potential will be exhausted in about ten years.”

  16. Aws. says:

    CSX train hauling Bakken oil derails in Virginia, cars ablaze | Reuters

    http://www.reuters.com/article/2015/02/16/us-usa-train-derailment-csx-idUSKBN0LK1ST20150216

    • A short video of the fireball here.

      State of emergency declared in West Virginia after train derails and explodes

      Nearly three hours after that declaration, the fire was still burning, and 1,000 people had been evacuated, according to Lawrence Messina, the state’s public safety spokesman.

    • Regex Wald says:

      The biggest story of all here: the media is now reporting that the train had the newer, supposed-to-be-safer tank cars that the Department of Transportation has been urging railroads to move to. An order forcing the use of these cars has been long been anticipated.

    • ezrydermike says:

      I saw a video that purported to show the train a hour before the wreck. About 100 railcars. I didn’t see one of them with a flammable placard. How is this material bursting into flames?

  17. Watcher says:

    Lotsa deadlines being quoted for Greece.

    Critical error being made in them. They presume Greece will make loan payments. They celebrated “primary surplus”. They have enough money to function if they declare a moratorium on payments to the ECB and EU.

    There is no legal mechanism for removing them from the EU. They could just say they are taking a few months off from payments, and if the ECB doesn’t want that moratorium to happen, it can just print up some Euros and make the payments without Greece’s involvement.

    Primary surplus means whatever you want it to mean, but in this instance it is a pathway to more time. If Greece doesn’t get money agreed to, no one starves in Athens. But there may be a ton of credit default swaps globally the blow up.

    Not Athens problem.

    • Strummer says:

      “There is no legal mechanism for removing them from the EU”

      The EU and the Eurozone are two separate things. No one is removing Greece from the EU. As to the removing from the Eurozone and going back to separate currency, there are processes in place for that, which have been established in the recent years. Most people don’t know it, but the banks and governments are technically well prepared for that alternative.

      • Watcher says:

        EZ vs EU doesn’t matter. All that matters is the suspension of payment of loans, which triggers credit default swaps. Regardless of currency, all that matters is swap trigger. That gets global.

        If they run a primary surplus, no one will starve. They have a strong bargaining position. And they have a logical one — you’re printing 1 Trillion Euros over the next 18 months anyway. Those come from thin air. Why force Greece to condemn its citizens to misery for something you just print from nothing.

        Answer: Because the whole system would fall apart if that logical reality were widely understood.

        Rebuttal: Not our problem.

        • Caelan MacIntyre says:

          “Because the whole system would fall apart if that logical reality were widely understood.” ~ Watcher

          “Treaties formed an important part of European colonization and, in many parts of the world, Europeans attempted to legitimize their sovereignty by signing treaties with indigenous peoples. In most cases these treaties were in extremely disadvantageous terms to the native people, who often did not appreciate the implications of what they were signing.” ~ Wikipedia

          WTO: Why Is It Bad For You

          • Ronald Walter says:

            The Manhattan Tribe traded an entire island for some beads and trinkets, fair is fair, a deal a deal. Besides, they’re gone, wiped out, the Last of the Mohicans.

            Napoleon sold the Louisiana Territory to finance his Waterloo; sell a third of North America to suffer the agony of defeat, a fool’s maneuver if there ever was one.

            France could be the wealthiest country on the planet had not sold the Mississippi/Missouri land mass from the Mississippi Delta the Great Divide to Thomas Jefferson et al, who were willing to buy all of the land for the vast sum of four cents per acre. Land stolen from indigenous North Americans, but what does it matter?

            ‘An election is a pre-arranged auction of already stolen property’

            Includes oil, by the way.

            Invade Indochina, exploit that land mass and buy all of the surplus military equipment from the United States, courtesy of the Eisenhower Administration. France has a way of colonizing, expanding their sphere of influence, in some inglorious ways themselves. Didn’t want to look like the fools they were when they sold the Louisiana Territory.

            Always a way to make a buck. It makes the world go round.

            Ohio, Illinois, Indiana, Massachusetts, Mississippi, Wisconsin, Wyoming, Nebraska, Kansas, Oklahom, Dakota, Minnesota, Michigan, Iowa, Arkansas, Tennessee, Alabama, Ontario, Erie, Saskatchewan, Manitoba … All indigenous words from North America.

            Royalties need to be paid to indigenous North Americans for the use of Native American words used to promote United States states, Canadian provinces and the Great Lakes. Canada is a Native American word for ‘big village’. Paybacks are a bitch.

            Royalties need to be paid to indigenous peoples for coal and oil resources exploited for profits from indigenous peoples’ land.

            No need to start a riot or a war, just negotiate a settlement, like the Dutch when they duped the Manhattan Tribe. Takes a lot of energy. Pay Native Americans first for what originally belonged to them, then take what you can get. Seems as though Native Americans have made the sacrifice. It is readily apparent there has been plenty for all. Trading some beads and trinkets for a continent is not a fair deal, somebody needs to pony up some dough. Something other than some beads and a few trinkets.

            Might as well live in peace, it’s better.

            A refinery fire in California, an oil train derailment in West Virginia. A couple of red flags?

            • Old farmer mac says:

              Part of the job description of COURT JESTER is that the candidate be very well informed.

              He must also be a journeyman communicator when it comes to irony humor sarcasm etc etc.

              Our Ronald is one of the very best.

              • Caelan MacIntyre says:

                “Know the rules well, so you can break them effectively.” ~ Dalai Lama XIV

            • Caelan MacIntyre says:

              And of course the dupes and hoodwinks, etc., continue…

    • I heard from a neighbor they are already preparing plans to help the Greeks print their own currency. The mood around here is that Greece should be eased out of the eurozone, and then a mechanism developed to force them out of the EU.

      • Strummer says:

        I don’t think anyone wants Greece to be removed from the EU. That would effectively make it a Russian province, as Russia would happily finance Greece in exchange for control. The Ukraine example shows that this is the last thing the EU would want, and Greece is even more geopolitically sensitive territory than Ukraine.

      • The Greeks can join the Russian Federation if they wish. However, I think before they do they will make the commie regime fall. And I think that’s the best outcome.

  18. Allan H says:

    On slide 44, the marketing differential cost appears larger than the production cost. Could someone explain what costs comprise the marketing differential for oil production?

  19. Political Economist says:

    In 2014, China made a total investment of 99 billion Yuan on wind generating capacity. This made wind the single largest category of China’s electricity generation investment in 2014. In the energy media, there is lots of celebration of China’s wind investment exceeding the investment on fossil fuels power plants.

    For 95 billion Yuan of investment on fossil fuels, China installed 47 GW of fossil fuels power plants; for 99 billion Yuan of investment on wind, China installed only 21 GW of wind generating capacity. The implied investment cost per GW of wind generating capacity was 4.7 billion Yuan. When 4 billion Yuan of matching grid investment is included, the total capital cost per GW of wind generating capacity was 8.8 billion Yuan or about 1.5 billion US dollars. Currently, the US construction cost for wind electricity is about 2 billion dollars per GW (China’s total grid investment in 2014 was 412 billion Yuan and 104 GW of new generating capacity was installed; grid investment per GW amounted to 4 billion Yuan)

    To calculate the annual fixed cost, I simply assume that the annual fixed cost is 10% of the capital cost. 10% is assumed to include 5% for interest rate (or minimum rate of return on capital), 2.5% for depreciation rate, and 2.5% for operation and maintenance. Thus, the annual fixed cost for 1 GW of wind power plant is estimated to be 880 million Yuan. This may be a siginficant understatement because wind generating capacity has an average life of 20-30 years, requiring depreciation rate of 3-5%.

    Wind power plant has an average capacity utilization rate of about 20 percent (this is the OBSERVED capacity utilization rate, not technical or theoretical rate). So 1 GW of wind power plant can generate 1 GW * 8760 * 0.2 = 1752 GWH = 1.75 TWH.

    Wind electric power does not require fuel cost.

    The annual total cost is the same as the annual fixed cost. Thus, the average generation cost = 880 million Yuan / 1.75 TWH = 0.88 billion Yuan / 1.75 billion KWH = 0.50 Yuan / KWH. This is higher than the fossil fuels generating cost (0.365 Yuan/KWH) by about 40 percent.

    Wind is limited by intermittency and land availability. China is estimated to have a technical potential of onshore wind power of 800 GW. China has already installed about 100 GW of wind power and is currently building wind power at an annual rate of about 20 GW. If China continues to to build at this rate, China will exhauste its onshore wind power potential in 35 years.

    • Nick G says:

      When 4 billion Yuan of matching grid investment is included, the total capital cost per GW of wind generating capacity was 8.8 billion Yuan or about 1.5 billion US dollars.

      What data do you have to support the idea that 8.8B Yuan was spent to connect wind power to the Chinese grid?

      Using total grid investment doesn’t work: much of it is on the consumer side.

      Allocating an average cost doesn’t work either: we need to know the relative costs for wind power.

      for 99 billion Yuan of investment on wind, China installed only 21 GW of wind generating capacity.

      All we know is that China is installing wind power for less than 50% of the cost of the US (about $.80/Wp, vs $1.75 in the US).

      Cheap installation works a lot better for wind power than for coal or nuclear, as the potential risks are much smaller. With cheap coal you get massive pollution. With cheap nuclear you get Fukushima.

      • Nick G says:

        oops – 8.8B should be 4B.

        • Political Economist says:

          Nick, all generating facilities need to be connected to grid and have to share in the grid investment cost. In the short run, new generators may be added without adding grid. That does not work in the long run.

          It is probably generous to assume that the wind share of grid investment is the same as other generating sources given their remoteness and intermittency.

          See the comments towards the bottom under Ron’s previous post

          • Sam Taylor says:

            There are also going to be large costs involved in moving from a predominantly FF grid to one with large renewables penetration. Systems with lots of wind and sun in them have very little inertia, and maintaining frequency stability is a very significant problem on which there’s not really been a whole lot of research done. Distributed solar can especially be a nightmare in this regard. Significant EV penetration is also going to be a real challenge to grid stability as a vast new load is added, yet all these costs and problems tend to be ignored in cost projections.

            • Nick G says:

              Utilities *LOVE* EVs. Love, love, love.

              EVs add demand, and that demand can be scheduled when needed. They have great synergy with wind, solar and nuclear.

              Utilities promote EVs every chance they get.

              • Sam Taylor says:

                I wasn’t aware that loving EVs somehow made it easier to integrate large numbers of them into a grid archetecture.

                • Nick G says:

                  Well, EVs are easy to integrate into the grid. In fact, they make the grid easier to run.

                  The fact that utilities love and promote EVs (and buy them for their own internal operations when they can) is proof of that.

          • Nick G says:

            This discussion is pointless unless we agree on some basics:

            In the US, “grid investment” includes transmission and distribution (T&D). That includes a wide variety of stuff: transformers, substations, neighborhood lower voltage lines, central control systems, etc. transmission lines to new generation is a relatively small percentage of that.

            So, what are you including?

      • Political Economist says:

        And China’s fossil fuels power plants are 2/3 cheaper than the US, even after adding the grid investment.

        See the comments under Ron’s previous post

      • Political Economist says:

        See my comments under Ron’s previous post regarding China’s general electricity statistics.

        412 billion Yuan was actually spent in China in 2014 to expand the grid. Meanwhile, 104 GW of new capacity was installed.

        Clearly, all 104 GW of new capacity benefited from the new grid investment. The grid investment cost has to be recovered from electricity price.

        In the above exercise, it is assumed that each GW shares the grid investment equally. Given the remoteness of wind and solar, this could be an underestimate.

        If you’re not satisfied with this assumption, then I have to wonder in a 100% wind or solar world, who is going to pay for the grid investment?

        • Nick G says:

          No, you can’t allocate all grid investment to connecting new plant.

          There’s enormous consumer-side investment.

    • Allan H says:

      Wind is providing power in the US at about a nickel per kwh. It is also not at risk for future environmental law changes.

      Data Source: EIA, Levelized Cost of New Generation Resources in the Annual Energy Outlook 2013

      • I dont get it. Where do you get a nickel? Do you mean a dime?

        • Allan H says:

          The second chart ended up way down the comments. It’s a bubble chart and shows a contracted cost range from 2 cents to 12 cents with a lot of it around the 5 cent range.

    • Allan H says:

      The following chart depicts actual long-term contract power purchase agreement prices for wind energy projects over time, showing the variation in pricing across regions of the country as well as project size

      • Got it. But a purchase agreement can be below cost. The generator can make it up using subsidies, or in some cases the system pays a much higher feed in fee and the cost is passed on to the retail buyer. The real cost of wind depends on the intermittency and the nature of the load follower. Wind doesn’t work alone, therefore its real cost is higher than 10 cents per kWh.

        • Allan H says:

          All fossil fuels are highly subsidized and the long term costs are huge and passed onto the public, never to be paid by the producer. The real costs of using coal and natural gas are extremely high.

          No generator works alone, there is a network of generators. Yes, wind is intermittent but predictable. The cost of other systems do not change the fact that wind is mostly producing around a nickel per KWh, much as many do not want to hear. The variance is probably due to local markets, geography and wind availability.
          Texans seem quite happy about wind power:
          http://awea.files.cms-plus.com/FileDownloads/pdfs/texas.pdf

          Here is a study of wind power coupled with pumped hydroelectric storage:
          http://www.colorado.edu/engineering/energystorage/files/MSThesis_JGLevine_final.pdf

          This is of particular interest to me since there is a pumped hydro facility nearby and another planned for a deep abandoned mine within 20 miles of where I live. Makes a lot of sense to use pumped hydro as a backup and leveling storage against the variability of wind and solar. It also allows extra power to be generated at peak demand times (higher cost), independent of the low cost renewables.

  20. Political Economist says:

    In 2014, China installed 8 gigawatts (GW) of grid-connected solar PV power. There is no data on the total investment on solar power. However, other Chinese sources indicate that the current investment cost of PV in China is about 8000-9000 Yuan per KW (about 1300-1500 dollars per KW). If 8 billion Yuan is required to install 1 GW of solar power, then China’s total investment on solar power was likely to be 64 billion Yuan in 2014.

    When 4 billion Yuan of matching grid investment is included, the total capital cost per GW of solar generating capacity would be 12 billion Yuan or about 2 billion US dollars. Currently, the US construction cost for solar electricity is about 3 billion dollars per GW (China’s total grid investment in 2014 was 412 billion Yuan and 104 GW of new generating capacity was installed; grid investment per GW amounted to 4 billion Yuan)

    To calculate the annual fixed cost, I simply assume that the annual fixed cost is 10% of the capital cost. 10% is assumed to include 5% for interest rate (or minimum rate of return on capital), 2.5% for depreciation rate, and 2.5% for operation and maintenance. Thus, the annual fixed cost for 1 GW of solar power plant is estimated to be 1.2 billion Yuan. This may be a siginficant understatement because solar generating capacity has an average life of 20-30 years, requiring depreciation rate of 3-5%.

    Solar power plant has an average capacity utilization rate of about 10 percent (this is the OBSERVED capacity utilization rate, not technical or theoretical rate). So 1 GW of solar power plant can generate 1 GW * 8760 * 0.1 = 876 GWH = 0.88 TWH.

    Solar electric power does not require fuel cost.

    The annual total cost is the same as the annual fixed cost. Thus, the average generation cost = 1.2 billion Yuan / 0.88 TWH = 1.2 billion Yuan / 0.88 billion KWH = 1.36 Yuan / KWH. This is about 3.7 times the fossil fuels generating cost (0.365 Yuan/KWH).

    An often heard claim regarding the solar energy is that the solar production cost will continue to fall rapidly as technology progresses. I am doubtful about the argument. The recent decline of solar price has much to do with China’s overproduction and the superexploitation of the Chinese workers and environment (as the toxic wastes generated in PV production can be dumped without much environmental regulation). In the US, the true cost of solar panels should be measured by their US production costs.

    In the future, solar will also face resource constraints. When precious metals (such as silver) begin to run out, the solar panel price will tend to rise.

    Regardless of assumptions about the future technological progress. Let’s make the extreme assumption that the future generation investment cost for solar can be reduced to ZERO. So the only investment cost will be the investment on grids. For that the solar generators will have to pay in the future, especially when solar becomes mainstream source of generation. There is nothing revolutionary about the electric grid technology. So we can assume its future costs will be the same as the present cost (though resources constraints may force up the grid investment cost too).

    China’s current grid investment cost is 4 billion Yuan per KW. If the annual fixed cost is 10% of the capital cost, and there is no other cost, then the annual total cost would be 400 million Yuan. Solar electricity has a 10% capacity utilization rate, so that 1 GW of solar generating capacity can generate 0.88 TWH of electricity in a year. The average generation cost will be 400 million Yuan / 0.88 TWH = 0.45 Yuan / KWH. This would still be significantly higher than China’s current fossil fuels generation cost of 0.365 Yuan / KWH.

    In reality, the investment on solar generation certainly cannot fall to zero and the current cost may not be far away from the bottom. Thus, at least in China, solar electricity cost may never fall to a level that can compete with fossil fuels with government subsidies. (Wind has a better chance; but wind technology has become relatively mature and wind limited by land availability)

    True, as the fossil fuels become depleted, the fossil fuels prices will rise. However, as the recent events have demonstrated, if the fossil fuels prices rise to levels that begin to suffocate the economy, global economy will enter into recession and fossil fuels prices may collapse. Moreover, the production of “renewable” energy also uses fossil fuels as inputs and for transporation. So higher fossil fuels prices will drive up the construction cost of renewable energy facilities.

    As far as coal is concerned, even at the current price of 500 Yuan per ton (about 80 US dollars per ton), China is still capable of producing about 3.6 billion tons a year and China’s coal reserves at the current coal price is about 200 billion tons. In addition, China can import cheaper foreign coal (now at about 50 US dollars per ton) from Indonesia, Australia, and even from the United States.

    • Thanks for the analysis. We need a realistic view and to understand that renewables do cost a lot more, and highlight that wind and hydro are much better than solar.

    • Sam Taylor says:

      PE,

      I’m interested in your explanation for the drop in price of solar panels. I’ve had similar thoughts myself regarding both China flooding the market, and the fact that they’ve rather lax industrial regulation in comparison with the US or EU, along with the usual reservations about the possible quality of cheap Chinese goods. I have to admit I find the “prices dropped because technology!” explanation for the cratering in solar prices offered by many renewable-focussed websites to be rather unsubstantial. Have you got much in the way of sources which back up your position, as I’d be interested to see what they say.

      • SW says:

        The price of solar has dropped because of technology but not the kind of technology that most people think of. It isn’t because China has a lack of industrial policy but because they have one. When a new technology is struggling to gain market share against an old entrenched legacy technology it is a sort of chicken and egg problem. You need massive investment in manufacturing capacity in order to drive the price down to get the economy of scale required to get market share. Yet without market share, it is difficult to rationalize the investment in the manufacturing capacity. In China, this isn’t an issue. They simply do it. They chose the easiest most simple device possible, poly crystalline silicon and focused on manufacturing technology rather than the wiz bang technology of the latest and greatest devices since they really didn’t have the technological base to support that. All things considered, it was a rather effective and well considered strategy.

      • Political Economist says:

        There are some Chinese sources saying although the solar panels have come cheaper, they are of lower quality too, so that the effective life time is reduced from about 20 years to 10 years.

      • Nick G says:

        Forty years ago solar PV cost $40 per watt. It has fallen steadily and inexorably due to incremental improvements – mostly in manufacturing, not basic technology.

        The same thing applies to $1,200 DVD players – it’s a general rule of manufacturing (and not the same as the price of computing).

        • Political Economist says:

          Let’s see what happens 40 years from now. Don’t tell me solar panels will cost nothing

          • Nick G says:

            It will be much lower – it’s the power of exponential cost reduction.

            That’s just what manufacturing does.

            • Political Economist says:

              Very well, in 100 years, every thing will cost ZERO! Is that not what your exponential cost reduction implies?

            • Sam Taylor says:

              Most cost reductions follow more of a power law shape than exponential decreases. http://www.forbes.com/sites/jimhandy/2013/03/25/moores-law-vs-wrights-law/

              Of course it’s likely that these cost reductions are achieved using low cost but high-energy usage automation. Whether or not such practices remain viable in a world in which energy costs are rising appreciably remains to be seen.

              • Nick G says:

                Industrial energy costs tend to get reduced in the same inexorable way labor is reduced.

                Manufacturing engineers are relentless in their cost reductions: supply chain, in-house labor, etc. Suppliers are squeezed for pricing, inputs are reduced by changing designs or manufacturing practices, substitutes are found that are cheaper, etc., etc.

                I remember an industrial engineer in a automatic transmission plant report that their normal practice was to achieve a 5% reduction in unit labor costs every year, year in and year out.

      • Ilambiquated says:

        Prices have fallen because of increasing output. This is a very common phenomenon in all kinds of manufactured goods. Technical innovation continues, so the best panels are getting better and better.

        But commercial panels are not improving much probably won’t until the costs get significantly lower and stop falling. The main reason for this is that there is absolutely no shortage of land to set up panels, so increasing efficiency doesn’t help much. All it does is reduce the spend on mounting hardware etc, but since those prices are falling quickly anyway, there isn’t much value in working on better efficiency.

    • Dennis Coyne says:

      Hi PE,

      David Rutledge estimates about 800 Green for. World coal urr.

      What is your estimate for the world urr of coal?

      • Dennis Coyne says:

        800 gigatonnes for world coal urr by Rutledge.

      • Dennis Coyne says:

        Also note that about 270 Gt of coal have been produced by 2014, if the URR is 800 Gt as Rutledge estimates and peak happens near 50% of URR then we have 130 Gt of coal output until the peak, 2013 output was about 8 Gt, if we assume at least this much coal is produced each year until peak then the peak will be in 16 years or 2030.

        Steve Mohr estimates 2020 to 2030 for the peak in World coal output.

        When the peak arrives, coal prices will rise, making wind more competitive.

        Solar PV panel costs will continue to fall, this is more similar to CPU manufacturing where costs have been falling for 35 years. The main input is silicone (sand), and the supply of sand is pretty large. There are many metals besides silver which can be used and the amounts are not large. Also metal can be recycled, often more cheaply than mining.

        • Political Economist says:

          Dennis, I’ve some estimate about coal URR in my last year’s guest post here on world energy projections.

          Rutledge’s estimate of China’s coal URR is too low. I think the Chinese URR is near 300 Gt. For the rest of the world, I don’t remember the URR, but I think the US has about 100 Gt as remaining recoverable reserves and for the world excluding US and China, I prefer to use the BP reserves which stand at about 500 Gt.

          I think a world coal peak between 2020 and 2030 is reasonable. My point is that when the peak arrives, the coal price may first rise and then fall (as rising price deflate the economy which in turn reduces coal price).

          About solar pv, please note that my surprise finding is that when solar has its share of grid investment, even if, hypothetically, the investment on generation falls to zero (which is obviously not possible), it is still too expensive relative to fossil fuels

          • wimbi says:

            Too expensive relative to fossil fuels! That has GOT to be wrong cubed.

            Just what is the cost of fossil fuels- only the entire biosphere. How much is that? I didn’t see it in your analysis.

            Here’s a little exercise for the economist. Think of this scenario. We stop making ALL vehicles, and I mean all of them, for the next ten years. We take those resources-all of it, including the fossil fuels to make those vehicles, and we put it all into solar, which everybody knows is fully scalable to a SENSIBLE, not a BAU, rate of energy use, and we do exactly what we did during the war- keep all those not-replaced vehicles- the ones doing useful things- going with parts from all the ones now rotting in the used vehicle lots.

            Can’t be done? Look around. Lots of examples of has been done.

        • Political Economist says:

          Dennis, here is the world energy report I posted last year:

          http://peakoilbarrel.com/world-energy-2014-2050-part-1-2/

          Where I assumed China to have a URR of 300 Gt and the rest of the world has a URR of 740 Gt. So the world total URR is about 1.04 trillion tons.

          I will revise it this year by about July after the publication of BP Statistical Review

          • How deep did they assume they can dig for coal?

          • Dennis Coyne says:

            Hi PE,

            When the price of coal falls, output will fall, there may be a lot of coal fired power that has no coal to burn. I think that coal prices will generally be higher, unless coal fired power plants are shut down. Same story for natural gas once the peak is reached. I also think your analysis of the grid is flawed. The grid will be in place to provide the power needed (with some maintenance and upgrades which are just a part of having a grid). The power supply to the grid should be analyzed separately. Except for connections from a wind or solar project to the grid when the project is in a remote location.

            Wind and solar will replace coal and natural gas over time, except for grid connections (which are necessary for every power plant and are part of the cost of the project) no grid upgrades are necessary.

            In the case of grid tied solar on residential or business rooftops, there is no grid cost at all.

            It would be interesting to get Wimbi’s take on Chinese solar panels.

            There may be some shoddy panels that will last only 10 years. My guess is a company that makes such panels will ruin their brand name and will not be in business for long.

            • Political Economist says:

              Dennis, someone has to pay for the grid. If you shut down all the coal and natural gas plants, the grid investment still needs to be paid and it will have to be covered by solar or wind electricity.

              But because the capacity utilization rates of solar and wind are quite low, it means their grid investment cost per kwh is much higher than fossil fuels and because grid investment is very mature technology and there is little scope for improvement.

              What I realized from the Chinese data is that the grid investment turns to be quite substantial, even bigger than the generation investment.

              In addition, I am still of the view that in the long run, solar and wind construction costs will tend to rise. You’re correct that solar panels mainly use silicon. But silver is a significant input too. And, in the long run, solar will dominated by utility solar (as supposed to rooftop), which requires lots of steel (about 10 million tons for each 100 GW), which in turn requires coal and iron ores.

              About the coal price, they will not keep rising. There will be an economic limit. Below the economic limit, substantial quantities of coal will be produced for a long period of time even after the peak. I suspect world coal production will not fall below 7 billion tons by 2050.

              • Nick G says:

                If you shut down all the coal and natural gas plants, the grid investment still needs to be paid and it will have to be covered by solar or wind electricity.

                Well, no, it will be paid by ratepayers (consumers), just as it is now. It may be a fixed cost per meter, or it may be a cost per kWh.

                Again, you seem to be assuming that “grid investment” is primarily related to new generation: it’s not. Really.

                because the capacity utilization rates of solar and wind are quite low, it means their grid investment cost per kwh is much higher than fossil fuels

                No.

                You really don’t know that – you’re just assuming that’s the case. You’re dividing the cost of “grid investment” by the new generation nameplate capacity, and then thinking you’ve learned something. You haven’t.

                I mean no offense, but this is a classic case of Garbe In – Garbage Out.

                I am still of the view that in the long run, solar and wind construction costs will tend to rise

                And yet, all the data points otherwise.

                silver is a significant input too

                For the moment. It’s not a requirement. Some manufacturers don’t use it, like First Solar.

                utility solar …requires lots of steel

                That’s the first I’ve heard. Aluminum seems to be preferred. And about 10 million tons for each 100 GW” means 10 kilos of steel per 100W panel – where did that figure come from??

                which in turn requires coal and iron ores.

                Iron smelting doesn’t require coal – coal is just convenient at the moment. Smelting isn’t even needed: you could use recycled steel if you really wanted t (almost all US steel production does).

              • Dennis Coyne says:

                Hi pe

                I did not say coal price rise will be unlimited.
                When coal peaks the price may rise close to the price of natural gas in $/btu.
                The supply of power should be analyzed separately from transmission and distribution. The t and d companies pay for that investment.

            • Political Economist says:

              “Brand” is not yet the priority for many Chinese manufacturers

    • Nick G says:

      In the US, the true cost of solar panels should be measured by their US production costs.

      And US production costs continue to fall quickly.

      When precious metals (such as silver) begin to run out, the solar panel price will tend to rise.

      Silver is convenient, but not required. For instance, First Solar has started using copper.

      China’s current grid investment cost is 4 billion Yuan per KW.

      It’s not valid to use overall grid investment, and it’s not valid to use an industry average for solar power. In particular, installations on industrial/commercial roofs can actually reduce transmission and distribution costs.

      if the fossil fuels prices rise to levels that begin to suffocate the economy, global economy will enter into recession and fossil fuels prices may collapse

      This has not been demonstrated. The idea that we can extrapolate the effects of short term oil shocks isn’t valid.

      Moreover, the production of “renewable” energy also uses fossil fuels as inputs and for transporation.

      Only for some things, and only temporarily. Fossil fuels can (and should) be replaced.

      • wimbi says:

        Bravo! What I think too.

        Another thing. I have spent my life doing engineering R&D. I have a high regard for the innovation capability of the technical/scientific community. I have seen examples over and over of getting on top of what looked like super tough jobs.

        Example- my roommate in grad school went on to be chief of a team working on ICBM guidance. That was early ’50’s when a rocket might hit the city it aimed at, maybe. Not a great many years later he had a chat with me in which he remarked that he had worked his way out of a job. “We can hit anything from anywhere, any time.”

        I do not say that new energy gadgets will save humanity, but I do say that if we keep our wits on the job, we surely can solve relatively trivial things like silver in PV.

        As has been said, there are so many not-yet explored options on all new tech that it is unrealistic to assume any problem of the moment will remain a problem for long.

        “Do it quick and do it over”. And when doing it, keep your head in gear. Very often that intractable problem does not need to be solved at all, it can be simply thrown out the window by a smarter system design.

        Storage? Lots of options which make sense at first glance. I am having fun trying some of the simple ones myself.

        And another obvious point- some things make sense in only large installations, some other things make sense in only small installations. But– lotsa small installations sum to a large installation. So?

      • Political Economist says:

        Copper has a limit to. A good ecologist should realize that eventually everything has a limit, including the so-called “renewables”

        • wimbi says:

          We live on a sphere, spheres have limits- of everything.

          Now, how does the limit for silver compare in size to the limit for copper?

          Make two balls side by side for those two limits. If the one fits on the page, the other one might be sorta hard to notice somewhere around the edges.

        • Nick G says:

          Sure, but are they meaningful limits? And if they are, are there substitutes?

          In the case of copper for PV “fingers”, the answer is “only a little bit”, and “yes”.

          • Political Economist says:

            I am glad we all agree there will be a limit. I am sure the limit to solar will be reached long before 100% roof is covered solar panels.

            Let’s see

            • Nick G says:

              No, we don’t agree that there’s a relevant, practical limit.

              I am sure the limit to solar will be reached long before 100% roof is covered solar panels.

              Which is probably roughly 30% of the overall kWhs needed. More than that would be sub-optimal: you’d need to shift demand to the daytime, or store energy for the night. Shifting demand probably makes sense up to a point, but energy storage is relatively expensive, so you’d reach diminishing returns.

      • Political Economist says:

        US solar price has been falling … but because of imports from China

        Try to have all the solar panels sold in the US to be produced by American workers with American wages, see what happens

        • Nick G says:

          No, that’s not the reason.

          US solar prices have been falling because the cost of manufacturing has been falling – that’s true in the US, Germany, Indonesia, etc. Chinese manufacturers have flooded the market so that PV manufacturers everywhere have very low margins (or are losing money), but the fundamentals are the same. It’s true that Chinese manufacturers have been subsidized, had quality problems, and saved money by polluting. But, that’s not the overall cost picture, it just causes heartburn for non-Chinese competitors, who have moderately higher costs.

          One complication: the cost of purified silicon was temporarily high, which obscured the underlying cost reductions downstream. New supplies of silicon hit the market at the same time Chinese manufacturing ramped up, causing a perfect storm of crashing prices.

      • Ilambiquated says:

        Also silver’s main industrial use, camera film, is rapidly fading.

    • TechGuy says:

      PE Wrote:
      “Solar power plant has an average capacity utilization rate of about 10 percent (this is the OBSERVED capacity utilization rate, not technical or theoretical rate). So 1 GW of solar power plant can generate 1 GW * 8760 * 0.1 = 876 GWH = 0.88 TWH.”

      Divide Name Plate PV power by 4 to get a more realistic estimate. if you take the convolution of daylight in North America applied to PV power output, it averages about 5.5 hours over the entire year. Meaning that for every day PV panels will product at Name plate capacity for about 5.5 hours or 5.5Kwh per day for 1KW in panels. PV panel generate power proportional the angle of incidence to the sun (ie only produce a small fraction of power output when the sun is low on the horizon)

      Your estimate does not include the cost or power storage during night time and overcast conditions. Renewable storage systems can cost many times the cost of the panels. For instance to store the total raw output of a 1KW PV system for nighttime use is about $2800 (using Li-Ion batteries ~ $500 per kwh * 5.5 hrs). The cost of the panels is about $1000 ( ~ $1/Watt). To Store 18Kwh for an average 1KW load (7/24) would cost about $9K in Battery storage and another $3K in PV panels to charge the batteries. The Batteries will also need to be replaced about every 5 years. The PV Panels would need to be replaced about once every 20 years (failure, storm damage, degradation of power output, etc).

      PE Wrote:
      “Solar electric power does not require fuel cost.”
      It does if its backed up by NatGas or Coal fired power plants. The materials in PV Panels consume a lot of fuel. To make Silicon PV panels, Sand is reacted at high temperatures with carbon (usually Coke which originates from either Coal or Oil) to form silicon carbide. Than the Silicon carbon is reacted with a nitric acid (a derivative of nat gas) to refine out the silicon which then is smelted to produce silicon. There is a whole supply chain that relies on Fossil fuels to manufacture PV panels.

      PE Wrote:
      “True, as the fossil fuels become depleted, the fossil fuels prices will rise. However, as the recent events have demonstrated, if the fossil fuels prices rise to levels that begin to suffocate the economy, global economy will enter into recession and fossil fuels prices may collapse.”

      Yes, As I stated, the global economy is likely to go through a serious of demand destruction cycles that will cause a lot of price instability. Drillers will be reluctant to spend $$$ on expensive oil projects wihout price stability, and power companies will also be reluctant to spend big $$$ on displacing Fossil fuel plants. US Power companies are even reluctant to replace the coal power plants that are being forced to shutdown with NatGas or Nuclear.

      Most Coal plant operators are just planning to downsize after coal fire plants are shutdown instead of replacing them. Unless the regulations are reversed, the US will be forced to permanent rolling blackouts. The US is expected to lose about 132 GW of coal power plants by 2020 (~22% of US Generation). In 2016, the US will lose about 44GW of power from coal plants, which will likely case periodic rolling blackouts during the summer of 2017 unless the cuts are rolled back or if the US economy falls.

      http://www.sseb.org/wp-content/uploads/2010/05/Retirements-under-111d-8_14.pdf

      FYI: China has 31 new Nuclear Power Plants under construction and plants to produce 150 GW using nuclear power by 2030. Although I wonder where they are going to get all that uranium from? Of course the words “China”, “Reliability”, “Quality” and “Safety” are oxymorons

      http://oilprice.com/Energy/Energy-General/China-Moves-Forward-with-New-Nuclear-Reactors.html

      • Political Economist says:

        If China does go down the path of nuclear great leap forward, there will be a high risk of a major nuclear incident in the coming years

      • wimbi says:

        ‘Making solar panels requires a lot of fuel”. No persuasive power at all- HOW MUCH fuel compared to the production of energy over the life of the panel? NREL says pv produces all the energy required to make it in two years. 20 yrs is easy.

        So the energy produced looks like around 40/1, solar/ff.

        I would like to hear comments on that NREL number. Wrong? What’s the right one?

        Like unto the air-headed remark so often heard about chain saws- “Yeah, it cuts a lot of wood, but it takes gasoline to run it”. Right, a REALLY small amount relative to the energy in the wood it cuts.

        And down at the primitive level of direct experience unhindered by any deep analysis- my electric bill last year was minus a couple of hundred $, and my gasoline bill was zero + $ 30 for a couple of trips in a Honda fit.

        And then there’s that remark about EV’s–“Only a tiny percent of cars sold”. Right again, and when the first mammals came along- “Only a tiny percent of us reptiles.”

        • TechGuy says:

          Wimbi Wrote:
          “Making solar panels requires a lot of fuel”. No persuasive power at all- HOW MUCH fuel compared to the production of energy over the life of the panel? NREL says pv produces all the energy required to make it in two years. 20 yrs is easy.”

          I didn’t discuss payback on PV panels. Merely discuss that PV production is dependent fossil fuels. As the prices of Fossil fuels rise its going to affect the cost of Production. PE did a good job on the issues with a switch to renewable energy, I was merely adding to his thesis.

          Wimbi Wrote:
          “And then there’s that remark about EV’s–“Only a tiny percent of cars sold”. Right again, and when the first mammals came along- “Only a tiny percent of us reptiles.””
          That was Jeff, not me, but his point is valid. EVs will never dominate Autosales. At best as fuel costs rise, people will turn to much smaller cars (ie smart cars or mini-sized) and reduce driving. The very first victum of peak oil is going to be the economy. People will lose there jobs. Most will be forced to accept part time jobs as global demand for goods and services that depend on cheap energy, decline. Less good & services sold means less jobs needed. In addition, Companies are switching out labor for automated systems. There will less need for workers as machines replace workers.

          In addition, The Grid won’t be able to cope with a large and sudden increase in EV. The US is shutting down 22% of its generation capacity (ie Coal plants) in the next 5 years, and at this time, its not getting replaced. If the coal plants are shutdown, Expect Electricity prices to rise 5 fold, and rolling blackouts.

          • wimbi says:

            Thanks, Tech Guy, for this reply. I don’t often get any reply at all.

            Transportation. Of course private cars of any stripe whatsoever don’t make sense. We need to get around, and having any kind of expensive monster sitting outside 90% of the time doing nothing is an atrocity.

            Wife likes her Leaf, but she and I would both far rather just hit a button on her phone and have some sort of thing show up and carry us where we want to get. That thing, whatever it is, carefully designed to do the job with the least damage to the grandkid’s world.

            As a kid I lived near New Orleans. There was a creaky little toonerville trolly that would take us there over the swamps in about an hour. Very pleasant time doing nothing but staring out the window watching the swamp critters watching us.

            My mother never learned to drive. She just phoned Sam the pickup man, told him what she needed, and after a while he would chug down the road in his model T pickup truck and deliver what he knew from experience she would accept. We got great fun from jumping on and off the back of the truck as it rattled along at a fast walk.

            Highly educational–Hit the ground running, or AOT.

        • Allan H says:

          Surprisingly most people who think solar PV is very dependent upon fossil fuels don’t realize the intensive energy steps in forming metallurgical silicon and then upgraded MG silicon (solar grade) are dependent upon electricity.

      • Nick G says:

        Divide Name Plate PV power by 4 to get a more realistic estimate

        That’s in the best locations: Morocco, Nevada, S. California. Germany struggles to get 10%.

        Location matters.

        Renewable storage systems can cost many times the cost of the panels.

        Which is why you don’t want to plan for a 100% solar grid. Better to use solar to provide power needed in the daytime.

        “Solar electric power does not require fuel cost.” It does if its backed up by NatGas or Coal fired power plants.

        This is a misconception: in a well managed grid, *everything* is backed up by other sources, and everything backs up everything else, in multiple & complex ways. To allocate backup to one source is double counting.

        Solar is actually pretty reliable – for the most part, you know when you’ll have it, and when you won’t. It is indeed very variable from day to night, and summer to winter, but that’s different – that’s variance, not reliability/predictability.

        Both wind & solar are installed in small units so you don’t have the danger of a large increment failing suddenly, like you do with nuclear and coal. When wind & solar decline, it’s pretty predictable – which is what utilities need.

        “forecasts are helping power companies deal with one of the biggest challenges of wind power: its intermittency. Using small amounts of wind power is no problem for utilities. They are accustomed to dealing with variability—after all, demand for electricity changes from season to season, even from minute to minute. However, a utility that wants to use a lot of wind power needs backup power to protect against a sudden loss of wind. These backup plants, which typically burn fossil fuels, are expensive and dirty. But with more accurate forecasts, utilities can cut the amount of power that needs to be held in reserve, minimizing their role.

        Before the forecasts were developed, Xcel Energy, which supplies much of Colorado’s power, ran ads opposing a proposal that it use renewable sources for a modest 10 percent of its power. It mailed flyers to its customers claiming that such a mandate would increase electricity costs by as much as $1.5 billion over 20 years.

        But thanks in large part to the improved forecasts, Xcel, one of the country’s largest utilities, has made an about-face.

        It has installed more wind power than any other U.S. utility and supports a mandate for utilities to get 30 percent of their energy from renewable sources, saying it can easily handle much more than that.

        ..forecasts from NCAR are already having a big effect. Last year, on a windy weekend when power demand was low, Xcel set a record: during one hour, 60 percent of its electricity for Colorado was coming from the wind. “That kind of wind penetration would have given dispatchers a heart attack a few years ago,” says Drake Bartlett, who heads renewable-energy integration for Xcel. Back then, he notes, they wouldn’t have known whether they might suddenly lose all that power. “Now we’re taking it in stride,” he says. “And that record is going to fall.””

        http://www.technologyreview.com/featuredstory/526541/smart-wind-and-solar-power/

        • wimbi says:

          Now, I offer a slight change to the wind system design.

          Take off all those transmissions and alternators ( chief cost and maintenance) and replace them with a robust crank floating on plain bearings, the kind that lasts more or less forever.

          The crank pulls tension con rods attached to a water pump at the base of the turbine tower. That puts all maintenance right on the ground.

          Connect all those 3-5 megawatt pumps to a central hydro-turbine-alternator- way cheaper than all those little ones, and totally alert to despatch

          The water either goes straight to the turbine, and/or goes to a big hydraulic accumulator conveniently located in that big salt hole down under.

          No hole? No problem, we have lotsa hydrogen warheads just sitting around hoping for useful employment.

          This all works even better offshore. No need for the hole or the bomb.

    • Allan H says:

      The following chart depicts actual long-term contract power purchase agreement prices for wind energy projects over time, showing the variation in pricing across regions of the country as well as project size

    • Allan H says:

      Even though Germany and Great Britain are at latitudes further north than Newfoundland, Canada they are hot on the solar PV trail. I assume they understand that PV’s are just one part of a mix needed to provide electricity. Here is an article discussing a record breaking day for the two countries.
      http://www.theguardian.com/environment/2014/jun/23/uk-and-germany-break-solar-power-records
      Here is an interesting site that shows the power produced across the country, with the ability to set the specific date and run that day.
      http://www.sma.de/en/company/pv-electricity-produced-in-germany.html

  21. Futilitist says:

    In his blog entry, As Night Closes In, at:

    http://thearchdruidreport.blogspot.com/

    John Michael Greer pays his respects to the recently deceased William Catton. By misrepresenting and soft-pedaling the stark implications of his life’s work! I left Greer a comment. I wanted to post it here to see what people think (and mostly because I don’t know for sure that I actually succeeded in posting it there, since JMG reviews comments before they post). Here is/was my comment to Greer:

    “Hello John. It’s been a while.

    I very seriously doubt that Catton would enjoy your eulogy, since your life’s work seems to be mostly about obscuring the real implications of his life’s work.

    Even here, you list the various items to be found on the cover of Overshoot, and talk at length about each one, except the very last one.

    crash: die-off

    You are always trying to paint a picture of collapse that looks like a long decline. But that is not where Catton’s logic leads at all. His logic leads to a rapid collapse.

    Aside from the usual stuff about how doomers love Hollywood movies, why can’t you ever accept that a rapid collapse is not only very likely, it is almost certainly the natural outcome?”

    • Thanks Futilitist, that is my sentiments exactly. I probably would have written something very similar. But I didn’t because I don’t read Greer except on the occasions when his blog is re-posted on Peakoil.com.

      • Futilitist says:

        Thanks for commenting Ron. And thank you for creating this site which allows free and uncensored debate.

        I never intended to open (reopen?) this can of worms, but for those who are really interested, here is a little trip down memory lane. (I know you will get a big kick out of it, Ron.):

        http://futilitist.blogspot.com/2012/08/the-cat-in-john-michael-greers-kitchen.html

        How the whole thing got started. Highly intriguing excerpts of an old Oil Drum comments thread featuring many of the folks who regularly comment here: Ron Patterson (as Darwinian), Futilitist (as LOREN_SOMAN), Caelan MacIntyre (as Tribe Of Pangaea – First Member), Dennis Coyne (as dcoyne78), and some I haven’t seen here like Ghung, sgage, Jedi Welder, jokuhl, and even the ever hopeful AlanfromBigEasy. And, of course, John Michael Greer (as himself). Leanan acts as moderator/censor.

        http://futilitist.blogspot.com/2012/09/lets-get-real_1.html

        In which I issue a totally uncensored, no holds barred, indictment of the Charlatan, John Michael Greer. Not for the faint of heart.

        http://futilitist.blogspot.com/2012/09/memory-hole.html

        A short piece on internet censorship.

        http://futilitist.blogspot.com/2012/09/the-big-formal-scientific-critique.html

        The “BIG FORMAL SCIENTIFIC CRITIQUE PAPER THINGY”. A formal, peer reviewed, scientific critique of John Michael Greer’s Theory of Catabolic Collapse. (OK, not really!)

        (*A couple of disclaimers up front:
        1. I have nothing personal against JMG. He seems like a nice enough guy. But his ideas are so far off base, it is difficult for me to remain composed. So, I am not anti-Greer. Just pro-satire.
        2. I am certainly not trying to promote my own blog here. My blog did not exist before my unfortunate run in with Greer (and completely unjustified banning from TOD as a result), and I don’t even maintain my blog anymore. I haven’t posted an entry since 2012.)

        • Mikeb says:

          What’s his expertise? Professional Druid?

          I’d never paid much attention to him, until listening to a radio program one day, he comes on and announces that everyone who currently survives on medication is going to die.

          It was one of those watershed moments that led me to the humbling realization that I had been had by the peak oil movement, which is apparently populated mostly by cranks and pseudo-experts.

          You just don’t find the robust opinions of professionals behind the peak oil thesis that you find with other issues, such as climate change, vaccinations, and genetic modification, where whole scientific bodies issue a consensus.

          No, with peak oil it’s largely druids, organic farmers, 9-11 conspiracy theorists, “cultural critics,” astrologers, and bankers.

          Today, I’ll read this site sometimes for Jeffrey Brown’s comments, and go to Robert Rapier’s site. And that’s about all these days.

          • Boomer II says:

            It was one of those watershed moments that led me to the humbling realization that I had been had by the peak oil movement, which is apparently populated mostly by cranks and pseudo-experts.

            I stumbled onto the peak oil discussions to get a better grasp of the future of fracking.

            I find the peak oil discussions about well decline rates to be very useful. It involves some great research.

            But also in the peak oil discussions are speculations about the future. Those differ widely. Some are extreme doomers who go so far as to predict the extinction of homo sapiens relatively soon. Others predict various forms of economic and social collapse.

            I think you have to separate the technical discussions about oil availability from the speculations about what will happen as oil becomes much more expensive and harder to get.

            • Thirunagar says:

              Ditto! Its all about separating technical discussion and speculation. The former is useful, the later – not so much. I do enjoy OFM though.

            • Futilitist says:

              I think that technical discussions about oil availability are meaningless (and boring) without speculations about the inherent implications. And they can’t really be separated anyway, since the implications of future oil availability dynamically feedback to effect future oil availability.

              • Boomer II says:

                I think that technical discussions about oil availability are meaningless (and boring) without speculations about the inherent implications.

                But people differ wildly on the implications. Then everyone spends time discussing the future, which is fine, but not necessarily what this forum is about.

                • Futilitist says:

                  “…everyone spends time discussing the future, which is fine, but not necessarily what this forum is about.”

                  I think this forum is about what people spend time discussing here.

                  • Boomer II says:

                    My understanding the forum is primarily focused on what Ron posts. And that’s mostly about numbers.

                    We do have people jump in with other topics, but those tend not to continue very long because there isn’t a commonality on those topics. We’ve got renewable energy folks, doomers, anarchists, science skeptics, new agey types, and so on. But not enough of any of them to dominate here.

                  • wimbi says:

                    Right, and I for one wish they would discuss solutions more. I am fully fed up with endless point-outs of the multitudes of the goddam problems.

                    Yep, we are in for it all right. Now, what do we actually DO?

                • Thirunagar says:

                  What is boring and meaningless for you is exactly what I am looking for! The data’s and models gets consolidated here better than any other place. MSM while useful is diffuse and noisy.

          • Futilitist says:

            Hello Mikeb.

            You said:
            “I’d never paid much attention to him, until listening to a radio program one day, he comes on and announces that everyone who currently survives on medication is going to die.”

            I agree with you that Greer is a crank. But amazingly, in this case, Greer is correct. If peak oil leads to the collapse of industrialized civilization, pharmaceuticals will definitely be in short supply.

            Do you have a preconception that collapse is impossible?

            “It was one of those watershed moments that led me to the humbling realization that I had been had by the peak oil movement, which is apparently populated mostly by cranks and pseudo-experts.”

            Unfortunately, speaking out about the possibility of social collapse is considered highly taboo. Since peak oil is very likely to trigger a near term social collapse and die-off, it is not a popular topic you might see on the evening news. Thus, the lack of “robust opinions of professionals” informing you about peak oil might indicate something about just how serious a threat peak oil actually is.

            You say you are looking for the “robust opinions of professionals” as opposed to “cranks and pseudo-experts”. Are you sure you aren’t just seeking reassurance?

    • cytochrome c says:

      Well said!

      Disclaimer: I’m not a Greer fan, as he is too Postmodern for me, and his science literacy is sometimes questionable.
      Good writer, but not somewhere I go often.

      • Old farmer mac says:

        Greer may be right or wrong in terms of his prediction of a long slow collapse. I once believed collapse would be fast myself and fully recognize that it indeed may arrive suddenly and happen fast.

        But nowadays I believe that collapse will more likely occur piecemeal fashion in time and place with collapse in the US and Canada playing out in a way not altogether different from what Greer envisions. And while I fully understand that SOMETHING is going to get us ALL sooner or later I do not believe that we are necessarily looking at the end of industrial civilization. There will be fossil fuels and minerals available in smaller quantities for a very long time- and the MUCH reduced population after collapse is going to know how to use them much more efficiently.

        I have inquired of a number of reputable physicists and all of them assure me that there is nothing in the laws of nature that precludes an economy based entirely on renewable energy – that wind and solar power can be scaled in theory to any level we please in terms of the energy returned on the energy invested.

        Now I personally try really hard to discover and eliminate my own blind spots but no doubt I am wrong about some strongly held beliefs. The PROBLEM is that you can’t get rid of erroneous beliefs because you don’t know WHICH ones are erroneous.

        I THINK I know better than most of the people posting in respect to some given point or another. But that does not mean I know more than they do or that their expertise in a given subject is not far superior to my own. So – the point is that just about everybody is apt to be wrong about some thing or some things.

        Unless their mistaken beliefs indicate fundamental ignorance or misunderstanding we should not question their overall credibility.

        Greer may be right or wrong on a few given points but he is an awesomely knowledgeable guy taken all the way around. I rate him as well within the top one per cent of all the social commentators I have ever read.

        None of us actually know in detail how the future is going to play out.

        Greer is about as far from a charlatan or a fraud as you will ever find. Forget the Druidry ( which has very little to do with what he writes other than as frame of reference useful in comparing various societies and historical periods ) and focus on what he actually writes and you will be the richer for doing so.

        But be forewarned. If the tldr too long did not read meme applies to you then Greer is not for you. Greer is about nuance and about understanding in depth.

        • Futilitist says:

          Hello Old farmer mac.

          Thanks for commenting. I think we may have gotten off on the wrong foot. Sorry, my bad.

          I think your social commentary is far superior to Greer’s. And, as far as I know, you don’t make your living off your opinions like Greer does.

          And forget the Druidry, just like you said. I don’t think being an Archdruid has anything to do with it. It doesn’t matter to me if he is crazy. Many people think I am crazy. So what? Crazy people often have good insights. Greer rarely does.

          Take a close look at Greer’s “Theory” of Catabolic Collapse sometime. It is nothing but gobbledygook pseudoscience bullshit! But it looks all cool and “sciency”. An he has rationalized his whole slow collapse concept on it. From that incredibly weak foundation, Greer has managed to fool his legions of fans and make a pretty good living off of them. He has figured out how to package and sell false hope to an army of wishful thinkers.

          As I explained to Ghung:
          I also have nothing personal against JMG. Or anyone, actually. My target in all of this is not really Greer at all. He did not originate the idea of a slow collapse. The idea originates in the subconscious minds of it’s adherents. It is just an emotional response, a rationalization to minimize a terrible dilemma that they cannot face head on.

          Greer is probably genuine in his belief in slow collapse. But when Greer dresses his ideas in scientific jargon and mumbo jumbo, I think he crosses the line.

          Please reread my formal indictment to see exactly why John Michael Greer is a Charlatan:

          http://futilitist.blogspot.com/2012/09/lets-get-real_1.html

          Ofm, here is something you said that I am very interested in:

          “Greer may be right or wrong in terms of his prediction of a long slow collapse. I once believed collapse would be fast myself and fully recognize that it indeed may arrive suddenly and happen fast.

          But nowadays I believe that collapse will more likely occur piecemeal fashion in time and place with collapse in the US and Canada playing out in a way not altogether different from what Greer envisions.”

          What exactly changed your mind?

          • Nick G says:

            As far as I can tell, Greer’s theory is based on simple observation: many societies have collapsed slowly in the past.

            On the other hand, that points out a basic problem: modern industrial society doesn’t work the same way as an agricultural society. Ag-based societies simply can’t grow quickly, and if they try to they create Ponzi empires, which collapse when they run out of new victims to conquer.

            For the same reason, the kind of research that Catton and Diamond have done isn’t really very relevant.

            • Futilitist says:

              Greer’s historical observations are very selective. His favorite example is the fall of Rome. He says it fell slowly but that is not really true. He completely disregards the evidence pointing to a series of rapid population declines. The fall of Rome should be seen as what it actually was.

              Diamond does a lot of interesting anthropological research, but he dances around drawing the right conclusions. His book on collapse contains about one sentence on peak oil.

              Catton takes an ecological, not a historical or anthropological perspective. Please read this:

              http://dieoff.org/page15.htm

              Catton’s ideas are very relevant. You should try to understand them.

  22. Toolpush says:

    It seems like Canadian Heavy crude is only just now reaching the Gulf Coast is any quantity.

    https://rbnenergy.com/they-did-it-seawaycanadian-heavy-crude-arrives-at-the-gulf-coast-by-pipeline

    They Did It Seaway – Canadian Heavy Crude Arrives At The Gulf Coast By Pipeline

    The opening up in December last year (2014) of the Enterprise/Enbridge joint venture 450 Mb/d Seaway Twin pipeline from Cushing to Freeport, TX in conjunction with the Enbridge 585 Mb/d Flanagan South line from Pontiac, IL to Cushing has enabled significant pipeline flows of heavy Canadian crude to reach the Texas Gulf Coast. According to our friends at Genscape, average daily flows on Flanagan South since December 19, 2014 have been 389 Mb/d and average flows on the Seaway Twin have been 240 Mb/d

    Apparently up to now the mid west refineries have been snaffling it all, and rail has generally been too expensive, also LTO has been out bidding capacity on the pipelines. The article goes into detail about competition from Mexico, but doesn’t mention Venezuela? It appears the Keystone protesters have had some effect?

    You learn something new every day?

  23. Toolpush says:

    And the cuts keep on coming!

    Pioneer Energy Services Reports Fourth Quarter 2014 Results –

    Currently, 38 drilling rigs are earning revenues under drilling contracts, of which 26 rigs, or 68%, are earning under term contracts. In response to the dramatic decline in oil prices during recent months, we have received early termination notices for 12 drilling rigs, 10 of which are included in the 26 rigs currently earning revenues under term contracts. –

    : http://www.noodls.com/viewNoodl/26934573/pioneer-energy-services-corp/pioneer-energy-services-reports-fourth-quarter-2014-results#sthash.onCYVqQE.dpuf

    Nearly 40% of their long term contracts terminated early! Plus rigs that have just not had there contracts renewed. I wonder how Continental and EOG are going to read when they finally get around to reporting?

    • ezrydermike says:

      fwiw department. retail gasoline out here in SoCal has jumped about $0.40 per gal in the last 2 weeks.

  24. Ronald Walter says:

    Oil at 10 dollars?

    http://www.bloombergview.com/articles/2015-02-16/oil-prices-likely-to-fall-as-supplies-rise-demand-falls

    25 cents per gallon, not 2.50, finally, a price break that is good for the consumer. Oil producers will have to produce eight to ten times the current production of oil to break even. Shouldn’t be a problem.

    Speaking of bursting bubbles, BDIY, Baltic Dry Index at 522 today, a new low, doing the limbo.

    Something is rotten in Rotterdam.

    • I don´t think it´s going to drop below $50 Brent. It makes more sense to cut back activity and shut in wells.

    • Jeffrey J. Brown says:

      Excerpt from the March, 1999 Economist Magazine cover story on oil prices:

      “Consumers everywhere will rejoice at the prospect of cheap, plentiful oil for the foreseeable future.

      “Policymakers who remember the pain of responding to oil shocks in 1973 and in 1979-80 will also be pleased. But the oilmen’s musings will not be popular with their fellows. For if oil prices remain around $10, every oil firm will have to slash its exploration budget. Few investments outside the Middle East will any longer make sense.

      “Cheap oil will also mean that most oil-producing countries, many of them run by benighted governments that are already flirting with financial collapse, are likely to see their economies deteriorate further. And it might also encourage more emissions of carbon dioxide at just the moment when the world is trying to do something about global warming.

      “Yet here is a thought: $10 might actually be too optimistic. We may be heading for $5.”

      The annual price of Brent rose at 34%/year from 1998 to 1999, and the 1998 to 2013 rate of increase in annual Brent crude oil prices was 14%/year.

      In any case, the Bloomberg column linked above as well as the item below were both posted on Peakoil.com:

      Discoveries of new oil and gas reserves drop to 20-year low

      http://peakoil.com/geology/discoveries-of-new-oil-and-gas-reserves-drop-to-20-year-low

      New finds of oil and gas are likely to have been about 16bn barrels of oil equivalent in 2014, IHS estimates, making it the fourth consecutive year of falling volumes. That is the longest sustained decline since 1950.

      Because new oilfields generally take many years to develop, recent discoveries make no immediate difference to the crude market, but give an indication of supply potential in the 2020s.

      Peter Jackson of IHS said: “The number of discoveries and the size of the discoveries has been declining at quite an alarming rate . . . you look at supply in 2020-25, it might make the outlook more challenging.”

      So far there has not been a single new “giant” field — one with reserves of more than 500m barrels of oil equivalent — reported to have been found last year, although subsequent revisions may change that.

      The figures for declining discoveries are particularly striking because exploration activity in 2014 showed little impact from the sharp fall in oil prices in the second half of the year. The last time oil and gas discoveries were around 2014’s level was in the mid-1990s, when exploration activity was hit by a period of weak prices.

      Last year, the number of exploration and appraisal wells drilled worldwide was only 1 per cent lower than in 2013. This year, exploration budgets are being cut back across the industry and the number of wells drilled is likely to fall further.

      Depending on later revisions, 2014 may turn out to have been the worst year for finding oil and gas since 1952.

      • Jeffrey J. Brown says:

        “Consumers everywhere will rejoice at the prospect of cheap, plentiful oil for the foreseeable future.”

    • Allan H says:

      OPEC is seeing demand fall in the near future and possibly a continued fall in demand. The Saudis have determined that their oil empire will fizzle after 2030 due to falling production. These are very smart people that are attempting to maximize their business and are keeping up production during a downturn in prices, should tell everyone something. Bloomberg’s view of playing chicken does make some sense, but can it play out in the real world?
      If OPEC keeps up production against a low oil price, high cost players such as the shale producers will default. Oil companies in the US (and possibly elsewhere) will have to sell assets as their values fall since proven reserves are now much lower in amount. Basically a lot of oil assets will be going on the market at low price and investors will flock to the fire sale and production will rise again. Venezuela will be forced to let in foreign producers to straighten out their mess thus heartening the market. The US will support further development of oil production with government monies due to the large contingent of “US energy independence” type politicians and voters.
      All in all it is possible the price may fall somewhat before it rises, but I doubt if it will rise much very quickly. The Saudis know that a fast high price rise will further kill future demand permanently and will provide as much oil as possible to keep that from happening.

      So the US can import more crude for a while or it can stir up problems in oil producing countries to reduce their output and force a dramatic rise in price, restarting the US shale production.
      In the meantime, efficiency, conservation and alternatives will keep eating away at oil demand. Most people in the world don’t use much oil and so could care less. It’s only about 2 billion people are hooked on oil, that leaves 5 billion with minimal oil use.
      It’s obvious that few of those five billion are going to get much extra oil in the future. They will seek alternatives and let oil go, especially as a transport fuel. It is also obvious that the 2 billion people now hooked on oil will have to dramatically reduce their use of oil in the next two decades. High prices will accelerate the reduction in consumption, low prices will reduce production in certain regions. So we will see a typical price cycle (up and down) until disruptive technologies and societal changes take over. The trend toward lower production and less consumption is clear. How bad the roller coaster ride will be is unknown at this point, but barring major wars the degree of hurt will be dependent upon the degree of stubbornness of the oil industry and related industries to change.

      • Jeffrey J. Brown says:

        Of course, total vehicle sales hit an all time record high in the US and globally in 2014, with electric and plug-in hybrid vehicles reportedly accounting for about one-half of one percent of total global vehicle sales in 2014.

        • Watcher says:

          Ya that pretty much encapsulates the Everything Is Going To Be Fine crowd.

          Consumption is falling, except for those places where it is not, which happen to be the only places that matter and who will fight huge wars about it.

          But they are right. For the 800 million who will be left, everything will be fine — for a few years before no pharmaceuticals starts to whittle them down further.

        • Nick G says:

          Which is far more than anyone expected 10 years ago!

          • Watcher says:

            So is the global total of QE.

            • Nick G says:

              How does QE produce more oil?

              It can lower interest rates, but shale oil economics don’t really depend very much on interest rates: the fact that LTO depletes quickly also means that nominal values aren’t really very different from net present values. IOW, you produce it quickly, so the cost of money doesn’t really affect you much because you don’t have to wait long for the return on your investment.

              • Futilitist says:

                “How does QE produce more oil?”

                QE produces more oil by pumping up the economy into which the oil is being pumped. Without massive QE, we might all be dead already.

                • Nick G says:

                  Wow. It’s nice to see there are some people who are impressed by the power of QE.

                  Most US Republicans want to deny that it has any power at all. In fact, many politicians around the world want to make that argument.

                  On the other hand most respected economists think that it’s a moderately effective. Neither magically powerful, but not ineffective either.

        • Ilambiquated says:

          Higher new car sales in a saturated market like the US does not necessarily imply more miles driven.

      • Allan, what is your source of this information?

        The Saudis have determined that their oil empire will fizzle after 2030 due to falling production.

        • Allan H says:

          Ron, I can’t find the original article right now. It was part of a news article on the Saudi solar investment program saying how they expect diminishing oil production 2030 to 2040 and are replacing some of the oil used for power with solar. I know they are also developing natural gas for domestic use only with the same idea in mind (http://petroglobalnews.com/2014/11/saudi-arabia-to-double-gas-output-by-2030/).
          After Citigroup predicted increasing internal use of oil would eliminate exports by 2030, the whole thing becomes obvious. Either change the internal use of oil or failing fields and increased domestic use will end the export capability of the country.
          http://www.nbcnews.com/id/42457058/ns/business-world_business/t/oil-supply-dwindles-saudis-turn-renewable-energy/#.VOOYY7c3O1s

          And yet another take on the Saudi “pump a lot” policy:
          http://www.nbcnews.com/id/42457058/ns/business-world_business/t/oil-supply-dwindles-saudis-turn-renewable-energy/#.VOOYY7c3O1s

        • PeterEv says:

          This came from a debate with Matt Simmons at the CSIS around 2004. The 2030-ish comes from the Saudis pumping 12 Mbps at a reserve figure of 256 billion barrels. At 10 Mbps, the date is extended to the early 2040s.
          The unknown is the actual reserve figure. I’ve seen estimates slow as 156 billion barrels.

          • Then you haven’t seen my estimates. I put Saudi Reserves at 90 billion barrels, give or take 10 billion or so.

            • PeterEV says:

              Hi Ron,

              I’m just trying to related what I have read from about a decade ago. The 156 Billion number came from the late Samsam Bakhtiari.

              I found the slides in PDF format from the CSIS February 24, 2004 debate between Simmons and Aramco and when I tried to upload them here, I received an “invalid image” message which is understandable. Ron I will email the PDFs to you if that is okay by you. They are 3.3 and 5.0 MB in size and ask you all for advise on how to make them available to people using this site.

              Attached is Aramco slide 37 where the peaking dates come in for a steady poduction of 10 MBOD. I have no way to verify the veracity of the data but just to present it as a historical benchmark between two “in the know” parties. I tried to upload the second file but the Browse would only let me upload one at a time.

            • PeterEV says:

              Here is the second file:

          • Jeffrey J. Brown says:

            A review of the Saudi 2002 to 2005 and the 2005 to 2013 responses to rising global oil prices.

            Saudi net exports (total petroleum liquids + other liquids, EIA) increased from 7.1 mbpd in 2002 to 9.1 mbpd in 2005, in response to annual Brent prices doubling from $25 in 2002 to $55 in 2005.

            Saudi net exports have been below their 2005 net export rate of 9.1 mbpd for 8 straight years (falling to 8.7 mbpd in 2013), in response to annual Brent crude oil prices doubling from $55 in 2005 to the $110 range for 2011 to 2013 (and it appears that 2014 net exports remained below the 2005 rate).

            One can argue that the Saudis chose to reduce their net exports after 2005, but in my opinion to the extent that the Saudis have any excess capacity, it consists largely of high water cut production.

            A chart showing normalized values for Saudi Arabia for 2005 to 2012 follows. I estimate that remaining post-2005 Saudi CNE (Cumulative Net Exports) were down to about 60% at the end of 2013. By definition, it’s not whether the Saudis have depleted their remaining post-2005 CNE, it’s only a question of by what percentage.

            The Saudi Export Capacity Index (ECI, the ratio of production to consumption) Ratio fell from 5.7 in 2005 to 4.0 in 2013. Based on the eight year rate of decline in their ECI Ratio, I estimate that their post-2005 CNE are on the order of 60 Gb (billion barrels), with 25 Gb having been shipped from 2006 to 2013 inclusive, putting their estimated post-2005 CNE at about 40% depleted in only 8 years.

            The Six Year Case History consists of the major net exporters that hit or approached zero net exports from 1980 to 2010, excluding China. Based on the initial 1995 to 2002 rate of decline in their combined ECI Ratio, their estimated post-1995 CNE were 9.0 Gb. The actual value turned out to be 7.3 Gb.

            • Jeffrey J. Brown says:

              Incidentally, as noted above, I put estimated remaining post-2005 Saudi CNE (Cumulative Net Exports) at about 35 Gb (total petroleum liquids + other liquids).

              They net exported 3.2 Gb/year in 2013.

              So, the ratio of estimated remaining Saudi CNE divided by 2013 net exports (analogous to a reserve to production ratio) would be 11 years.

      • Old farmer mac says:

        ”So the US can import more crude for a while or it can stir up problems in oil producing countries to reduce their output and force a dramatic rise in price, restarting the US shale production”

        The very fucking LAST thing the US wants right now is higher oil prices.

        The oil industry wants higher prices.

        NOBODY AT ALL outside the industry from Joe Sixpack to the President wants higher prices.

        I don’t know how many people there are in the oil biz but my guess is that they are outnumbered by at least several hundred to one.

        • Futilitist says:

          The alternative crowd here wants (and expects) to see higher oil prices. Their whole world depends upon it.

          • Nick G says:

            People who are primarily concerned about PO don’t want high prices, they just see them as inevitable and therefore something which needs solutions.

            People who are primarily concerned about the externalities of oil (like oil wars, security costs and pollution) argue that oil is *already* high cost, but the market isn’t pricing oil properly.

            • Futilitist says:

              Nick,

              People like you, who promote the idea that alternatives will somehow save us, need high oil prices. It is critical to your narrative on how a transition can take place.

              • Nick G says:

                You’ll need to expand on that – you seem to have a narrative in mind, so just write it out…

                • Futilitist says:

                  My alternate narrative is very well explained by William Catton:

                  http://dieoff.org/page15.htm

                  He covers a lot of relevant history from an ecological perspective. I extend his line of reasoning to include things like the Great Recession. This suggests that we are already in collapse. Dennis Meadows also agrees.

                  I suspect you don’t really understand the ecological perspective. So you have different explanations for every historical event; explanations that conform more to your hopes and dreams than to reality.

                  If we are already in collapse, it is too late for alternatives. Pretty simple.

                  • Nick G says:

                    Oh, I understand the ecological argument perfectly. I’ve been following this issue since the Club of Rome LTG report came out.

                    Could you find the page in his text where he talks about the significance of high oil prices when discussing alternatives?

                  • Boomer II says:

                    I just looked at your link, and then I went to the last chapter of his book.

                    In neither case does he say it is too late to do anything and that homo sapiens is doomed. Based on what I read (granted I was only skimming) he said the best chance of survival for the species is to assume the worst will happen, and then take steps based on that.

                    My view has always been as long as the species keeps going, the species is doing what it needs to do. And if homo sapiens can’t survive on Earth, Earth is probably so messed up that it is time for one of the major lifecycles on the planet where the planet begins anew. One more step in the history of Earth and its inhabitants.

                  • Futilitist says:

                    “I just looked at your link, and then I went to the last chapter of his book.

                    In neither case does he say it is too late to do anything and that homo sapiens is doomed. Based on what I read (granted I was only skimming) he said the best chance of survival for the species is to assume the worst will happen, and then take steps based on that.”

                    The book came out in 1980. Since then, we haven’t taken those steps.

                    The same is true for the Club of Rome and their Limits to Growth. They said if we didn’t change course we could expect serious trouble ahead. We did not change course and instead continued on a trajectory toward collapse. We have already reached the point of no return that they forecast. Dennis Meadows thinks the collapse has begun.

                    It is far too late to start doing the “right” thing now. We should have listened better then. Oh well.

                    I think it is amazing that Meadows and Catton took completely different approaches and came up with the same answer. Collapse.

                    That is called consilience. It is pretty hard for them both to be wrong.

                  • Caelan MacIntyre says:

                    Succinctly-put, Futilitist.

                    To embellish…
                    Fenner, who [was]
                    “…emeritus professor of microbiology at the Australian National University (ANU) in Canberra, said homo sapiens will not be able to survive the population explosion and ‘unbridled consumption’, and will become extinct, perhaps within a century, along with many other species…

                    Fenner told The Australian he tries not to express his pessimism because people are trying to do something, but keep putting it off. He said he believes the situation is irreversible, and it is too late because the effects we have had on Earth since industrialization… rivals any effects of ice ages or comet impacts.”

                    We have yet to see some of our effects, due, in part, to some kind of thermal oceanic delay on its effects on climate.
                    In a sense, EV-advocation is really about ‘unbridled consumption’-advocation, because it is about continuing the car-culture and all that comes with it, such as going to one’s job to make money to feed the consumptive crony-capitalist plutarchy system.
                    As I’ve writ before, TPTB of this system are not going to willingly let go, and this is going to be a problem and already is.
                    As I’ve also write before– perhaps on TOD– is that ‘[capitalist/scarcity-based] greed has hit the glass ceiling’.
                    It really does appear that TPTB will have to let go and that getting out of this conundrum may largely be about democratizing society.

  25. Jeffrey J. Brown says:

    What ISIS Really Wants

    http://www.theatlantic.com/features/archive/2015/02/what-isis-really-wants/384980/

    The Islamic State is no mere collection of psychopaths. It is a religious group with carefully considered beliefs, among them that it is a key agent of the coming apocalypse. Here’s what that means for its strategy—and for how to stop it.

  26. Lloyd says:

    ‘Anti-petroleum’ movement a growing security threat to Canada, RCMP say
    http://www.theglobeandmail.com/news/politics/anti-petroleum-movement-a-growing-security-threat-to-canada-rcmp-say/article23019252/
    While Prime Minister Stephen Harper has identified the threat as violent extremists motivated by radical Islamic views, the legislation would also expand the ability of government agencies to infiltrate environmental groups on the suspicion that they are promoting civil disobedience or other criminal acts to oppose resource projects.(Emphasis mine.)

    The RCMP has labelled the “anti-petroleum” movement as a growing and violent threat to Canada’s security, raising fears among environmentalists that they face increased surveillance, and possibly worse, under the Harper government’s new terrorism legislation.

    In highly charged language that reflects the government’s hostility toward environmental activists, an RCMP intelligence assessment warns that foreign-funded groups are bent on blocking oil sands expansion and pipeline construction, and that the extremists in the movement are willing to resort to violence.

    “There is a growing, highly organized and well-financed anti-Canada petroleum movement that consists of peaceful activists, militants and violent extremists who are opposed to society’s reliance on fossil fuels,” concludes the report which is stamped “protected/Canadian eyes only” and is dated Jan. 24, 2014. The report was obtained by Greenpeace.

    “If violent environmental extremists engage in unlawful activity, it jeopardizes the health and safety of its participants, the general public and the natural environment.”
    —snip—
    The British Columbia Civil Liberties Association has already launched challenges to the RCMP complaints commission and the Security Intelligence Review Committee – which oversees the Canadian Security Intelligence Service – over alleged surveillance of groups opposed to the construction of the proposed Northern Gateway pipeline in B.C.

    “These kind of cases involving environmental groups – or anti-petroleum groups as the RCMP likes to frame them – are really the sharp end of the stick in terms of Bill C-51,” said Paul Champ, a civil liberties lawyer who is handling the BCCLA complaints. “With respect to Bill C-51, I and other groups have real concerns it is going to target not just terrorists who are involved in criminal activity, but people who are protesting against different Canadian government policies.”

    In Canada, we’ve had a war on dissent for the entire period of the Harper government. Worse, in fact- a war on democratic process. The fact that they are trying to further legalize and normalize this is disturbing, mainly because no government wants to roll back it’s powers, so even if we get a new government in the fall, they aren’t going to repeal this, because they will fear the backlash from the anti-Islamic hordes (FYI, anti-Islamic hordes are the general uninformed populace.)

    “This document identifies anyone who is concerned about climate change as a potential, if not actual – the lines are very blurry – ‘anti-petroleum extremist’ looking to advance their ‘anti-petroleum ideology,’” said Keith Stewart, a climate campaigner for Greenpeace.

    So its’ not just the FBI going after the Deep Green Resistance. The governments on both sides of the border are going out of their way to make dissent more dangerous. Soon enough, we won’t be dissenters here, we will be framed as environmental Jihadists, encouraging the weak minded who can’t see the correctness of the government’s vision to take stronger action.

    -Lloyd

    • Jay Faulders says:

      All environmental laws, just like all safety regulations, are invented by left-wing government bureaucrats explicitly for the purpose of punishing and destroying successful businessmen.

      Sent from my iPhone using Tapatalk

      • Boomer II says:

        Except for those laws that prevent companies from killing you with pollution, unsafe medicines, unsafe foods, and so on.

        The reason we get those laws and regulations is that some company or industry overstepped its bounds, there were obvious safety issues, and the problem wasn’t being corrected without government intervention.

        Now, if you want to go Libertarian, and then sue the hell out of these companies and industries whenever they cause damage to property and harm people, you could do so, but if the lawsuits are property enforced by courts, the companies and industries will actually pay far more in damages than they are now penalized by regulations.

        • Boomer II says:

          Okay. Here’s a scenario. Some guy sells you a food or medicine that he tells you is safe. Your child takes it and dies. There are no laws against what he did so he isn’t thrown into jail.

          In a fit of helpless and anger you shoot him. Frontier justice.

          That’s how it might have been done in the “snake oil” days.

      • Doug Leighton says:

        “All environmental laws, just like all safety regulations, are invented by left-wing government bureaucrats explicitly for the purpose of punishing and destroying successful businessmen.”

        Congratulations, you win: That’s the stupidest comment I’ve yet to read on Ron’s Blog.

        • Boomer II says:

          I read it and thought it could have been some sort of joke. But given what some “trolls” post here, he probably was serious.

          • Old farmer mac says:

            Doug is RIGHT. This idiot tops Ellen Anderson for stupidity without even taking a deep breath.

      • All environmental laws, just like all safety regulations, are invented by left-wing government bureaucrats explicitly for the purpose of punishing and destroying successful businessmen.

        Ignorant fools who post such stupid shit as this on this blog don’t post it but once.

    • Boomer II says:

      I am sorry to see the trends in Canada. I’ve always looked toward it to be model of rational thinking and a country that values and preserves its natural beauty.

    • Allan H says:

      Never let common sense or what the citizens want get in the way of big business making more money. Sometimes I wonder who the real terrorists are and then I remember.

  27. Ronald Walter says:

    That Buffalo Commons that Frank Popper touted as what was going to happen to some of the Great Plains, a bold prediction, are filling up with oil wells and people, not buffalo. Well, there’s buffalo too these days, and deer, and moose, and bald eagles, and bear, and geese and ducks and fox and coyote and mountain lions and wolves and cattle and wheat and barley and oil and coal and wind turbines and the whole enchilada is there, the antelope play. Oil is not what it’s all about.

    Karl Popper’s prediction 100 percent wrong and yet 100 percent correct. The increases in fauna has been incredibly eye-opening, ineluctable entelechy, as it were. Except for the deer population, which experienced about 90 percent decline during the cold winters of 2009 through 2011. Devastated the poor critters. ‘Dead deer all over the place’ were the words I heard. Where there were 40 deer in a herd is now reduced to several in different areas. The deer will and are making a return.

    Another prediction was snow-less winters in the northern latitudes, just isn’t at all becoming fact.

    In fact, Boston is snowbound and cold, more hydrocarbons needed to keep them warm.

    Climate Change indeed, colder, not warmer. Shucks.

    Climate Change is like a diet. You’re always on a diet, whether it is
    rabbit food or double cheeseburgers with bacon, fries, a triple thick chocolate shake, and some cheesecake for dessert, it’s a diet.

    The same for Climate Change, it is always going to change, if it is colder, the climate has changed, if it is drier and no rain, the climate changes to a semi-arid to arid conditions, warming up for a while.

    Then it rains, cools, the water levels rise, more vegetation, the climate becomes more accommodating to human habitation.

    ‘Death Valley’ and ‘desert’ are words that are heeded. NSS

    Words like ‘Peak Oil’ are too scary to comprehend, so those words are mostly ignored, out of sight, out of mind.

    • Ronald Walter says:

      Didn’t mean to call Frank Popper ‘Karl’, it was just a mistake.

      There is an explanation, but it isn’t necessary.

    • d mcarthur says:

      You obviously don’t live in alaska…

  28. Discoveries of new oil and gas reserves drop to 20-year low

    New finds of oil and gas are likely to have been about 16bn barrels of oil equivalent in 2014, IHS estimates, making it the fourth consecutive year of falling volumes. That is the longest sustained decline since 1950.

    That’s barrels of oil equivalent which includes natural gas. My best guess is the world uses about 50bn barrels of oil equivalent per year. Which means less than one third the boe consumed was found. But if anyone has any better figures please post them.

    • Watcher says:

      bingo, I saw the Boe too.

      IHS should be pay a serious price for this stuff some day.

    • Chris says:

      From BP Statistical Review of World Energy 2014, the world consumed 4185,1 million tonnes of oil and 3020,4 Mtoe. So 7205.5 Mtoe or about 59 bn boe. So discoveries accounted for 27% of the production in 2014.

    • Jake B. says:

      I was in Indonesia this spring for a few months. In Lombok, where I did most of my surfing they went from paved roads to electricity to telecommunications towers with 4G LTE in just the last 5 years. The kids can read and write, but most adults over 30 are illiterate. The only printed words around around are dogeared paperbacks that surfers, scuba divers and backpackers have handed down.

      Their lives have changed little in 1000 years until recently. They live in bamboo huts, there’s no running water. Still, all the teenagers have their faces buried in their $50 smartphones every chance they get.

      Really amazing and cool to see all these people go straight from the dirt to the most futuristic stuff around. We desperately need more oil discoveries in order to give them a chance to figure out which way is up and join modern society.

      • Boomer II says:

        We desperately need more oil discoveries in order to give them a chance to figure out which way is up and join modern society.

        But apparently there aren’t going to be many of those, if any. So we’ll have to find other ways to give them opportunities. Luckily, cellphones can be charged by solar.

        I am assuming you mean it is oil money that keeps their country afloat. But those days are waning for lots of places, not just Indonesia.

        • Jake B. says:

          Whoa, better back off with that “luckily, cellphones can be charged by solar” hippy-commie line of reasoning. Your solar and other shortsighted alternative forms of power are proven to be unreliable and inefficient. Do you want to be the one on the operating room table when the lights go out because a cloud moved in front of the sun?

          The real truth of the matter is fossil fuels keep us out of the Stone Age. And they are the greatest antipoverty program the world has ever known. That is what I was trying to convey by mentioning the world needs more oil discoveries.

          • Boomer II says:

            Your solar and other shortsighted alternative forms of power are proven to be unreliable and inefficient

            I can buy solar phone chargers right now for a number of camping supply retailers.

            The real truth of the matter is fossil fuels keep us out of the Stone Age. And they are the greatest antipoverty program the world has ever known. That is what I was trying to convey by mentioning the world needs more oil discoveries.

            And do you realize where you are posting? This forum points out that there aren’t more oil discoveries. Have you seen this article, which has been posted here several times already?

            There aren’t anymore big discoveries to be found. We’ve pumped out oil at a crazy rate and it is disappearing.

            “Discoveries of new oil and gas reserves drop to 20-year low”

            http://peakoil.com/geology/discoveries-of-new-oil-and-gas-reserves-drop-to-20-year-low

            • Boomer II says:

              Typo. I meant to say this.

              I can buy solar phone chargers right now FROM a number of camping supply retailers.

              In fact, if you are out in the middle of nowhere, having a solar phone charger is a great thing to have. Generators won’t fit into a backpack, but a solar charger will.

            • Jake B. says:

              Well I don’t always know where I’m posting. Because the TalkTalk app just points out discussion threads it thinks I might be interested in, but usually doesn’t give me much info about the web site they’re being held at.

              But I will say this the “peak oil” thing, I’m sure someday the world will run out of oil, but I have no worry of that happening in my lifetime (and I am 27) or that the generation being born now will face any problems either. Certainly they will be able to get through their prime investing years without having to worry about oil shortages. If there was fear and paranoia to stoke in the masses about peak oil the media would have done it a long time ago like how they always try to get us fearful and paranoid about “climate change”.

              Just remember that as technology advances, not only do we get more and more new sources of oil, but it becomes easier and cheaper to extract. For example, Alberta tarsands just weren’t economically viable until recently, but thanks to some pretty ingenious techniques that have fostered by the free market, it will be a completely viable solution for decades to come.

              • Boomer II says:

                Just remember that as technology advances, not only do we get more and more new sources of oil, but it becomes easier and cheaper to extract.

                Not exactly. Unless oil is being made out of non-oil products (like bio-diesel), there isn’t any new oil being created.

                This forum is very knowledgeable about oil supplies. There are petroleum engineers here, and quite a few other people who study well output as well, so for the most part these aren’t people who don’t know what they are talking about.

                Jumping into the discussions here, particularly when you don’t even know where you are posting, and when you haven’t been following all that has been posted here, doesn’t really foster your contributions to the discussions.

                You have opinions, but you don’t have the facts to back it up.

              • But I will say this the “peak oil” thing, I’m sure someday the world will run out of oil, but I have no worry of that happening in my lifetime (and I am 27) or that the generation being born now will face any problems either.

                Jake, like all other cornucopians, you have not one clue as to what peak oil is all about. You talk abour “running out of oil”. No, the world will never run out of oil. There will be oil in the ground 1,000 years from now. Peak oil means the point in time where more oil is produced than has ever been produced in the history of the world, or ever will be produced in the future of the world. Then it will begin to decline. And world oil production will begin to decline in your lifetime. In fact it will very likely begin to decline in my lifetime, and I am, by 49 years, your senior.

                But I am not really concerned with what you think. If you think that discovering less than one third the new reserves that we used in 2014 has little or no significance, then your opinion is not worth much anyway.

              • Fred Magyar says:

                But I will say this the “peak oil” thing, I’m sure someday the world will run out of oil, but I have no worry of that happening in my lifetime (and I am 27) or that the generation being born now will face any problems either. Certainly they will be able to get through their prime investing years without having to worry about oil shortages. If there was fear and paranoia to stoke in the masses about peak oil the media would have done it a long time ago like how they always try to get us fearful and paranoid about “climate change”.

                Wish you lotsa luck son! For the record,the future is no longer quite what it used to be. I would at the very least recommend checking all your CERTAINTIES at the door. If you stick around here for a bit you might even learn a thing or two and based on your comment you have quite a bit to learn.

              • SW says:

                How in the world did you get to be 27?

          • Dennis Coyne says:

            Hi JakeB,

            Wishing there was more oil does very little. There is only so much oil, we have consumed about 1250 billion barrels already and there may be another 1750 billion barrels, 500 billion of those barrels are tar sands in Canada and Venezuela, which are not easy to develop quickly.

            Same story for natural gas and coal, they will all reach a peak and then decline and they will become much more expensive. Alternatives will need to be found and we will have to use less energy. It is as simple as that.

          • Sam Taylor says:

            Jake,

            I’m a professional of around your age working in the oil exploration business. This last decade has been the single busiest decade for oil and gas exploration ever. The oil companies have been throwing mountains of cash into upstream spending, increasing at a rate of about 10% a year. We’re looking deeper underground, further offshore, under giant subsurface salt domes and we’re even down to trying to crack up source rocks to squeeze out the oil. And what do we have to show for this superhuman effort? Around a 4% increase in oil production over a 10 year period, and a whole lot of surveys which didn’t find a great deal. Most of the money we were throwing into the system merely went to holding off decline, but that’s coming to an end now because the oil majors simply can’t afford to do it any more.

            So while you might be right that we need many more oil and gas discoveries, it’s extremely likely that it ain’t what we’re gonna get. We’re going to get to live through some very intersting times, my man, and no mistake.

    • nNgass says:

      http://oilprice.com/Energy/Oil-Prices/Why-Oil-Prices-Must-Go-Up.html

      Excerpts
      may be difficult to look beyond the current pricing environment for oil, but the depletion of low-cost reserves and the increasing inability to find major new discoveries ensures a future of expensive oil.

      While analyzing the short-term trajectory of oil prices is certainly important, it obscures the fact that over the long-term, oil exploration companies may struggle to bring new sources of supply online.
      Worse still, last year marked the fourth year in a row in which new oil discoveries declined, the longest streak of decline since 1950. The industry did not log a single “giant” oil field. In other words, oil companies are finding it more and more difficult to make new oil discoveries as the easy stuff runs out and the harder-to-reach oil becomes tougher to develop.

      In fact, half of the additional supply needed from the Middle East will have to come from a single country: Iraq. Birol reiterated those comments on February 17 at a conference in Japan, only his warnings have grown more ominous as the security situation in Iraq has deteriorated markedly since last June. “The security problems caused by Daesh (IS) and others are creating a major challenge for the new investments in the Middle East and if those investments are not made today we will not see that badly needed production growth around the 2020s,” Birol said, according to Reuters.

      • Excellent points. I’m afraid the whole region is a huge can of worms. You know, I can’t remember exactly when, maybe around 1990 , I saw information which established the economic return of rank exploration was negative.

        Back at that point in time I suggested acreage acquisition had to be based on technical or political discontinuities, and/or rely on ever increasing prices. But as of today I cant visualize any more technologies we can use to access large reserve volumes. This leaves exploration hung out on political discontinuities (example would be accessing the California continental shelf, or the Alaska National WR).

        • Oskar DeSilvo says:

          Cali Continental Shelf and ANWR are drops in the bucket.

          Vz…is another matter….right across the U.S. American lake called the GOM.

          Gotta have stability though…catch mor flies with honey than vinegar.

  29. Doug Leighton says:

    Hi Dennis,

    I don’t know if you’re interested but I was handed a pamphlet at a China Coal & Mining Expo in Beijing last year which stated that China’s current remaining reserves are: 44 billion tons of bituminous coal, 35 billion tons of sub-bituminous coal and 19 billion tons of lignite. Guess this makes about 100 billion tons in total. Note: I’ve zero interest in coal other than how it relates to CO2 emissions (and air pollution). I was literally dragged to that convention by a Korean friend who is a coal geologist.

    • Dennis Coyne says:

      Thanks Doug,

      Probably PE’s estimates are good, I believe he can read Mandarin and so has access to much more information than I have. He estimates a URR of 300 Gt. Based on Steve Mohr’s estimates in his PhD Thesis, I modelled 985 Gt for a World URR for coal, this is in the same ballpark as Political economist’s estimate. After the peak of coal and oil, around 2020 at the latest I expect both coal and oil prices will rise, there will be a switch to natural gas which may push the date of the natural gas peak to 2030 or earlier.

      Prices of all fossil fuels will be volatile, but they will rise unless there is a Great Depression, in that case prices might fall temporarily, but they will rise again as supplies fall with prices.

      The peak in fossil fuels will make people rethink how cheap power produced by fossil fuels really is.

      • Political Economist says:

        Dennis, to further illustrate my point. If oil, coal, or natural price can indeed keep rising, then those mainstream economists who believe that “give me a price, I can give you whatever production level you need” may indeed be correct. Peak oil may never arrive if price can just rise towards infinity. After shale oil, there will be oil sands; after oil sands, there will be “oil shales” (from Colorado), et al.

        I think peak oil will happen because at some point oil prices will be so high that world economy will be suffocated. But with global economic recession, oil prices will fall or collapse. With lower oil prices, only a limited amount of oil will be economically recoverable. But I suspect those “cheap”, post-peak fossil fuels will hang on there for quite some time. (Think about the world oil price fluctuation from 2005-2008 and -2009)

        • PE, I really like the material you write, but I’m not sure your logic holds. I think about this using oil fields and basins I know very well. And in almost every case the inputs needed to go beyond a certain recovery factor are extremely high. This in turn stresses the supply chain, costs go up, and the system goes into a death spiral.

          The system stress is worse if the oil decline rate is higher, because we waste a lot trying to rush things. I’ve learned this by experience working in partially contained systems, for example I worked for three years in a country where the government put limits on work visas and imports, but wanted oil production to increase on top of a broad 10 to 12 % decline rate. We faced really steep wage and supplier inflation as we tried to speed up activity.

          • Political Economist says:

            Fernando, thanks for the comments. But considering the current environment, the underlying structural cost of oil production (and energy input required energy output) for any given level of oil production and for the marginal/last unit of oil production has certainly increased (shale oil, oil sands).

            But the combination of supply/demand leads to a temporary “glut” of oil production. And, it is only after the current decline of oil price, we may expect the US shale oil production may begin to decline in the coming months. So a peak/decline of oil production is not necessarily associated with permanently higher oil prices

            • You are right. But if we look forward the inexorable price increase does cause an input price increase. Let me ask, do you think we can revisit old abandoned fields and recover an incremental 10 % recovery?

        • Sam Taylor says:

          PE

          Given recent events there’s maybe the chance the the peaking period will be marked by violent price swings, as opposed to a metronomic rise. As Ugo Bardi has pointed out, that was the case with whale oil and other historical commodities which have peaked. It might end up being the price swings that really kick the industry in the balls.

          I’ve seen numbers that suggest the world can’t pay more than $120 or so on a sustained basis, which sounds about right.

          • Political Economist says:

            I agree about the violent fluctuation

          • Old farmer mac says:

            I would not argue that a hundred twenty bucks is all the world can stand – maybe more than the world can stand- in the present or near term.

            But we can and most likely will be able to live with two hundred dollar oil in constant dollars within the next ten to fifteen years.

            Some uses will be largely abandoned – air travel will probably fall off given that only relatively rich folks will be able to afford it.

            We already know how to get twice the bang for the buck in automobiles and light trucks etc.

            They may even cost less considering they are going to be downsized in both physical dimensions and mass and also in performance.

            But my guess is that they are going to be more expensive.

            Lifestyle changes will make up the difference. Most of us relatively rich westerners use a hell of a lot more oil than we really need to simply because it is so cheap.

    • Political Economist says:

      Doug, it appears China Coal and Mining Expo just copied the reserve numbers from BP, which in turn copied it from China in 1992 and has not updated it since.

      China’s Ministry of National Land and Resources reported China’s coal reserves to be around 180 billion tons in the early 2000s. In recent years, the same ministry has reported China’s coal “reserve base” to be around 200 billion tons.

      I’ve no disagreement with Dennis regarding a coal peak around 2020-2030. But we disagree regarding the price trend after the peak

      • Doug Leighton says:

        Could be, not even sure there was anything even pseudo-official about the pamphlet. It was just something handed out, wound up being my bookmark, or something, and so I passed the numbers along to Dennis because he seemed interested. As I said, I have no interest in or knowledge about coal resources other than I wish they would stop burning so much of the stuff — especially near where people live! Good luck on your analysis.

  30. Ronald Walter says:

    I am all for free speech, regardless of the topic, content, subject, issue, etc., I support it all.

    However, it is important that an author of any content published to not resort to berating and belittling. Please redact any words that are not constructive. There is no room for idiotic comments that serve no purpose other than to drive everything to distraction.

    Critics are a dime a dozen, always somebody willing to point with pride and view with alarm.

    Theodore Roosevelt’s words ‘Man in the Arena’ come to mind.

    “It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat.”

    • Longtimber says:

      Nice Packaging. We need to dare him to put on Ebay. He’d make money twice. Can’s of his megafactory new and improved mega tasty 16 watt/hr 18650’s with silicon anodes. current gen: http://www.fasttech.com/product/1141104-panasonic-ncr18650b-protected-rechargeable . All hell will break loose when mortals can buy these by the 40ft container for under $1.00 Ah. LiFePO4’s Prisms are (were) $.90/Ah from CALB FOB. Factory in medium quantities.
      Elon says materials cost ~ $80 per kWh. or 8 cents per watt hour. The 18650 Protection IC is made by Seiko – the watch people. Note the 18650 Battery is about the largest battery not considered hazardous for shipping by UN regulations.

    • TechGuy says:

      “Tesla announces new home battery design.”

      Sure, for every home owner that can afford to spend $150K on a Tesla. Now all you have to do if land that $300K per year dream job so you can afford it!

      • Old farmer mac says:

        The modern battery industry is still wearing short pants.

        When I was a young guy a transistor radio that would barely pick up a powerful station a few miles away and had such poor sound quality that you could barely understand an announcer never mind enjoying music cost a weeks pay for a farm hand.

        You can get a MUCH better radio now for ten bucks or so.

        High capacity high performance batteries are coming down in price pretty fast.I expect that in ten or fifteen years most people with a good job will own some renewable generating capacity personally in the form of pv at home or maybe a share in a pv or wind farm remotely located.

        Purchased electricity is going to keep on going up. The depletion of fossil fuels and the printing of money guarantee it. Battery prices are coming down.Time of use pricing – peak pricing – is coming.

        Most of the early patents on modern batteries will have expired within ten years and manufacturing capacity will be way up. Owning pv and batteries may make good sense in dollar terms within a decade even without subsidies.

        • Longtimber says:

          For “Life’s essentials” you really only need ~1kWh Storage to get thru the dark hours, 10kg of Li Cells in a package the size of a 50 cal Ammo Box, with 4 60 cell/280w PV Panels providing 5 kWh daily average. Ceiling Fans, Lighting, comm, efficient Fridge, Security System, etc. If your casa requires 2500 kWh / month just to occupy, what do you do as nat gas prices normalize? Battery light systems work fine when you can shift the loads you can to daylight hours. PV is now affordable , Large batteries maybe not.

          • TechGuy says:

            Longtimber wrote:
            “For “Life’s essentials” you really only need ~1kWh Storage to get thru the dark hours, 10kg of Li Cells in a package the size of a 50 cal Ammo Box, with 4 60 cell/280w PV Panels providing 5 kWh daily average.”

            The Typical American household uses about 30 kwh per day:
            http://www.eia.gov/tools/faqs/faq.cfm?id=97&t=3

            Most people run Dishwashers, washing machines, clothing dryers, air-conditioners, well pumps, perhaps a heat pump, Ducted heat system (need heavy duty motor). All which consume much more than you suggest. Even if you go rid of all those, I think just a few large screen TVs, computers, WiFi, and Refrig would probably overload your 1KW system.

            Some how I don’t think Americans will adopt a frugal lifestyle you are proposing. By the time they are forced to rely on a 5kwh/d, the economy will be in a state of collapse.

            • Boomer II says:

              I think just a few large screen TVs, computers, WiFi, and Refrig would probably overload your 1KW system.

              I saw a video about a tiny house owner who was able to get a large screen TV effect without the power consumption. He ran his video off his laptop and then projected it onto a wall. Much less energy use.

        • TechGuy says:

          “Purchased electricity is going to keep on going up. The depletion of fossil fuels and the printing of money guarantee it. Battery prices are coming down.Time of use pricing – peak pricing – is coming.”

          I agree that prices for electricity and fuel are going up. I disagree that battery prices will buck that trend. Battery tech based upon ionic transfer has reached the end of the road. Modern batteries (ie Lithium based) depend on a semi precious element: Lithium. Currently all Lithium is mined from dry lake salt beds. Sooner or later that resource is going to be depleted.

          For batteries to get cheaper they would need to switch to cheap and abundant compounds, which seems very improbable since abundant\cheap compounds lack the chemistry to provide high density energy. The only way I see batteries become a realistic solution is if they develop a completely new solid state storage system. So far I have yet so see any breakthroughs yet.

          My point is don’t look to Tesla for a solution. Elon Musk sells very expensive products. Whether its $150K EV cars or Billion dollar SpaceX projects. He’s not interested in selling low margin, high volume products. Whatever Tesla ends up selling, its likely to be expensive and be marketed to the top ~5% wage earners.

          • Doug Leighton says:

            Using conventional technology, 10 kW·h requires 1 kg of lithium, so it takes approximately 2.4 kg of lithium to make a battery for an average vehicle (Nissan Leaf?). And, Bolivia is there, with most of the world’s reserves: somewhere between 20 and 100 million tons Li. That’s a lot of batteries (there are many mining related issues as well). China, Japan, the Netherlands, and Korea currently negotiating JV deals with the Bolivian government. For some reason Bolivians are mad at the Yanks these days: Something to do with helicopters, gorillas and airspace I think.

            • Doug Leighton says:

              Perhaps I should add that a lot of geophysicists started life as EEs (though not I) and the above came via an e-mail from a retired dude now living in Chile who pays attention to Bolivia for some reason. Maybe because he’s (the EE/geophysics dude) fluent in Spanish and is involved in the lithium negations in some way?

              • Political Economist says:

                Let’s do some rough calculation. A Nissan with a full tank (12 gallon) can drive for approximately 300 miles.

                1 gallon equals 3.8 liter and one liter of gasoline is about 0.74 kilogram. So 1 gallon of gasoline equals 2.8 kilogram

                One kilogram of oil has the same energy content as 11.63 kwh of electricity. But electric motors are more efficient. So using thermal equivalent, 1 kg of oil = 4.4194 kwh.

                Assuming the conversion is true for gasoline. So to have an electric car having a range equivalent to gasoline powered Nissan, it needs to have the capacity to store:

                12 * 2.8 * 4.4194 = 148.5 KWH

                Using your recommendation that 10 KWH requires 1 kg of lithium, it will require 15 kg of lithium.

                Based on the latest Mineral Commodity Summaries (2015), world lithium production was 36000 tons in 2014 (6% higher than in 2013).

                Only 30 percent of that right now is used for batteries. So if all lithium used for batteries is used for electric cars, 10800 tons can supply 720,000 electric cars. World car production was 56 million in 2013.

                If all of the world’s annual lithium production is committed to electric cars, it can supply 2.4 million electric cars or 4 percent of world annual car production.

                World lithium reserves were 13.5 million tons as of 2014 and identified resources are estimated to be 40 million tons.

                At the current production rate, the reserves can last 375 years. However, if the lithium production is to be increased by 12 times (and again all lithium production is committed to electric cars), so that electric cars can account for approximately half of the world’s annual car production (without considering future car production growth; from 2000 to 2013, world car production grew at an average annual rate of 2.5% or doubling in every 28 years), then the current lithium reserves will be used up in 31 years.

                And there is no guarantee that the identified resources beyond the current reserves will be economical or will make sense in term of energy input-output ratios (the ratio of energy required for extraction and procession relative to the energy output used for car driving)

                • Doug Leighton says:

                  Sounds logical except that given 31 years to play with I expect lithium recycling would be an established process. Don’t think I should be part of this dialogue though since I’m not an electric car buff, don’t think I’ve ever seen one or if I have I didn’t recognize it as such.

                • Nick G says:

                  Let’s not be silly.

                  EVs get about 3 miles per kWh, so 300 miles range needs about 100kWh storage. But, that’s pretty irrelevant to this discussion.

                  A Chevy Volt can reduce oil consumption to 200 miles per gallon with an 18kWh battery.

                  As for lithium – there’s quite a lot in the world. Heck, Tesla’s Gigafactory is planning to use lithium mined in Nevada, quite nearby.

                  Using current production and reserves is highly unrealistic. As we see so often in discussions of commodity supplies, reserves for most commodities relate to the current needs of the industry, not what’s really out there.

                • John B says:

                  The total lithium content of seawater is very large and is estimated as 230 billion tonnes

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

                  • TechGuy says:

                    The gas giants of our solar system enough hydrocarbons to run our fossil fuel economy until the sun expands into a red giant.

            • Political Economist says:

              The estimate I’ve seen it that the lithium requirement per car needs to be 10-30kg if they want to have range comparable to today’s cars

          • Old farmer mac says:

            A high energy density is worth it’s weight in carbon fiber in mobile uses such as automobiles but in stationary applications the cost of manufacture and durability are going to be the key controlling factors.

            I am no battery expert but I believe there are a number of promising new technologies in the testing stage right now.

            In any case lithium is not the problem when it comes to current day battery prices. There isn’t very much lithium in a Tesla battery in terms of dollar cost. The cost is almost all due to the complicated manufacturing process.

            In ten years the process will be well along it terms of simplifying the design and manufacturing techniques. Economies of scale will come into the picture. Patents will be expiring.

            Battery prices ARE going to come down and come down substantially. Lithium prices will no doubt be a problem at some point but not anytime soon.

            And even a very small -as electric car batteries go – can have a huge impact on oil demand. Gasoline and diesel fuel are eventually going into the stratosphere price wise barring the development of alternatives.

            When this happens a subcompact electric capable of only thirty or forty miles will be a hot seller. That much range will meet the needs of tens of millions of drivers.

            And ten or fifteen miles on plug in power will relieve the need of tens of millions of other drivers of hybrids for gasoline except at longish intervals. I live out in the boonies but if I still worked I could cut my gasoline consumption in HALF with a hybrid capable of just twenty miles on the battery. People who live near their jobs and shopping etc will sometimes be able to drive a hybrid with a twenty mile battery range for weeks at a time without buying gasoline.

            Lithium recycles. Oil does not.

            • Doug Leighton says:

              Hi Mac,

              “Lithium recycles.” Well, yes, sort of, but perhaps we should add a couple of caveats:

              1) Lithium prices have nearly tripled over the last 10 years,
              2) Recycled lithium is as much as five times the cost of lithium produced from the least costly brine based process,
              3) There is currently no main recycling infrastructure in the world that treats automotive Li-ion batteries.

              That said: “For the future, recycling of Li-ion batteries is expected to be one of the main sources of lithium supply.”

              The Lithium Battery Recycling Challenge: http://www.waste-management-world.com/articles/print/volume-12/issue-4/features/the-lithium-battery-recycling-challenge.html

              • Old farmer mac says:

                Ouch-I didn’t know lithium batteries are so expensive to recycle.

                But I have high hopes the cost of doing so will fall dramatically once there are enough of them to make it worthwhile to put some real effort into the process.

                In the meantime what I have had to say about them still applies. Even a ten mile range in a hybrid vehicle is enough to cut millions of drivers use of gasoline to the bone.

                And it won’t take much lithium to build a forty mile battery for an ultralight subcompact two passenger fore and aft seating car capable of going only thirty five mph.

                When I was a kid I simply could not imagine how rich people could be satisfied staying in the house and yard around it most of the time except when gone to work. Then I went away to university and lived in the city and got used to it.

                (I am back on the farm now and although the house is large with all the modern toys I still feel like I am in jail after just one day of really rotten weather and go outside anyway.)

                People will get used to driving sub compact two seaters that will go only thirty or forty miles at thirty five mph if that is all the economy can support.

                Such a car will be useful in terms of storing surplus wind and solar power produced at hours of low demand and can also be used to partially offset high priced time of day domestic consumption for the homeowner as well.

                I am assuming of course that the economy holds up well enough for this scenario to come to pass. It depends mostly on fossil fuel supplies declining gradually rather than abruptly so as to allow time to adapt to new circumstances.

                There is a local guy who has actually managed to register a conventional lead acid battery golf cart for highway use..

                He is not allowed on limited access roads and has the good sense to stick to streets with a low speed limit.

                He did the job in his backyard shop adding lights seat belts windshield wipers and better brakes etc plus a small propane fired heater for really cold days.

                He gets around the small town where he lives just fine and no longer owns a conventional car. He tells me he can go twenty or more miles very easily on most streets without damaging his batteries by discharging them too deeply. Steep hills eat batteries is the way he puts it.

      • $300k isn’t enough to buy those batteries. You got to pay taxes, put away money in your 401k, and there are other spending priorities. Most individuals making that much won’t buy those batteries.

        By the way, I just got me a 0,12 € per kWh contract, fixed price, from Iberdrola.

  31. Old farmer mac says:

    Change of subject but highly relevant to energy markets since ISIS if this aborning new nation state survives it seems very likely the oil weapon will be deployed as enthusiastically the rest of the arsenal available to it.

    This article is the best one by a factor of ten of any thing I have seen about ISIS.Hardly anybody who is literate except the most boneheaded pc type will argue that the Atlantic lacks credibility..

    http://www.theatlantic.com/features/archive/2015/02/what-isis-really-wants/384980/

    These people are about as bad as bad gets in terms of dealing with everybody except their own followers.

    Some of the regulars here may be under the impression I am a defendant of religion which is somewhat of an error. I just want to keep the discussion balanced in respect to religions- why they exist, why they persist, what the benefits are of belonging to one, etc as opposed to not belonging.

    ISIS is as bad as or worse than the Nazis and the Commies during Stalin’s time. Idi Amin and Pol Pot and Chairman Mao could have taken lessons from these guys. And the entire organization is based virtually one hundred percent on Islam.

    PC is killing us western liberal civilization by keeping us from discussing real problems in an honest and realistic fashion.

    My guess is that it is going to take a major hot war to put these nut cases back in their caves.

    But I am not worried about them taking over the world. The P C class in this country and modern secular Europe is going to be in for a VERY rude awakening someday when the right wing sweeps into complete power as a result in part of a backlash against PC type thinking and intellectual censorship.

    This backlash is going to be about as bad or maybe worse than the pc disease that helps bring it into being.I am not defending it or wishing for it but merely predicting that it will come to pass.

    But I can take comfort in one thing at least. If ISIS succeeds well enough to start a hot war with the West they will have AMPLE reasons to regret it.

    A guerrilla movement is one thing and hard to extinguish without killing too many innocents.

    But a nation state in control of territory with infrastructure such as highways water and sewer systems electrical grid manufacturing etc etc is very easily destroyed with modern weapons. ISIS is determined to be a nation state rather than just a political organization.If they conquer a bunch of middle eastern territory and establish long term control and keep trying to expand the West will eventually wake up and bomb them back into the eighth or ninth century .

    The sad part if it comes to that will be the loss of life of tens of millions of people who if given a choice would have chosen to get along rather than try to conquer the world.

    And once a Leviathan is fully aroused and raging – well , we firebombed German cities and the firebombing actually was more destructive than the small atomic bombs dropped on Japan. It took a lot of men and planes but if the armies on the ground had not succeeded in breaking thru German lines the bombers would – once complete air superiority was established -have destroyed one city in Germany one after another until they surrendered due to a lack of industrial capacity to wage war.

    Modern bombs mean one bomb per bridge or office building. It might take a dozen or more to destroy a good sized industrial plant but that is still only one sortie ( round trip ) for one plane . Back in WWII it took dozens of planes and hundreds of bombs to be sure of hitting a bridge or ordinary sized building.

    You must have industry to project power. ISIS will not have industry very long if it picks a fight with a western country..

    If they succeed in consolidating power in a few middle eastern countries they will continue to expand until somebody stops them.

    • Jeffrey J. Brown says:

      Posted up the thread.

    • Boomer II says:

      I’m reading the Atlantic article now, and not surprisingly my impulse is to wipe out the ISIS.

      But war is complicated. We were able to win against Germany and Japan and make that victory stick. We obtained surrenders and then established permanent occupation of those countries.

      So to wipe out ISIS, we would not only need to defeat them, we would need to have a surrender from people who can actually deliver a surrender that their citizens would respect, and then we would need to occupy those countries permanently.

      We have seen from the Korean War on that today’s wars are hard to win. We haven’t asked the country to make the post-WWII wars the absolute priority, we haven’t asked citizens to make financial sacrifices to win those wars, and we haven’t expanded the military to such an extent that it becomes the biggest activity in the nation until the war is won.

      We’ve got politicians who talk war talk, but even the most right wing haven’t dared to ask the country to put everything on hold until whatever war we are fighting is decisively won.

      I’m not sure we can effectively mobilize the country against ISIS until the US and/or Europe is significantly threatened and we are willingly to drop everything we are currently doing in pursuit of war.

      • Watcher says:

        Go back a year and read about ISIS.

        Oh, sorry, there was nothing to read about them a year ago, was there?

        They managed to become a Great Satan in less than 12 months. Impressive.

      • Old farmer mac says:

        Boomer you are dead on about the willingness – or more specifically the lack of it- to fight ISIS right now. And maybe the world will be lucky and ISIS will lose locally.

        There is significant local war making capacity available against them already.

        Defeating a motivated enemy for the long term- your are right again. But it is not our job in the here and now to defeat them permanently . S omebody is going to have to stop them or they would actually be invading western Europe within a few years.

        The fact that modern forces can wipe out primitive forces on the battle field without breaking a sweat is beyond dispute. It is also beyond dispute that there is no country in the Middle East with the industrial capacity to wage a modern war of aggression against the west-Stopping ISIS from expanding will be a big job but a technically easy one in terms of wiping out whatever industrial capacity exists in territory they conquer.

        But doing so will mean the death of many millions of innocent local people. Taking out ISIS by taking out ISIS’ s capacity to wage large scale war will destroy the infrastructure that keeps those millions alive.

        For now they are going to continue to run wild. I wonder if they have any senior people with brains enough to see beyond the next year or two.

        A senior Japanese admiral back before WWII said he could run wild for a year or two …. but after that……. The sleeping American Leviathan would be fully aroused.

        It is hard to say how the US might react short term to continued ISIS aggression. But at some point we will fight ISIS if we ” must” to defend friends and assure continued access to middle east oil . If that time comes we will get good use of the unimaginable amounts of money we have spent on our MIC.

        ISIS will never in our lifetimes invade a western country such as Italy in the sense of boots (sandals?) on the ground.

        Terrorism is another matter.

        We might have to give up on pc and close the west to all visitors from that part of the world except ones very carefully vetted.

        • A sounder solution is to stop feeding their recruiting effort. This would require having Israel withdraw from the occupied territories. And that’s a tall order given the brainwashing all sides have undergone. This analysis comes from Michael Scheuer, a senior CIA analyst who used to head the bin Laden Unit. Unfortunately professional opinions within the CIA ranks don’t get much reception from the politically appointed directors.

          • Old farmer mac says:

            It is an unfortunate political reality that while Protestants generally secretly or openly detest Jews that the US citizenry is mostly behind Isreal lock stock and barrel. This is partly the effect of there being quite a few very successful Jews in this country and thus their having a powerful lobby. They have cultivated relationships in politics very carefully and very successfully. Beyond that it is one of those ” the enemy of my enemies is my friend things”.

            There is a huge amount of latent anti Jewish prejudice just under the surface of American society but hardly any politician in this country is willing to turn on them.

            And in the last analysis they are doing what any other culture would do in their circumstances- whatever they think is necessary to ensure their survival. I feel for the Palestinians but it is a cast iron fact that Isreal accepts all Jewish refugees and sends transportation for them in some cases.

            None of their enemies will accept any of the people from Palestine which would allow a peaceful settlement..

            We all want to call the game of conquering territory off when we have just raked in a big pot. We aren’t about to give Manhattan Island back to the Americans who got here ahead of us by ten thousand years or so.

            Incidentally although I am a conservative with semifuntcional brain these days I was once a card carrying ACLU sort of guy and my second wife was Jewish. I don’t have any trouble seeing both sides of most cultural issues.

            Sometimes there just aren’t any good solutions to such problems. This is one of those times and there will be no end to the war between Isreal and her enemies for the foreseeable future. They have made NO SECRET of their heart felt desire to wipe Isreal off the face of the earth.

            One reason I remain a conservative is that the jaw jaw technique the leftish wing of politics has mastered to a far greater extent than the conservative wing. They say give us this and we will be satisfied. But in a few days or a year or two they are always back wanting more and more. Both sides do it of course but the left is much better at in my opinion.The Islamic countries in that part of the world in my opinion will never be satisfied until Isreal ceases to exist.

            It is ironic that this could result in a nuclear WWIII thus fulfilling the prophecies in the KJB of the end of the world.

            • If they accepted the Palestinians which were forcibly removed from their land they would be complicit with Israeli ethnic cleansing. This is considered a crime against humanity. I first heard this point of view from an Egyptian. And after I gave it some thought I had to agree.

              Understanding this point of view made it easier to understand Scheuer’s point of view when he wrote that Al Qaida (or what he called its offshoots) was undefeatable, as I mentioned the CIA was fully aware of the conflict between Israeli objectives and US strategic needs. The USA elites have been recruited to serve Israeli interests. This is what puts the usa in a huge bind and endless wars it can’t really win.

              • Old farmer mac says:

                It is the utter height of hypocrisy for Muslims to talk about ethnic cleansing while making no secret of their desire to kill off infidels right and left.

                Personally I can’t see any hope of a peaceful solution to this issue.

                The Isrealis are back to the wall – or more accurately the sea and will continue to do whatever they think is in their best interests in terms of their survival as a nation.

                At some point that might even extend to nukeing a country that launches an invasion of Israeli controlled territory if they decide their survival depends on doing so.

              • Nick G says:

                If they accepted the Palestinians which were forcibly removed from their land they would be complicit with Israeli ethnic cleansing.

                So, anyone who accepts refugees is complicit in the crimes that caused them to flee?

                I think if you ask the refugees, they’ll disagree.

          • Boomer II says:

            If it hadn’t been for oil and for Israel, our involvement in the Middle East could have been so much different. That area of the world has been in turmoil for most of recorded history. Wouldn’t it have been better to be able to keep hands off, other than perhaps keeping whatever turmoil is there from spilling over to other continents?

            If the US had not had anything to do with that part of the world, would the terrorists have even bothered with us? Seems like they are most likely to fight amongst themselves over religion and control.

            • Nick G says:

              Israel exists because of sponsorship by the UK, which was heavily dependent on oil.

              Would Israel exist if there was no oil in the ME?

              • Old farmer mac says:

                If it weren’t for oil hardly any Westerner except archeologists and a few tourists would ever think twice about the middle east.

                • Nick G says:

                  So, think about the extraordinary amounts the US (and other countries) have spent on creating “stability” in the ME?

                  Add up security costs and pollution, and I’d say the true cost of fuel is at least $7 per gallon – a level that strongly contributes to Europeans using 18% as much oil per capita on personal transportation as Americans.

        • Jeffrey J. Brown says:

          The Italian Interior Minister had some interesting comments on the threat posed by ISIS.

          Libya Faces ISIS Crisis: Italy Wants NATO Intervention

          http://www.nbcnews.com/storyline/isis-terror/libya-faces-isis-crisis-italy-wants-nato-intervention-n306896

          LONDON — Italy warned that ISIS is at Europe’s doorstep as France and Egypt called for the United Nations Security Council to meet over the spiraling crisis in Libya.

          The growing alarm came as Egyptian jets bombed ISIS targets in the North African nation as revenge for the beheadings — documented in an ISIS propaganda video — of 21 Coptic Christian Egyptian nationals in Libya. The release of the video has underscored fears that ISIS is taking advantage of the chaos in Libya to expand its reach and stake a firmer foothold there. . . .

          Libya has been unraveling since the overthrow of Moammar Gadhafi in 2011. There are rival governments operating under separate parliaments — each with their own security brigades — and a plethora of armed Islamist groups jockeying for control.

          United Nations negotiators have been meeting with representatives from the internationally-backed government and the one which claimed power through force in Tripoli last summer. But the presence of numerous and competing armed Islamist groups has added fuel to the political fire, and an upsurge in violence has had Western nations increasingly alarmed.

          Libya is not only situated close to Egypt and Algeria, but is just across the Mediterranean Sea from Europe. The spiraling violence has sent floods of migrants to European shores — and ISIS has repeatedly mentioned Rome as a benchmark of its growth.

          Italy’s Interior Minister Angelino Alfano expressed the growing alarm in an interview with La Republica and urged NATO to intervene “for the future of the Western world.” “ISIS is at the door,” he said. “There is no time to waste.”

      • TechGuy says:

        In my opinion ISIS was created by the US. First by destabilizing much of the Middle east. The US helped remove Ghadaffi from Libya, which put his weapons in the hands of ISIS. Then the US tried to remove Assad from Syria and started providing arms to the Syrian rebels which formed ISIS.

        The more the US gets involved in the Middle east the worse the problems will become. Every time the US acts it never plans for the long term. Either the US must station troops in that region indefinately, since when the US troops leave the area falls into utter chaos. Unfortunately the best choice would have been to leave the strong man in power (Ghadaffi, Saddam). While these men are tyrants, I have to believe that the number of people that are suffering or been killed had rising 10 to 100 fold since their removal. The strong men were able to maintain order and peace. At this point the Middle East is a complete basket case and will remain that way indefinitely. There is to much social division (Sunni vs Shiite) to restore order. Its going to take a long time before one group is able to obtain control and restore order and in the process millions or perhaps 10s of millions will die.

        The only way I see that the US can restore some order is if they pick replacement strong men to take over. But in this era, that seems unlikely as the US tries to promote democracy, which unfortunately just isn’t feasible because of religious riffs between Sunni and Shiite.

        • Old farmer mac says:

          If Saddam had been left in power we westerners would be sort of short of oil in my estimation.Sky Daddy alone knows where he would have stopped if he had been allowed to consolidate his gains and rest up a little.

          But I agree we are prone to do things hoping they will turn out well while failing to take the possibility into account they will not..

          Our leadership gambled and lost on a very big bet.

          • Farmer, the USA can’t win in Iraq until it decides whether it wants to tear it apart or not. This decision will be helped by reaching an understanding with the Iranians. But such an agreement is hindered by the Israel lobby and usa politicians and media it controls. Everything seems to loop back to Israel and the conflict between Israeli objectives and what should be usa objectives.

        • Nick G says:

          If the UK and US hadn’t stifled democracy in the ME over the last 200 years, we wouldn’t have this problem.

          Democracy is the cure, not the problem.

          • Old farmer mac says:

            Democracy was just getting out of diapers in most of the West two hundred years ago. If there were no West to set the example it seems more likely to me that the Middle East would still be controlled by priests preachers mullahs of various and sundry description.

            • Nick G says:

              You might want to read “The battle for God” by Karen Armstrong.

              Page 197 discusses how democracy was suppressed by the UK in Egypt after WWI. There are numerous other examples of how Russia, the UK and others suppressed a natural, organic movement towards democracy.

              And, of course, there was the US’ invasion of Iran in 1954, in which a nascent democracy was destroyed. The events in Iran in 1979 (and the current nuclear program) were direct blowback to that.

            • Nick G says:

              Our dependence on oil creates war:

              “Winston Leonard Spencer Churchill was appointed First Lord of the Admiralty in 1911. With characteristic vigor and verve, he set about modernizing the Royal Navy, jewel of the empire. The revamped fleet, he proclaimed, should be fueled with oil, rather than coal — a decision that continues to reverberate in the present. Burning a pound of fuel oil produces about twice as much energy as burning a pound of coal. Because of this greater energy density, oil could push ships faster and farther than coal could.

              Churchill’s proposal led to emphatic dispute. The United Kingdom had lots of coal but next to no oil. At the time, the United States produced almost two-thirds of the world’s petroleum; Russia produced another fifth. Both were allies of Great Britain. Nonetheless, Whitehall was uneasy about the prospect of the Navy’s falling under the thumb of foreign entities, even if friendly. The solution, Churchill told Parliament in 1913, was for Britons to become “the owners, or at any rate, the controllers at the source of at least a proportion of the supply of natural oil which we require.” Spurred by the Admiralty, the U.K. soon bought 51 percent of what is now British Petroleum, which had rights to oil “at the source”: Iran (then known as Persia). The concessions’ terms were so unpopular in Iran that they helped spark a revolution. London worked to suppress it. Then, to prevent further disruptions, Britain enmeshed itself ever more deeply in the Middle East, working to install new shahs in Iran and carve Iraq out of the collapsing Ottoman Empire.

              Churchill fired the starting gun, but all of the Western powers joined the race to control Middle Eastern oil. Britain clawed past France, Germany, and the Netherlands, only to be overtaken by the United States, which secured oil concessions in Turkey, Iraq, Bahrain, Kuwait, and Saudi Arabia. The struggle created a long-lasting intercontinental snarl of need and resentment. Even as oil-consuming nations intervened in the affairs of oil-producing nations, they seethed at their powerlessness; oil producers exacted huge sums from oil consumers but chafed at having to submit to them. Decades of turmoil — oil shocks in 1973 and 1979, failed programs for “energy independence,” two wars in Iraq — have left unchanged this fundamental, Churchillian dynamic, a toxic mash of anger and dependence that often seems as basic to global relations as the rotation of the sun.”

              http://grist.org/climate-energy/what-if-we-never-run-out-of-oil/

  32. Fred Magyar says:

    Don’t know if anyone here is following the flight of the Solar Impulse 2 but I thought I post this link.
    Personally I’m really excited about this flight.

    http://www.solarimpulse.com/timeline/view/7763#.VOP6EfnF_94

    • Watcher says:

      dood, why? They flew coast to coast USA, west to east (tailwinds are west to east), 3000 miles, in a time period of just . . . of just . . . 2 months.

      hahahahahahahaahah This is progress?

      • Fred Magyar says:

        hahahahahahahaahah This is progress?

      • Fred Magyar says:

        Dood! You really don’t get it do you? This is about paradigm change not about competing with commercial airlines. There are a lot of very smart people involved in this and they are doing a lot of research and development with immediate commercial applications in a broad range of fields.This is a showcase for technology that is just being born. If you listen to the founders and partners you might learn a thing or two but apparently you are still clinging to the past. Yes, this definitely is progress with a capital ‘P’!.

        • Watcher says:

          It’s soaking sponsor money with capital S. hahahhahaha 2 months to fly 3000 miles. hahahahhahh

          • Fred Magyar says:

            So all the supporters and partners of this project are just a bunch of fools who are all getting fleeced? Now it’s my turn to laugh!

            Do you even know who is behind this?

            http://www.solarimpulse.com/en/our-story/partners/

            • Watcher says:

              The tailwinds west to east. That is what was behind it.

              Why are you wasting time on this? War is coming.

              • Fred Magyar says:

                Why are you wasting time on this? War is coming.

                Yeah, and probably Famine, Pestilence and Death too…
                Doesn’t mean we should all commit suicide now.

                Song by The Low Anthem
                Set the sails I feel the winds a’stirring
                Toward the bright horizon set the way
                Cast your wreckless dreams upon our Mayflower
                Haven from the world and her decay
                And who could heed the words of Charlie Darwin
                Fighting for a system built to fail
                Spooning water from their broken vessels
                As far as I can see there is no land
                Oh my god, the waters all around us
                Oh my god, it’s all around
                And who could heed the words of Charlie Darwin
                The lords of war just profit from decay
                And trade their children’s promise for the jingle
                The way we trade our hard earned time for pay
                Oh my god, the waters cold and shapeless
                Oh my god, it’s all around
                Oh my god, life is cold and formless
                Oh my god, it’s all around

                https://vimeo.com/7275301

                • Futilitist says:

                  Hi Fred.

                  I think it is pretty cool, too, but unfortunately, Watcher is basically correct here. It might have been a paradigm shift, as you suggest, but for the fact that collapse has already begun to overtake the system.

                  That doesn’t mean we shouldn’t try, just that we aren’t very likely to succeed. But we don’t really have a choice anyway. So…

                  • Fred Magyar says:

                    Oh no worries, despite my posting of the link I’m still a realist and and am well aware of the reality of our predicament. I’m not expecting any miracles or easy solutions to our many dilemmas. However I can either chose to throw my hands up in despair and just give up or I can support those few people in the world who get that major change is upon us. I feel that this particular project embodies the essence of that change and they are doing what they can to let that message ring forth. Hell they might even crash in the middle of the ocean but they at least are embarking on one hell of a great adventure. I wish them and all of humanity the best of luck and I at least will be up at night following their flights.
                    Cheers!

            • Old farmer mac says:

              Watcher gets his cookies playing the sophisticated cynic.But every once in a while he says something that throws some light in a dark corner.

              My own guess is that solar powered aircraft suitable for certain purposes such as surveillance, mapping, research and communications will be practical within ten years or so.

              The first generation will probably be towed aloft or launched from a mother ship.

              • Fred Magyar says:

                My own guess is that solar powered aircraft suitable for certain purposes such as surveillance, mapping, research and communications will be practical within ten years or so.

                Yeah but that isn’t what this is really about.

                http://www.solarimpulse.com/en/our-story/change-the-world/#.VOTO5PnF_94

                EXPLORATION TO CHANGE THE WORLD
                With each of their great “firsts”, the adventurers of the last century constantly pushed back the limits of the impossible. Today, the drive to make new discoveries must go on, with the aim of improving the quality of life on our planet.

                By writing the next pages in aviation history with solar energy, and voyaging around the world without fuel or pollution, Solar Impulse’s ambition is for the world of exploration and innovation to contribute to the cause of renewable energies, to demonstrate the importance of clean technologies for sustainable development; and to place dreams and emotions back at the heart of scientific adventure.
                By going beyond the question of energy, Solar Impulse would also like to encourage each and every one of us to become pioneers in our own lives, in our ways of thinking and behaving.

                • Watcher says:

                  It’s a new paradigm.

                  One where suicide is defined as crawling into one of those things and taking it over a battlefield.

                  Small arms are no threat to well flown close air support sorties. This silly thing could be knocked down by an antiaircraft frown.

                • Caelan MacIntyre says:

                  Fred, this seems to look merely like yet another elite endeavor, and it is very doubtful that our communities would really benefit from such. Especially not without real embedded democracy, such as in the R&D process too.
                  We could balloon around the world too, or boat, and have been doing the latter for quite some time.

                  • Fred Magyar says:

                    Everything you say is true but still misses the point point by a mile. Democracy?! That would be nice but it doesn’t exist in the US. hasn’t for a long time. As for benefiting communities, I disagree it is pushing the envelope on technology that will reach even the poorest communities all over the globe.
                    Don’t know if you watched the video of the unveiling of the route and what the plans are but a big part of what they are doing is starting a conversation. I for one welcome their presence. But maybe we are all fucked and there is no hope for any of us…
                    Cheers!

  33. Watcher says:

    Greece oil consumption. Ballpark 350K bpd. Production pretty much nada.

    Two big refineries. Hellenic Petroleum. Outputs gasoline and diesel and whatever. No mention of restrictions. Capacity far above present depressed consumption. Present suppliers:
    KSA, Iran, Iraq, Libya, and Russia, not in order of amount.

    350K X 365 X $50 looks like about $6.4 billion a year. Greece GDP is about $240 Billion. So almost 3% flows out per year for oil. Constant 3% drag on any “growth”. haha

    So. Is pipeline easement worth a few billion a year to Russia? GAZPROM presently pays well over $3 billion per year to Ukraine for transit fees. Those would no longer get paid to Ukraine with the rerouted pipeline thru Turkey and Greece. I think it is distance related so Greece could expect $3B but not over — not as much as Ukraine gets.

    But $3B is half the Greek oil bill. There might even be an oil discount for Russian tanker deliveries. GAZPROM might be willing to pay more to avoid the aggravation of Ukraine gas thefts.

    Greece vaunted primary surplus should keep the trains rolling and people going to work. If they happen to miss some loan payments, so what. The only people who are going to suffer are the ECB and IMF people who approved the loans. They’ll just retire on EU pensions paid in printed Euros.

    • Spain lended $20 billion to the Greek government. This is drving the current to propose that Greece be given the boot from the eurozone if it’s not willing to reform. There’s also a proposal to vote on a mechanism to force them out of the EU.

    • Old farmer mac says:

      ”The only people who are going to suffer are the ECB and IMF people who approved the loans. They’ll just retire on EU pensions paid in printed Euros.”

      Very close but not a ringer. All the people who are holding Euros will lose a little with the printing of Euros. That is just about every body with a Euro in his pocket or the bank.

      It is that old more money chasing the same amount of goods and services thing.

      You may be onto something in respect to the Russians and the Greeks and pipelines.

      • Watcher says:

        The ECB already announced they are printing. Two weeks ago they committed to 1 Trillion Euros to be printed (govt bonds bought) between next month and Sept 2016.

        That’s going to happen regardless of Greece.

  34. Political Economist says:

    http://www.elechina.com.cn/index.php?c=form&a=show&id=1122&modelid=7&cid=341&page=1

    Here is a Chinese article talking about the various technical and economic difficulties involved in a wind power project. The wind power project was to be built in Gansu province (in Northwest China), in a location near one of China’s earliest oil fields and a satelite launching base. The wind power project was designed to have a peak capacity of 5GW. So it’s huge.

    But the current transmission capacity is only 0.7 GW. They are planning to invest 9 billion Yuan to build transmission lines with a total length of 1,000 km to increase the transmission capacity by 1.8 GW. That would only connect the wind project to the grid in the eastern part of the province (the province’s population and economic center), not yet to eastern provinces in China.

    The article also talks about limit to the grid capacity to absorb wind electricity. According to the author, the province has a maximum demand of 10 GW. The author contends that when the baseloads of hydro and fossil fuels plants are taken into account, “it is nearly impossible” for the 5 GW of wind electricity to be absorbed in the 10 GW system.

    • Old farmer mac says:

      They have to spend the dollars they are accumulating on SOMETHING.Putting them in effect under the mattress is a sure way to lose them to inflation or dollar debt default.

      The return on a giant wind project and transmission lines is going to be higher than on a new football stadium or spending it on hauling tourists around in jets which is what we would do with it here in the US as likely as not.

      Maybe the Chinese are really as good at taking the long view as they are reputed to be. It does seem to be a well established fact that you don’t often get to the very top in the Chinese government unless you are technically well educated.Maybe the Chinese powers that be really do believe in peak oil and peak coal etc.

      In that case there is an excellent case to be made that intermittent wind power is going to be precious beyond price.

      Furthermore the major overbuild of the wind farm itself will mean that when the wind is less that optimum the transmission lines will still be heavily utilized. With ten times the generating capacity necessary to fully utilize transmission lines you would need only ten percent output – which will probably be available just about all the time.

      With four or five times the generating capacity as transmission capacity the lines will be at or near capacity most of the time. The lines will be fully loaded anytime the wind farm is doing just twenty five percent of nameplate. I will venture a wild ass guess that the transmission lines will be at or near capacity over eighty percent of the time and never at less than ten percent for more than a day or so at long intervals.

      Now here is a question you may be able to answer. I have had no luck searching for HARD information about the possibility of building out new industrial infrastructure designed to make economic use of intermittent wind and solar power.Speculation on the part of wind boosters is easy to find of course.

      But what I want to know is whether it is TECHNICALLY POSSIBLE to build an affordable water desalinization plant designed to run intermittently – or an aluminum smelter – or a steel mill – or any large scale essential infrastructure.If a water treatment plant can be started and stopped without damaging the equipment then it could run on intermittent power. Ditto a modern electrical steel mill. ( Such mills reprocess scrap rather than iron ore.)

      We are used to thinking it terms of large scale infrastructure such as a steel mill running almost continuously or continuously but there is no reason this is necessarily true other than the capital costs and the problems associated with starting and stopping.

      If such a mill could be made to run twenty five or fifty percent of the time it would cost two to four times as much per ton or cubic meter of capacity to build it but it would run almost fossil fuel free. This might turn out to be a very profitable undertaking a few years down the road as fossil fuels deplete and the prices of them inevitably go up.

      There is plenty of expensive heavy infrastructure that is used intermittently ranging from school buildings to air borne divisions to freeways to shopping malls to vacation resorts etc etc etc.

      Maybe the Chinese believe that building wind farms pedal to the metal is the best of an assortment of bad choices available to them.

      They might succeed in building enough wind farms – and enough pipeline and canal and pumping capacity – to move water enough from places they have it to places they need it thus ensuring their very SURVIVAL. Moving water as power is available is not a problem so long as you move ENOUGH water in total.

      They might even move water this way to reservoirs located high up enough to make the reservoirs function in part like hydro plants thus also getting some load balancing help from a wind powered water project.

      Environmental considerations will not stop the Chinese from building a reservoir wherever one is needed if the ground is suitable.

      • Boomer II says:

        They have to spend the dollars they are accumulating on SOMETHING.Putting them in effect under the mattress is a sure way to lose them to inflation or dollar debt default.

        YES.

        I’ve been reading for a long time (in the US business papers) that the Chinese should be spending more money at home rather than focusing only on export.

        So now there is criticism of them building up renewable energy rather than constructing lots of housing that no one uses?

        Or does anyone welcome them putting this renewable energy money into building a bigger military? Let’s see, the return on investment for renewable energy can’t possibly be a good investment, so maybe we create the biggest Navy in the world.

        • Boomer II says:

          To rephrase my above comment.

          China was told to increase internal consumption. So one way to do that is to increase spending on renewable energy. And that is being criticized for an inefficient use of money?

          If they are going to do anything with their funds, why NOT renewable energy? It’s much better for the world than China using the same money to build up its military or using it for industries that pollute. So what if renewable energy doesn’t solve all of China’s energy policies?

          • Boomer II says:

            I meant to say: So what if renewable energy doesn’t solve all of China’s energy problems?

      • Political Economist says:

        I agree that investment on wind project is incomparably better than a football stadium

      • Nick G says:

        Mac,

        It’s pretty common for steel mills to run only at night, when power is cheap.

        The steel mill a mile from my house was very busy at night.

        • Old farmer mac says:

          If one steel mill can do it then others can be made to do it too. I presume the mill near your house is a modern electric mill that processes scrap rather than iron ore.

          But the time is coming when most new steel is going to be old steel recycled anyway and wind power can take care of the steel industry.

          I suspect it will suffice for a number of other industries as well.

          It might even be practical to MOVE a lot of industry to remote places where wind power is potentially plentiful. Just one rail line can move many billions of dollars worth of high value goods annually.

          So – suppose the Chinese decide to build one of their new cities from scratch where the wind blows and locate some electricity intensive industries there?

          It is my opinion that the Germans long ago recognized that if they want to continue to be a rich and important country they have no choice other than to break the fossil fuel habit. Industry is inevitably going to go places where energy is cheaper in the long run. A country with oil and gas and or coal to sell will figure out it is better to add value by using the fossil fuels at home rather than exporting them– and there will be no shortage of capital to create let us say luxury car factories in Canada or the US which have substantially greater fossil fuel resources.

          • Nick G says:

            The steel industry is generally highly sensitive to the price of power – I believe most US Mills operate primarily at night. And, almost all steel in the US is produced from scrap.

            Similarly, the aluminum industry historically has located near cheap power, such as Canadian Hydro.

            On the other hand, smart industries are not going to locate near fossil fuels – the risk of carbon taxes and other similar regulation is too great.

  35. Dean says:

    Tight Oil Production Will Fall 600,000 Barrels Per Day By June (by Art Berman)

    http://www.artberman.com/tight-oil-production-will-fall-600000-barrels-per-day-by-june/

    “In 2008-2009, the U.S. rig count dropped from 2,031 to 876 over a period of 283 days. As of February 13, 2015, the rig count has fallen from 1,931 to 1,358 over a period of 151 days. The current rate of decrease is greater than in 2008-2009. I used the 2008-2009 rig count trend as a general guide for rate of change and duration recognizing that there are differences between the two events. Other than the rate of decrease, the most notable difference is that in 2008-2009, there was more vertical drilling than in 2014-2015 and that rig efficiency was lower in 2008-2009 as a result.
    I believe that I have accommodated that difference by using EIA production per rig and legacy production change data from the February 2015 Drilling Productivity Report. I used that data in conjunction with projected rig count decline rates to forecast future production for each play. The results are summarized in the following table:”

    • Dean says:

      “This is significant because the EIA world liquids production surplus for January 2015 is 0.97 million barrels per day and the estimate for June 2015 is 0.63 million barrels per day (EIA February STEO). In other words, the estimated decline in U.S. tight oil production should correct a substantial proportion of the world supply surplus by mid-year.
      This suggests that prices may rebound strongly in the second half of 2015 even without an OPEC production cut assuming that demand does not falter.”

      • toolpush says:

        The Eagle Ford may take a bigger hit than he expects, last week the were at 164 rig, only 4 higher than his June high case of 160 rigs, and DJ-Niobrara 42 rigs last weeks compared to 52 for his high case and insight of his low case of just 38.

        I assume he doesn’t believe the company reports that say, they can halve the number of rigs and double the production? smiles!

    • AlexS says:

      Art Berman doesn’t take into account the fact that:
      – The less efficient rigs, with the lowest horsepower, primarily for vertical and directional drilling , are likely to be idled first.
      – Drilling will decline first in the periphery of the key tight oil plays and in emerging plays with lower productivity per well.
      – There is a large inventory of drilled but not completed wells, especially in the Bakken. As soon as oil prices start to recover, companies will be interested in complete more wells. So the number of completed wells will exceed that of drilled wells.

      My guess is that U.S. oil production will peak in the second quarter, then slightly decline (but much less that 600 kb/d), and will remain flat in the last several months of the year, reflecting higher oil prices.

      • shallow sand says:

        Even if US and Canada just flattens, believe there will be a big impact. Other than IRAQ, what other countries will increase production in 2015? Iraq is difficult to gauge given the issues there. The information I read here and elsewhere indicates outside US and Canada was at best flat at much higher oil prices.

  36. Jeffrey J. Brown says:

    Art Berman doesn’t take into account the fact that:
    – The less efficient rigs, with the lowest horsepower, primarily for vertical and directional drilling , are likely to be idled first.
    – Drilling will decline first in the periphery of the key tight oil plays and in emerging plays with lower productivity per well.
    – There is a large inventory of drilled but not completed wells, especially in the Bakken. As soon as oil prices start to recover, companies will be interested in complete more wells. So the number of completed wells will exceed that of drilled wells.

    Wouldn’t virtually all of this also be true for the Haynesville Shale Gas Play? As I have previously noted, at the 2009 to 2012 rate of increase in Louisiana’s shale gas production, Louisiana’s shale gas production would have met 100% of US gas demand by 2017 and 100% of global gas demand by 2020.

    Even as conventional gas and associated gas production continued to increase from 2012 to 2013 in Louisiana, their shale gas production dropped by about one-third, resulting in total dry gas production falling by 21% (EIA).

    • AlexS says:

      I think Haynesville is a different story.
      Nat gas production there has been in decline for the past 3 years, and this was due to reserves depletion, rather than price volatility (in bcf/d):
      2011: 9.84
      2012: 9.78
      2013: 7.69
      2014: 6.70
      The overall decline between 2011 and 2014 was 32%
      (data from EIA’ DPR)

      • Jeffrey J. Brown says:

        I guess the key then is to find non-depleting plays.

        • AlexS says:

          All plays are depleting, but, unlike Haynesville, tight oil plays did not yet reach the point when production from new wells cannot offset declining output from old wells.

    • I don’t know who’s Art Berman, but I wonder if he realizes there’s a lot of declining production outside the USA?

  37. Watcher says:

    Cable is obfuscating Euro weakness. The dollar is being held back. Oil’s decline, ditto.

  38. pochvennik says:

    Today Press Secretary of Rosneft called Canadian oil production “dead” commenting sanctions against Rosneft.

    “The project is not very interesting in terms of commerce, and at the present level of oil prices is a disaster for the Canadian side. Canada sublimates. It’s like Bulgaria, in tears, would impose sanctions against the “South Stream”. In Canada, the industry is in a dying condition. It was a sanction against a dead man – I do not mean “Rosneft”, I mean the Canadian oil production “, – said Leontiev.

    “Canada – a country preoccupied with its Ukrainian diaspora, most of which pro-nazi, it is well-known case. There’s a very strong lobby. Canada-specific nonsense is difficult to expect. Nonsense is pretty creative thing “- he said.

    http://www.vedomosti.ru/companies/news/39542271/leontev-nazval-pokojnikom-kanadskuyu-neftedobychu

    • Watcher says:

      “It’s like Bulgaria, in tears, would impose sanctions against the “South Stream”. ”

      This is the part that matters. The Russians are absolutely going to pursue the Turkey route. Ukraine will have nothing at all.

      • pochvennik says:

        Since 2012, Rosneft has owned a share in the tight oil Cardium development project run by U.S. oil major Exxon Mobil in Alberta.

        http://business.financialpost.com/2015/02/18/rosneft-lashes-out-at-ottawas-sanctions-saying-canadas-oil-industry-is-on-its-deathbed/

      • shallow sand says:

        Per ND website, rig count 131. Wonder how many more of the undeterminds are really stacked or will be shortly?

        How many jobs are lost for every ND rig stacked? This is the big negative that will come out of this mess. This country needs a stable well trained oil and gas workforce, but as a parent I don’t know that I want my kids to get into it. Too much boom and bust. However, I guess many other occupations are that way in the US. And of course, the kids will do what they want and not what their parents want, anyway. Which, as long as they are working and living right, is fine by me.

  39. Ronald Walter says:

    Looks like the oil industry has been shooting itself in the foot time and time again. Where’s John D. Rockefeller to save the bidness?

    http://www.timelines.ws/subjects/Oil.HTML

    1859 Aug 27-28, The US oil business was born in Titusville, Pa. Former army officer Colonel Edwin L. Drake drilled the first oil well in Titusville, Pa., striking oil at 70 feet and setting off a wild scramble for wealth similar to the California gold rush of 1849. The land belonged to the Pennsylvania Rock Oil Company. Until that time, the company had simply collected oil that seeped out of the ground. Drake’s plan was to produce it in large quantities for use in heating and illumination. Overnight oil fields sprang up in Pennsylvania but competition, disorganization and oversupply kept oil prices low. It was not until John D. Rockefeller and the Standard Oil Company came onto the scene in 1870 that the petroleum industry developed into a vastly profitable, although much hated, monopoly.

    1880 Nov 8, Edwin Drake (b.1819), the man who drilled the first productive oil well (1859), died penniless.

    http://www.timelines.ws/subjects/Oil.HTML

    Nobody says you’re going to get rich, but probably won’t starve either. Maybe.

  40. Watcher says:

    View all things through the prism of oil and it becomes more clear that the crisis is passed . . . is just silly.

    Let’s look at some minutae. Greece’s ELA reqmts (Emergency Loan Authorization) is funding from the ECB to Greek banks whose capital ratios (reserve ratios) got weak for this reason or that. Today’s is the bank runs. People are yanking money before it gets frozen like Cyprus. The Greek banks’ total ELA take to date is north of 60 billion Euros. It has turned into a backdoor bailout.

    But again they are going dry. The ECB just granted another 3B today. Germany was against any ELA facility at all for anyone months or years ago because they knew this would happen. Ain’t just Greece. Italy and Spain, too. But even if you’re Germany and all this stuff is anathema, something like 80% of your exports are bought by EU countries. If they have no money, they can’t buy. So Merkel shook her head and agreed.

    US budget deficit will log in at about 500B this year. GDP is nudging $18 T in post QE dollars. That’s about 2.8%, and lo and behold, in a world of oil scarcity, that’s almost exactly average annual GDP growth. Behold, NOTHING ORGANIC. It’s all gubmint stimulus.

    Merkel is seeing this unfold and looking at her 10 yr paper at 0.37% and there is no way in hell her advisors are not telling her deflation is rampant. She has no oil. She never will have oil. She has a PhD in physics. She UNDERSTANDS, but she has to do what she can . . . and that’s . . . keep the wheels turning, regardless of direction of travel.

    Anyone remember the absurd “the US can ship LNG to Europe and replace GAZPROM?” hahahahah what happened to that?

    The EU imports a ton of oil. The North Sea is dying, as we know. So it’s coming from the Middle East, and the good high diesel stuff used to come from Libya, but oh well, the Administration really handled that well.
    Gaddafi was a reliable supplier. The Eurozne burns about 9.5 mbpd and looks like 8 of that is imported, though that can be a smidgeon bogus because Norway didn’t join the EU.

  41. Watcher says:

    Ooooh.

    Well well well (as it were).

    From the FOMC minutes:

    “Several participants noted that there were signs of layoffs in the oil and gas industries, and that persistently low energy prices might prompt a larger retrenchment of employment in these industries.

    In addition, it was observed that if capital investment in energy-producing industries slowed significantly, it could damp the overall expansion of economic activity for a period, especially if the slowing took place after most of the positive effects of lower energy prices on growth in household spending had occurred.”

    • toolpush says:

      Longtimber,

      From your link,

      The train, heading to eastern Canada from Alberta, derailed shortly before midnight about 80 kilometres south of Timmins, Ont., a CN spokesman said. Canada’s largest rail operator said 29 of 100 cars were involved and seven had caught fire.

      I would love to know what sort of oil this was. If it was dilbit (tar sand oil) and it can catch on fire in freezing temps, there is no hope of shale oil in the middle of summer.
      It must surely be a light oil. Hopefully someone will think it is important enough to publish to actual information.

  42. Pingback: EIA Drilling productivity reports for the major oil and gas fracking regions in the USA | Green People's Media

  43. AlexS says:

    Another article by John Kemp

    “COLUMN-U.S. shale on more sustainable course after price rally: Kemp

    http://in.reuters.com/article/2015/02/16/us-crude-shale-kemp-idINL5N0VQ2N120150216?feedType=RSS&feedName=everything&virtualBrandChannel=11709

    Feb 16 (Reuters) – U.S. shale producers have responded even more quickly to lower oil prices than analysts expected, which should ensure shale production hits a plateau by May or June and is sustained rather than falling in the second half of the year.
    The number of rigs drilling for oil in the United States declined by another 84 last week, according to oil field services company Baker Hughes.
    The oil-directed rig count has now fallen by a total of 553, or 34 percent, since early October, the fastest decline since 1986.
    Some analysts have questioned whether the decline in rig counts will really result in a slowdown in oil output.
    The most basic lower rigs, those with the lowest horsepower and depth ratings, capable only of drilling vertically, are likely to be idled first, leaving more powerful units with horizontal capability still working.
    And drilling will pull back from speculative frontier areas to concentrate on the most productive parts of well-established plays to maximise new output per well drilled.
    But however the data is analysed a broad-based slowdown in drilling is now occurring across the entire U.S. shale sector.
    BROAD SLOWDOWN
    In two of the Big Three shale plays, Williston and Permian basins, the number of rigs drilling for oil has fallen by 34 percent, exactly in line with the national average.
    Only the Eagle Ford play, where the rig count is down 28 percent, shows a slightly smaller-than-average percentage decline.
    In terms of rig capability, the number of vertical rigs is down by 43 percent and the number of directional rigs is down by almost 41 percent. …But even the number of horizontal drilling rigs is down by 24 percent, taking 328 horizontal rigs out of operation since early October.
    Horizontal rigs (328) account for almost 60 percent of all units taken out of service since Oct. 10 (572), according to Baker Hughes.
    …..Nonetheless, the slowdown has occurred even faster than expected as ultra-low prices in January sent a shock through the entire production community.
    The bravado with which shale drillers greeted falling prices in October and November, openly challenging to OPEC to do its worst, reminiscent of President George W Bush’s “bring ’em on”, has evaporated.
    Now shale producers are focused on restructuring their operations and conserving cash to survive until prices recover.
    BREAKING EVEN AGAIN
    The faster-than-expected response from producers has helped oil prices rise from their mid-January lows to a more sustainable level.
    Front-month Brent prices are up 31 percent from less than $47 on Jan. 13 to $62. WTI has risen 20 percent from $44 on Jan. 29 to $53.
    Plains Marketing posted prices for Bakken sweet are up 28 percent from just $28 on Jan. 28 to more than $36. Texas posted prices have risen by around 20 percent from $41 to $49 a barrel.
    In January, oil prices had fallen to levels at or below breakeven levels for even the best parts of the major shale plays and obviously unsustainable.
    But the rebound should ensure drilling in the best properties within the core areas of the Big Three is just about sustainable.
    Based on a simple average of posted prices and WTI, wellhead prices in North Dakota have risen to almost $45 per barrel.
    Wellhead prices are now at or above the breakeven levels needed in all four counties at the heart of the Bakken play (Dunn, McKenzie, Mountrail and Williams) according to estimates published last month by North Dakota’s Department of Mineral Resources (DMR).
    These four counties together accounted for more than 1 million barrels per day of the state’s total production of 1.23 million in December.
    Wellhead prices are now much closer to the level needed to sustain North Dakota’s output at around 1.2 million barrels per day throughout the rest of the year and 2016.
    The same is true in Texas, where wellhead prices are close to $50 per barrel in much of the state.
    SUSTAINING OUTPUT
    Prices have responded faster than the Energy Information Administration (EIA) predicted in its January Short-Term Energy Outlook (STEO).
    EIA forecast Brent prices would gradually climb to around $54 by May and end the year at $70, with WTI recovering to $51 and $67 respectively.
    The agency’s projected price rebound underpinned its prediction that crude production would end the year at about the same level as it began, after dipping between May and September.
    In fact, prices have recovered slightly ahead of that timetable. Crude prices no longer appear severely undervalued or out of line with underlying supply and demand.
    The faster-than-expected price recovery, if it is sustained, would help support oil production around current levels and ensure it hits a plateau, rather than declines, over the summer months and into the end of the year.

    • Anon says:

      Bunch of baloney. No one went into the Bakken for $45 wellhead.

      • SRSrocco says:

        Anon,

        I agree with you. According to Art Berman, BREAK-EVEN for those four counties on a FULL CYCYLE basis (if there is such an average cost) is north of $80. As Art repeats OVER & OVER again… if you deduct enough costs, you make anything profitable.

        steve

    • John B says:

      Brent is already over $60.

      http://www.oil-price.net/

      • Heinrich Leopold says:

        John B,

        In my view it will take a long time until the oil market recovers. Just yesterday the news came out of a huge inventory build (API numbers). http://www.marketwatch.com/story/crude-oil-shocker-api-data-show-supply-surging-2015-02-18 . If the EIA confirms this number oil will go down even further. One of the reasons for the inventory surge is that shale oil yields mostly light distillates in the refinery process. Therefore US refineries have to import more heavier crude grades in order to produce middle distillates. This is a considerable mismatch in the oil market. Another reason is that the shale boom is based on debt. Companies have to produce any barrel as fast as they can.

  44. aws. says:

    Greening the Tea Party

    By Carolyn Kormann, The New Yorker, February 17, 2015

    Debbie Dooley was one of the twenty-two organizers of the first nationwide Tea Party protest, in 2009. A preacher’s daughter from Louisiana, she is a co-founder of the Atlanta Tea Party, on the board of directors of the national Tea Party Patriots, and, since 2012, has been a fierce solar-power advocate. “I thought that the regulated monopoly in Georgia had far too much power,” she told me recently, describing the dominant utility company in her state. “They had begun to look out for the best interests of their stockholders instead of their utility customers.” Solar, she said, promised to give people energy autonomy. “The average person cannot build a power plant, but they can install solar panels on their rooftop, and they should be able to sell that energy to friends and neighbors if they wish.”

  45. Dave Ranning says:

    Our Nazi Friends in Kiev better get better mercenaries:

    http://edition.cnn.com/2015/02/18/europe/ukraine-conflict/index.html

    • Watcher says:

      Regardless of inflammatory phrasing, reality is Ukraine’s army is not a regular army. It’s more or less bodyguard arrays of various oligarchs seconded to a Ukraine defense ministry with about a year of experience and no money.

      Not so much “in contrast” but in parallel, look at the age of the separatists in that film clip. These are not 18-20 yr old guys out there wiping the floor with the “Ukraine military”. They are quite old. Kiev’s Right Sektor (neo nazi) bunch are no different than their other factions — untrained, unorganized, and pretty frequently defeated by middle aged men.

  46. aws. says:

    Demand destruction…

    If driving is believing, 2015 Ford F-150 is the best one yet

    By: Jil McIntosh Special to the Star, Published on Thu Oct 09 2014

    Fuel economy increases as well with the weight loss. Those numbers won’t be available until closer to the on-sale date later this year, but Ford says to expect a five- to 20-per-cent improvement depending on the engine.

  47. ezrydermike says:

    coup attempt in Venezuela?

    http://econwaronvenezuela.telesurtv.net/

  48. bakkenhand says:

    Apologize for a tangent, but i saw in a previous post Toolpush was looking at EOG on the NDIC active rig count list and noticed old spud dates from November. I looked today and saw only one well started in February. I know they do not drill slow so it makes me suspect they only have one active rig. Very curious given that they seem to be in the know on how to play the shale game…..

    • toolpush says:

      Bakken Hand,

      Thanks for the feed back, it certainly looks as EOG are playing their hand close to their chest. also nearly all of their wells are on the confidential list, I am sure they are happy to be able to create as much confusion as they can.
      Their results were released today, and even there they didn’t mention the number of rigs they had, just how many wells they were planning for this year. I was 25 for Bakken for 2015, which over the year would be work for 2 rigs. If 6 are currently working as per the ND rig list, then they may finish the year with only one rig. Who knows, their confusion is definitely working on me?

      Stay warm up there, I hear it is a little cold these days.

      • AlexS says:

        EOG joined other producers that have significantly cut their 2015 capex

        Below is an article from Bloomberg:

        Fastest Growing Shale Producer Is Going To Halt Output Growth

        February 19, 2015
        http://www.bloomberg.com/news/articles/2015-02-18/eog-quarterly-profit-declines-as-oil-crash-trumps-prolific-wells

        The biggest, fastest-growing oil producer in the U.S. said it plans to halt output growth this year, delivering a signal that shale companies are beginning to do what it takes to reduce oversupplies.
        EOG Resources Inc., which has boosted its oil production by almost 50 percent annually for the past five years, is slashing spending 40 percent and will drill half the wells it did in 2014.
        The company joins Apache Corp. in its plan to pump about the same volume of oil as last year. The cutbacks are a sign that shale producers can slow down a lot more quickly than forecasters are expecting, said Michael Scialla, a Denver-based analyst at Stifel Nicolaus & Co.
        “EOG is viewed as the premier company in shale development, and if they’re not going to grow, it is a very important signal to the market,” Scialla said in a telephone interview. “The argument that this slowdown is going to take a while to have an impact on supply is completely wrong.”
        “The company is not interested in accelerating crude oil production in a low-price environment,” EOG said in a statement.
        The collapse of oil prices by more than half since June has forced major producers and drillers to cut more than $40 billion in spending and fire 50,000 workers. The number of oil drilling rigs working onshore has declined by a third since October.
        The producer’s net income fell to $444.6 million, or 81 cents a share, from $580 million, or $1.06, a year earlier. Profit excluding one-time items was 79 cents a share, less than the $1 average of 36 analysts’ estimates compiled by Bloomberg.

      • shallow sand says:

        Thanks for the info Bakkenhand. From my reading, EOG has about the most productive wells in the Bakken so this should be further confirmation that the oil price is too low for most wells up there. I recall about a month ago a service co. Owner predicting 50 rigs by June. Looking accurate. Also bakkenhand, normally this isn’t the case but you area lot warmer than we are this morning, hope better weather coming our way!

      • bakkenhand says:

        toolpush, I think EOG may be looking into refracking some earlier wells at $1million a pop as a temporary way cost effective way to boost production without more drilling. I don’t know details but think it pertains mainly to old wells not fracked with as many stages and propant. Think i read it from this an article written by this guy http://seekingalpha.com/article/1286011-bakken-update-depletion-of-the-top-20-oil-producing-wells-in-the-bakken

  49. Decline rate with inverse power to the 0.57 as shown is very close to a diffusive flow power law of inverse 0.5.

  50. FunnelFan says:

    Enron Corporation spun off Enron Oil & Gas which went on to become the publicly-traded EOG Resources. It has been a separate company since a couple years before the Enron bankruptcy. EOG was one of the earliest developers of the Bakken, and in later years has been using its knowledge gained from there in the Niobrara of Wyoming and Colorado. EOG is very highly regarded in the business, both as an innovator and workplace.

    (In the interest of transparency, I have owned shares of EOG for a few years.)

  51. tfark45 says:

    If You Average The High & Low Price – From 2000 to 2015
    Bakken Oil Ranges From $34.09 to $66.09
    With WTI Discount Spread – It Is What It Is…………………………………………………………………………………
    The Years Above $66.09 Are Very Very Few – 5 In 15 At Best
    http://bakkenboomorbust.com/aaacurrentbakkencrudeprices.jpg

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