All rig count data is provided by Baker Hughes. All monthly charts are oil rigs only. Gas rigs are not included in the count. The last data point for all monthly charts is April 2015.
When I talk about “peaks” in this post I am only speaking of the peak since 2011 and am not suggesting that there were not higher peaks in previous years.
The International Rig Count has fallen by 150 rigs, from 1,080 in July 2014 to 930 in April 2015. This count does not include the USA, Canada or any of the FSU countries.
The European Oil Rig Count dropped from 96 in October and November to 65 in April.
The African Rig count peaked at 123 in February and dropped to 88 in April.
The Asia Pacific rig count stood at 211 in January 2011 and now stood at 164 in March and April.
The Latin America oil rig count stood at 396 in May of 2012 and has since dropped 100 rigs to 296 in April.
The Middle East oil rig count rose from 179 in January 2011 to 349 in July of 2014 and stood at 317 in April.
The Saudi Arabia oil rig count has been bucking the trend. They have been increasing rigs while everyone most everyone else has been cutting rigs. Saudi oil rigs have increased from 23 in January 2011 to 81 in April 2015. Saudi is doing everything it can to ramp up production.
Kuwait has also been trying to increase production lately and have increased their rig count, though it fell by 3 from March to April.
The UAE, like Saudi And Kuwait, have been increasing their rig count as of late.
Iraqi oil rig count has fallen from 96 in June to 53 in April. That’s quite a drop. I don’t understand that zero rig count until June of 2012 but that’s just what Baker Hughes is Reporting.
Mexico’s oil rig count began to erode long before the price collapse. The recent peak was 104 in march of 2013 but stood at 60 in April.
India has a strange profile. Hitting 114 last April but dropping to 86 in April.
Brazil’s oil rig count has dropped considerably, from 90 in June of 202 to 41 in April.
There were far too many graphs of rig counts to post, but I wanted to post the most interesting to give you some idea of what is happening. One question bound to be asked is why does it take so many more rigs in North America than it does in the rest of the world. That would be a good question to discuss in the comments. I won’t attempt to answer it right now.
This is the USA weekly oil rig chart. The peak was 1609 the week of October 10, but we were still at 1575 the week of December 5th then dropped to 1546 the week of December 12th. The last data point is the week ending May 8th.
But I would like to post the weekly rig count from Canada. The weekly count gives us one detail that the monthly count did not show, the spike downward at the very end of every year. I hope some Canadian can give us the reason for this phenomenon.
The above is the Canada’s total rig count, which differs from the oil only rig counts above.
Canada exhibits a strange annual rig pattern. The rig count normally bottoms out the first or second week of May at around 120 rigs, though it was 145 in 2014. Then it heads up and reaches a plateau around August. It remains on this plateau until near the end of December. Then it spikes down at the end of the year. Then it heads back up and peaks in February. Then it goes back down and bottoms out again in May. Except this year, when it started up at the first of the year it did got only about half way up before the oil price collapse knocked it back down again. This year that huge first quarter hump is completely missing and now sits at 75, or 70 rigs lower than it was at this point last year.
This is the combined total of all rigs, gas and oil, from the US and Canada since February 2011 to the present. The high for this period was 2707 in February of 2012 and now stands at 989, a drop 63% since that point.
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Check back to the tail end of the last post for useful discussion of the value of the new Tesla battery. I am putting a link there with discussion of it.
Mac, I wrote a critique, it’s under your link.
O-F-Mac – (and anyone else) you can link to a comment by right-clicking –> “Copy Link” on the date/time stamp under the poster’s name, then one can paste that link, like the one immediately below (to your comment…).
http://peakoilbarrel.com/reserve-growth-in-west-siberian-oil-fields/comment-page-1/#comment-516088
Fernando – you’re (usually) a smart guy, think a little bit.
For $3,500 one gets a battery pack that is warranted for 10 kWh for 10 years at _weekly_ cycle,
For $3,000 one gets a battery pack that is warranted for 7 kWh for 10 years at _daily_ cycle.
7/10 = .7 3000/3500 = .86 520 cycles / 3652 cycles = .14
About the same cost/capacity, just disparity in cycles.
Both have the same POWER RATINGS/WEIGHT/temp rating/dimensions/etc.
Both can be ganged up to 9 units (bonus quiz, why 9? (see below))
DUDE – it’s (essentially, if not exactly) the SAME BATTERY!
They just manage/warrant it differently. The decline in capacity per cycle is finessed with software in their charge controller/BMS (Battery Management System) (inside the powerwall).
Both are probably around 12 kWh batteries under the covers (same weight!), with a good BMS – something Tesla has a lot of experience with.
http://rameznaam.com/2015/04/30/tesla-powerwall-battery-economics-almost-there/
They may put “lower capacity” cells in the 7 kWh unit (analogous to slower chips in slower computers), or not, depending on their cell yield/variance.
Back in the day when one could look at a chip on a computer circuit board and say something like “that’s the lower nibble of the 3rd byte of the ALU”, it was not uncommon for processors to be identical, but sold at different speed ratings. Need more power? Send in a big check and some service guy would come out and replace a clock or sometimes just cut a jumper or reprogram some microcode, and voila – twice the speed.
Plus ça change, plus c’est le meme chose.
Then, electronics had gotten so cheap, one could afford to “hide” “excess power”.
Now, batteries have now gotten so cheap, Tesla can afford to “hide” “excess” capacity.
Computers used to require a full-time operator, and systems analysts to interface for users.
Now you’ve got a computer inside your cell phone that’s more powerful than the ones the US went to the moon with, and you use icons and gestures and maybe voice to interface to it.
Batteries used to need dedicated rooms and technicians with hygrometers and electrical meters making the rounds.
Now they’re sealed, and a BMS hides the individual cells from the user.
And Elon comes along and offers them in designer colors (just like computers or their covers now!).
Announcement event video at:
http://www.teslamotors.com/powerwall
re: why 9?
you can gang these with 3 phase inverters (as well as single phase/split phase), so you want multiples of 3 (or 1 or 2). If you want more storage, they do that too – like the ones they powered the announcement event with.
BTW your properly discounted analysis needs to include the increasing cost of fossil fuels, with cases for various carbon taxes and cost of disruption due to lack of fuel, grid outages, etc.
Decline in capacity is already handled/hidden by the BMS – triumph of software, electronics and the learning curve.
Sunny: the method I suggested to Mac is plain vanilla, to fix the problems I saw in the analysis he linked. Such an analysis doesn’t use fossil fuel costs, it uses the peak versus off peak rates charged by the power utility. Those rates are impacted by too many factors for me to consider making a ten year forecast.
If you wish me to give you a better analysis load a text file with two columns, time and kW for a typical residential customer. I propose to run a 10 % discount for those using financing, a 7 % for those who forego stock investments, and 4 % for those who invest in CDs and bonds.
The round trip loss will be 10%, and I’ll b extremely generous and assume the capacity doesn’t degrade. The house won’t be used at all 21 days per year, and I’ll assume there’s no extra insurance costs. Maintenance will be $50 per year. Fair enough?
Of course this analysis was written by a layman rather than an engineer and Fernando as usual has a hard nosed engineers dollars and cents way of looking at an investment.
I am still waiting for him to admit IN SO MANY WORDS that the world will eventually have to run on either renewables or nukes.
Now his argument about a house not being used twenty plus days a year in California will not hold water. Noboby in California who can afford one of these systems is going to turn off anything except the tv when he leaves home. He MIGHT turn the thermostat up or down. Most such folks will even put their lights on a timer to fool potential burglars into thinking somebody might be home.
There are certainly opportunity costs and lost energy in the round trip but I strongly suspect that almost any Californian who buys one of these batteries will manage to use it to the max allowed by the software just about every day. Coming home to a nice cool house at five thirty is the ticket. The people that buy them are not going to be skimping on electricity like misers. The typical customer will probably be using well over the average monthly number of kilowatt hours.
The question boils down to this. If the owner finances the battery and installation at say six percent will he lose or save money?
I don’t pretend to know.I just posted the link with enough commentary to let other forum members know what it claims without having to read it.
Plus there are probably going to be some tax incentives involved for most customers. I have extremely mixed feelings about tax breaks for rich or well to do consumers.
Personally I do not buy the argument that folks who own pv are freeloading on the folks who are not – if the rate structure is properly set. Net metering can allow a utility to cut back on present day and future expenses in peaking capacity and upgrading transmission lines.
Mac: In this particular case I’m only trying to perform a customer protection service. If I find the power consumption curve I’ll give you my result. But I can confirm the analysis you linked is flawed.
Here´s the analysis result: The 7 KWH Powerwall yields negative value for a customer served by Southern California Edison.
Here´s an overview of what I did:
I checked the Southern California rates, as issued by Megan Scott-Kakures here
https://www.sce.com/NR/sc3/tm2/pdf/CE220.pdf
This is a California Public Commission form, I used the sheet 2 rates for generation, because the other rates are held constant. If you look carefully at the sheet 2 you will see the important figures are the Level I and Level II rates for winter and summer for peak and regular hours.
They have an OPTIONAL program, under which a customer can offer to have a two tier rate plan, with a much higher price during peak hours, which are defined as 12 noon to 6 PM on weekdays. They don´t offer a definition of winter season, so I assumed half the year is “winter” and half is “summer”.
I can´t find the level I KWH. When consumption exceeds level I, the rate goes up slightly. However, the difference between the two is less than 2 cents per kwh, so I assume the hypothetical customer uses the average of the two levels.
Here are the actual differences listed in the rate sheet
Here is a table showing the Present Value Results for three discount rates.
And here is the present value evolution, shown in a graph. The problem is simply that the cash flow generated by arbitrage of the peak rate to normal rate just doesn´t pay for the battery investment.
This is a safe conclusion, otherwise we would see large industrial players buying industrial scale battery systems.
Lesson learned: We see a lot of flawed analysis printed in the media or discussed in the internet. A careful analytical approach should be used before getting scammed by investments like this.
Ok, thanks Fernando for the analysis.
Now one more question.
You are handy at math whereas I haven’t done any serious math for close onto fifty years and have forgotten what math beyond arithmetic that I once knew.
Assuming the same rates and discounts etc, how what would be the break-even price for the customer for such a battery?
What is the most he could pay for the turnkey installation without losing money?
Mac, if you look art the graph, the fully installed cost would have to be about $3000 if the differential between peak and normal increases at 5 % per year. The graph shows a negative value at the end of the analysis = $4000 for the 7 % discount (red) curve. To avoid going underwater by that amount we have to make the negative $7000 climb to ~ $3000. A person who gets 10 % financing over 15 years would have to pay $2500 to break even.
A home equity line of credit in my area currently has interest rates of 3% or so, but the rate is variable. For a fixed rate line of credit it is about 4.25%, with a 15 year repayment period.
Hi Old Farmer Mac,
A problem with Fernando’s analysis may be the assumption that electricity rates will rise at the same level as inflation.
As peak fossil fuels hits, does that seem like a reasonable assumption? Let’s assume peak fossil fuels arrives in 2025 as Steve Mohr’s analysis suggests, I would submit that electricity rates for thermally generated power will rise by about 3% per year in real terms, if we assume inflation is 3%, that would be a 6% rise in electricity rates after 2025 (with gradually rising rates from 2015 to 2025 say by 0.333 % per year).
As far as I can tell Fernando assumed the various summer and winter peak and off peak rates were fixed at present levels for the next 14 years.
These types of “investments” are not done to make money. Early adopters of this technology will do it because they can afford to do what they think will be good for the planet.
Another thought is that as more solar power is installed, the price of backup grid power may rise as this will be best provided by spinning natural gas backup that can be ramped up and down quickly. This electricity could be quite expensive in the future as natural gas peaks and the “off peak rates” when the sun is not shining may be much higher than the way current rates are structured so that batteries become more valuable.
Dennis, I assumed variable RATE DiFFERENTIALS. The 4 % discount rate requires the peak to regular charge differential to increase at 14 % per year for almost 15 years to achieve the zero pv4. I must conclude the Powerwall is a senseless investment for a private home served by Southern California Edison.
Hi Fernando,
If we assume a $3000 home equity loan at 4.25% interest and we discount the loan payments at a 5% real discount rate (assuming an investment in the stock market will yield a real rate of return of 5%), then if the regular rate is the average of the winter and summer rates, if that rate rises by 5% per year in real terms, then the power wall breaks even.
I was wrong, Fernando has the differential between peak and off peak rising at 5% per year. I would think the differential might narrow over time as more solar is installed, the peak demand for fossil generation will decline and the demand for off peak fossil power for back up would increase and we would expect the differential to narrow rather than increase. However I would also expect fossil generation to increase in price as fossil fuel depletes.
My expectation is for both peak and off peak rates to rise with the differential between peak and off peak narrowing. So off peak rising by 6 % per year and peak by 4% per year due to more solar power being installed.
Dennis, the battery system is sold as an arbitrage device. The article Mac linked mentioned the ALL INCLUSIVE installation cost is $7000.
The price increase in electricity has no impact, what enhances the battery’s economic return is the DIFFERENTIAL. And even when I assumed absurd escalators for the differential (on top of 3 % inflation), the battery fails to pay out.
I decided to look at this particular case because it gives me the investment cost to make power storage break even, just to arbitrage the daily peak.
It looks like it takes about $2800 to $3500 per 7kwh equivalent. $400 to $500 per kWh.
The trick for California seems to be to use a long lived storage device (not a battery system). I haven’t looked at it in detail, but it seems that linking up a pumped storage catchment pond to an existing dam and rigging up solar and wind to drive the water pumps may be the better solution. Unfortunately the California regime seems to lack working brains. Therefore they specified pumped power storage couldn’t be bid for state projects.
They also lack water. So they need to use gravel or sand as their potential energy storage device. If they have abandoned mines, that would work for water since the evaporation rate would be low.
Of course, since California is high tech, they could be the first to implement large scale molten metal batteries for storage. Nice to see if they can be made to work at scale.
Hi Fernando,
I missed the $7000 as I didn’t read the article Mac linked to, I also forgot the 10% losses, so I would have to try again.
I agree that the energy arbitrage use is unlikely to work for very long. In fact if many people did this, it would tend to reduce the price differentials by increasing off peak demand and decreasing peak demand, more installation of PV would have a similar effect, tending to smoothe the differential between peak and off peak demand from fossil fuel generation due to the day night cycle.
What will not change is that the general price level of fossil fuel generation will tend to rise as fossil fuels deplete.
The only way this does not occur is if there is so much power supply from wind, solar, hydro, geothermal, and nuclear power, that the prices of fossil fuels falls due to a lack of demand.
Even I am not that optimistic, though Nick G thinks in these terms. There is a possibility that we might get there by 2075 if all the stars align. We will need peace to guide the planets and love to steer the stars 🙂
Dennis,
Declining prices for coal, especially, is exactly what’s assumed by the Peak Coal analyses that you’ve been looking at.
The world has *enormous* supplies of coal. The reason that production, and economic reserves, have been falling is that there have been cheaper alternatives. Resources that were reserves are being abandoned in places like the US, UK and Germany.
See http://energyfaq.blogspot.com/2008/06/are-we-running-out-of-coal.html
and
http://energyfaq.blogspot.com/2009/02/are-we-running-out-of-coal-part-2.html
Marble, here’s a link about California hydropower.
http://www.energyalmanac.ca.gov/renewables/hydro/
the battery system is sold as an arbitrage device. The article Mac linked mentioned the ALL INCLUSIVE installation cost is $7000.
Well, let’s say it one more time: No. It’s not sold as an arbitrage device for the US. The $7k cost is for the 10kWh backup system, not the 7kWh daily load shifting system.
The load-shifting systems are being sold without inverters because their primary residential use is as an adjunct to an existing solar system, which already has an inverter.
Neither solar PV nor the load-shifting system can be cost justified based *purely* on US grid prices (in most of the US). Fortunately, most people are more foresighted than that.
Electricity rates may fall as more solar and wind power comes on line. Especially during the day when solar will provide most of the powr, which would make having some storage capability nice for the evening and nighttime, storing almost free electricity.
What makes the installation of Tesla batteries so expensive, sounds odd to me?
It looks like the average differential is about 15 cents. Is that about right?
Again, what about residual value at the end of 10 years? The battery is likely to have 80% capacity remaining: if you have 1-5, you can just add one and bring the whole thing up to capacity.
Nick, the economic evaluation assumes the battery life is 15 years (it doesn’t get used on weekends or vacations). The negative value exceeds the initial price, therefore the investment doesn’t make sense unless the differentials increase at incredible rates. If any of you want to defend this particular technology you have to find a logic to support higher differentials.
I didn’t get into the really nitty gritty details, but I do want to remind you this is only an analysis for peak to regular arbitrage. Other ahalyses can be prepared for other uses. For example, I think I can game the system to exploit loopholes in the California public utility commission rules. But once every Tom Dick and Jane starts gaming the PUC will catch on and change the rules. They tend to be brain dead, but I don’t think they are that stupid.
I agree – when it comes right down to it, the original article was silly, as these rates are very likely to change soon. They have to: the pattern of consumption in CA has changed dramatically since these were created.
FWIW, I don’t see a firm basis for your counter-analysis: I don’t see any basis for: a 15 year life; a zero residual value; a $7k price (which was for a different use); or assuming only a single unit. It’s also not clear what differential was used here.
otherwise we would see large industrial players buying industrial scale battery systems
Isn’t that pretty much what we ARE seeing?
The product was just launched 9 days ago, and they’ve already sold out until the summer of 2016, with most of the customers being businesses.
http://www.techtimes.com/articles/51311/20150508/want-a-tesla-powerwall-its-sold-out-until-mid-2016.htm
Yes John, they may live in areas other than the ones served by Southern California Edison with extreme peak power surcharges.
Or maybe they lack the ability to do the analysis, or are being deceived by the plethora of pompous printed propaganda prepared for prospective victims.
Hi Fernando,
Yes most businesses do not know how to do a discounted cash flow (DCF) analysis and need your protection.
Many businesses need backup power, so the competition is other types of battery back up systems. In many urban applications backup power using a fossil fueled generator is not a viable option.
No doubt the powerwall is competitive with other battery backup systems. If not, few would purchase them.
Dennis: the discussion was about the article linked by Mac, which referred to a residential use for arbitrage of peak vs off peak.
A business may wish to buy the battery to show off its green credentials. For example, one of those restaurants serving funky salads to Beverly Hills millionaires. They could have Christos wrap it in colorful biodegradable plastic sheets.
A restaurant is going to be in deep trouble if a power outage happens in the middle of the night and thaws out all their food.
A UPS can be very cheap protection.
Yes. if the California grid sees more renewables and goes unstable a restaurant should comsider a kit with a small gasoline powered generator backup. It’s cheaper.
Generators are noisy, smelly, dangerous, and require on-site operation and substantial maintenance. They’re not appropriate as a UPS.
In many countries the grid only operates for limited hours during the day: a PV/battery system will be better in every way.
And, given that renewables are domestic, they have a significant edge over imported fossil fuels in reliability (security of supply).
Whoa! You’ve got a way to get a *guaranteed, risk-free* 7% return on stocks, and 4% on bonds/CDs??
Who’s your broker? Email me their phone number!
10% financing cost? A lot of people are looking for investment ROI of 2% for their cash…
Finally, what about residual value at the end of 10 years? The battery is likely to have 80% capacity remaining: if you have 1-5, you can just add one and bring the whole thing up to capacity.
actually, forget guaranteed and risk free. Show me 7% stocks and 4% bonds (and not including Greece). And I do know the history supports such rates, but for one stocks are elevated due to the low interest rates prevailing (source. Buffet). Two, in a world of declining resource growth, which I think everyone here more or less buys into, that 7% is going to be harder and harder to get. So is 6, 5,4,3….
The 4 % to 10 % is intended to cover prospective battery purchasers who may range from a debt free investor to a person who holds debt at 10 %.
4 % is a fairly conservative figure for an investor with a diversified portfolio, when inflation is 3% (assumed in the analysis). If you can’t get 4 % then you should change investment advisors. I get that in dividends from plain vanilla hospital and retired folk stocks, real estate trusts, mixed bond funds, farmaceutical stocks, etc. it’s below the historical return for stock investors. But hey, if you want to buy the battery suit yourself. It’s intended for people like you.
4 % is a fairly conservative
No. The investments you’re discussing have risk – they can go down in a recession. As a general thing (as opposed to this California analysis, which is a bit of a red herring), investments in domestic cost reduction are risk free – that’s very different from the investments you’re discussing.
inflation is 3%
Not in most of Europe, and not in the US. Inflation is below 2% – in some cases well below.
the battery..It’s intended for people like you.
No, it’s not. The 7kWh version isn’t being marketed for residential customers in the continental US. It’s for businesses, and residential customers outside the continential US: India, China, Hawaii, etc.
Thats’ why this whole discussion is a red herring: some US customers will save some money in addition to the Uninterruptible Power Supply function, but that’s not the primary market.
I assumed inflation would be 3 %. When inflation runs 3 %, a 4 % return is considered conservative. If you don’t like it, give me what you want me to use. If your numbers are close to rational I’ll plug them in my spreadsheet and give you an answer.
US 10 year Treasuries are about 2.2% right now. They have some risk, of course, as rising rates could lower prices. 3% would be conservativley high as a general rule, especially given the large non-cash benefits of a whole-house UPS.
You also need to assume 2-3 units, which would reduce unit costs: most people are ordering multiple units.
And, include a residual value: these will only lose about 20% of capacity.
Of course, keep in mind that in the end this is all unrealistic: the original article is just speculating, as these units aren’t being marketed for this purpose in the US.
Recall the analysis I am doing is constrained to the case used in the article linked by Mac. I read the article and I volunteered to reanalyze the economics using what I felt was a sounder method.
Economies of scale may be possible, but I´m not sure installing three battery packs will drop the price enough to make it worthwhile.
I also confirmed the $7000 installed/unit cost via a different source, which said this was the actual offer being made by a company allied with Tesla.
I consider these batteries to be a dead, end, but since Mac was interested I decided to read whatever came up on the subject, and I found articles which seemed to have very similar content, mentioned the economics were poor, but then went on to discuss what a nice technology it was, etc. Seems to me there´s a tendency for some publications to write pleasantries about the Tesla products, but the authors understand the economics don´t work for a residential customer.
I ran the economics at 3 % inflation and 3 % interest rate, and the results are similar, the loss is reduced by about $200. But the overall loss is still very high, $2000 to $3000.
As an engineer who dabbles a bit in electronics (for the little high school projects I mentor here), I don´t see this technology to have much of a future, except for houses in remote areas equipped with solar panels, like somewhere in South Western Argentina, where the solar panels and a small wind turbine should do fine to supply fishing camps and remote cabins (the problem I see with such remote installations is theft, this is a pretty expensive kit).
If you want to spend time on this, and have others spend time reading it, you may as well read real feedback and use realistic assumptions(le.g., a realistic life; realistic scale of number of units, realistic operating conditions,etc) and show your calculations.
I don’t see much point in your just repeating unrealistic assertions.
The cell level BMS is internal to each cell. cell All 8000+ 18650 cells in the P85 PAK are protected and have the Sieko chip and switch. If the “18650” Battery is Protected it is actually measures 19×68 mm and will not allow over or under charge. You can never bring back to life a Li cell below 2 volts or so.
“Declaration of Religious Leaders, Political Leaders, Business Leaders, Scientists and Development Practitioners“
Unless any cost analysis includes the cost to the future, it is a crime against humanity and the biosphere.
On the Chevy volt, GM restricts the useable charge range from 25% to 80% to maximise battery life. In other words, battery charge is not allowed to go higher than 80% of full charge or lower than 25%. Only the middle 55% of the battery capacity is used.
Does anyone know what the useable battery charge range is on a Tesla car and power wall? Is there a more standard/wider range built into laptop computer batteries thru a BMS? How sensitive is the useable charge range to the duty cycle?
I think the duty cycle on a car battery would be much more severe than on a computer battery
The analysis I prepared didn’t consider this detail. But since the use of the Tesla Powerwall to arbitrage (peak to off peak electricity charges) is such a turkey, we don’t really have to focus on the nitty gritty. It would be like beating a corpse.
My question was not intended for the analysis. It was more of question of “Is Tesla pushing the useable battery charge range to get his 500 mile car range, and in the process sacrificing battery life. In other words, will a Tesla owner find out that he needs a new battery, at a huge cost, 5 years from now.
Considering the wealth of the people who are buying the Tesla, replacement cost may not be an issue.
That’s right. Tesla products are luxury goods, intended for rich folk with money to burn. I remember the time I went nuts and spent $100 on a leather belt (around 1990, I think). The feeling of power lasted 30 minutes. So I imagine a Tesla buyer must be doing it to get a 30 week rush. After that, it’s just a piece of metal full of lithium batteries.
Tesla products are luxury goods, intended for rich folk with money to burn
No. Not in the long run. Tesla’s EV business plan is built around developing economies of scale, to make EVs cheaper at every price point, including the very cheapest (e.g., the GM Spark and Nissan Leaf, the very cheapest cars on the road to buy and own). This battery pack accelerates that process.
Think of the tens of millions of business owners and homeowners in India, China, Pakistan, Iraq, Afghanistan etc., who use their generators for 1-20 hours per day, paying 30 cents or more per kWh. They can buy a solar system that provides power for about 15 cents per hour for direct power about 8 hours a day, and use the Tesla battery as a substitute for *most* of the rest of the diesel generation: much quieter, much more reliable, and a bit cheaper at about 25-30 cents for the timeshifted power (15 cents for the PV, 10-15 cents for the amortized cost of the battery per charge-discharge cycle). Really, a no-brainer.
I think those poor country homeowners will do better if they have access to cheaper electricity delivered at industrial scale using a high efficiency coal plant, nuclear, gas turbines, and hydropower, and other renewables to serve as extenders.
I realize you have a very quaint idea about little villages in third world countries, but most of the population is urban, and their economies require something better than a Tesla battery. This conversation is getting a bit boring, you really need to read a bit about energy problems in the third world, disconnect your thinking from an individual solution used by a rich person, and remember the key target is an urban population living in a crowded city, with poor sewage, bad air, and more crime than you are used to.
those poor country homeowners will do better if they have access to cheaper electricity delivered at industrial scale using a high efficiency coal plant…
In theory that might work in the very, very long run, assuming the world doesn’t get serious about climate change.
In reality, people living in Karachi won’t have that any time soon.
quaint idea about little villages in third world countries
No, I’m thinking of Karachi, Mumbai, Kabul, etc. Power there is expensive and/or unreliable.
This conversation is getting a bit boring
Yes, it is. It’s not surprising: you seem to be having it with yourself, as you’re not incorporating my feedback.
an individual solution used by a rich person, and remember the key target is an urban population living in a crowded city
There are many 10’s of millions of people around the world who live in compounds with high walls, and run generators for hours every day to deal with their unreliable grid.
There are millions who live in areas where the power is very, very expensive because it’s generated from oil.
There are millions of businesses who use UPS units to safeguard their operations.
There are many large and small utilities who are using or planning to use batteries to deal with various operational challenges.
Hi Ovi,
The Tesla range in normal use is about 300 miles. If anyone is getting 500 miles they are “hypermiling” which is driving very conservatively at slow speeds (probably 30 to 40 miles per hour).
In a Prius I have managed about 85 miles per gallon (US gallon) on a tank of gas doing this, where my typical mileage is about 50 miles per gallon. So about a 70% improvement by hypermiling.
Almost nobody drives like this in the real world.
Dennis I got the units wrong. I once saw 500 in an article and assumed it was miles. Looking into it more closely today, it is 500 km (close to 310 miles) on the New European Drive cycle vs 265 miles on the EPA cycle. The European drive cycles are not as severe as the US EPA cycles.
On the EPA drive cycle, the Tesla model S is rated with a range 265 miles when equipped with an 85 kwh battery. The new 2016 Chevy Volt is rated with a 50 mile range with an 18.1 kwh battery. Allowing for differences in aerodynamic drag and weight between the two, the numbers for range scale reasonably well, i.e. 85/18.1*50=235. This tells me that the Tesla battery is also designed for long life and both use between 50% and 55% of the full battery charge
I just never thought to dig out the above numbers before I posed the question.
A discussion of load shifting in the US is a red herring: the 7kWh version isn’t being marketed for residential customers in the continental US. It’s for businesses, and residential customers outside the continential US: India, China, Hawaii, etc. Some US customers will save some money in addition to the Uninterruptible Power Supply function, but that’s not the primary market.
You can do this for far less with lead acid. I’m surprised this have been given so much attention here. It’s just a gimmick. Society has an idiot vein thick and wide, clever people like Musk tap into that vein to enrich themselves.
You can, but it’s far more expensive.
Lead-acid is very useful when the duty cycle is undemanding and you want to minimize capital expenditures. If you’re going to use a lot of deep charge-discharge cycles, it won’t work.
The Tesla power wall weighs 100kg and contains 10kWh of power. Approximately the same amount is contained in 1kg of gasoline. Peak oil is so incredible important because no battery to date even comes close to the energy density contained in oil derived fuels.
“There is nothing special about the Tesla technology, lagging the competition in various aspects, but the hype is a case study in itself. Almost at the same time Toshiba firmed one more contract with its own stationary Lithium ion technology, that is supposed to last 6 to 7 times longer that Tesla’s. To that the media remained widely silent, while on Tesla they went wild. Forbes started by claiming a manufacturing cost of 0.02 $/kWh, meaning it would be essentially free. It then switched discourse to claim that figure was relative to operational costs – but even in that case it still remains ridiculously low.
Once again the media appears little interested in informing the public, it ignores relevant developments while promoting dubious products. As long as the hype lasts there is money to be made in stock markets; but at some point reality settles in. This same dynamics was in great measure responsible for the shale sub-prime bubble. “
Yes, and only 15% of that one gallon of gasoline becomes effective energy, the rest is waste heat, noise and pollution. While electricity is about 90 to 95% efficient. So really the battery has about 6 gallons of gasoline equivalent useful energy.
A good Honda generator is about 15% efficient in producing electric energy from gasoline. A car is about the same as far as energy to the wheels.
Weight is not much of a factor in a house and not a huge problem in wheeled vehicles.
It’s aircraft that have the big problem with energy density and weight.
I was talking 1kg of gasoline, not 1 gallon. Also, it is mostly fossil fuels that generate electricity, that is not 95% efficient. Weight certainly affects all transportation because it is the useful net load that counts. If you need a lot of energy to cart the batteries around, then there is less left for the actual load.
Ok, then 6 kg of gasoline would have to be burned to provide the electricity that can be stored in the battery. Since you want to talk about source power, the power can come from a rooftop. The efficiency is irrelevant since it’s not burned. It takes a continuous effort to produce gasoline at a huge pollution and land sacrifice (US oil and gas took over the area of Massachusetts and Rhode Island since 2000 ). With rooftop, it happens once, no land takeover and it provides power for 3 to 4 decades.
Unlike gasoline, which is getting worse as far as net energy and has a future footprint about 10 to 20 times it’s initial cost, PV and batteries are improving. PV is 3 times better than commonly available panels and I expect commonly commercial ones to become twice as good. Batteries will become twice as good. The rest of civilization could disappear and those PV panels would still keep making electricity. Can’t do that with gasoline or diesel.
As far as rolling energy goes, electric cars use 0.25 kwh/mile (EPA test figure) while gasoline ICE cars average out at 1.4 kwh/mile equivalent energy. Even the low performance high mpg cars use 0.7 kwh/mile. I expect when electrics reach full design capability (current technology) they will be below 0.2 kwh/mile. So apparently you don’t need a lot of energy to cart the batteries around and get high performance to boot.
Consider that the electric motor is far lighter than an ICE engine and cars can use lighter materials now, the difference in weight is fast disappearing. I won’t even get into the latest technology which cuts the battery size in half without losing range. Coming soon to a planet near you.
Thanks for all that, Zepp. I agree.
People usually don’t realize how rapidly a good new tech improves in its early days of development. I myself am so pleased with my leaf, esp its simplicity relative to the old familiar ICE I spent my life around, that I am sure EV’s are gonna take off like a booster rocket when people start to notice their capabilities.
If I had any energy left, which I don’t, I would take that tesla domestic battery and stick it into a really bare bones commuter car, which is all we ever use anymore. Running on PV, of course.
It would still be there for domestic boost if grid goes down, so no loss in using it to scoot around when not otherwise employed.
Much like the pioneering days across the American Continent, a few hardy adventurers explored the new regions. Soon more and more followed until a flood of people came.
I think that is the way it will be with electric car types, PV, wind, carbon-free houses and building. The mad rush is yet to come.
Yabut try burning that kg of gasoline more than once.
NAOM
NOAM may not have a whole lot to say recently but today he wins hands down on brevity and relevance. WELL SAID SIR!
So I finally get around to watching the 18 minute video of the launch and what I think has gone over the heads of far too many people is that, Musk must have spent at least half of his time on stage talking about his vision for a 100% renewable future. This is Hermann Scheer/Tony Seba kind of crazy talk! What is significant is that since he is now a celebrity of sorts, in the business/finance arena at least, I would imagine he is reaching a far larger audience than any of those other guys.
Also worthy of note is that, this is the first time I am aware of that any body has spoken of dismantling the status quo that actually has the chops to do anything about it. He not only has ideas about what needs to be done but he has somewhat workable ideas about how to do it and might I add, a lot of what he thinks needs to be done fits in with those of us who believe in a near term peak in global oil production and/or global warming!
And as far as financial viability goes, there are companies making expensive, deep cycle flooded lead acid batteries that need a lot of care and maintenance, if they are to last as long as they are designed to. These companies are in business because there is a market for their product no matter how uneconomical Fernando’s analysis says they are for Southern California. Tesla is just making that market bigger and in my neck of the woods , where electricity is generated by oil and the utility pays half of the retail rate for electricity consumers feed back to the grid, these batteries might just pencil out! I certainly like the idea of a small maintenance free battery with a ten year warranty!
Here’s an interesting article from may 2013, two years ago almost to the day, that I’ve just skimmed so far:
When Will Solar Batteries Become Economical?
Silicon Valley sees opportunity in disrupting traditional energy, utility, and transportation companies.
There’s a lot of money floating around there looking for the next big thing to transform and become involved with.
My analysis was for the Southern California market served by Edison. Jamaica should build two coal fired supercritical steam power plants to provide reliable service to the island. If you want to be green hitch solar collectors to the feed water, upstream of the boilers. Using diesel for such an island borders on economic insanity. By the time the coal plants are old something else will hopefully turn up.
With due respect Fernando, increasingly when I read a lot of what you write about renewables and solar PV, I hear Tony Seba’s voice in my head where at about 3 minutes 45 seconds into the video of his keynote to the Sept 19, 2014, AltCars Expo and Conference, he says:
“There’s something interesting about disruption. it’s usually the experts and the insiders who basically say, ‘Nah! Never gonna happen. Not in this lifetime. No way. Gonna take a hundred years. You know, good boy, go home. Right?'”
It is the same video I have linked to a few times before, in which he extrapolates cost and growth trends for PV and batteries to predict that solar PV will become the lowest cost source of new electricity generation within the next fifteen years. In other videos of his that I have watched, he has predicted that solar PV will generate electricity at cost that are below the cost of transmission of centrally generated electricity to distributed consumers! That is going to disrupt electricity generating and distribution markets in a very big way.
What you propose is basically a continuation of BAU. Note that Jamaica is not alone as an island in depending on oil (not diesel but Bunker C) to generate most of it’s electricity. AFAIK Hawaii and up to quite recently Puerto Rico and the Dominican Republic have/had similar oil use in the electricity generating sector. However if I were going to invest in a generating plant on any tropical island and saw Tony Seba’s video (or read his book), there is no way on earth I would invest in a plant that, I could not easily decommission and ship back out any time solar PV took over the market. Right now, in Jamaica, electricity from grid tied solar PV is less expensive than electricity from the grid and with each introduction of batteries that are less expensive and require less maintenance, like Tesla’s, the point at which a fossil fuels become uncompetitive seems a little bit closer. I can envision a point where solar PV generates electricity at a cost that is less than the cost of delivering fuel to islands. I believe that, unless something, like Peak Oil, comes along and interrupts the growth of solar PV, it will eventually produce electricity that is “too cheap to meter”.
What I think would be better for islands, especially those relatively close to large NG markets, is to use gas turbines. If such creatures exist I would opt for modular units preferably mounted in shipping containers and configurable as combined cycle plants. I would site them as close to shipping ports as possibly and try to use CNG as opposed to LNG to reduce the fixed infrastructure requirements. Finally, I would lease rather than buy, preferably for periods no longer then ten years with the option to renew every five years after the initial period. There is a precedent for this when in 1995 the local utility leased plant from a San Francisco based Kenetech Energy Systems.
Islandboy, in that case the solution may be for you to continue to burn diesel and take on IMF debt, and in 15 years you can install the technology Seba extrapolates using little dashed lines into the unknown future.
I´m really good at crunching numbers, when I started reading the blog I thought Ron, Dennis and the others were a bit obsessive but I think I´m like them, and I do enjoy running these cases in a spreadsheet. If you give me the expected end state, and how you get there by burning diesel, or what you think Jamaica can do now to install solar panels and batteries, I will run you the economics assuming you get a cheap World Bank loan. Given what I read, I think you are out of luck with the solar power game at this time, but I´m willing to show you the numbers.
Regarding Seba´s statement, it´s simple baloney. Ask Seba what he thinks happened to Moore´s Law when it ran into quantum effects. Solar power, with the technology used by Tesla, just doesn´t have the physics behind it to work at large scale. There´s a need for radical solutions which may involve using some sort of bacteria that sweats ethanol, a fusion power engine with a radical new design, better cheaper geothermal, and things like that. This electric battery just doesn´t meet the requirements.
If you continue to make silly assumptions, like that a 100% solar grid makes sense, or that batteries are an appropriate solution for seasonal lulls in solar/wind, then, yes, you’ll find that renewables won’t work.
Garbage in, garbage out.
Top Ten Facts about Tesla’s $350/kWh (DC) PowerWall battery
http://www.catalyticengineering.com/top-ten-facts-about-teslas-350kwh-powerwall-battery/
Tesla Powerwall & Powerblocks Per-kWh Lifetime Prices vs Aquion Energy, Eos Energy, & Imergy
May 9th, 2015 by Zachary Shahan
http://cleantechnica.com/2015/05/09/tesla-powerwall-powerblocks-per-kwh-lifetime-prices-vs-aquion-energy-eos-energy-imergy/
Ron,
The Canadian rig count does seem a real mystery, but I will throw in a few ideas, and maybe I can be corrected where I go wrong.
spring thaw shuts many rigs down due to weight restrictions, and most rigs are laid down and the boys have a traditional break. Many are laid off.
Summer, rigs go back to work and crew up with new employees.
It appears many rigs get the Christmas new year off. Lucky them.
I believe the February peak would come from any rig relying on ice roads. I know in Alaska, drilling in some regions is restricted to January to Mar/Apr, due to ice road construction. I suspect Canada would be the same? Not sure how many rigs would be normally be effected by this, but it looks like it could be a good deal.
Which brings us back to spring thaw again.
All I can say is, it would be a strange place to work?
That’s interesting what toolpush said about Canadian rig counts.
As for the sudden drop at the end of each year, here’s a wild guess. Maybe at that time drillers are moving a lot of rigs to areas with ice roads where they’ll be drilling January to March. If a lot of rigs are in transit during a particular time, that would show up as a drop in the number of active drilling rigs, right?
My guess is that the end of the year drop has something to do with Canadian taxes. After all, we don’t see such a corresponding end of the year drop anywhere else in the world.
Don’t know if it’s involved, but Suncor (the primary oil sands folks) tried to divest a substantial interest in Libya and failed. If rig count is down there, it may be in these Canada numbers.
Could the December drop in Canadian rig count actually be due to moving the rigs on newly opened ice roads to drill in those northern areas?
Mason,
It could be a possible reason, but if you look at this winters numbers, you see we still have the Christmas break without the Feb increase. If no peak in Feb, why the drop in Dec?
If Canadian oil production is depending on ice roads, how will it be affected by climate change thawing the ground? Like the germans when they invaded Russia?
Regarding the downward spikes, my guess with my background in industrial construction is they send the lads home for christmas and call in the welders for maintainance. Just a guess.
Regarding the downward spikes, my guess with my background in industrial construction is they send the lads home for christmas and call in the welders for maintainance. Just a guess.
Okay, but tell me why no one else in the world does this? Why do only Canadians send their crews home for Christmas and New Years while not giving the maintenance crews the same break?
If I were a Canadian I would be asking “What the hell is this all aboot?” 😉
I have no clue. But this is a signal. Whatever it is, its man made. They do this is by design.
It is common to send in maintanance and reconstruction crews when the staff is off. I’ve done work in alu melting plants and the cellolouse industry during vacations. Also christmas season is no-home-time in that branch. But I’ve never worked within the petroleum industry so I have no experience of that.
JW, it´s hard to generalize. I´ve worked on a rig in Xmas offshore West Africa. The only nod to the holiday was better food in the galley (they flew lobster for senior personnel, and I think the hands got grouper).
On the other hand, when I planned operations in Venezuela I always made sure we had an excuse to shut down from mid December to the day after the three wise men dropped off their presents in early January. This avoided heavy abseteeism, drunks, and industrial accidents. If a rig had to work we planned the crew shifts to make sure those who did have to work had a chance to see their families before or after the holidays, prepared better meals, gave them little presents, gave away food baskets, and also put on extra safety types to keep an eye on things, with the authority to shut down operations if they felt an accident was bound to happen.
About never sounds like ‘aboot’ when I pronounce about. It is only my American acquaintances who seem to hear ‘aboot’… perhaps their hearing is suspect. 🙂
Here is the first line from Alberta Transportation dated May 6
Road Ban List
Please Note:
When inquiring for current road ban information prior to the effective date shown on this list, please see the previous ban order. Changes From Previous List: (15 – ROAD – 09)
————————————————————————–
Effective 1:00 pm Wednesday, May 6, 2015:
50% Axle Weights Will be Placed On:
Highway Description:
686 Jct. 88 – Trout Lake
I work in the athabasca oil sands (sagd) and have worked further north by the alberta/ nwt border.
Terrain is the same (muskeg) and activity off high grade roads require ice roads. These become available first few weeks in january typically. End of december if we have an early freeze.
Even on paved roads though, usually secondary highways there will be weight restrictions in unfrozen conditions. This can be gotten around by trailers with more axles, but definately alot more hassle.
I dont have any involvement with anything rig or downhole related, but have seen a bit of a slowdown around christmas new years. Even road crews which seems silly because that is exactly when you are getting the roads in. There would be rigs in transit, but i dont know if that would affect the rigs that were working previous.
This
Thanks Danny,
It sounds like I was not too far off the mark. It does seem as though Canada has its own little drilling cycle all by itself.
Global Production Up One Million bpd in March
Ron, this is my monthly “Vital Statistics” post. The US steams on. And while rig count is way down, there are still about 700 rigs drilling oil in the USA – that’s still a lot of rigs. North Sea is only place to see a fall in production in March.
What I found just as interesting about the latest IEA report, besides supply and consumption and the fact that the Saudi Arabian government decided to boost production by almost 1 mb in March, is the amount of oil going into storage.
A simple materials balance analysis yields the following equation:
And as the IEA reported, there was “a build in global oil inventories of nearly 140 mb in 1Q15.”
Over half of this — 76 mb — was in China.
The US, despite all the hype in the US MSM and alternative media about Cushing “filling up,” accounted for less than one fourth — 33.3 mb — of the build in global oil inventories in 1Q15.
The remainder of the buildup took place in the rest of the world.
The Chinese, it appears, see this as an opportunity to stock up on oil at what they believe to be fire sale prices.
However, if the Chinese were to have a change of opinion, and everything else stays the same, I’d say look out below for oil prices.
Saudi Arabia increasing rig count almost 4 fold in just 4 year to keep production at current levels is pretty alarming.
Sawdust,
The last major project announcements I know of are to produce from the bad end of a couple of previous developments
http://www.reuters.com/article/2013/07/02/dz-saudi-oil-idUSL5N0F81R520130702
(Reuters) – Saudi Aramco plans to develop two less productive areas of major oilfields, industry sources said, as Riyadh takes care to maintain excess capacity for the long term, even while non-OPEC oil supplies are on the rise.
The plan to increase capacity from Khurais and Shaybah by a total of 550,000 barrels per day (bpd) by 2017 will take the strain off Ghawar, the world’s largest conventional oilfield, two sources familiar with the plans said.
The next step for Saudi after Khurais and Shaybah, is for Saudi
1/ to explore and develop their own shale
2/ Develop their Nat gas fields and displace oil from power generation for export.
3/Prey.
We may have to wait and see if they have an alternative for number 3, but I suspect some pretty serious EOR projects will get the go ahead. The one thing about the Saudis is that they are very conservative with their production and seem genuinely interested in the long term production of the fields rather than the next quarters financial report.
The increasing rig count certainly leads one to believe the productivity per rig is definitely falling.
The Khurais megaproject started in 2006, and must have been fully completed by now.
Shaybah is the newest of all the big Saudi oilfields, discovered in 1998, and would have had the benefit of using advanced technology right from the start.
Do they really believe they can get another 550,000 barrels/day out of these two already heavily developed fields. More likely they’re trying to prevent their production from dropping. And Ghawar, they’re pretty well admitting that it’s watering out.
That is why I sad they plan on developing the “bad end” of the fields. They had already developed the better areas. But basically they are install Gas Oil Separators with the greater capacity, and then it will be a matter of drilling and producing enough to fill the gas oil separator.
But the trick is, the spare capacity calculations will be made on the gas oil separator capacity, and not what is being produced?
The next step for Saudi after Khurais and Shaybah, is for Saudi
1/ to explore and develop their own shale
2/ Develop their Nat gas fields and displace oil from power generation for export.
3/Prey.
Prey on what/whom?
That might be necessary post peak.
The person who can fully explain what is going to happen in US production has to be named “Gunga Din”, because he be a far, far better man than I.
I do know that the Eagle Ford permits have dropped about half of what they were since January 2015, and in May they are barely a dribble, so far. Eventually, this will result in less oil being produced. How much? Possibly, the best way to look at it is to take the best scenario, and the drop that will actually happen will be larger. Take the largest in company in the Eagle Ford with the best overall lease area, and project that point. Fortunately, EOG has provided us with some really good guidance with what to expect. There first quarter is only minutely less than what they produced the last quarter of 2014, at around 300,000 barrels a day. The second and third quarter, they expect a 10-12% drop in production with less wells being completed, with a rebound in the fourth quarter to closer to 300k barrels due to rebounding prices that would have to get over 65 a barrel to make it worth it. Let’s make a wild assumption then say all of the rest of the companies have the same assets, and can do the same. Then a 10% reduction in the second and third quarters will result in a decrease of about 450,000 barrels a day from US shale in the second and third quarters, then rebounding to ending production the last quarter of 2014. Obviously, this is a totally unrealistic projection at a high point. Not all companies have the same assets, and not all companies can command the same response from drillers and the fracing industry. At one point, while drilling was reaching it zenith around 2011, there was a six month backlog of wells to frac. That is when the fracing industry had not dropped down to 41 to 61, and the remaining companies lost half their people. Going 0 to 100 mph in the last three months is not going to happen. Don’t forget, more than half the rigs have been laid down with a corresponding cut in drilling operators. You can’t steal employees from McDonalds to cover what is needed to get it back up to speed. There are enough horror stories of fracing operations blowing up, and employees killed to give a good picture of how bad it could be with brand new GED grads running it.
I am projecting a 450k barrel a day drop by the end of the second quarter to be at the low end of the drop. It will take years to get back to 2014 production if it ever happens.
Just as an FYI, GEDs are more difficult than outright graduation. IQ profile of GED recipients is above 100. High school grads . . . right at 100.
I had no disrespect for GED achievement vs high school grad, and I have no idea how you perceived that I did. Inexperience, and untrained is the point, and would represent either within context of the discussion. There is no attempt to demean someone’s IQ as a distinction between either groups’ achievement, nor was IQ ever mentioned.
Hi Guy,
In March about 132 oil wells were completed in the Eagle Ford, if we assume the wells completed continues to drop to 100 wells per month by Oct 2015 and stays at that level until 2035, with 33,000 total oil wells completed, output drops by about 250 kb/d by Jan 2016 and continues to drop more gradually, Economically recoverable resources (ERR) is about 7.4 Gb. Oil prices rise from $57/b (2015$) in 2015 to $137/b in 2034 (about 4.65% per year). This scenario is unrealistically conservative in my opinion.
Not sure what you are trying to do, it bears no resemblance to what I was saying.
Hi Guy,
I thought you stated that output would drop by 450 kb/d by the end of 2015.
I am showing that if we assume the average new well’s estimated ultimate recovery (EUR) over 20 years decreases starting in June 2015 and that the rate of decrease in new well EUR gradually increases to a 6% annual rate of decrease by June 2016 that 100 new wells per month will result in the output profile shown in the chart. How low do you expect new well completions to go in the Eagle ford on a wells per month basis. Last year they averaged about 225 new wells per month so 100 new wells per month is less than half the peak rate.
Bottom line, 150 new wells per month keeps output relatively flat, 100 wells per month results in a gradual decline. There will not be a problem completing half the number of wells with half the number of rigs.
Guess you missed the last half of the sentence.
And the Saudis are still ordering new rigs as my friend in the seamless steel tube industry informed me. But nobody else is, according to him.
Another rig company in trouble:
http://www.upi.com/Business_News/Energy-Resources/2015/05/04/Another-rig-company-stumbles/1561430739883/
If you live in the United States or Canada, you’ll be able to watch the biggest TV show yet about the Bakken this upcoming TV season. ABC has picked up the drama formerly titled “Boom,” now in search of a title, that portrays the shale oil industry in North Dakota and the people moving in to get a job.
SHOW INFO
The largest oil discovery in U.S. history is happening right now in North Dakota and people are coming from all over the country to strike it rich. Heading there with big dreams and sky-high ambition are the young married couple of Billy (Chace Crawford) and Cody Lefever (Rebecca Rittenhouse), pulling their truck full of washers and dryers to start their first laundromat. Their plan: to lever-up, and step-by-step, build their fortune from scratch. The growing boomtown of Winslow, ND has 100% employment with oilrig jobs paying $100/per hour. While the champagne is flowing and the clubs and restaurants are packed, living here is shockingly expensive and everyone is too ambitious for a normal paying job. Just ask Sheriff Tip Hamilton (Delroy Lindo) – whose department is understaffed as the crime rate is rising – not a good thing in a town full of roughnecks, grifters and newly made millionaires with cash to burn on anything. This really is a modern-day Wild West. The town’s wealthiest and most powerful man is Hap Briggs (Don Johnson). This iconic selfmade oil baron has made billions and lost them too, and he’s married to Carla Briggs (Amber Valetta), as brilliant in business as she is beautiful. Together, they have the inside track on everything oil, turning that world to their advantage. This power couple is out to charm Oil And Gas Commissioner, Myron Stipple, a Mormon and not easily seduced by the decadence of the Briggs’ lifestyle. Hap’s children, Wick (Scott Michael Foster) and Lacey (Caitlin Carver), have their major challenges with stepmother Carla, but it is Wick’s complicated relationship with his successful father that leads to the ultimate showdown between father and son.
In the pilot, Hap cuts Wick off, taking him out of his will. Wick gets help from his lover, and ambitious businesswoman, Jules Jackman (India De Beaufort). Spurned by his father, Wick’s choice is to become a dangerous wild card in the oil game, building his own Cowboy Mafia from scratch. Hap’s daughter, Lacey, is on the opposite side of the oil business: a fracktivist. She’s a bleeding-heart environmentalist – with a brain. Job one is to stop the drilling before it destroys the land, which includes sacred Native American burial grounds the oil is buried two miles under. Lacey and AJ Menendez (Yani Gellman), Hap’s driver, are having a secret affair, and he takes Lacey’s side in this oil debate. But AJ has his own agenda and is not who he seems to be. Billy and Cody’s dreams are derailed right from the jump when their truck is hit and their washers and dryers are destroyed, strewn like tumbled dice across the highway. But oil fever is contagious, and after hearing a tip, they leverage everything they have to make a last-ditch play to be become part of the boom, putting them squarely in bed with the Brigg’s family, way over their heads.
Ron made an interesting point in his post as to why the US needs so many more rigs running than the rest.
I assume part of the answer is the largest and best fields in the US have long since depleted and US has to scramble the most to fight the decline.
I think also interesting is feet drilled in US compared to the rest. I think one of the major service companies made reference to this recently, and the numbers were pretty staggering.
Is it possible that KSA and their Gulf OPEC brethren are going to go for broke and put the US and Canadian (as well as some other high cost locales) out of business. If KSA could knock prices back down into the 40s or lower it could be the knock out blow for many US companies. We see how poorly they did with oil in the 40s in the first quarter.
I would really be interested to hear others opinions on this.
This may be of help in illustrating one of your points:
http://i.imgur.com/Zzb2mm4.png
Thanks Glenn. That is the illustration I was referring to.
Looking at those figures really drives home the fallacy of Saudi America.
In all likelihood, however, the real battle is between the sovereign wealth funds and the US bankers/investors in a race to the bottom.
Again, will US banks keep increasing their LOC with US drillers, and as those fill up will there still be demand for US driller bonds/equity?
Regardless, KSA gets the benefit of increase in long term oil demand plus less push for renewables.
I know the EV folks here will disagree about the renewable part. It may keep chugging ahead, but 2.50 or less gasoline v 4.00 gasoline surely slows EV progress. Until EV can be get a full charge in less than 3 minutes, I think only extremely high gasoline will cause a massive switch.
China won’t care. They must strive to improve their citizens’ lives and that requires increased per capita consumption of oil.
April China car sales up 6% over 2014 April. They aren’t slowing down.
Running faster up
the sloping Seneca hill
and over the cliff
A proper Haiku is supposed to refer at least obliquely to a season or seasons.
Fall.
Nice double entendre.
On the other hand, total penetration is still low. It’s pretty clear Chinese cities are realizing they can’t car up the way American cities did. Heck even American cities are having second thoughts.
Like a lot of Western cities (London Paris, New York, San Francisco, most cities in Holland, Denmark, Sweden and Germany, Montreal Chicago, Indianapolis, Pittsburg, Los Angeles, Bogota, Medellin, Buenos Aires, Mexico City, Guadalajara etc) Chinese cities are turning back to bicycles and public transportation.
Hangzhou has a bike sharing system with 60,000 bikes.
Here is an interesting article about it.
http://www.ecf.com/wp-content/uploads/Tang-Yang-Bike-sharing-Systems-in-Beijing-Shanghai-and-Hangzhou___.pdf
It includes a list of 70 Chinese cities introducing or already having bike sharing systems.
Here’s an up to date overview:
https://www.google.com/maps/d/viewer?mid=zGPlSU9zZvZw.kmqv_ul1MfkI
I’m certainly not a member of what here in Mexico they call the círculo rojo, that very small number of powerful insiders that is in the know. So I certainly don’t know what Saudi Arabia, the U.S. government, China and Russia are up to.
But I think one must leave open the possiblity that Saudi Arabia, Russia and/or China could have much bigger targets in their cross-hairs than the U.S. shale oil industry. And that bigger target might be the Anglo-American financial system, or even dollar hegemony.
These are treacherous waters, full of hidden whirlpools and eddies, swirling with deception and intrigue, and many unintended outcomes.
The VERY EXISTENCE of the Saudi royal family – except possibly as scattered refugees-is totally dependent on the USA protecting them from their neighbors.
You can bet your last can of beans the Saudis are NOT so dumb as to try to upset the YANKEE apple cart. Tweak our nose , rob us to the extent they can , well that is ok. Stab us in the back, in a serious fashion- absolutely not.
The Saudis have no use for their neighbors and little to no use for the Russians. They are smart enough to know they can never ever ever hope to resist a country as powerful as China ( maybe not today but soon ) or Russia or the USA.
So they made a deal with us. We protect them. When the chips are down they help us by manipulating oil prices. I repeat myself. Nobody in official Washington REALLY gives a damn about the problems of American oil companies except maybe the congress critters owned by oil companies – most congress critters are not oil company property.
The BIG banks have ten or a hundred times as much money invested in other businesses and industries such as real estate. What they might lose in oil they are making up several times over in other areas.
It never ceases to amaze me that peak oilers are so clannish and provincial that they seem to believe Uncle Sam sees low oil prices as a problem.
Listen to me folks. With the exception of a very small handful of congress critters in individual races that might turn on oil prices there is not a SOUL in Washington who is not TICKLED PINK that oil is dirt cheap.
Ye OLDE BEST ELIXIR when it comes to winning the next election is a strong economy if you are an incumbent.
If anybody has a lick of understanding of international politics they must understand that Uncle Sam and all the major western countries are extremely mad at Putin and company and want to hurt Russia to the extent possible at this time. Low oil prices are the only real option other than import export hat tricks.
On the OTHER HAND the Saudis and the Russians do have a common interest in RAISING oil prices- as soon as they can figure out how without creating too many problems for themselves.
I personally think the Saudis have made a hard core decision to let the rest of OPEC ROT LIKE FISH IN THE SUN THIS TIME AROUND so as to make SURE the OTHER cartel members understand that NEXT time they WILL stick to the agreement and cut production along with the Saudis.
If one wants to speculate about hidden motives and secret agreements think about this. Low oil prices may be THE DIFFERENCE NOW between an American economy that is at least hanging on and showing some signs of good health versus our sinking back into a bad recession.
The so called ” powers that be ” LIKE cheap oil. They LOVE cheap oil.
old farmer mac,
You assert that “The VERY EXISTENCE of the Saudi royal family…is totally dependent on the USA protecting them from their neighbors.”
I’d argue the Saudi royal family’s “very existence” is far more dependent on the USA protecting the royal family from the Saudi people.
And, as happens with all these puppet dictatorships installed and maintained by the United States by the use of state violence, the Saudi royal family gets trapped between Washington’s demands and the popular demands of the country’s people. Washington’s economic and political interests and those of the nation’s great unwashed are, after all, almost invariably the opposite of each other.
Perhaps the Saudi royals are beginning to suspect there’s trouble in paradise, are beginning to doubt the US’s prowess in projecting state violence, and are beginning to look for options in an attempt to stay ahead of the power curve and not behind it?
Also, speaking geopolitically, maybe you’re right in saying the Saudi royal family “helps us by manipulating oil prices.” However, this is not the 1980s. The world is far closer to peak oil now.
Granted, there is a surfeit of oil at the moment, but it is small and is not of the cheap-to-produce variety. Creeping peak oil means Saudi Arabia’s power as swing producer is now greatly diminished from what it was in the 1980s, making low prices almost impossible to maintain for an extended period of time and making Russia’s ruling regime far less vulnerable to an oil price war, the way it was back in the 1980s.
Turning our attention away from politics and towards more purely economic considerations, I agree when you say that, “On the OTHER HAND the Saudis and the Russians do have a common interest in RAISING oil prices.”
The theory here is that the the Saudis and the Russians are joined in a Rockefeller-Standard Oil monopoly and predatory price cutting strategy. Here’s how the strategy works:
I would just add that your analysis in this regard is not nuanced enough, that there is a huge difference between BIG OIL (the majors or IOCs: transnational corporations with both upstream and downstream operations) and LITTLE OIL (the independents: domestic corporations which operate within national borders and with only upstream operations).
We all know of course that ExxonMobil CEO Rex Tillerson has gone out of his way to talk the price of oil down. The question is why? Maybe BIG OIL sees its interests served by jumping on the Saudi-Russia predatory price cutting strategy? Total’s CEO could not have been more explicit when he stated:
”I’d argue the Saudi royal family’s “very existence” is far more dependent on the USA protecting the royal family from the Saudi people.”
I believe you are partly right in this remark – but otoh many many oppressive governments stand for a very long time because the common people are not organized and capable of overthrowing them.
I will agree that the royal family enjoys protection from the commoners as well as the outsiders due to American support but I believe that the danger to the family from OUTSIDE the country is many times greater.
If we had not stopped Saddam where do you think the borders of the Iraqi empire would be today?
Now as far as supporting the USA on the price of oil TODAY – there is absolutely so far as I can see NOTHING preventing the Saudis from unilaterally cutting production to any extent they please.
SOMETIMES you support your allies by NOT doing something.
It would take all day to get into all the various ins and outs of oil politics. You make some EXCELLENT points.
No doubt a lot of big oil companies are ready in the wings to buy up the assets of any relative small fry at fire sale prices when they go broke. Big oil has deep pockets and management with a long term pov.
The more you understand the more you come to realize that any given player both gains AND loses by following any given path. The question is whether the gain or loss is NET long term and there is no way to even answer it for sure since the future cannot be reliably predicted.
The Saudis are definitely losing tons of money right now by refusing to cut production. If they cut their short term revenues would fall but their long term revenues would surely rise by enough to justify the short term losses since they would have MORE oil to sell later when prices are up again.
So- They have plenty of well trained business guys and they must understand this basic fact. Oil sold today is selling for a lot less than it would sell for later and they have megabucks in the bank.Holding onto that oil and spending down the cash would almost for dead sure be the more profitable thing to do.
Why then are they continuing to sell cheap?
I do not believe they think they can run American tight oil companies out of business – not for long at any rate. The tight oil guys will be back in a year once prices are high enough to justify their going back to work.
I do not pretend to know how much tight oil really has to sell for to justify producing it but my GUESS now is that prices above about eighty bucks will result in the tight oil industry hanging in there so long as interest rates are low. It might take a price of well over a hundred to make tight oil truly profitable when interest rates go up.
I am a firm believer in peak oil and think the industry is like an old geezer that keeps on surprising his doctor and family by remaining healthy well beyond normal expectations.
But every old geezer like that eventually winds up in an armchair or hospital bed and eventually out on the hill by the church pushing up daisies.
DECLINING oil production cannot be too far away now, at least not at prices below a hundred bucks.
I expect oil prices to be well over a hundred bucks even in the face of a weak global economy within a very few years due to rust and depletion never sleeping.
And I do not believe oil prices above a hundred dollars are going to wreck the world economy – so long as they go up in a relatively slow fashion.
The economy nationally and world wide has plenty of room to adapt to much higher oil prices – but adaptation takes time. I have doubled my own efficiency in the use of oil over the last fifteen years and if I live long enough I expect to double it again.
Glenn, there is no doubt that the USA helps maintain neighborly relations in the Middle East. When Iraq invaded and took over Kuwait, it was the US that put the Kuwaiti government back into power. And I think that was a good thing. But the invasion would never have happened if our very stupid ambassador to Iraq had not told Saddam, when he asked, what we would really do if he invaded. She was a political appointee and had not a clue as to what the job really entailed. However…
I’d argue the Saudi royal family’s “very existence” is far more dependent on the USA protecting the royal family from the Saudi people.
No, that is simply not the case. There is not one US soldier keeping the peace in Saudi. The Saudis have a very effective hierarchy of power that helps maintain the status quo. Every member of government and every cleric and every member of the police guard their position with a system of “wasta” that assures they stay in power. (You can google wasta.)
And, as happens with all these puppet dictatorships installed and maintained by the United States by the use of state violence, the Saudi royal family gets trapped between Washington’s demands and the popular demands of the country’s people.
Good gravy, do you really believe that the Saudi royal family was installed in power by the US government. I would suggest that you brush up on your Middle East history. And the King pays little attention to Washington’s demands. He lets the US maintain a presence there to keep his outside enemies at bay. That is now Iran but once was Iraq. But the US sets no demands on Saudi domestic policy and is granted no say-so in Saudi domestic policy.
If you think the Saudi King or any member of the Royal Family cow-tows to Washington where domestic policy is concerned you are seriously mistaken.
Ron has stated the true position of the Saudi’s. Because of US dependence on oil, they actually need the Saudi’s more than the Saudi’s need us. Sure we help them militarily, but we have a mutual objective of keeping KSA stable and producing. That is how nations work, mutual objectives, mutual support.
That does not mean that KSA is in a safe position. Iran is a powerful nation with lots of missiles. But what would ran gain by starting a major war with the US and KSA?
MarbleZeppelin says:
I suppose it depends on what you mean when you say “we.”
Many of the US’s military adventures serve only the very narrow interests of a small handful of US elites. (Can we say Halliburton?)
Here’s how Reinhold Niebuhr put it in Moral Man & Immoral Society:
Niebuhr goes on the explain that:
Here are some statistics which are germane:
Glenn, the “we” represents the governing body. I fully realize that no “we” actually exists. In fact modern society has destroyed even the small family “we” and the local community “we” as much as possible, substituting itself and commercial services for the services of the family and local community. Independent action is frowned upon, sometimes called criminal. Authority of parents has been undermined by the state. So the “we” is now the state or some large group of strangers.
Ron Patterson said:
Well yes, I do believe that the Saudi royal family was installed in power by the US government. From Wikipedia:
And yes, I do believe the “Royal Family cow-tows to Washington where domestic policy is concerned.” But, just like in Latin America, Washington has many ways of projecting state violence inside Saudi Arabia short of overt US military intervention. It has convert ops like the CIA, DEA, etc. It can employ sanctions and other types of economic and financial warfare. It has its NATO allies. And it has other proxies — other foreign governments and their armies or covert ops — at its disposal. To wit:
Mark me up in the Michael Parenti school of thought. In this video presentation he lays out the operating philosophy and procedures of the US govenment and its European allies in their imperial enterprise:
https://www.youtube.com/watch?v=jKhRE61VE0E
Well yes, I do believe that the Saudi royal family was installed in power by the US government.
From Wiki: He reconquered his family’s ancestral home city of Riyadh in 1902, touching off three decades of conquests that left him the ruler of nearly all of central Arabia. He consolidated his control over the Najd in 1922, then conquered the Hejaz in 1925. He united his dominions into the Kingdom of Saudi Arabia in 1932. As King, he presided over the discovery of petroleum in Saudi Arabia in 1938 and the beginning of large-scale oil production after World War II.
To claim that the US installed Ibn Saud in power is sheer nonsense. To make such a claim is beyond absurd.
Ibn Saud died in 1953, after having cemented an alliance with the United States in 1945.
Good God, the US has alliances with half the world’s nations. An alliance does not mean that these governments are puppets. I would suggest you look up “alliance” in the dictionary.
I am the last person to defend the past aggressions of the US government, especially during the Vietnam era. But there is no drive to build a US empire. We don’t want a fucking empire. That this is the aim of the present government in Washington is pure bullshit.
Ron Patterson said:
Oh really?
This opinion may resonate within the United States, but outside the United States it resonates with only a small minority.
The opinion defies all reality and all common sense. As Edward Said noted in Orientalism:
A few things:
1) The U.S. already is an empire. Hundreds of military bases worldwide, aggressive military posture, compliant foreign govts, covert ops to overthrow non-compliant actors, world reserve currency, “free trade” agreements that indenture foreign workers and give Imperial citizens as much cheap shit as they want, etc.
2) The U.S. may not directly keep the Saudi royalty in power, but the petrodollar monetary system and arms sales sure help them hold onto it.
3) while it may appear that the U.S. is more reliant on SA than vice versa, it’s really the European imperial province that’s most reliant, and as the imperial authority it’s the responsibility of the U.S. to keep the oil flowing. However, if (hypothetically) US support for the Sauds was rescinded and an embargo were imposed, the Saudi royalty would fall within a year.
It’s basically like a mafia front; as long as the shop owner let’s the mob launder money thru the business, everyone’s friendly and maybe some of the mobsters get some free dinner at the restaurant. But if that shop owner tries to back out, his knees get broken.
Thus, Saudi Arabia is locked in to this dynamic and they know it. With all this in mind, is it any surprise that their populace is the most radicalized?
Yes, the US was the natural successor to British Empire. I refer to today’s version of empire as the militarist-imperialist, Anglo-American-Zionist, hyper-financialized, rentier-socialist corporate-state. (Or I suppose rentier corporate-state might suffice.)
The corporate-state is now the de facto global model for economic, financial, social, and political organization among the leading powers, with the US-Canada, EU, Japan, Russia, and China exhibiting different forms of the same.
http://www.newscientist.com/article/mg21228354.500-revealed–the-capitalist-network-that-runs-the-world.html#.VVDLe3U4nK4
http://www.forbes.com/sites/bruceupbin/2011/10/22/the-147-companies-that-control-everything/
It is less a “conspiracy” than “self-preservation” and the evolutionary progression of economic and financial hierarchical power relations and the associated upward flows of resources, income, wealth, status, influence, and power. Connections provide access to the resource and money flows, which in turn reinforces the network, its influence, and the capacity to confer status, wealth, and power on well-connected individuals and groups.
What is overt CCP state-capitalist central planning differs in the US and EU in that the principal planners are at the central banks and IGOs, such as the World Bank and IMF, that essentially run political cover for Wall St., The City, and Frankfurt, i.e., serve primarily the interests of the rentier top 0.001-1% owners of the imperial corporate-state.
The corporate-state is now the de facto global model for economic, financial, social, and political organization among the leading powers, with the US-Canada, EU, Japan, Russia, and China exhibiting different forms of the same.
That’s why I think a lot of policies based on national borders are pretty meaningless. Corporations aren’t really loyal to any particular country these days.
BC,
I think that’s an accurate description of the current reality.
I would just add that, from the point of view of an Argentina, Venezuela, Cuba, Bolivia, Brazil and Equador, it is better to have a multi-polar world than a uni-polar world, and to have the major powers competing for your resources and markets.
What I’ve noticed in Latin America is that China tends to bring its checkbook to negotiations, while the US brings its covert and overt military ops, its regime-change artists, its state violence and its threats of state violence.
But maybe China is just playing nice for the time being, not trying to establish any sort of hegemony as it tries to gain a foothold.
China is run by a neofascist dictatorship. They seem to be good pals with corrupt and autocratic “left wing” latinamerican regimes with neo fascist tendencies. These “nice Chinese” brought you Tibet and exploit over 500 million Chinese slave workers. They won’t be nearly as nice with non Chinese once they get the world by the throat.
KSA and whoever trying to smash US oil . . . assuming they can drop price . . . need not be compelling.
If shale is deemed national security, then it will be subsidized in some manner or other. Much easier to do this by backstopping shale lenders with the Fed. More publicly palatable, since the public has no idea what the Fed does.
KSA and the others would face a difficult problem if they are facing the Fed.
KSA sees the writing on the wall, both decreased demand for oil in the future and depletion looming. They want to sell now to build their own future and keep their people happy.
It’s a combination of fracking and infill drilling in mature fields. The US of course has zero virgin conventional fields so if you want more current production, you sink new wells.
Fracking is a massive well sink because each well is (largely) isolated. Drill, drill, drill. And since the decline is so incredibly rapid, drill constantly.
The US also has tons of competing operators, unlike a Saudi ARAMCO.
Hard to say what the all the issues are. I have read the Obama administration thought greatly increased US oil production gave US more diplomatic leverage.
I wonder what the total amount of cash burn was in the US oil and gas sector in the first quarter. I would not be surprised if the amount exceeded $20 billion dollars.
”I have read the Obama administration thought greatly increased US oil production gave US more diplomatic leverage.”
This is as obvious as the noontime sun on a cloudless day.
OFM. Yes it is obvious. So much so that folks like Watcher, and sometimes me, think that Washington will make sure the “frackers” keep drilling and completing, even as the losses mount, and even if “green” is discouraged in the process.
If this is so “obvious,” then why did Russia refuse to cooperate with Saudi Arabia, in a meeting prior to last November’s OPEC meeting, to cut production so as to bring oil prices back up?
Why, as the post Euan Mearns links to back up the tread shows, did Russia increase production in March, only adding to the glut and extending low prices?
Why would Washington start a price war with someone like Russia who has a far lower cost of production than the US does?
I know neocons like Cheney, Rumsfeld, Brzezinski and Hillary Clinton are eat up with American exceptionalism and the notion of full spectrum dominance, but are they that stupid? If the neocons are indeed that stupid, then the only thing they have succeeded in doing is to take the aura and mystique off their hallowed “US shale revolution.” This would be a good example of an “unintended outcome” of what the Prussian military analyst Carl von Clausewitz called “the fog of war”: the uncertainty regarding one’s own capability, adversary capability, and adversary intent during an engagement, operation, or campaign.
Sometimes things are not what they appear to be, or what the MSM is telling us they are.
I don’t think anything can be gleaned from pointing out that someone did not cooperating with OPEC. True Russia did not cooperate but Brazil did not cooperate, China did not cooperate, and absolutely no one else cooperated with OPEC in reducing production. So you must put Russia in the same basket with everyone else who did not cooperate with OPEC.
That being said Obama had nothing to do with the fracking revolution that greatly increased US production. Though it happened on his watch, he had no hand whatsoever in causing it. And I say that as a Democrat who voted for Obama… twice.
Ron. It is true that neither President Obama nor anyone else in his administration helped the shale boom.
Do you think he or anyone in his administration either knows or cares about the dubious economics involved?
Further note, I friends who are bankers, some at local and some at regional, none with loans to shale, do have loans with small private conventional producers. I have talked some to them about this shale stuff. They seem to agree that OCC must be looking the other way, but will admit none have the time to get into the numbers. I would note most shake LOC are a banking consortium of TBTF types. There is a shock? TBTF raising LOC to hugely cash flow negative shale companies after a commodity price crash. I know the loan amounts in total are much smaller than in the mortgage loan and student loan sectors. I guess I need to stop looking at Q1 10Q and conference call transcripts and do something more productive with my free time.
Shallow, I got TBTF, too big to fail, but OCC and LOC I faild to figure out. Google did not help. OCC came up as “Office of the Comptroller of the Currency” and LOC is Library of Congress. I don’t think those are what you meant with those acronyms.
So without knowing what those acronyms stand for I cannot adequately reply to your post.
I may have my banking regulator acronym wrong. Loc is line of credit. I admit I don’t know a lot about banking regulations, but what I hear from those in that business is that since 2008-2009 lending standards are much tighter. However, shale is still getting loans to drill.
I can see loaning more $$ to keep the business afloat. But to drill wells that are economically challenged?
I guess there are short memories. Look at what happened to Texas banks in the late 1980s. Or read up on Neil Bush and Silverado. I thought the S & L crises was due in part to the collapse of the oil industry.
How do these banks know oil is heading back to $100 anytime soon. That is the only way the Continentals of the world survive IMO
I may have my banking regulator acronym wrong. Loc is line of credit.
Not being a banker I would have no idea. But just writing “line of credit” would have avoided all confusion. And I still have no idea what “OCC” stands for.
Sorry for the acronyms. I can see how those are annoying.
I guess the banking regulators believe extending further credit to shale oil drillers is ok, otherwise it would not be happening?
Office of Comptroller of the Currency. Mission is to charter, regulate and supervise all national banks.
They have bank examiners who review all banking facets, including loan quality. Loans are graded A through F. Too many D and F loans will cause more supervision and possibly other issues.
I know I am too focused on the financial side of shale oil. However, without the banks continuing to loan, it is dead in the water for the most part IMO. I can’t figure out how US bank regulators are ok with the continuing loans. Again, sorry about the acronyms. I’ll try to cut that out.
shallow sand says:
Just one more intriguing data point in a long and sordid tale.
Have you read Kevin Phillips’ Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism?
He develops a theory of what has gone wrong with finance in the US, tying it together with peak oil.
shallow sand,
I don’t think you’re too focused on the financial side of shale oil–I think the more inquiry on the topic, the better. Your posts here are important; keep them up.
Your questions are clear and focused, and I think they’re some of the clearest and most insightful posts on this site.
I agree wholeheartedly with Syn, Shallow. You are one of the very few that seem to understand that this shale stuff has not worked at 100 dollar oil, much less 55 dollar oil. It is really not rocket science; the oil business, including the shale business, is about making profit. You can’t do that if you are up to your arm pits in debt.
Its not any more complicated than that.
Mike
Hi Shallow Sands,
I think many of the LTO focused companies were doing pretty well at $100/b based on analysis by Rune Likvern. During 2013 and early 2014 the average Bakken company was starting to slowly pay down their debt and they had significant positive cash flow.
Things are certainly far from rosy at $55/b, but Mr. Likvern believes that $70/b or so will at least get these companies back to cash flow positive (barely).
If the cornucopian(Maugeri) thesis that oil supplies will be plentiful is correct, then oil prices never make it to $70/b and the LTO companies are toast. There is also the possibility that financial constraints (no ability to increase debt levels any farther) will constrain both investment and GDP which will make a large real oil price increase(say $35/b or more) unlikely because oil will not be affordable (Likvern’s thesis).
I favor the Kopits and Brown position that demand growth will outstrip supply growth in the oil market and drive oil prices higher.
I am wrong at least as often as I am right about future oil prices.
If oil prices remain low and there is no financial crisis in the short term, at some point demand growth will be higher than supply growth in the oil market, when this will occur is an open question, my guess is before December 2015.
Dennis Coyne said:
That’s an apostasy that will get you censored in a New York minute on Gail Tverberg’s blog.
Heck, Gail even removed a comment I made, using IEA data, that showed that in no calendar quarter over the past four years was there a y-o-y decrease in global oil consumption. Some of the loops they put themselves through over on her blog to argue that oil demand has and still is declining are beyond the pale.
Reality, I suppose, must be custom tailored so that it conforms to theory.
Ron Patterson is a lot better sport. I know a lot of my comments, especially the ones about politics, must raise the hair on the back of his neck. But as of yet he has not censored any of my comments.
Dennis. I think about the only thing Mike and I might disagree on is that some shale works at $100 oil. I do not have time to do any comprehensive analysis, but it has looked to me that EFS in Karnes County, TX and Sanish/Parshall in Bakken do well even below $100.
Much of the problem, as I have frequently alluded, is the economics in years 5-20. A big unknown.
By the way, spent about 10 minutes over lunch looking at Rosetta production on Texas Interactive PDQ. Looks like the oil well have a tremendous decline. Many Bone Spring Wells under 20 bopd after 24 months and some even SI.
Too much money chasing too little good investments still. Looks like maybe Noble is bailing them out. Do admit I don’t know gas, so maybe that is where the value is?
Shallow sand has it right, the economics are going to work if the wells have a healthy tail. The tail´s length will depend on the amount of water, the gas oil ratio, pressure, and the ability to pump those fluids in a horizontal well.
I havent seen the detailed well directional designs used by these companies. The designs will tend to be more complex when drilling from multiwell pads. And I wonder if some of these companies have engineers who considered the artificial lift requirements 5 to 10 years in the future. If they didn´t, they will face much higher operating costs.
Fernando, I noticed you’ve got an if and a depends in your comment. There is a lot of that going around these days.
To answer your question, no. The first 6 years of shale development was all about big IP’s and booking reserves; laterals and radiuses, heel to toe to regional dip orientations, none of that was designed for long term rod lift recovery. Buy stock in anybody that makes rod guides, I say.
I have vested interest in EF shale wells; I know what they cost, how much they decline, what it costs for an operator to rid itself of water, what their ultimate economic outcome will be, I think. Several wells I know of are in year 6 of their lives (and that will NEVER reach payout); I am not so sure that a lot of these EF wells are going to have fat tails at all. These are depletion drive “reservoirs” subject to fracture closure in rotten mudstones, IMO, and I am very unclear, knowing a little about the depositional environment of this particular shale bed (EF), where all the formation water is going to come from to make those EUR tails fat. Never mind my opinions, however; you know what people say about those things.
I wish I had time to participate in this project but I don’t, sorry: why don’t you and Shallow define for all of us what “works” with regards to LTO development. Pick some imaginary rates of return that will keep your imaginary company floating and its upper management with 8 figure incomes. I wish I could suggest that you start out with a new imaginary shale company, without debt, but that is not the case, unfortunately, is it? I am interested in how you think you can get yourself out of debt at this stage, with 70 dollar oil prices. Forgive me, but nothing “works” in my oilfield until you pay people what you owe them.
So I think you guys should pick an imaginary Shale R Us, LLC company, with say 1.5 B of debt, 800 M of available cash on your LOC, and 75 dollar oil prices over the next 5 years. EUR’s, CAPEX, decline rates, royalty, taxes and incremental lift costs has all been guessed to death; any of that will work in this project. I think you should assume that when your 800 M is gone, you won’t get any more unless you can pay back the 2.3 billion, in full.
I am interested in defining once and for all what “works” for the LTO industry from this point going forward. Please leave out the hypotheticals, for instance that Walmart might buy you out down the road, or the FED will forgive your debt in the same bill it forgives college loans.
I may be entirely wrong about the shale industry, I don’t know. Show me I’m wrong, just make sure the definition of works includes paying off the debt.
Thank you.
Mike
Mike,
Why are the banks deliberately and intentionally making bad loans?
Bill Black offers an answer. It’s called “bank led control fraud.”
It seems Al Capone got it right when, from his Chicago headquarters in early 1929, he condemned the speculation on Wall Street. “It’s a racket,” he said, “Those stock market guys are crooked.”
How to rob a bank | William Black | TEDxUMKC
https://www.youtube.com/watch?v=-JBYPcgtnGE
Its a good question, Glenn, and an important component to “predicting” the future of LTO production and peak oil. Let Fernando answer it.
From my perspective getting further in debt does not meet my definition of the LTO industry “working, or working pretty well.”
Mike
Dennis, you had a lot of ifs, ands and buts in there but I appreciate your answer. Its an honest answer, and probably the only one I will get. In the oilfield you got your problem identifiers and then you got your problem solvers. The ID guys generally go home at 5.
The question remains, how are those shale guys ever going to pay back their indebtedness using the numbers you have used, ever? They have no net income and to get back on the drilling treadmill, they’ll have to borrow even more money. I have no idea how all that debt is magically going to disappear. That’s not a problem I can solve either.
This shale thing is a financial disaster that people someday will only be able to look back on and shake their heads in utter disbelief. I am astounded how few people seem to really get that.
Mike
Hi Shallow, Mike and Glenn and Ron.
I have been reading Shallow and Mike’s thoughts on this for the past few weeks. I think this is as big as you think it is- maybe bigger. I think Glenn has hit the nail on the head- the problem is not solely in the oil fields, but in possible collusion with the banks: small scale greed (comparatively speaking) with vast geopolitical implications. This is an area we have no first-hand expertise in and that we don’t have the resources to investigate. And of course, nobody is listening to a bunch of eggheads and roughnecks complaining about bankers.
Anybody have Michael Lewis’ phone number? This is right up his alley. If anyone can make “Control Fraud in Oil Field loans” sit right beside “sub-prime loans” in the current lexicon, it’s him.
-Lloyd
Another effort to provide more missing information and connect the dots is Kevin Phillips’ Bad Money: Reckless Finance, Failed Politics, and The Global Crisis of American Capitalism.
I’m not sure I agree it’s lights out for Modernism, or even capitalism, as Gail Tverberg argues. There are many potential outcomes.
Nevertheless, I don’t think the current form of predatory, crony, American-style “democrtic-capitalism” has any future.
Shallow, there are indeed several areas where LTO worked pretty well at 100 dollar oil prices, all of which are diluted significantly by more places, often drilled by the same companies, where LTO well performance is dismal, at best. Average the good with the bad and what have you got? You have, as you point out, a company like CLR, arguably the biggest Bakken player there is, that has not made a nickel of profit since it’s IPO and owes over 7 billion dollars. You have an industry with 240 billion dollars of unpaid junk bond debt and probably another 100 billion of conventional unpaid debt, and no net income to service that debt. That does not meet the definition of “working pretty well” to me. And for the record, $70.00 oil and slim profit margins ain’t going to fix the mess.
To understand the role that LTO has relative to our country’s energy future folks need to put away the models, the what if’s, assumptions and hypotheticals, and worry about where the money is going to come from.
http://fuelfix.com/blog/2015/05/11/american-eagle-energy-seeks-bankruptcy-protection/#31744101=0
Mike
Agree with you Mike. The vast majority of companies are in trouble. At least that’s how I see it. There might be an exception here and there, but neither you nor I could get away with borrowing year after year.
I bet driving around in S Texas and seeing the activity has been like when I would go to a city and see all the huge new homes 10-15 years ago. At first I thought it was a sign of prosperity. Then, after thinking it through, I realized it was pretty much a scam. I think much of this shale is too. Yes, it is real, and has created jobs for a time, like the housing boom, but it will end badly I think.
Hi Mike,
I agree that if oil prices remain $75/b for the next 10 years, few if any LTO focused companies will make money. If oil prices rise by 4.65% per year to about $136/b in 2034 from $57/b today, and well cost (including money set aside for P+A is $7.5 million (2015$), discount rate is 10%(assuming 3% inflation), OPEX and other costs are $10/b, transport cost is $4/b, royalties and taxes are about 27% and average new well EUR is 270 kb over 15 years, then the the net present value of discounted cash flow over the life of the well is more than the costs by $0.45 million for a well drilled in April 2014. The well’s net revenue (without discounting) reaches $7.5 million at 42 months, and net revenue over 180 months is $10.6 million.
Not a lot of money considering we don’t really know what these wells will produce after 5 years or so. The oldest wells were drilled in 2010 so only 3 or 4 years of data.
As the average well using these optimistic numbers barely pays out in 4 years, it is hard to understand why anyone bothers to do it.
Okay, now that I know what all your acronyms mean, I can, hopefully, reply to your post with my opinion.
I don’t think bankers are completely blind to what is happening.
Creditors Pulling The Rug From Under U.S. Shale Sector
As Bloomberg reports, lenders are preparing to cut the credit lines to a group of junk-rated shale oil companies by as much as 30 percent in the coming days, dealing another blow as they struggle with a slump in crude prices, according to people familiar with the matter.
Though bank lending did fuel much of the shale boom in the past, that money is drying up and may completely dry up by October this year. Right now it’s junk bonds that is fueling most of the shale industry. Well that and new issues of company stock.
How easy money is helping oil companies weather the bust
A survey of energy industry participants conducted by Douglas Westwood for Energy Voice found that an overwhelming number believed oil prices will remain above $60, and more than half said they are confident prices will be at or above $100 in five years.
The capital markets seem to agree. In the first quarter, for example, companies issued about $10 billion in junk bonds and another $10 billion in new stock issues, private equity investor Carl Tricoli, with Denham Capital, told Forbes recently.
Today, oil companies find themselves with a greater array of financing options. Junk bonds no longer carry the stigma they did in the 80s, when Michael Milken’s escapades made them toxic.
They are all betting that prices will increase again and they will be able to pay the interest on all those junk bonds and perhaps even redeem some of them. If, if, if prices do increase later this year.
Well mark me up in the Michael Parenti camp when it comes to this notion that “stuff just happens”:
http://market-ticker.org/akcs-www?post=230114
Military practicing for civil insurgency?
Based on their publicly available operating guide (JOE 2010) this would make sense.
Weird, when I lived in Caracas we had an FBI rep living in the same building. The USA embassy also had DEA in country. We had so many USA intelligence types chasing druglords and money laundering criminals they even put a surveillance TV camera in my service entrance (my company’s counterintelligence department located the camera, traced the signal to a remote multiplexer they had in the buildings front garden). I think that paranoid link of yours has a slightly off planet version of reality.
This is a USA biased analysis…
Karl Denninger is a sharp cookie. He helped to found the Tea Party based on his financial analysis (which is excellent in my opinion). But (to his credit) he has abandoned it because it was hijacked by right wing fools.
I don’t agree with his views on guns, climate change or that anyone who makes a mistake should get 10 years in prison.
But, he is no doubt, highly intelligent.
And I am an idiot!!! LOL!!!
He has been banging the drum on Thorium and CTL for the USA for years. I think he is correct on this. But I am not qualified.
thanks!!
I was a big Denninger fan until I saw his Obama birther rant. He went on for about fifteen minutes, if my memory is correct. I remember his main case was that Obama’s birth certificate had to be filled out on a typewriter on a pre-printed birth certificate card. But the entries lined up perfectly on each line and that would not have happened if a typewriter had been used.
The damn fool had apparently never used a typewriter. I have typed, and observed a lot of pre-printed cards filled out on a typewriter. Every time something did not line up correctly, you just hit the “carriage relief lever” and line it up manually.
Yet Denninger ranted on and on that the birth certificate was a fake because he said it was computer generated instead of filled out on a typewriter. I never watched or read his report after that. I decided he was a dolt.
I am not promoting Denninger. I enjoy his financial analysis (it is very good IMO) and I like reading opposing views to counter act groupthink.
He has some extreme ideas (like we should all arm ourselves), but he is unquestionably an intelligent man.
I am on this site because I like Ron’s and the other posters opinions.
Is it unreasonable that the military that has itself predicted peak oil…might prepare for it????
I don’t think so.
thanks!!
It is a sign of brains and wisdom – which are not necessarily the same thing – to recognize that the world is full of people who are wrong on some particular issues but right on as many or more OTHER issues.
So – it is thus good policy to try to read and understand what people such as Denninger have to say. I do not know much at all about him but what I do know indicates that he is dead on correct about some things.
About other things he is apparently sort of deluded , to put it mildly- from the point of view of people who have better technical educations for instance.
We should never make the mistake of assuming somebody is stupid or deliberately denying a fact such as global warming just because he does not accept the evidence.
I know some people who are incredibly intelligent who do not accept global warming – for the basic reason that they do not possess the technical education to understand the arguments. One of them is an attorney, another is a cpa. Both of them were honor students at a university that is VERY hard to get into and actually graded on a bell curve when they were in school – meaning less than ten percent ” A’s” were awarded.
But they did not study chemistry or physics or biology.
Plenty of the people in this forum seem think bankers and industrialists are cynical and dishonest and do not care if their own grandmother starves and their own grandchildren die of asthma or malnutrition so long as they get richer than they are already.
These two guys think scientists are like cpas and lawyers – loyal to the dollar they can put their hands on.
WHY should they think any differently?
They have reached conclusions consistent with everything they believe they know for sure to be facts.
The FACT that they are wrong about warming is not due to errors in their thinking but rather errors in the data they are using.
They don’t understand science because they don’t know any science.
Very smart people also learn to defer to experts, unless you have the evidence to doubt their claims or their credibility.
Global warming denies have neither.
FWIW or if anyone cares,
Denninger believes Peak Oil is nonsense because we can convert Coal, Kerogen and Natural Gas to liquid fuels using existing technology that is also economical. All of that is OIL!!!! I am not a chemist but technically, I think he is correct.
The root cause of the military practicing civil insurgency drills…is a mystery!!! Give me a break!!!!
Anyone who has worked for an organization that has finite resources (which is all of them) knows that expensive practice drills aren’t for FUN!!!
Who is right?
I disagree with Karl on many things. Be he is much more knowledgable than I am on financial stuff (he was the CEO of a multi million dollar company)
and who on this site is smart enough to say we cant convert the USA massive Coal and Kerogen supplies to liquid fuels…No one knows that answer….We may be better than we think.
I agree with Ron’s position that even if we can combat Peak Oil (unlikely IMO) we are still doomed.
I am gonna go hug me daughter and me beer.
thanks guys!!!!!
Denninger believes Peak Oil is nonsense because we can convert Coal, Kerogen and Natural Gas to liquid fuels using existing technology that is also economical. All of that is OIL!!!! I am not a chemist but technically, I think he is correct.
Coal can be converted to fuel but it is a dirty and expensive process and good coal has already peaked and bad coal will peak soon if we start converting billions of tons per year to liquid fuel.
Kerogen will never be oil. The US supply of kerogen is located in the dry desert and it requires massive amounts of water and there is no water there. The crap must be mined and it is a dirty and expensive process.
Natural gas is a fossil fuel that will also peak. Gas to liquids is an extremely expensive process. The gas to liquids plant in Qatar was cancelled because it would cost too much money and would not be economical.
Karl Denninger is a birther. Any birther has to have a screw loose to believe that Obama was born in Kenya and all the newspaper birth announcements and hospital data was faked.
Therefore we can infer that Karl Denninger a nut case.
I want it to be perfectly clear that I am not a ” birther” but the issue has a dead fish smell about it and it is altogether possible that there was some faking going on. The Obama outfit was EXTREMELY slow in producing any documentation. I have had to routinely produce my birth certificate a number of times. It took me only an hour or so to fetch it. Can’t replace a lost drivers license these days without it , even with the retired head of the local circuit court to vouch for the fact he has known you since you were born- and your mother attended at your birth by his brother.
If one is a bit cynical , it is VERY easy to believe that the president who promised us the most open and transparent administration in history has actually given us one of the most secretive and opaque.
One of the most respected members of the old TOD community who lives in Hawaii assures me that the government of that state is probably THE most corrupt state government in the USA – which is the usual result of long term dominance of either party.
Cynics who believe it is not fair for cops to run an internal investigation of one of their own for weeks on end before anybody else is allowed a peek at the evidence or an opportunity to question the cop who has shot somebody under questionable circumstances say with plenty of good reason that this is done partly or in some cases ONLY to allow the insiders to get their stories together and make sure any evidence disappears before it can be seen by a prosecutor or the family of the shooter.
If a person is inclined to distrust Obama he is justified in wondering about his birth place. If a person is inclined to believe the MIC owns and operates the USA then he is justified in believing the old USSR was never a threat to this country.
HRC has been exposed to anybody who understands some very basic math as a first class con artist and undoubtedly a felon – ANYBODY who doubts a person with her education/ background is lying her ass off about cattle gate is an utter and absolute goddamned fool.
People who have ANY brains do not believe a person who is running a lottery happens to WIN it HONESTLY.
I personally know a great many well educated people who simply REFUSE to consider the POSSIBILITY their dear Hillary could tell a lie.
I don’t know if the OBumbler’s mother sneaked into Hawaii to have her son , or if the birth paperwork was faked.A hell of a lot of women who have had the means to do so have managed to be in the USA when their kids were born as a deliberate choice. I would do this myself if I were a woman from a less safe and prosperous country and could manage it. My own guess is that OBumblers birth certificate is good..
I do know that conservatives who continue to talk about this issue are shooting off some more of their own toes and that if they were a little smarter they would drop it.
But I do not doubt that every president during my life time has lied his ass off for partisan and or personal reasons. I expect even George Washington himself told a few whoppers.
Incidentally I happen to believe that probably ninety percent of cop shootings are justified and nearly all of the final ten percent can be put down to inexcusable poor judgement rather than malice.
Now as I said before I don’t know anything about Denninger except that he is right about some issues relating to our national finances. If he has been the ceo of a serious company and he believes in kerogen to oil from the American deserts he is either totally ignorant of the physical sciences or just flat out lying for political purposes.
My take would be that he is cynically lying in this instance for political reasons. A financial guy who is serious doesn’t have to understand the science of oil to understand the economics of kerogen or coal to liquids etc. He can investigate the question in a matter of hours or even minutes given the existence of peak oil sites these days having gathered the evidence together for him gratis.
There is a hard core of technically ignorant people in the American right wing and people like Denninger play them like violins.
This is not to say there are not almost as many on the other wing. The average union worker is a ignorant as a sign post. Ditto the average person on the street.
I seldom meet a card carrying liberal democrat who does not believe in the continuation of business as usual. I have never met a card carrying conservative who does not believe business as usual will last at least until Jesus comes for him, lol.
I want it to be perfectly clear that I am not a ” birther” but the issue has a dead fish smell about it and it is altogether possible that there was some faking going on.
Mac, you say that you are not a birther then much of the rest of your post is pure birther rant. I mean birther rant that would put Donald Trump and Fox News to shame.
Really Mac?
Speaking of crazy crap that won’t go away, Tom Whipple is out with his most recent version of “Just wait until next year” missive regarding cold fusion:
http://fcnp.com/2015/05/06/the-peak-oil-crisis-the-cold-fusion-conference/
http://scienceblogs.com/startswithabang/2013/05/21/the-e-cat-is-back-and-people-are-still-falling-for-it/
“Rossi also refused to unplug the machine while it was operating! Now, Peter Thieberger (who co-wrote this post with me, and who is a respected nuclear/particle physicist) has demonstrated just how easy it would be to keep power flowing to a device in such a way to fool an ammeter, which is a device for measuring electrical current. In other words, it would show that no current was flowing when one actually was!”
http://scienceblogs.com/startswithabang/files/2013/05/Power-Magic-1-600×515.jpeg
Lot of water under the bridge since 2011, rehashed in 2013, and still being cited in 2015. Need better info to cast ridicule, don’t you think? You ignore reports of the 400 day commercial test, which has not yet been completed (had issues which temporarily interrupted it, I understand, to be resumed shortly).
I’ll remain skeptical until I see it, but the real science is getting harder and harder to deny. And Rossi may not have the better technology (at least three different technologies seem to work, producing heat, light, and electricity respectively).
Mourn for the planet if any of these things become commercial, as human population growth will probably continue unabated for awhile longer, to the detriment of everything else. Maybe there would be be no reason to keep hot nuclear reactors to generate electricity….
We didn’t know about lots of things during much of our history, like gravity, magnetism, radio waves, radiation, physics and chemistry. There are still things to learn. Best to keep an open mind.
Deniers can scream now.
Jim
People who believe any type of free energy are just down in the dirt dumb. I mean really, really, really dumb ass dumb.
Nuff said.
Mr. Brown, ERRATA, Mr. Patterson, …
This is not so much a challenge to your positions as a sincere inquiry on my part to point me to clearly understood research that has disproven the work launched by Pons and Fleischman decades ago.
I have zero scientific credentials, but the work of labs such as SRI, SPAWAR, NASA, Mitsubishi, Toyota have ALL found “anomalous” readings in heat during their work in this field.
The Swiss company StMicroelectronics – 50,000 employees, $8 billion revenue – APPLIED for a US patent for their cold fusion process in 2013.
A prominent Russian scientist recently mimicked Rossi’s model with success.
Whether or not this stuff proves to be valid is unknown at present, but the dismissiveness cast towards this field and its participants is puzzling to me.
http://en.wikipedia.org/wiki/Pathological_science
Pathological science is an area of research where “people are tricked into false results … by subjective effects, wishful thinking or threshold interactions”.[1][2] The term was first[3] used by Irving Langmuir, Nobel Prize-winning chemist, during a 1953 colloquium at the Knolls Research Laboratory. Langmuir said a pathological science is an area of research that simply will not “go away”—long after it was given up on as “false” by the majority of scientists in the field. He called pathological science “the science of things that aren’t so.”
Mr. Brown
That is an excellent description – Pathological Science – ‘stuff that ain’t so’.
Hmmmm … so, can you he’p me out with the timeline of , say, Galileo’s and Copernicus’ ‘stuff’ as to when it morphed from ‘Pathological Science’ into … sumpin’ else?
Whether or not this stuff proves to be valid is unknown at present,
Baloney! It is very well known at the present that there is no such thing as free energy. There are no perpetual motion machines. The Second Law of Thermodynamics cannot be violated. Cold fusion is pure baloney and that is a known.
There is No ‘Free Energy’
Hmmmm … so, can you he’p me out with the timeline of , say, Galileo’s and Copernicus’ ‘stuff’ as to when it morphed from ‘Pathological Science’ into … sumpin’ else?
Coffeeguyzz, you should know better than that shit. Galileo and Copernicus were bucking the church not science. They were the scientists, the church was the pathological science.
The idiots that think there is such a thing as free energy are bucking science not the church. Science says you cannot violate the Second Law of Thermodynamics. These idiots say “Yes we can, we don’t believe that laws of science are valid.”
Please read this article.
There is No ‘Free Energy’
Mr. Patterson
I would take your statement that there is no free energy one step further and emphatically declare that there is no ‘free’ anything in this world (and its corollary, value gotten being commensurate with effort given).
The folks cooking up these lattice contraptions declare that more energy is being released than is being inputted (is that a word? Is now, I guess).
Main point being IF some type of force/energy is being accessed and released – even as it is not only NOT understood but adamantly (by some) denied the possibility of very existence, well, a new page of human understanding may about to unfold.
I sure dunno, but if this all comes about at some point in time, tomorrow’s Pathological Scientists (today’s skeptics) may be likened to future ex-wives … great while they lasted …
Gerard
Mr. Patterson
Quick followup to our cold fusion discussion that you may find of interest.
I read your link (thank you) several times and found it enlightening without indications that it denigrated the concept of Low Energy Nuclear Reaction.
However, in further reading, I came across a more recent (Oct/Dec) Huffpo piece that seemed much more open minded to the rapidly evolving field of LENR …
“Fusion Energy Hope or Hype”. by David Bailey
Fusion Energy: Hope or Hype?
Pretty good article but it does not support your case. It list three possibilities:
1. Fraud
2. They are mistaken.
3. They have made a discovery that will revolutionize the world of energy.
I think it is a 50 to 50 chance. A 50% chance it is no. 1 and a 50% chance it is no.2.
I think the “weird science” stuff is interesting, FWIW.
http://oilprice.com/Energy/Energy-General/Andrea-Rossi-Vindicated-Cold-Fusion-Takes-Another-Step-Towards-Credibility.html
http://www.space.com/29363-impossible-em-drive-space-engine-nasa.html
Cold fusion, aka Low Energy Nuclear Reactions (LENR), aka Chemically Assisted Nuclear Reactions (CANR) is not “free energy”.
It is (apparently) fusion, only happening with deuterium in palladium or titanium, or protium in nickel.
I am majorly suspicion of Rossi however.
Everybody else gets excess power in the range of a watt or few per cm^3 of metal,
and excess power over the electrolytic current to load the hydrogen into the metal of around 30%. These have been replicated by various labs around the world, all very publicly.
A recent reply to a skeptic:
http://dspace.mit.edu/openaccess-disseminate/1721.1/71632
many papers at:
http://lenr-canr.org
On the other hand, Rossi is claiming massive amount of energy out, essentially no radiation, and hiding a bunch of stuff. Very dubious.
Folks
I just checked the Brillouin Energy website (first time in ages) and they have just posted up a ton of technical details of their theory. Big significance of these guys is that they seem to be the ONLY outfit that sez that they understand what is actually happening. As such, they are the only ones that can repeatably, controllably conduct demonstrations.
As the math symbols are all hieroglyphics to me, I wonder if any of this site’s uber brainiacs would be interested in checkin’ ’em out and see what’s up.
Fascinating stuff.
@sunnnv
I think it’s not really “Fusion”. So you don’t have any gamma, or x-rays being produced.
The Widom-Larsen theory:
http://newenergytimes.com/v2/sr/WL/WLTheory.shtml
Ron,
I agree on the free part, except that it is a straw man, a distraction that misses the possibility of learning something new. Even with my college understanding of chemistry and physics, I can see how it probably works and understand where the energy is coming from. IT IS NOT FREE, thus the straw man.
The energies of electrons in their orbits around nuclei are considerable, and the energy is released when orbits change, yielding energy (heat, light, charged plasma) and byproducts that are different. It isn’t hot fusion, and it bridges chemistry and physics.
Hasn’t been long since most people were sure the earth was flat. Problem was they couldn’t SEE the truth, and we can’t see these processes either. Doesn’t necessarily make them impossible, like a round earth was thought to be.
Too many good scientists (in too many places working for smart governments and business people) have yielded reproducible, interesting results for me to be dismissive of their efforts, but I’ll believe when I see.
As i wrote earlier, mourn for the planet if one of these comes to fruition.
Jim
I exaggerate to make my case. 😉
If you believe in the Democratic Party (and in Obama – which I do not but have posted in this forum that he is a better president that whats his name opponents would have been-) then you believe the Obama camp story.
If you don’t then you don’t.
Glen Sthele up above has OBVIOUSLY made his mind up that the USA installed and has kept the Saudi family in power. You and I know better.
Now if you go back thru the history of the Obumbler you will find that you have to look long and hard to find out very much about him and his family at the personal level.
Nobody but hard core right wingers have made any serious effort to find out anything about him.
The facts in such a matter are not easily found out , especially if the people involved are extremely powerful and extremely well connected, and manage to delay and obstruct any inquiries.
Now in some cases the facts are more easily ascertained.
Tell me for instance about what you think of Cattle Gate.
I have been following politics about as long as you have and have less respect for the ethics of most of our national level politicians than I do the guy who runs the local cat house.
If the Obumbler had a birth certificate that had NOTHING about it worth covering up it would have been produced in a fucking flash. How long exactly did it take ?
Hence my personal guess is that he was born in Hawaii but that some of the paperwork probably involving his parents was maybe not totally up to a close examination.
This is not exactly a capital sin in my estimation- I personally know a couple of young guys whose mothers managed to cross into the states specifically to have them born here thirty years or so ago. I admire their mothers although I have never met them and never expect to. They are pretty quick to point out they were born here although they do go ”home” to visit quite often.
One of the Bushes managed to parlay a piddly hundred grand into fifteen or twenty million in a baseball team thru obviously fraudulent means, although the deal was probably not actually crooked in any way that could be PROVEN in court. It was all just good old boys working together to further the great American game- at public expense of course.
Don’t know, don’t really care about the birther thing. I brought it up to make the point about what people believe and why.
My point is that you and I and just about everybody else believes what they please about such things if they might conceivably be true.
Even if they are obviously not conceivably true people usually believe what they want to believe about politicians ANYWAY.
How many card carrying liberal democrats do you know who are willing to admit that HRC participated in defrauding her commodity brokers customers and lied her ass off about it ?
I have a nice toll bridge cheap for any body who thinks she ran up that track record honestly. Anybody who knows any math at all knows better because the facts involved are a matter she cannot deny.
But if you happen to suspect or believe something on a democrat then you get tarred and feathered as a nincompoop. For the record I suspect some coverup at some level. But I could care less either way. My guess is that the Obumbler was born in the states, as I have said earlier.
”Really Mac?”
But I am not offended and if you are I beg your forgiveness. Differences of opinion are the ingredient that gives flavor to life.
I personally find myself living in near vacuum politically given that our political system has degenerated into the factions that dominate it these days.
Human beings first and foremost make up their minds about what they believe according to the camp they identify with.
Unfortunately the so called conservative camp has fallen into the clutches of big business and so now does not any longer represent any real conservative values in the true sense of the word.
A real conservative with a brain for instance understands that protecting the environment is about the most conservative possible political goal , one that trumps everything else given we have only one Earth.
Even an illiterate farm hand understands that wells run dry when it doesn’t rain- and it never rains oil , at least not on this planet. But the so called conservative political camp, despite including countless well educated people , generally denies the reality of peak oil in particular and peak resources in general.
Hey – Liberal democrats are naked apes too.
There are no perfect answers , especially regarding popular culture. Sometimes the only way people can be happy and feel free is to go their separate ways. I suspect that if this country breaks up eventually cultural clashes may have as much to do with the break up as any other factors.
Of course, there is the fact that his mother was a US citizen, and children of US citizens are US citizens regardless of place of birth.
In any case, it’s more than a little ironic that Ted Cruz was born to a US mother, in a foreign country, but he is the darling of the same crowd that vociferously asserts the birther bullshit, expending enormous efforts in attempts to suggest that Obama was born to a US mother, in a foreign country.
McCain was born when his father was assigned to the Panama Canal naval base and born in the hospital there.
Be that as it may be, citizenship . . . naturally born . . . likely is a fairly important thing, beyond being in the Constitution.
For chuckles be aware that the longest reigning monarch on Earth is the King of Thailand. A very good guy. As a young man he went out and spent days with a shovel in his hand working on road infrastructure, to encourage parliament to spend more on it.
He’s the absolute highest figure in Thailand. Unquestioned popularity and the entire populace is uber loyal to him.
He’s an American. Born in Boston when his parents were attending Harvard.
Good points Jeff and Watcher.
I agree with those who think this is a non issue. But I do not believe everything I hear coming from either camp. I made a point way up thread about it being the smart thing for hard core right wingers to just drop the issue instead of continuing to harm their cause by clinging to it.
Just to put a point on the end of this discussion:
If a person has at least one out of two parents who is a U.S. citizen, then that person is a U.S. citizen. Nothing more required…zip…end of story. It is irrelevant where the person is born: on U.S. territory, in one of the 50 states, at any other location on Earth, on the International Space Station, or on the back side of the Moon.
This President Obama birther nonsense is utterly stupid.
Do not think for a second that this issue, for many people who promote it, is not anything less than racist dog whistling to label him as ‘an Other’.
Shades of Airdale, more and more…
Perhaps instead of rants about fake issues, we should pay attention to real issues:
http://www.slate.com/blogs/the_slatest/2015/05/10/jeb_bush_says_he_would_have_invaded_iraq_just_like_his_brother.html
http://www.slate.com/articles/health_and_science/science/2015/05/arizona_water_shortages_loom_the_state_prepares_for_rationing_as_lake_mead.single.html
Plenty of real issues to discuss that pertain to Limits to Growth and the political knock-on consequences, instead of Fox-Noise and talk radio-sponsored distraction crappola.
Spot on Naked Ape.
Amen, I personally paid so little attention to this that I totally forgot that his mother is ( was? still living I presume ) an American citizen.
The reason I brought it up was to make a point about what and why people believe certain things- and to point out that while Denninger – or anybody else – may be totally wrong about certain things , he may still be a world class expert in regard to other matters.
We tend to believe whatever our camp or tribe mates believe – or failing to believe , we pretend we do.
There is no question whatsoever in my mind that the birther issue was no more than a ploy by the republican opposition to fire up some of the far right wing.
But I will go to my grave wondering why the birth certificate took so long to emerge. People who have their shit together can put their hands on their birth certificates in a matter of minutes. ESPECIALLY people who have been to law school and have held positions of trust and influence. They are how shall we say it – VETTED by intelligence agencies, police, employers etc.
The Commonwealth of Virginia absolutely flat fucking refused to replace my lost drivers license a few years ago without my birth certificate. There is appacethry NO PROVISION in the law for any other form of ID .
So far I am still waiting for any self identified liberal democrat to tell me what he or she thinks of Cattle Gate.
The point again to prove that we believe what we want and otherwise pretend to believe what our campmates believe.
Personally I don’t believe very much positive about any of our current or recent leaders at the personal level. My inclination when one is exposed (rightly or wrongly in the end ) as less than forth right and honest is to believe the accusation until he proves himself innocent.
I am seldom disappointed in my cynicism.
Mac, your words inspired me to write a movie script.
Yes, we’ve had Republicans spending years focusing on irrelevant issues so they don’t have to deal with real ones.
For example, did we really need to spend so much time and money investigating the Lewinsky affair? Presidents have been fooling around for a very long time. And when we had one who was pretty morally pure (Carter) we didn’t give him two terms.
That is where I want my vote to go. For the morally pure. Intellectually bankrupt does not matter.
Unfortunately too often we get both in one package: The immoral, intellectually bankrupt politician.
Carter was smart and moral, and he didn’t win a second term.
OK, let’s say Carter was smart. But he was a totally incompetent manager. I was in my 30’s, and you were??
I was in my 30’s, and you were??
Late 20s when he was elected. But I am not sure how that is relevant to the discussion.
Boomer II, you say “Carter was smart and moral, and he didn’t win a second term.”
I have a more mixed opinion of Carter.
As Andrew J. Bacevich explains in The Limits of Power, Carter tried to take the “smart and moral” route with his “crisis-of-confidence” speech in the summer of 1979. As you probably remember, the US was in the throes of a second “oil shock.” Bacevich explains that
How Americans dealt with the question of energy, the president believed, was likely to determine which idea of freedom would prevail. “Energy will be the immediate test of our ability to unite this Nation, and it can also be the standard around which we rally.” By raising that standard, Carter insisted, “we can seize control again of our common destiny.” With this in mind, Carter outlined a six-point program designed to end what he called “this intolerable dependence on foreign oil.” He promised action to reduce oil imports by one-half within a decade. In the near term, he vowed to establish quotas capping the amount of oil coming into the country. He called for a national effort to develop alternative energy sources He proposed legislation mandating reductions in the amount of oil used for power generation. He advocated establishment of a new federal agency “to cut through the red tape, the delays, and the endless roadbocks to completing key energy projects.” And finally, he summoned the American people to conserve: “to take no unnecessary trips, to use carpools or public transportation whenever you can, to park your car one extra day per week, to obey the speed limit, and to set your thermostat to save fuel.”
But the speech, politically speaking, was suicide. As Bacevich goes on to explain:
Carter’s crisis-of-confidence speech did enjoy a long and fruitful life — chiefly as fodder for his political opponents. The most formidable of them, already the front-runner for the 1980 Republican nomination, was Ronald Reagan, the former governor of California. Reagan portrayed himself as conservative. He was, in fact, the modern prophet of profligacy, the politician who gave moral sanction to the empire of consumption. Beguiling his fellow citizens with his talk of “morning in America,” the faux-conservative Reagan added to America’s civic religion two crucial beliefs: Credit has not limits, and the bills will never come due. Balance the books, pay as you go, save for a rainy day — Reagan’s abrogation of these ancient bits of folk wisdom did as much to recast America’s moral constitution as did sex, drugs, and rock and roll.
Carter, realizing his mistake, then did a flip-flop and set the nation down the “stupid and immoral” road. He militarized US energy policy with the Carter Doctrine, and he declared a class war against the working and middle classes with his appointment of Paul Volcker as Fed chair. Reagan would pick up both these footballs and run them through the goal posts.
The other tidbit of history important in the presidential election in 1980 is how the Reagan team conspired to make sure Carter would not resolve the Iran Hostage Crisis in such a manner that was favorable to the Carter campaign, or to the interests of the United States. As Peter Dale Scott explains in The Road to 9/11:
Ayatollah Khomeini, concerned no doubt about the increasing signs of a possible Iraq-Iran war, authorized his son-in-law Sadegh Tatabatbai to approach the Carter representatives with an acceptable offer for release of the hostages….
The negotiations, had they succeeded, would have constituted the October Surprise [in the month before the presidential election in Novemeber, 1980] about which the Reagan campaign was so worried.
However, the Reagan team went into action to make sure that the American prisoners would not be released before the election:
That the Rockefeller-Reed visit to Casey concerned an October Surprise was corraborated by sworn testimony from a CIA officer, Charles Cogan. Cogan was present when Joseph Reed, by then Reagan’s new ambassador to Morrocco, visited Casey in early 1981 and reportedly said something to the effect that “we did something about Carter’s October Surprise.” In a less formal setting Cogan told an investigator that Reed’s words to Casey were “We fxxxed Carter’s October Surprise….
Today it seems certain that Republicans plotted with Islamists, in a possibly treasonable arrangement to keep American hostages imprisoned until Reagan’s inauguration….
Some observers have suggested that the Republican dealings, which involved Casey and also possibly Bush the elder, may have constituted treason. What is certain is that they played a major part in delivering Iran into the hands of Shi’a Muslim extremists, a revoluton that inspired Sunni Muslim exremists in their own jihad.
Scott then goes on to describe in detail how David Rockefeller and William Casey set out to sabatoge Carter’s efforts to secure the release of the hostages.
This is one of the reasons why Carter lost the election in 1980, and is also one of the reasons why the neocons triumphed in becoming the most powerful voice in US foreign policy, right along with Reagan.
What I find ironical is that most Americans, who buy uncritically into the national mythology and believe immoral power plays like this just don’t happen in the United States, have no compunctions whatsoever about believing they happen in Russia, such as described in the recent PBS special, Putin’s Way.
Hi Glenn.
I enjoy your posts, but when you get five comment threads in, it would help readability if you would just italicize and start with quotation marks rather than block quoting. I refuse to read pages of two-word sentences, and I don’t think I’m alone in this.
-Lloyd
I assumed it took him so long to produce it because he was trolling the right wing in an effort to make them look silly, or rather, to let them make themselves look silly
His birth was announced in the local paper back in 61 after all, and his mother was a citizen.
Karl Denninger is the only blog which I read where I strongly agree and strongly disagree with the content.
Guns, climate change and the birther stuff is best ignored – but in stockmarket/IT related stuff he is usually right on the money – for example -Blackberry/phone security, net neutrality, ridiculous stock P/Es and algo trading
I agree with Rollo.
Karl’s financial analysis is off the charts. It’s some of the best stuff I’ve ever read.
Despite believing in the Laws of Thermodynamics he is a Catholic (which IMO is a bad sign) and doesn’t believe in climate change or peak oil.
Don’t disagree with him or you will go to prison for 10 years.
I wonder if future humans that suffer from climate change will make Karl go to prison…..!!!!!
LOL!!!!
Worth knowing about:
China’s oil import ports:
http://www.port-investor.com/wp-content/uploads/2012/03/The-Chinese-Oil-Port-Sector.pdf
Page 5, scroll
Ningbo 575K bpd (7.14 conversion tonnes to b) is just across a bay south from Shanghai. It’s their biggest throughput port
Quingdao 465K bpd and well north, actually due west of South Korea.
Tianjin 440K bpd is even farther north and nestled farther westward away from South Korea.
Dalian 435K bpd is also up there west of North Korea
The next on the list is Zhoushan at 321K bpd and is on an island east of Ningbo
The next is Huizhou at 284K bpd and is far south, likely arranged as the source of gasoline for Macau and Hong Kong.
Nanjing is 238K bpd and appears river fed just west of Shanghai
You can do the rest if you want, but what I was looking for is indeed there.
The Japanese targetting challenge is significant. The Chinese have spread these out. It’s not like the Houston complex at all, where the US has greatly concentrated its import and refinery array. Indeed, with all that import capacity up north directly upwind of a US ally, it’s even more difficult.
There is some Chinese talk in that link of tripling imports by 2030 I think. That will be fun. They are burning about 11 mbpd now and 6 of that is influx? Sooooo 18. haha
They could finance pipelines from Russia.
The 2002 to 2012 decline in the GNE/CNI Ratio. At a GNE/CNI Ratio of 1.0, China & India alone would theoretically consume 100% of Global Net Exports of oil. The decline continued in 2013, although there were some revisions to prior years.
Chinese oil imports hit a new all time record high last month:
http://www.marketpulse.com/20150508/china-crude-imports-rise-to-record-high-in-april/
If Brent averages about $65 in May, the annualized rate of increase in monthly Brent crude oil prices from 1/15 to 5/15 will have remained at about 90%/year, versus the 43%/year rate of increase in Monthly Brent prices from 12/08 to 2/11.
Re Pipelines. The US imports from Canada are similarly shielded from attack. But there is still a helluva lot coming into the Houston area.
There is an offshore Louisiana terminal that advertises handling 15% of US oil imports. Just one terminal. Looks vulnerable to me.
Watcher,
Why is it that you believe that US and EU will do any and all kind of financial/monetary shenanigans to maintain status quo, and that China will jettison status quo at first sign of supply problems, and start a world war? Why do you believe that China has any more to fear from unhappy populous than US or EU? As semi democracies we don’t even need revolution to shake our rulers out of their powerful and privileged positions? Maintaining power and privilege means maintaining status quo for all these people. The Market system is what we have. Probably peak oil will crash it. But the rich and powerful have a much better chance of surviving collapse than they do world war. My thoughts anyway. Why do you disagree?
You asked a lot of questions about why I think things I don’t think.
The point is the mechanism proposed for peaceful address of scarcity has always been price forcing some folks to not get what they need, and also a presumption that vast quantities are not needed.
The response is price can’t do any of this because everyone has their own central bank, and all those central banks cooperate with each other to ensure no one’s currency collapses vs the rest — because allowing that would provide export of goods advantage over their own country’s. So they can all print the money they need to pay any price.
And thus, scarcity will exist. China has no reason to allow perpetual US lifestyle advantage. That requires per capita consumption to undo, and so they must ramp that per capita consumption, as it is clear they are doing. There is no reason for them to stop. Nor should they. Humans don’t accept perpetual subordination.
When the pie doesn’t get bigger and you want a bigger slice, you take it from someone else. Period.
Wathcher,
The point is the mechanism proposed for peaceful address of scarcity has always been price forcing some folks to not get what they need, and also a presumption that vast quantities are not needed.
People need transport.
US market want large 4×4 for transport.
You don’t need Large 4×4 for transport!
People need to know the difference, between Needs and Wants
Push,
Great distinction.
A poster on ZH nailed it years ago re the inflation/deflation scenarios, to wit
That which is NEEDED will cost more.
That which is WANTED will be valued less.
But you missed the underlying point of printing money.
When you can print money there is no difference between need and want. Want is demand — and consumption need not be equal to demand. You have to really understand business theory and monetary economic theory to be able to reject truisms.
If people want pickup trucks, then they are going to burn oil for them. Period. They’ll be able to pay for it because the money will be provided to do so. During that time, demand turns into consumption.
Only oil scarcity stops all this. That’s when demand exceeds consumption. Scarcity trumps printing money. When it doesn’t exist to buy, then you have to take the other guy’s slice of pie.
Soon.
Yep, you do “have to take the other guy’s slice of the pie” in order to obtain what you WANT, even if that means the other guy starves to death.
Or in other words, if market fundamentalism goes unchallenged, then a lot of people are going to be deprived of what they NEED so others can have what they WANT, because the price theory of value will be inviolate.
Here’s a manifesto of market fundamentalism which I ran across the other day:
Possibly the Chinese are buying when the price is low and storing the oil.
Still, that graph is disturbing and I assume is calculated against a constant production of oil . As oil production descends, there will be inflection points in that curve. Just one more potential limit in a limited world.
It’s Global Net Exports of oil (Top 33 net exporters in 2005, GNE) divided by the Chindia Region’s Net Imports (CNI), by year.
It’s analogous to what I call the Export Capacity Index (ECI), which is the ratio of production to consumption in oil exporting countries.
Given an inevitable ongoing decline in GNE, unless the Chindia region cuts their oil consumption at the same rate as, or at a rate faster than, the rate of decline in GNE, it’s a mathematical certainty that the resulting rate of decline in ANE* will exceed the rate of decline in GNE, and the rate of decline in ANE will accelerate with time.
ANE (Available Net Exports) = GNE – CNI
Slight correction:
Given an ongoing (and inevitable) decline in GNE, it’s a mathematical certainty that unless CNI (Chindia’s Net Imports) falls at the same rate as the rate of decline in GNE, or at a faster rate, the rate of decline in ANE will exceed the rate of decline in GNE, and the rate of decline in ANE will accelerate with time.
Thanks, that clears it up, must have been having a brain cloud.
China’s crude oil imports exceeded US crude oil imports in April (presumably gross imports in both cases):
http://www.ft.com/intl/cms/s/0/342b3a2e-f5a7-11e4-bc6d-00144feab7de.html?siteedition=intl#axzz3ZpMDGHCY
Jeffrey, thanks for that. At the risk of hyperbole, I must now share, with great personal trepidation, and a kind of acknowledging of a proverbial line in the sand, that the world has, without any fanfare so far to date, crossed the proverbial Rubicon towards the onset of the cumulative factors leading to the last-man-standing contest for the remaining resources of the planet between the West and China (and by extension Russia).
Future historians won’t refer to what we are about to face as a species, society, and civilization as a “world war”; rather, there might not exist hereafter an occupation of historian or imperial scribe to account accurately for what is about to unfold over the next 5-10 to 20 years with respect to collapse of net energy/EROEI and real GDP per capita, trade, and mass die-off of the human ape species.
Yes, and we have front-row seats with back-stage passes, and on-stage invitations…
But then, all the world’s a stage…
Gooood morning, slaves…
And welcome to another sedition of ‘It’s The End Of The World As We Know It And I Feel Fine‘.
The most inspiring show for police departments, everywhere…
Great video! Thanks.
All the old debates from the 1930s to the 1960s about the legitimate use of violence are now being revived:
“You Can Replace Property, You Can’t Replace a Life”: Voices of the Unheard in the Baltimore Streets
https://www.youtube.com/watch?v=2M9R9Oq2rXo
Also, since the video touched on this subject, did you see this?
Caravana43 will visit more than 40 US cities this spring to spread the call for justice—and against US funding of the drug war
“Legitimate use of violence” ???
That’s a slippery slope.
http://www.foxnews.com/us/2015/05/10/2-mississippi-police-officers-dead-after-shootings-coroner-says/
Peak police.
Why do you believe a discussion about the legitimate use of violence is “a slippery slope”?
Do you believe it was “a slippery slope” to discuss whether it was a legitimate use of violence to stop a criminal, unjust state like Nazi Germany, which represented a threat to the life of our own nation, using violence (war & insurgency)?
Do you believe it is “a slippery slope” to discuss whether it was legitimate to use violence to invade Iraq? The principle used to justify the invasion of Iraq is what is known as the “preventive war” doctrine, a doctrine which had been rejected in some quarters ever since the debates in 1551 and 1552 between Fray Bartolomé de las Casas and Juan Ginés de Sepúlveda.
In those debates, Sepúlveda hewed to the old Roman law which held that the discovery and occupation of a territory for the glory and material interest of Rome was sufficient justification for war. Las Casas, on the other hand, argued in favor of what is known as “just war theory,” which held that war conducted for the purpose of conquest and plunder was immoral, and thus not justified. Just war theory was an outgrowth of the Christian tradition, of the writings of St. Augustine, Thomas Aquinas, and Francisco de Vitoria.
The Spanish Crown judged just war theory — with its fundamental belief that all the different peoples of the world are men, that there is no man who is sub-human — the winner and ordered all the writings of Sepúlveda to be banned. Nevertheless, there evolved in the colonies a large gap between the letter of the law and the practice of the law. Sepúlveda became the hero of the conquistadores, the colonies were a long way from Spain, and what was all too frequently practiced in the colonies was the principle of “La ley se obedece pero no se cumple, that is, “The law is formally obeyed, but actually it is disregarded.”
In the English colonies, as J.H. Elliot explains in Empires of the Atlantic World: Britain and Spain in America 1492-1830, the legal philosophy of Sepúlveda would inform not only the practice of the law but also the letter of the law. As Elliot explains, the law in the British colonies was crafted around the philosophy that “The only good Indian was a dead Indian.” The Indians were marked for exclusion and extermination, an enterprise which the English and Americans proved quite good at.
And then of course there is the issue of slavery.
When the Spanish Crown opened up Texas to immigration from the United States in 1820 at the request of Moses Austin, the law of colonization prohibited the colonists from bringing their slaves with them. The Mexican Republic adopted a simiar law in 1823, disallowing the entrance of slaves into Texas. These laws the colonists would violate time and time again, and Stephen F. Austin immediately found the formula to violate the prohibition: the slave masters made their slaves sign a contract declaring that they wanted to enter Texas voluntarily, and that they would work for the slave masters until they paid the amount of their price.
Then, when in the Constitutional Congress of Texas and Coahuila of 1825 the subject of the aboliton of slavery in Texas came up again, Austin demanded that the Mexican government indemnify the slave masters for the loss of all their contracts with the slaves. Conscious of the lack of funds, the legislature ended declaring: “In the state no one is born a slave,” and reiterated the prohibition on importtation.
The slave issue was the #1 issue which drove the Texas colonists to succeed from Mexico in 1836, with the central dynamic being a rebellion against centralized authority in Mexico City. The Texans immediately made slavery the law of the land. In the constitution of the Republic of Texas is the following passage:
The Texans would fight another war of succession a couple of decades later, and for the same reasons they fought one against Mexico, except this time it would be against the United States.
The letter of the law to ban slavery in the United States was not changed until January 1, 1863: The Emancipation Proclamation was a presidential proclamation and executive order issued by President Abraham Lincoln.
However, the practice of the law in the United States still, all too often, follows the tradition established by the Spanish conquistadors: “The law is formally obeyed, but actually it is disregarded.”
Hi Glenn,
The slippery slope that JohnB referred to was the rule of law, if we think that the shooting of police officers is a “legitimate use of force” regardless of the facts of the case, then anarchy is not far behind. If you favor anarchy as the most legitimate social construct, there are not a lot of people who would agree.
I agree that police shooting unarmed civilians is a big problem, I disagree that police officers being murdered solves any problems.
The real problem is the fact that cops get away with shooting people. That, along with the fact that they victims are referred to as “civilians” are symptoms of how massively dysfunctional American government has become, especially at the city and state level.
I believe it is connected to the death of civil society and public space brought about by car culture, as expounded by the man who shut down Times Square:
https://www.youtube.com/watch?v=9N_SYYctrFk
Consider this little gem from the law books of Houston TX:
It shall be unlawful for a street vendor to expose for sale or sell any goods or merchandise on any public sidewalk, public street, parking space, right-of-way or other public property or to offer for sale or sell any goods or merchandise to any person who is on any public sidewalk, public street, parking space, right-of-way or other public property.
Houston has banned the free market — made it completely illegal to buy and sell goods in public.
Are they Communists? No, they just hate public spaces.
Cars have banned humans from public, and this had led to a mindset where the police are hostile to anyone walking down the street, especially poor people.
I suppose if you were a shop owner paying beaucoup rent, and property taxes. You would probably be not very happy about the sidewalk vendors selling the same merchandise in front of your shop for 1/2 price.
Also, “car culture” was very much alive in the 1950s, and you didn’t have these kinds of problems we’re seeing today. I would rather blame the trade deficit, and the loss of manufacturing jobs. With manufacturing in the US, Freddie Gray could have been working at a factory, instead of selling drugs.
Tough luck for the shop keeper. that’s how markets work. Got a problem with that? This is especially poignant since a lot of the “shop owners” are chains who crush locally owned business and take their profits out of town.
It is also the case the big box retailers so loved by cities often insist on huge tax breaks and infrastructure investments that will never pay off, as illustrated in this blog post:
http://granolashotgun.com/2015/03/17/urban-triage/
So the claim that it is in the interest of cities to suppress free markets this way is doubtful.
And car culture may have been alive in the fifties, but the gutting of American cities had only just begun. The current problems are the results of decades of mismanagement, not just a bad attitude.
“…if we think that the shooting of police officers is a “legitimate use of force” regardless of the facts of the case…”???
Dennis, I’m calling “straw man” on that one.
There’s a world of difference between Sartre and Frantz Fanon on the one hand, and on the other the Rev. Martin Luther King.
But even the pacifist King noted that “We must never forget that eveything Hitler did in Germany was ‘legal.’ It was illegal to aid and comfort a Jew, in the days of Hitler’s Germany.”
King then went on to develop his philsophy of “just laws” and “unjust laws,” the former were to be obeyed but the latter not.
Richard Nixon countered King with his “law and order racism.” Nixon, for instance, argued in U.S. News and World Report in 1966 that “the deterioration [of respect for law and order] can be traced directly to the spread of the corrosive doctrine that every citizen possesses an inherent right to decide for himself which laws to obey and when to disobey them.”
Myself, I’m no pacifist, philosophically speaking at least. I hew more to the realist position of those like Reinhold Niebuhr and Hannah Arendt. Niebuhr, as James Melvin Washington points out in A Testament of Hope, stood almost alone amongst white moderates and very early on “encouraged blacks to embrace nonviolent resistance.” As he goes on to conclude, “the later ‘black power’ disdain for hypocritical white liberalism was not without some ethical justification.”
As Neibuhr wrote in Moral Man & Immoral Society, the typcial white liberal tended to be a moralist who
Arendt said something very similar when in On Violence she wrote:
You’re welcome and, no, I was unaware of that event specifically, but am aware of the issues surrounding it.
It’s possible that the post peak oil wild-card will be radical decentralized networks based on ethical solidarity. In fact, I am not only betting on it, but about to help push it in that direction, and am putting the finishing touches on something I have written that is about that.
Sarkar’s Law of Social Cycles.
The West is transitioning from a rule by rentier-parasite Acquisitors to rule by Warriors.
Therefore, expect to see such values as fraternity, loyalty, courage, self-sacrifice, honor, and racial/ethnic/religious tribalism, i.e., martial/Bushido-like values, at increasing mass-social scale among the bottom 90% begin to oppose as an impulse/imperative for self-preservation against the zero-sum, extractive, rentier-parasitic values/zeitgeist of the top 0.001-1%.
The Wall St, The City, and Frankfurt Acquisitors will attempt to co-opt the more ambitious among the imperial officer corps (the single institution not yet co-opted by Wall St and the rentier top 0.001-1%), but the latter will eventually overcome the rentiers and their compromised peers and assert their own collective martial values during a period of existential crisis, much as what we can expect to occur eventually in China, as the emerging generation of PLA generals in Beijing assert their desires, influence, and power during the coming collapse in China.
Thus, war with China is inevitable, but the inference is that such a war will result in bankruptcy of the US and a collapse of the fiat, digital, debt-money regime and hyper-financialized rentier corporate-state.
When Wall St. puts forward an imperial US military senior officer for POTUS, it won’t be long before his martial peers either depose him or co-opt him to a coup to line up the Wall St. oligarchs and their rentier Power Elite parasites against the facing buildings of Wall and Broad and summarily execute them on pay-per-view national TV for free.
It’s not whether IF this occurs but when and how the masses respond.
Choose your sides now and prepare for the inevitable.
An interesting read about shale economics
http://seekingalpha.com/article/3164646-einhorns-fracking-concerns-are-nothing-new-but-they-matter-for-investors-part-1
Rune,
Art Berman wrote an article in response… David Einhorn Learns About Sex.
I didn’t realize what a good sense of humor Art has.
Steve
Steve, I read Art’s article as well.
http://www.artberman.com/david-einhorn-discovers-sex/
What I find interesting is that both Art Berman and Rune Likvern have been criticized by the “corns” for making predictions which underestimated shale oil production.
What is ignored is that both were assuming some modicum of rational behavior by banks, investors and the companies themselves.
CLR was extended a $2.5 BILLION dollar credit line at an interest rate of under 2% for this year. This is a company that has rarely been cash flow positive since going public and that has likely more debt than PV10 all categories at the current strip.
How could Art or Rune have forseen that credit would be extended in this manner? Or that companies would drill and complete wells that have little hope of payout.
As I have stated, we have not borrowed from an energy bank, but we have made application and been approved for loans with energy banks. They discussed standard collateral and cash flow requirements with us. Those parameters were so much more conservative than what is being extended to shale, IMO. Would like to see someone point out where I am wrong.
I would note, we were not looking to borrow to drill, but to buy low decline, existing production. We paid to have 3rd party engineering done. We discussed hedges. We were told 50-60% of PDP PV10 is fairly standard for what an energy bank will loan a customer for existing production. One would think loans for drilling would be more conservative, given the unknowns and pitfalls involved.
I am astonished at the loans being made to shale in this price environment, and even more astonished that such little attention is being paid to this issue.
Furthermore, where are the credit rating agencies with regard to the bonds? Where are the analysts regarding the equity valuations?
Only a major price spike or a bailout will save many of these guys, IMO.
Again, go back and look at the S & L crisis. Reagan deregulated the S & L’s in the early 1980s. Many went out and made crazy energy loans. Remember how much US taxpayers paid on that debacle?
The differences I see now are few, mainly being the amounts being loaned now are in the billions instead of the millions and the financial institutions are not smaller S & L, but TBTF banks.
Very surprised Elizabeth Warren is AWOL on this issue.
For some perspective on how much $2.5 billion is, the total budget for the State of Oklahoma is $7.1 billion dollars for fiscal year 2014-2015.
CLR has been approved to borrow the equivalent of 35% of the amount of the State of Oklahoma’s tax revenues/spending to drill shale wells at sub $50 BOE for 2015.
Then again, Noble buying Rosetta Resources for about $60,000 per flowing BOE, which includes assuming debt of $1.8 billion.
Rosetta lost significant $ in Q1 and production had dropped 8% from Q4 2014. Rosetta still had $800 million of a line of credit it could draw on, despite production falling and large loss. Produced about 66,000 BOE per day in Q1, but majority nat. gas and NGL. Lost money in Q1 despite having pretty good hedges.
Noble must see $100 oil and $6 gas in the near future. 50,000 acres in EFS and 56,000 in Permian must still be worth a lot of $$.
shallow sand,
If you haven’t seen this report done by the FDIC on the S&L crisis you might enjoy reading it. It is most informative:
The Savings and Loan Crisis and Its Relationship to Banking
Of course the very sane and rational recommendations made by the FDIC — which are along the same lines you speak of — were immediately disregarded by out policy makers. What we have now is the S&L crisis x100 or x1000 or x100,000,000.
I think the writings of Bill Black shed a great deal of light on what is taking place now in the finance industry.
What we have in US finance these days is a good ole boys’ network — a “mafia” as they call it here in Mexico; and you ain’t in it.
Art Berman had some interesting points in the comments of his post about oil prices. He expects they will go sideways with bumps up or down by $20/b, depending on OPEC cuts and US supply.
That got me thinking about US C+C output so I compare end of month 4 week averages (last week of month reported), through April, with monthly EIA reported output (last month is Feb). The weekly estimates do not get revised and are much less accurate, but from Jan 2012 to Feb 2015 the 4 week average estimates have been somewhat lower than monthly estimates (some of this may be a date artifact because the 4 week averages are not always for the last day of the month.) My expectation is that the March and April 4 week averages will be higher than the monthly output for March and April, output will likely be flat to down slightly and declines will continue until oil prices rise to $80/b or more.
Demand and supply of oil are pretty tough to predict, I am starting to change my thinking on oil price due to the lack of response of US output to lower prices so far, Art Berman may be right that prices will be stuck in the $40 to $80/b range moving mostly sideways at $60/b until supply growth slows down relative to demand.
Saudi is doing everything it can to ramp up production.
Uhmmm….they only have 80 rigs, and they’ve only been increasing rig count by about 15 per year. That 80 rigs is about 5% of the peak rig count for the US. That doesn’t look like a very big push to increase production…
Remember that Saudi Arabia produces roughly the same amount of oil as the US but with a magnitude fewer wells. In other words, an average Saudi well produces at least 10 times more oil than an average US well.
So for Saudi Arabia, 80 drilling rigs is huge.
But do those rigs cost significantly more than US rigs? If not, then they’re not investing very much – that’s just not “doing everything it can”.
And, if new wells are getting the same production as old wells, then Saudi Arabia isn’t in much danger of peaking or declining any time soon. Does everyone agree with that idea?
Drilling is more expensive outside the USA. New wells drilled in old fields don’t add the same oil production rate because at least half tend to be injectors, and many new wells are drilled in poor areas which didn’t merit drilling in previous years. But that’s just one of those generalizations I make, and I could be wrong.
Drilling is more expensive outside the USA.
I can imagine that it would be somewhat more expensive, though of course Saudi Arabia has to have a pretty well developed infrastructure and supplier network. But, if it costs 50% more per well, then KSA is still only spending 7.5% as much as the US. Again, that doesn’t seem anywhere near a “maximum” effort. It seems pretty casual, to me.
And, yes, I would expect new wells to be less productive than old ones. So…why isn’t KSA drilling more than they are?
Nick: Their decline rates are fairly low.
They seem to prefer peripheral water floods, but I assume they will implement pattern floods as time goes by.
These large reservoirs should be carefully managed to produce the near well environment as close as possible to the bubble point (bubble point means the pressure level which causes gas bubbles to form, consider it the boiling point of the oil at reservoir temperature). The oil swells and loses viscosity as it approaches the bubble point, this allows for a higher recovery factor.
It’s hard to keep a large reservoir at the optimum pressure using a peripheral flood in a mature field. Thus, to help sweep the oil and keep pressure at the optimum level the tendency is to implement line floods (alternating lines of producers and injectors), and later move to full patterns (a full pattern can look like a honeycomb or a variant). The pattern flood is nice to have for EOR, but the simulations I’ve seen show one really shouldn’t delay the EOR. This means the pattern flood and EOR are put in place almost simultaneously (if you have the money and the authorities have common sense).
The best EOR for Saudi Arabian fields is probably CO2 or chemicals. The chemical flood would require altering the water chemistry, and that’s pretty expensive, but I think it will be economic.
Thus, the Saudis are probably drilling both injectors and producers, but they keep production capacity by scaling up facilities, drilling wells in lower quality fields and placing injectors for giant EOR projects.
I’ve always been a fan of starting a flood as a peripheral one if there is good 4 way closure. Most fields in the Permian were drilled on 9 spot or inverted 5 spot injection patterns initially since very few operators have leases that covered the entirety of the structure of a field. Now most everything is on line drive, which I have an issue with since half of there are lined perpendicular to maximum stress and water out fairly quickly.
For CO2 flooding in KSA, is there even a source of CO2 large enough to flood a field like Ghawar? It would be in the BCFs of CO2 a day needed for a full field flood of just that field. The combined pore volume of fields beign CO2 flooded in the Permian Basin is probably a 10th of the Ghawar and takes it 1.5 BCFPD of CO2 a day.
According to this WSJ link the unemployment rate in North Dakota is still the second lowest in the country , which surprises me given the number of stories I have been reading about oil field layoffs.
Furthermore employment in the industry nationally is not down very much compared to a year ago according to this article.
It could be that it will take longer than most of us here (who have voiced an opinion ) think for the industry to bottom out. I have been thinking employment and prices would start going up again in the near future, probably less than a year. Maybe it will take considerably longer.
http://blogs.wsj.com/economics/2015/05/08/oil-jobs-fall-to-the-lowest-level-in-more-than-a-year/?mod=WSJ_EC_RT_Blog
North Dakota is probably similar to Alberta where a large fraction of the oil workers are from elsewhere. So most of the layoffs affect out-of-state/province workers.
Would that make any difference to employment numbers? I’d think the state would just count the number of people collecting paychecks, regardless of where they originally came from.
Would that make any difference to employment numbers?
Let’s say a fly-in/fly-out oil worker lives i Ohio but works in North Dakota. Which of these two states would count this worker in their unemployment data? I would think it’s Ohio because the worker lives there, regardless which of the two states collects the worker’s taxes.
The US Bureau of Labor Statistics does a household employment survey. They choose sample households and give them a phone call. It’s based on where they’re living that month.
How many fly-in workers are there, who would work in ND but not rent an apartment or some-such?
I have the feeling that rig counts matter.
Financing oil development matters less, first, you need to drill for oil to see if it’s there where you drill for it. You’ll need an oil rig to do that, the money comes later. A Robert’s torpedo is more important than 10 billion dollars to finance oil drilling and production.
Politics matter even less and batteries matter less than politics and matter much less than oil. Oil is first, then anything after that matters as long as oil is involved. If there is no oil, all the money in the world won’t do one bit of good.
Rig counts might not matter on CNBC, but they aren’t drilling for oil. However, rig counts do matter where there is oil and oil needs to be used for things like lubrication for bearings and fuel for engines.
In places like the real world, rig counts matter a lot.
Interesting process. CO2 + bacteria + waste water + sunlight = ethanol
Power plants in the desert sound like the ideal site?
http://www.greencarcongress.com/2015/05/20150511-joule.html
Joule, the developer of a direct, single-step, continuous process for the production of solar hydrocarbon fuels using engineered cyanobacteria (earlier post), announced the successful results from third-party testing of its ethanol fuel (Sunflow-E), setting the stage to obtain certification for commercial use.
I wonder if this will make the corn growers nervous? I don’t believe the ethanol mandate in the US states where the ethanol has to come from?
“There were far too many graphs of rig counts to post, but I wanted to post the most interesting to give you some idea of what is happening. One question bound to be asked is why does it take so many more rigs in North America than it does in the rest of the world. That would be a good question to discuss in the comments. I won’t attempt to answer it right now.”
Well, this is probably a two part answer. First, it takes a lot more rigs to maintain production equivalent to KSA because most production in America is pretty far post-peak. I’m sure KSA has some post peak production as well, but most of what they have is either just entering decline, at peak, or still has a little room to grow. It is logical that to keep production up in fields that are in decline it will take more rigs drilling than in fields that are not as mature. Along with that is the geology. In terms or reservoirs, the US has very few that could be considered “world class” and even then there is only one that will produce >10 BBO. If the porosity and permeability of fields is not sufficient to produce hydrocarbons at large spacing, like it is in many of the large non-US fields, then you have to infill drill far more heavily.
But why does the rest of the world have higher quality reservoirs than the US? There are a large number of factors that determine this, but I am only going to talk about one: age. The big four (conventional) areas in the United States are west Texas (Permian), California (Neogene) east Texas (Cretaceous), and Alaska (Triassic). The biggest field in west Texas will produce 2.5 BBO, the biggest in California will produce 3 BBO, east Texas will produce 5.5 BBO and Alaska will produce 13 BBO. So, the largest oil fields in the US come from the Mesozoic. That also holds true for most of the world. The Ghawar (Jurassic), Burgan (Cretaceous), Cantarell (Jurassic), etc. seem to mostly occur in the Mesozoic. Of course there are exceptions to this, but the bulk of the giant and super-giant fields in the world appear to be Mesozoic in age. However, the not a lot of production from the large fields in the US are from the Mesozoic. So simply, the deposition and seal mechanisms that were in place during the Mesozoic on Gondwana derived reservoirs (Africa, South America, Australia, India, Arabia) were not as established on Laurasia derived reservoirs (Europe, Asia, North America) outside of Russia. The reasons for that is a whole other discussion, but that should give you a general idea of the difference in US vs international reservoirs. The bulk of US (conventional) production has come from Permian aged rock in the Permian Basin. So since deposition, there has been about 250 Ma of time for diagenesis to plug up and decrease porosity and permiability. In most Arabian reservoirs there has only been about 150 Ma at most for diagenesis. 100 Ma fewer years for your porosity to get plugged up with anhydrite or siliciclastics makes a difference. The Neogene reservoirs of California have less diagenesis problems but are too immature to have large volumes of freely flowing hydrocarbons.
Part two is then if we have crappier fields, why do we have so many rigs? The answer to that is private ownership of mineral rights. In America, I can own the minerals, and thus I want to make a profit from them. So I will work with and encourage drilling on my land so I can make money. That is not the case in most of the rest of the world, so there is less push from the people for drilling. America’s production/reserves ratio is, in my head at least, far greater than other places on the planet because of this.
MBP,
Thank you for the geological overview. Very helpful for me, I never studied geology, not even at an introductory level.
At some point you posted a chart on Permian conventional output and my recollection is that in 2014 it was about 400 kb/d, am I remembering correctly? Also I forget if your chart was for Texas Permian only or if it included New Mexico as well.
Somewhere around 430 mbopd for the Texas side. It was really easy to track this until about 2005 when unconventional production started, so after I’ve tried to take the declines of the biggest 20 or so fields in the basin and approximate them for decline as a whole for conventional production. It is possible to get an accurate number from this but taking the field level production provided by the RRC (http://www.rrc.state.tx.us/oil-gas/research-and-statistics/production-data/monthly-crude-oil-production-by-district-and-field/) and summing it up, but I prefer keeping my sanity.
This is an interesting analysis of solar power rates in California. Bottom line is that solar power users are getting a tremendous bargain, by selling their unused electricity back to the electric companies during the evening, when there is very little demand for it. In the video Cato estimates that solar power costs 17 cents per kilowatt, nat gas power from the utility costs 10 cents, yet the solar user gets to sell back rate their excess solar power to the utility for 32 cents per kilowatt. Not the first time California set up a bunch of unworkable electric rules, remember the fiasco with Grey Davis.
http://www.cato.org/multimedia/daily-podcast/teslas-battery-advance-power-grid?utm_content=buffer6bc54&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer
The Cato analysis is basically right. Eventually the California Public Utilities Commission will have to change the rate structure, or the electric grid will develop serious instability, brown outs, power black outs, and extremely high fees. This is a consequence of “political engineering”.
The grid was not built for today’s realities. Most likely we’ll see more companies and people disconnecting from it. Perhaps that will reduce the load on it sufficiently to keep it going as is. Or it will be reconfigured to work with more varied energy inputs.
Actually, it is a consequence of the diminishing returns on complexity, and a collapsing infrastructure that can’t be maintained with this energy investment.
.
Fernando Leanme,
It’s easy to cite examples of “political engineering” gone wrong.
That politically or morally determined prices may not be compatible with the technical requirements of provisioning is amply illustrated by disastrous episodes in the history of many centrally planned socialist economies. (Heilbroner)
This objection thus leads logically to the quest for an answer to the value problemtic that eschews all reference to moral standards.
The problem is that these quests have proven quixotic. Both the labor and cost of production theories of value of Smith and Ricardo, by appealing to the market, smuggle in the very elements that their search for an objective determinant of value seeks to exclude, namely, the utility calculus of the marketplace, or accidents of history. Smith and Ricardo’s pursuit of value therefore terminates in nothing more than a description of the specific order of prices corresponding to a particular social structure with its legal prerogatives, its legitimated courses of action, and its traditional political and social habits.
Neoclassical and postclassical economists have completely abandoned an inquiry directed at some structure or principle “behind” the facts, choosing instead to limit their inquiry to the superficial “facts” of economic life. Thus orthodox economics ends up with the cirularity of the price approach: Wages and profits in various forms are subject to inertial tendencies preserved by pecking orders, reference groups, intergenerational transfers of taste and behavior, community sanctions, legal barriers, and the like, all of which create a framework of order sustained by powerful, although certainly not acknowledged, social and moral prerogatives.
As Heilbroner concludes:
Glenn, meanwhile a realistic look at California’s policies tells us they aren’t sustainable. Either that grid collapses and then they change their approach, or they change their approach before the grid collapses.
Cato are basically morons
Got a couple of emails from a Canadian oil field worker:
Year end Canadian production….I am a wellsite geologist and my rig always shuts down at Christmas (strong or weak oil price) because lots of the rig crew is from the east coast and have not seen their family in months. Last Dec we hit ICP, cemented and went home Dec 18 until Jan 02. That may explain the drop each late Dec in Canada.
Then another from the same person, this one quite interesting:
We are actually rigging up next week. Expect to start seeing Canadian rigs coming back. We all took pay cuts so with the lower loonie and the smaller discount to WTI netbacks are not that far off last summer for many e&ps in the WCSB.
Ron ,
As the roads harden up and the rigs go back to work, it will be interesting to watch the difference between last years count and this year. We should get an idea of how keen the oil companies are to spend money drilling. It would be nice if we could pick the difference of exploration/appraisal wells and production wells? The Canadians have a lot to gain, if they can prove up their condensate production to use as dilutent for the tar sands production. But from the Baker Hughes rig count, I do not think we will be able to.
Any thing that comes from the Cato Institute must be looked at sideways and from every other possible angle. Sometimes they are dead on about certain things – like Denninger. Denninger is either too ignorant of the sciences to understand global warming or else just lying about it to curry favor with his audience.
This does not mean he lies about every thing or is ignorant concerning other issues. His financial analysis seems to be pretty good but I am not a financial guy and don’t follow him to any extent so I am going by the opinion of others in this forum for the most part.
The Cato Institute has a lot of stuff to say about government and society that is worth thinking about that is glossed over or ignored by most of the msm and outfits like NPR.
So – Cato is not without credibility SOME of the time. But I have read enough of their stuff to know that they are basically in the fossil fuel camp and that therefore they are going to emphasize all the shortcomings of renewables while ignoring all the shortcomings of fossil fuels – including the biggest shortcoming of all , depletion.
Par for the course of course. There are very very few organizations that try to present a truly balanced view of any issue.
The true fact about solar power when it comes to time of day is that it can virtually ALL be used effectively without worrying about storage in California by idling back some fossil fuel production or some hydro during the peak sun hours thus saving the fuel to be burned later or the water to be released later during the evening after solar production drops off as the sun sets.
There are only TWO truly CRITICAL issues involved in burning fossil fuel. One is that it will be very scarce and expensive within the life times of most of us reading this forum. The other is that burning it results in climate forcing.
Hence the REAL value of renewable energy lies in conserving depleting fossil fuel and reducing the burn rate thereby reducing the rate of climate forcing.
Beyond that there is the extremely conservative self determination thing . Some folks believe that they should not be compelled to get their electricity from a monopoly supplier. Some folks think of this as a liberal issue. More power to them as well. When people at opposite ends of the divide in respect to any given issue happen to agree on a given point you can safely bet they are agreeing on something that is true or worthwhile.
Liberal and conservative environmental values mesh pretty well if both parties involved in a discussion have working brains.
Unfortunately a lot of so called conservatives are short of intellectual horsepower or scientific training and a whole lot more are willing to lie in order to protect their own vested interests.
It is one of the most unfortunate of all recent accidents of history that social conservatives have allied themselves with big business but they view that alliance as their best option when it comes to preserving their way of life. Ya take your allies and friends where you can find them when a war is on.
Liberal and conservative environmental values mesh pretty well if both parties involved in a discussion have working brains.
Yes they do. There is support for self-reliance on both sides of the political spectrum. The Whole Earth catalog types and the preppers are pretty similar in many ways. What is different is that some groups advocate peaceful co-existence while other groups are stockpiling weapons in anticipation of warfare.
It’s stupid for some groups to fight bike paths on the belief that bike paths lead to communist take-over. If you believe in self-reliance, you’re going to support ways to facilitate human-powered transportation because someday you may need it.
It’s stupid for some groups to fight bike paths on the belief that bike paths lead to communist take-over.
Oh please, does anyone really believe such a stupid thing? Surely no one is that paranoid.
Oh please, does anyone really believe such a stupid thing? Surely no one is that paranoid.
It was a campaign issue in the Colorado race for governor in 2010.
Bike agenda spins cities toward U.N. control, Maes warns – The Denver Post
Republican gubernatorial candidate Dan Maes is warning voters that Denver Mayor John Hickenlooper’s policies, particularly his efforts to boost bike riding, are “converting Denver into a United Nations community.”
“This is all very well-disguised, but it will be exposed,” Maes told about 50 supporters who showed up at a campaign rally last week in Centennial.
Mac, I would have thought the folks at the Cato Institute would have all been your heroes. 😉
Cato Institute
The Cato Institute is a libertarian think tank that often works in coalitions with right-wing groups. Cato’s extensive publications program deals with a host of policy issues including budget issues, Social Security, monetary policy, natural resource policy, military spending, government regulation, international trade, and myriad other issues. While the Cato Institute has increased its ties to right-wing policymakers over the years, it often reveals it’s libertarian philosophy in addressing government intrusion into privacy issues, recently calling the proposed federal marriage amendment “unnecessary, anti-Federalist, and anti-democratic.
The libertarian philosophy is popular with a number of tech entrepreneurs. They want government to get out of their way and let them do what they want.
The problem with libertarian politics as it is espoused by folks like the Kochs is that it becomes a way to preserve the status quo. If it is all based on property rights, and you have a big chunk of the populace that has no property and no way to get property, they are shut out of the system.
You’ve also got problems figuring out how the community will take care of those who can’t speak for themselves, like the poor, the disabled, the elderly. Do you hope charity will take care of them and if not, do you leave them to fend for themselves?
Also if property owners are polluting the community and the only way to stop that is to sue them and make them pay damages, then you have an economic system run by lawyers and courts. It’s not a simpler system, just a different one.
Libertarianism is great in theory but can get bogged down by the details. Whenever I read libertarian proposals, I find certain societal problems not adequately addressed.
Most libertarians are just republicans who like to sell drugs.
The thoughtful ones are just anarchists on training wheels.
Most libertarians are just republicans who like to sell drugs.
The thoughtful ones are just anarchists on training wheels.
Good observations.
Most “libertarians” these days are 24 kt hypocrites.
What they want is the jackboot of the state against the necks of folks like me, and anarchy for folks like them.
Not too sure how libertarians can be nothing more than Republicans who are pro drugs, when they are also pro abortion.
They also opposed war in Afghanistan and Iraq, which Republicans (and Democrats) supported.
Watcher said:
Well that’s half true.
Niskanen did, however, go on to express opposition to invading Iraq, a position he reiterated again on the eve of the Iraq invasion.
Well, you can belong to the Guns and Dope Party, if you want guns, you can have guns, if you want dope, you can have dope. If you don’t want guns, don’t have them. If you don’t want dope, don’t have any.
Don’t be a jackass or some stupid elephant, be an ostrich.
…Well, at least everybody who feels ready for the responsibility of self-goverment. Those who still need a Big Daddy or a Big Momma to discipline and dominate them should vote for whatever furhrer or saviour they like best. If you want self-government don’t vote for the Two Lying Bastards of the Democan and Republicrat parties….. or for any minority party that also wants to govern you….
http://www.gunsanddopeparty.com/
Political parties aren’t worth the powder to blow them to hell, the communists the worst of all, so it is better to belong to one that doesn’t suck.
Rig count in the Bakken is at 85.
Here’s some of what Voltaire had to say about the Cato Institute:
I used to support Cato big time.
They have/had a couple of papers on alcohol prohibition and the drug war that are just brilliant.
But then they sponsored a book by some idiot who claims that asbestos is absolutely safe and that the Challenger space shuttle disaster was caused by a ban on asbestos.
When I wrote to them about those lies, they said “Oh, we believe in free speech”.
Yeah, and I believe in responsibility and truth too, so no more checks to them.
I don’t have any heroes, not among the living anyway.. A pox on both parties, I say.
And I say that both parties own a good sized chunk of the truth – AS I SEE IT- which the other party often denies for one reason or another.
The fringe elements as well usually own a chunk of truth , although most of them are wrong (again as I see it) on three or four issues for every one they get right.
I lean Libertarian to a substantial extent myself but that does not mean I am so ignorant as to think we can have a world like the one Caelan Mc Intyre envisions.
Libertarianism MIGHT work in a world with only a few people well separated and little or no modern technology.
But only a fool could possibly imagine that we could live together in modern times without Leviathan to keep order. Imagine a modern city without a building code, if you can. Some idiot would build a shack with a stove pipe out the window and burn the entire city down some dry windy day.
Some people would still be tossing the contents of their chamber pots out the window. People would be selling food with LOTS of rat turds in it. ( Very few people know it but there is an ALLOWABLE STANDARD set for rat hairs and rat turds in grain products intended for human consumption. It has been a long time since I looked it up but it specifies how many hairs and turd fragments per kilo are acceptable. The squeamish among us will be glad to know that the allowable limit is microscopic. )
IF modern roads could even EXIST without an overarching government to organize the construction and maintenance of them, I would be afraid to venture out on the highway in anything smaller than a ten wheel dump truck for fear of my life.
Libertarianism is fine when it comes to whether people should be able to smoke pot or drink themselves to death or sleep with whoever they please -as I see it- so long as they do not please to sleep with children. I believe in libertarianism to that extent. I don’t like it that the government insists that I must comply with a lot of disagreeable laws but I recognize the necessity of most of them given current day realities.
But it doesn’t work so well from a conservative pov when a person decides that he or she will party and run wild and never accumulate any assets and then expect the ones of us who have worked and saved to support them.
I know a lot of that sort. They never tried to save a dime or hold a job- and now they go to the hospital and get a free six figure treatment that would have bankrupted me a few years back. It still would except for Medicare now. They have section eight and food stamps and clinics and utility assistance – and they work a little on the side or under the table and live better in some respects than a lot of people I know who have self respect and pay their own way.
Of course the flip side of this coin is that a lot of people thru no fault of their own wind up destitute and unable to work.Some people who are able simply cannot find work. Anybody with a brain can see that society has a moral responsibility to at least provide them with the basic necessities.
Beyond this moral responsibility there is the practical situation. It is better to feed and house a person unable to earn food and housing that to have him step out of a doorway and brain you with a piece of pipe and take your wallet. The problem is how to provide these necessities without destroying the recipients incentive to work.
I have relatives who have made a conscious decision to work as little as possible and suck on the government tit as much as possible. They have traded their self respect for the freedom to get up when they please and go to bed when they please and work a little – under the table of course – as and when they please.
The world is FULL of blindered idiots. They are blinded by their political prejudices and loyalties just like my dear old grandfathers mule was blindered so he found see only what Pa wanted him to see.Libertarians are blindered idiots in a hell of a lot of cases.
AS THINGS STAND NOW – IN HISTORICAL TERMS – our only real hope of surviving the coming collapse more or less whole is that Leviathan will take charge and do a good job of managing the crisis.
Could there be anything as ridiculous as the idea that a bunch of libertarians could keep the water and sewers working in a major city?
I shudder to think about the quality of leadership we have had in recent times when I think of the whole world in a long term hot crisis situation.
But I do believe there is a fair chance that maybe the USA, Canada, and a few other countries will pull thru without descending all the way back into the Dark Ages.
We hear all sorts of bullshit about conservatives hating government – and there is a ELEMENT of truth in this argument – but the truth is that the average conservative LOVES government – except when it is regulating his business or profession or taking his money to support people he does not like.
There would be no military industrial complex for instance if it weren’t for conservatives supporting its existence. Ditto no FBI no Homeland Security etc etc.
The average conservative LOVES cops and law and order and is willing to pay ANY amount in taxes for MORE cops and more law and order.
Cato has an agenda. Some of it I agree with. So does the Democratic National Committee. I agree with some of that agenda too.
I used to be a member of the National Education Association. I needed the insurance etc when I was part of it and cynically agreed with the NEA agenda when I was a member of it because it benefited me personally.
But in truth the NEA agenda has almost nothing to do with kids and damned near everything to do with teachers wants and desires. So I support school vouchers these days.
A little real competition is probably the ONLY possible solution to the sorry state of our schools , taken as a whole. UPS and FEDEX and the internet etc have FORCED the post office to get its shit together to a substantial extent.
So color me a hard core conservative when it comes to education and a pinko commie socialist when it comes to the environment if labels are necessary.
I am a long haired hippie throwback when it comes to dope and a redneck conservative when it comes to the MIC- because I happen to believe that the best possible insurance against a powerful Darwinian competitor in the form of another nation state is LOTS of military muscle.It could stand some severe pruning of course but I would rather have it as it is than not have it at all.
And of course it would be an enormous help if we had collective sense enough to manage our foreign affairs properly.
Mac,
I got a bad case of metal whiplash reading your next-to-last paragraph!
“…a redneck conservative when it comes to the MIC- because I happen to believe that the best possible insurance against a powerful Darwinian competitor in the form of another nation state is LOTS of military muscle.It could stand some severe pruning of course…”
“best possible”; “”LOTS”; “It could stand a severe pruning of course.”
…Severe……pruning….LOTS…best possible…
Followed by the: “but I would rather have it as it is than not have it at all. ”
OK, that is AFTER the SEVERE pruning…
Mac, I really jibe with ~ 70-80% of your writings, but the other 20-30% is a real confusion ray to me! You are complicated…that is why your posts are so interesting!
Thank you SP,
I try to think for myself and this puts me in various camps on various issues so that only somebody who knows me well can predict my position on any given issue.
And sometimes I say things in a deliberately exaggerated fashion to try to get folks on the far side of any given fence to better understand why the folks on the other side, my side, think like they do.
In some forums where I post occasionally, usually under a different handle, I am considered to be a full blown socialist or an outright commie. In others they think I am a Tea Party redneck.
And while I can put on evening dress and fit right in at a university faculty party I can also pass, if I want to, for the worst sort of redneck except I lack tattoos and my teeth are good. It is very hard to conceal good teeth and a lack of tattoos but a lot of rednecks are so stupid they don’t notice the discrepancy.
Life is more interesting when you experience the full spectrum of culture.
I spent the morning working with a hard core drunk who has been in jail numerous times , who probably doesn’t even know the earth orbits the sun or that oil comes out of a hole in the ground. Armed robbery figures on his resume.Retialing a little dope is likely a regular thing for him. . But so far as I know he doesn’t beat up women and he has never robbed an individual – only chain stores- or stolen anything from a poor person.
As he sees it , stealing from a big company or cheating the government is not cheating at all , given that big business and government wrote the rule book without consulting HIM. He has been robbed by the establishment many times. The dentist wants his earnings for a couple of GOOD weeks to extract a tooth for example, which takes maybe thirty minutes max.
He is not such a bad fellow. He cannot help it that he was born stupid to impoverished parents who themselves lacked a work ethic.He would stop and help an old lady change a tire without even thinking about robbing her .
” But for the grace of God ” I might be in his shoes instead of my own.
I needed a helper and he needed the ten bucks an hour I paid him in cash. That won’t count against his food stamps or welfare phone because he isn’t going to report it.
After I have my afternoon nap I will spend a couple of hours with somebody with real brains – by way of reading a classic novel or a work of science or history.
Mac,
I admire you taking care of your fellow human…enjoy your reads!
Another example of the move toward censorship of information.
Wyoming law against data collection: Protecting ranchers by ignoring the environment.
The Wyoming law transforms a good Samaritan who volunteers her time to monitor our shared environment into a criminal. Idaho and Utah, as well as other states, have also enacted laws designed to conceal information that could damage their agricultural industries—laws currently being challenged in federal court. But Wyoming is the first state to enact a law so expansive that it criminalizes taking a picture on public land.
The new law is of breathtaking scope. It makes it a crime to “collect resource data” from any “open land,” meaning any land outside of a city or town, whether it’s federal, state, or privately owned. The statute defines the word collect as any method to “preserve information in any form,” including taking a “photograph” so long as the person gathering that information intends to submit it to a federal or state agency. In other words, if you discover an environmental disaster in Wyoming, even one that poses an imminent threat to public health, you’re obliged, according to this law, to keep it to yourself.
Surely that’s an April Fools joke or at least some kink of joke? Is it legal to make such a law? Reminds me of proposals that would make it illegal to take pictures of the police even when (if) they are braking the law. Where I live I think you’re legally obliged to report poaching or any polluting activity; you are encouraged to do so in any case. Until confirmed otherwise, I think I’ll put this in the boundless free energy file. Does resource data include keeping track of the number of tree swallows or butterflies that you happen to notice in the Spring? Too bloody ridiculous Boomer.
No joke, the law enacted in Wyoming is just as described in the link. Whether or not laws like them are legal is something the federal court mentioned in the article is going to have to decide.
http://legisweb.state.wy.us/2015/Enroll/SF0012.pdf
http://legisweb.state.wy.us/2015/Summaries/SF0012.pdf
This bill creates the crimes of trespassing to unlawfully collect resource data and unlawful collection of resource data.
A person is guilty of trespassing to unlawfully collect resource data if he:
Enters onto open land for the purpose of collecting resource data; and Does not have:
1. An ownership interest in the real property or, statutory, contractual or other legal authorization to enter or access the land to collect resource data; or
2. Written or verbal permission of the owner, lessee or agent of the owner to enter or access the land to collect the specified resource data.
A person is guilty of unlawfully collecting resource data if he enters onto private open land and collects resource data without:
1. An ownership interest in the real property or, statutory, contractual or other legal authorization to enter the private land to collect the specified resource data; or
2. Written or verbal permission of the owner, lessee or agent of the owner to enter the land to collect the specified resource data.
A violation of these crimes is punishable by imprisonment for not more than one year, a fine of not more than $1,000, or both. A subsequent offense is punishable by imprisonment for not less than ten days nor more than one year, a fine of not more than $5,000, or both.
“Resource data” means data relating to land or land use, including but not limited to data regarding agriculture, minerals, geology, history, cultural artifacts, archeology, air, water, soil, conservation, habitat, vegetation or animal species.
“Resource data” does not include:
Surveying data to determine property boundaries or monuments;
Data used by a state or local governmental entity to assess property values;
Data collected by a peace officer while engaged in the lawful performance of his official duties.
Resource data collected in violation of this act is not admissible in evidence in any civil, criminal or administrative proceedings except to prosecute a violation of this act or in a civil action against the violator.
Resource data collected in violation of this act in the possession of any governmental entity is required to be expunged from all files and data bases and cannot be considered in determining any agency action.
From above: “But Wyoming is the first state to enact a law so expansive that it criminalizes taking a picture on public land.” In America no less, really and truly unbelievable. One of the more beautiful places on the planet and you can’t take a bloody picture without braking the law! Insane.
The odds are virtually one hundred percent that this law will be overturned in federal court the first time somebody is prosecuted under it.
Business people want to keep their operations out of the public eye to the extent they can in lots of cases of course. Such a law is a lot cheaper than a few miles of eight foot high chain link fence and locked gates , lol.
The people in Wyoming seem to have the attitude that although most of the state in actuality belongs to the feds, that it is their personal property. It is easy to see how this has come about since they have done pretty much as they please for generations, running cattle and mining on public lands.
Nobody really gave a damn until recently. Times have changed.
I would not bet on that.
We are drifting toward total corporate control of all information.
It is Oil Slick Dick’s home State.
Couldn’t this just be taken care of by posting no trespassing signs. May not stop off property photos, but should prohibit someone coming on the land and taking soil samples, for example, without permission or other legal authority.
If you mean you would not bet on the this no data collection law being overturned by a federal judge you have another think coming. Even if a ” local ” federal judge allows it to stand, which is VERY unlikely, the next one up the judicial ladder will reverse him.
And the ” local” federal judge , unless he has been on the bench so long he is senile, knows this without a doubt. NOTHING embarrasses a judge so much as being reversed on crystal clear grounds.
“Imagine visiting Yellowstone this summer. You wake up before dawn to take a picture of the sunrise over the mists emanating from Yellowstone hot springs. A thunderhead towers above the rising sun, and the picture turns out beautifully. You submit the photo to a contest sponsored by the National Weather Service. Under a statute signed into law by the Wyoming governor this spring, you have just committed a crime and could face up to one year in prison.
Wyoming doesn’t, of course, care about pictures of geysers or photo competitions. But photos are a type of data, and the new law makes it a crime to gather data about the condition of the environment across most of the state if you plan to share that data with the state or federal government. The reason? The state wants to conceal the fact that many of its streams are contaminated by E. coli bacteria, strains of which can cause serious health problems, even death. A small organization called Western Watersheds Project (which I represent pro bono in an unrelated lawsuit) has found the bacteria in a number of streams crossing federal land in concentrations that violate water quality standards under the federal Clean Water Act. Rather than engaging in an honest public debate about the cause or extent of the problem, Wyoming prefers to pretend the problem doesn’t exist. And under the new law, the state threatens anyone who would challenge that belief by producing information to the contrary with a term in jail.
Why the desire for ignorance rather than informed discussion? The reason is pure politics. The source of E. coli is clear. It comes from cows spending too much time in and next to streams. Acknowledging that fact could result in rules requiring ranchers who graze their cows on public lands to better manage their herds. The ranching community in Wyoming wields considerable political power and has no interest in such obligations, so the state is trying to stop the flow of information rather than forthrightly address the problem.”
Concerning consequence of assays.
Popular theory . . . XX% of oil consumption in the US is moving freight. If you can just get gasoline consumption down in passenger cars and SUVs you define that category of oil consumption, which 2 or 3 times what is consumed moving freight (food), then people last much longer before they starve.
How does that hold up against: Well, no. All oil is not created equal. If you reduce gasoline, you don’t really touch diesel and kerosene — and diesel plants and ships food and FedEx’s air fleet burns jet fuel. So there’s no starvation date impact from reducing gasoline consumption
(which of course really does essentially nothing but save more for China to burn and is thus pointless anyway).
Watcher for a person who is obviously well informed and pretty smart you sure do have an amazing ability to see a big picture and then ignore every possible scenario except one.
There is surely an element of truth in your remark about saving more for China to burn , and if climate is the sole criterion for that remark, I must agree with it.
BUT the REST of us are going to have to get along on a lot less oil, period, regardless of how much or how little China burns.
Whatever we do to use oil more efficiently is going to have an ENORMOUS positive impact of the economy going forward. The gas hog six thousand pound four by four beer fetchers being sold TODAY are still going to be on the road – if gasoline can be had for them- fifteen or twenty years from now. One Suburban or Expedition burns enough gasoline to fuel three compact cars depending on the drivers habits.
A shortage of oil is not going to lead DIRECTLY to starvation in this country and probably not anywhere else,at least not on the grand scale. But it WILL result INDIRECTLY in starvation once the shortage is bad enough because it will lead to lots of people losing their jobs and THEN starving. Food prices will go up faster than poor peoples incomes, which is already happening and has been happening for years already.
Don’t get caught in Egypt.
http://www.eia.gov/petroleum/drilling/pdf/dpr-full.pdf
May Drilling Productivity Report, is out. It show projected falls in oil production in Bakken, Eagle Ford and Niobrara, with a very small increase in the Permian.
A quick search on Google, for articles on the new report, did not show any matches for this month. The EIA numbers must not be news now they are showing a decrease? The press must still be working on their spin.
http://www.marketwatch.com/story/shale-oil-output-at-bakken-and-eagle-ford-starts-a-descent-2015-05-11
Thanks Greenbub,
It is good to see someone has finally caught up. I have been amazed by both, CNBC and RBN, both singing the phrases of the “rebound” in the Permian oil rig count. It went up by one for the oil rigs, down by 2 for gas rigs, therefore down by one for total count.
But both CNBC and RBN, see it as a big turn around, even though RBN cannot count and state it went up by a massive two rigs!
http://www.cnbc.com/id/102665790
In a sign the market was responding to those gains, rigs for drilling oil in the voluminous Permian shale basin rose for the first time this year after months of cutbacks.
https://rbnenergy.com/watching-the-defections-is-new-permian-crude-pipeline-capacity-needed#comment-1396
Last Friday (May 8, 2015), Baker Hughes data showed the Permian basin oil rig count up by two – suggesting that drilling may be picking up in West Texas.
They both neglected the Eagles Ford, down by 5 rigs!
For the week ending May 8th the Permian rig count was down by 1 and Eagle Ford was down by 5.
Baker Hughes rig count post
Ron,
To give them there dues, both articles do say “oil” rig count. To find the oil rig count, we can’t just look at the PDF summery. We need to go to the Excel file, where it breaks out each basin into oil/gas and total rigs count.
http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9NTgwMTcxfENoaWxkSUQ9Mjg1Mzk3fFR5cGU9MQ==&t=1
The legacy decline keeps right on increasing. EFS is particularly bad. Seems like lots of wells in the 10-30 range after 2-3 years. Some of the Permian horizontal declines look that way too. The large water and CO2 floods mute the legacy decline some.
Decline and fluid rates after five years are the key to understanding future performance. But I suppose they haven’t drilled enough wells to set a reliable set of type curves?
http://www.renewableenergyworld.com/rea/news/article/2015/04/turning-bakken-oil-well-waste-water-into-clean-geothermal-power?cmpid=GeoNL-Thursday-May7-2015
Can these guys actually be serious?
I am not an engineer but I know enough physics and chemistry to appreciate the difference between water hot enough to boil and water being boiled off continuously to power a steam turbine. A few hundred barrels of boiling hot water is not going to power a steam turbine or even an old piston type steam engine worth a damn in my estimation. And that volume of water is only going to be available for a few years anyway.
Of course containerized generator plants can be moved easily to the next well with a good amount of hot water.
Methinks these fellas are skinning fleas for the grease and hides- which is an old country saying in these parts referring to hard work that pays almost NOTHING.
Mac, I don’t think it’s that difficult. It is already being done in many places. It’s called “Geothermal Energy”.
How Geothermal Energy Works
Mac
The trick is to use produced water to heat a working fluid driving a turbine. The temperature difference between a hot well and ambient can range up to 100 degrees Farenheit. The cycle starts by pumping the working fluid from a pressurized container number 1, flowing into a heat exchanger to take energy from the hot water, this makes the fluid vaporize, the vapor is fed through a vessel to ensure it has no liquid, then it drives a turbine which drives a generator. The spent vapor is run through a pressurized cooling system, then pumping the liquid back up to container number 1. It’s actually a bit more complicated and there are parasitic losses.
This is a basic low temperature geothermal scheme. But I’m not sure they make enough hot water to be worthwhile. It gets complicated, but we are on to it for over 40 years.
Thanks Fernando I know enough to see how the heat can be extracted usefully using a closed cycle and a fluid that has a low boiling point compared to water to capture the heat and then be boiled off to drive the turbine – and then cooled sufficiently by ambient air to put the fluid thru the loop round trip again and again.
But unless the well produces quite a lot of pretty hot water it hardly seems like it would be worth the investment.
How long are tight oil wells going to produce large quantities of boiling or near boiling water?
I know that geothermal heat works very well to drive turbines when the source rock is really hot and there is really a lot of high energy steam to be had by pumping water down and putting the produced steam thru the turbine. .
Iowa is 58,000 square miles in size, 37,120,000 acres, if you want hectares, divide by 2.54. 80 chains at 66 feet, four rods, is one mile. The tar sands are 54,000 square miles in size, so the area is close to the size of the state of Iowa. Eventually, the farm bureau of Iowa will be interested in the tar sands up there in Canada. Trade some corn for oil, maybe.
“Each year, Iowa farmers produce approximately …
8.2 million turkeys
240 million: pounds of cheese produced (2010) *Iowa State Dairy Association
3.8 million cattle
1,230 million pounds of wool
2.1 billion bushels of corn
13.8 billion eggs
4.13 billion pounds of milk
17.3 million hogs
235,000 sheep
525 million bushels of soybeans”
http://www.iowafarmbureau.com/public/167/ag-in-your-life/ag-facts
They forgot tomatoes. There is a ketchup factory in Muscatine.
60 million bottles of ketchup
What the Iowa farm bureau didn’t do was count how many barrels of oil that were burned during each growing season all the way to harvest. It really needs to be done.
At any rate, nobody is going hungry in Iowa.