Jean Laherrere’s Take, Plus Other News

Note: Jean Laherrere sent me the below post and asked me to post it in reply to comments posted by Dennis Coyne and Political Economist on my post Bakken Update, March Production Data. But that was several days ago, the comments are stale. Also it was too large for a comment. So since we are a period where there is a dearth of data, I decided to make a post of it. Below Jean’s graphs and comments I have added a couple of news Items.

Policial Economist displays a graph for Bakken production Hubbert linearization trending towards 3.5 Gb, but it is from EIA DPR for the period January 2007 to June 2014 : it is not real data (we are not yet in June 2014) but estimates.

It is different from mine trending towards 2.4 Gb, but it is only for North Dakota Bakken using ND state data from 1955 up to March 2014.

In many of my papers I state that production Hubbert linearization is not very reliable and it is better to rely on the creaming curve of cumulative backdated 2P discovery versus cumulative number of fields. But for LTO there is no reliable way to estimate 2P reserves, because only the volume generated by the source rocks (using Rock Eval measures from cores) can be estimated but the amount lost from this generated oil and gas cannot be estimated and the recovery from what is left within the fractures needs longer historical data.

Laherrere E

The ND production excluding Bakken Hubbert linearization trends also towards 2.5 GbLaherrere

It is why I use a NG oil ultimate of 5 Gb with both 2.5 Gb for Bakken and non-Bakken.

Petroleum Economist suggests that I have confused Bakken data with Eagle Ford data :

Ron, you may want to double check with Laherrere if the above graphs were not sent by mistake.

I am old but not yet senile !

Dennis Coyne who makes many and good graphs wrote May 15, 2014 at 7/58 AM :

Thus the USGS believes that there is a 95% probability that the TRR of the ND Bakken/Three Forks will be at least 7.4 Gb. If there are no proven reserves added to ND Bakken/Three Forks the 2.4 Gb URR estimate is still likely to be 3.9 Gb-2.4 Gb= 1.5 Gb too low.

The mean (F50) USGS estimate of ND Bakken/Three Forks is 9.7 Gb.
The F95 estimate is 7.4 Gb and the F5 estimate is 12.9 Gb.

As these are rough estimates it is more appropriate to round them
so F95=7 Gb, F50= 10 Gb, and F5= 13 Gb.

My guess is that there is about a 99% probability that the TRR is at least 6 Gb.

When some one claims that he is 99% sure of the ultimate reserves being 6 Gb, means that he does not understand accuracy and probability and is incompetent in reserves estimate.

My guess is that there is about 90% probability that Dennis Coyne has never estimated oil reserves. As far as I can find on the web he is general manager of marketing with Tesoro in Texas.

TRR (technically recoverable resources ) is not what will be produced, which is what is economical!

Since 2000 USSG is estimating the world oil undiscovered resources using only six values to guess the sizes and the number of undiscovered fields (called the seventh approximation sheet see my papers:

Is USGS 2000 Assessment Reliable? by Jean Laherrere, published on the cyberconference of the WEC on May 19, 2000

Do the last 6 years production confirm the USGS forecast for the period 1996-2025? by Jean Laherrere August 2002

USGS is only giving the result of their wild guesses which go through a Monte Carlo simulation (50 000 runs) to look real.

USGS 2000 forecast for East Greenland undiscovered (number of undiscovered fields: minimum 1, median, 250, maximum 500 & size of undiscovered fields: minimum 20 Mb, median, 85 Mb, maximum 12 000 Mb) at 47 Gb was changed later in 2007 (FS07-3077) to 9 Gb (mainly by changing the minimum number of fields from 1 to 0 and the minimum size from 20 Mb to 50 Mb).

It is amazing to see such drastic change in the assessment just by changing the minimum from 1 field to zero field.

All these USGS guesses were done without any well and any seismic.

How to estimate future oil supply and oil demand?  by Jean Laherrere

In 2000 USGS said that there are 95% of finding

I do not trust at all USGS undiscovered assessment: it was done in 2000 from the guess of only one geologist (Henry for Greenland) when before with Chuck Master it was the estimate of a Delphi enquiry involving many geologists.

There were several USGS estimates for Bakken undiscovered: the last one in 2013 reports 7.4 Gb (covering North Dakota, Montana and Saskatchewan), when in 2008 it was 3.65 Gb, but in 2005 it was only 0.17 Gb. Such variation means that it is mainly wild guesses, never estimating the past discovery and its extrapolation (like I do with the creaming curve)

Dennis Coyne May 15, 2014 at 5:48 PM

His Gulf of Mexico estimates are also pretty low relative to the BOEM estimates which conservatively estimate undiscovered TRR at 39 Gb (F95 estimate). Then we need to add the 16 Gb already produced, and the 9 Gb of proven reserves, to get a TRR of 64 Gb. The BOEM estimates that there is a 95 % chance that the TRR will be at least this high in the Gulf of Mexico, Mr. Laherrere estimates 25 Gb, so I think he misses the mark here as well.

Link to BOEM report below:
BOEM Assessment of Undiscovered Technically Recoverable Oil and Gas Resources of the Nation’s Outer Continental Shelf, 2011

See page 5 table 3 for proven reserves and oil produced and page 3 table 1 for UTRR estimates.

BOEM estimate of undiscovered offshore (OCS) resources is similar to USGS assessment: they do not care to compare the yet to find to the past discoveries and they dot not give any detail on their work, only the result.

Like USGS the variation of their assessments with time varies wildly and the oil range in 1996 is outside the range of the next assessments in 2001, 2006 and 2011.


These assessments are not reliable.

BOEM 2011 (Link above) for the GOM estimates the mean undiscovered technical reserves at 48 Gb and the cumulative GOM oil production at end 2011 is 15 Gb with proved reserves at 5 Gb, meaning an ultimate of at least 68 Gb.

But BOEM reports the backdated field reserves of every GOM field (from 1998 to 2009) and the cumulative number of fields and the cumulative oil discoveries vary with time.

Laherrere 1ALaherrere 1B

For end of 1998, 1998 survey reports 984 fields, but 2009 survey reports 1087 fields: about 100 fields missing, meaning more than 10%: cumulative discovery is 14.3 Gb for 1998 report and 18.1 Gb for 2009 report: this 3.8 Gb difference is due to missing fields and reserve growth with oil price.

It is amazing to find that 10% of the fields are missing in official reports in federal waters!

The plot of the backdated (end 2009 and end 1998) oil discovery is plotted as a creaming curve (versus the cumulative number of fields);

Laherrere 1C

1988 data before the deepwater discoveries misses the subsalt large discoveires.

The 2009 data is modeled with 3 cycles with the last one (subsalt) trending towards 24 Gb. A fourth cycle is possible but it is unrealistic to see this crealing curbve trending towards 68 Gb as assessed by BOEM.

The plot of the backdated discoveries versus time (2009 and 1998) is compatred to the cumulative production and the current proved reserves by USDOE.

Laherrere G

USDOE should be using BOEM data and the blue curve in 2009 should be equal to the BOEM total which is 23 Gb, in fact it is 19 Gb.

USDOE is not reporting BOEM data: it could be due to the State waters.

The backdated discoveries in green is  flattening when the current proved reserves plus cumulative production in blue is sharply rising since 2007.

It is the problem pf proved reserves due to the SEC rules: they are financial data (minimum data and it is incorrect to add arithmetically the proved field reserves to get the proved reserves of the GOM: there is a huge underestimation. This poor practice explains the aretifiacl reserve growth.

See my paper -Laherrère J.H. 2011 «Backdating is the key » ASPO 9 Brussels 27 April

ASPO-9 INTRODUCTION ! Backdating is the key, Jean Laherrere

Dennis Coyne who makes good graphs should look more in detail the above graphs in order to be more reluctant to believe the assessment of ultimates using current proved reserves to please theSEC and the bankers.

Tesoro is not using proved reserves when deciding the development of a field: they used Net present Value based on the mean reserve values and not the proved reserves.

End of Jean’s post._____________________________

Chris Nelder predicts world oil production to start to decline in 2015. Below is the link to a one hour podcast from the Extraenvironmentalist and a transcript of a few minutes of that podcast.

Chris Nelder on Energy Transition

Starting at 29:40 into the podcast:

Question: Building renewables won’t ever work because of the drop-off in oil production and the difficult economic consequences that will have, especially later this decade, would actually prevent us from building up a renewable energy infrastructure. What do you have to say to that kind of argument?

 Chris Nelder: I have made that argument myself, I am very concerned about it. If we do in fact have global oil production beginning its decline around 2015, which has been my call for quite a few years now, and when you actually calculate the decline rates and you look at how much oil will be lost on the global market year after year after year and then you start to think about what is the effect on the global economy of losing 5% and then 10% and then 20% of global oil production.

 It doesn’t take a huge leap of imagination to think, wow, it’s going to be difficult to maintain a functioning economy. It’s going to be hard to maintain global shipping. It’s going to be hard to maintain an industry of big wind turbines where the supply chain for parts for those turbines might go all the way around the world. So my view has been that we should build as much renewable capacity as possible for the next 20 years while the availability of oil is reasonably good and the price is reasonably acceptable. I think that once you get out past 2030, 2035, it’s going to be quite difficult, and quite expensive to build anything or deploy anything  that requires a lot of shipping or that requires parts coming from all around the world.

And a bit later in the podcast, his opinion of the Steve Kopits Presentation:

 Kopits, his presentation was fantastic. Anyone could spend an hour looking at his presentation would understand everything they could possibly need to knowabout the global oil supply and demand and price situation. It was just a perfect encapsulation of everything you need to know. But one of the key things that he really brings out in his presentation is that historically everyone has modeled future oil supply from a demand perspective. That’s what the IEA does, that’s what the EIA does, and that’s what the whole alphabet soup of agencies do. You know they just forecast demand and they say, “well there will be supply and it will be at an acceptable price”. And that fine while you are in over a century of continually growing oil supply that’s relatively cheap. But that’s not the case anymore. We’ve exited that era in history. We’ve gotten into a supply constrained world.

And from Platts:

IEA looks to OPEC to boost oil production as output growth elsewhere slows

It has become increasingly clear that the world market cannot rely on non-OPEC supply growth given geopolitical events outside OPEC.

The IEA said the downward revision was due to lower forecasts for Azerbaijan, China, Colombia, Kazakhstan, Mexico and South Sudan.

The agency singled out Colombia and South Sudan as particular areas of concern, saying new “politically-driven disruptions have intensified” in both countries.

The IEA is still predicting an increase in Non-OPEC liquids but they are looking to the US and Canada to provide virtually all that increase.

And this is interesting: What the Frack: N.D. Oil Well Ron Burgundy Is Leaking, But They Don’t Have To Tell Us How Much,

Alarmingly, 22% of oil booming North Dakota’s 1,813 oil and gas wells are now on its “Confidential Well” list, probably because the state automatically awards such “tight hole” status to any operator who asks without having to offer any justication other than, in the words of one, “because we can.”

Okay, so the well is leaking pretty bad. But the point I wish to make is it seems that a lot of wells in North Dakota are coming up with very little oil. But the oil companies can keep that confidential for as long as they wish. And when they do release the well from “Tight Hole” or Confidential status, they still don’t have to tell you how much oil or water the well produces. Many do but many do not. Check the Bakken Blog and click on “ND drilling permits issued week ending May 16” and you will see what I mean.

Total numbers from all a companies wells are reported to the North Dakota Department of Mineral Resources but apparently they are not required to break it down by individual wells. That is they do not have to report production from each well. That is why county by county production numbers are often way off. Anyway would I expect the dialogue would go something like this:

Big Boss: How did that last well come in?
Drilling Boss: Not too good, 56 barrels of oil per day and 571 barrels of water per day.
Big Boss: Okay, better put that one on the “Tight Hole Confidential” list, we don’t want to upset the investors.

My final comment: It is looking more and more like 2014 will be the year Crude+Condensate peaks. It all comes down to US Tight Oil in the Bakken and Eagle Ford and Canadian oil sands. Even if tight oil does not peak this year, any increase in production after 2014 will be slowed dramatically. With the world’s largest crude oil producer, Russia, now in decline, there is just no way any the US and Canada can make up for the shortfall in the rest of the world.

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177 Responses to Jean Laherrere’s Take, Plus Other News

  1. Watcher says:

    Models are largely silliness.

    I got $5 that says every single one of these models applied in in 2003, 4, 5, 6, 7 whatever, predicted US oil output decline. Every Single One of them with the data available would say that.

    So they’re all ALREADY proven wrong.

    And if the NoDak industrial commission decides to restrict output, or if chokes are adjusted to change flow duration, or if taxes are changed, or if the Teamsters call strikes, or if roads get clogged with trucks, or if a domestic terrorist or some other variety takes out the railcar depot in the Bakken or wherever it is south of San Antonio or if water scarcity gets imposed in the Eagle Ford, any of a ZILLION very possible and somewhat likely things happen then every single model will be shown to be . . . silliness.

    • dolph9 says:

      Well I think the main point being that we face a discontinuity and thereby can’t predict how humans will react. We must always keep in mind that fossil fuel production and consumption are human endeavors, and there is no iron law that dictates either infinite expansion in energy use or a nice, smooth ride down either.

      However, we can make educated guesses. That is what the Limits to Growth people have been doing for a long time. Based on everything I’ve read since I became aware of this 5-6 years ago, I think we face a pretty steep decline ahead, breakdown in financial and political structures, and then a period of stabilization under strict government and military control. After that, we probably face a series of stair steps down, and ultimately most of the industrial infrastructure will simply be abandoned.

    • Watcher, that is sheer nonsense. No model is perfect but most all models have an element of truth in them. Because something very unexpected happens does not mean the model was silliness.

      Let’s take Malthus for instance. Malthus correctly observed that the population tries to expand exponentially but food expands arithmetically. Therefore he concluded that there would always be starvation and misery. He never counted on fossil fuel and the huge amount of food and employment it would provide. But his theory, his model, was sound. The something that happened was a once in a planets lifetime event. It was not the norm.

      Those models that showed peak oil happening around 2005 were sound, not silliness at all. What happened was the price of oil increased five fold, from $20 a barrel to over $100 a barrel. As a result crude oil production increased by about 5% since 2005. Actually as Jeff has shown, if you don’t count condensate there has been a 0% increase in crude oil production since 2005.

      All we can do is work with the data we have and make the best projections we can. If some unseen or unimagined happens that invalidates our model that does not make it silliness any more than fossil fuel made Malthus’s hypothesis silliness.

      If there is ever a time of plenty this very fact will automatically lead to an increase in population until the natural state of starvation and misery is restored.
      Richard Dawkins: River Out of Eden

      • Jeffrey J. Brown says:

        X = Global crude oil production (45 or lower API gravity crude) and Y = Global condensate production (a byproduct of global gas production).

        Rounding off to two significant figures, after hitting 74 mbpd in 2005, X+Y did not exceed 74 mbpd for 2006 to 2011 inclusive. Since Y (a byproduct of rising global gas production) had to be increasing, X had to be falling. As you noted, I suspect that all the global industry has been able to do in 2012 and 2013 is to approximately match the 2005 global crude oil production rate.

        And speaking of failed models, what has always failed is indefinitely extrapolating a perpetual rate of increase in regional oil production. As I noted in another thread, at the 1978 to 1988 rate of increase in Alaska’s Crude + Condensate production, Alaskan production would have been at 133 mbpd in 2018.

        • Jeffrey J. Brown says:

          Minor correction. 2011 Global C+C production rounded up to 75 mbpd, so 2006 to 2010 did not exceed 74 mbpd (rounding off two significant figures).

      • Watcher says:

        Silliness is silliness.

        Working with the data you have is why the left wing leaning Tony Blair approved of invading Iraq. So why criticize him?

        Don’t defend a “model” that makes no effort to explore all factors. “We have no data on that” is never an excuse to glorify squiggly lines of data you do have, or worse, merely think you have.

        It’s just silliness.

        Keep in mind economists get paid by banks to prepare and present models not guide anything at all, but to impress clients with visuals and encourage them to remain clients. The clients might never use them. Does anyone really think Congress acts on the basis of CBO econometric models rather than pressure from lobbyists.

        Sorry, folks, it’s silliness.

        • yt75 says:

          you for sure know a thing or two regarding “silliness”, some kind of expert most probably 🙂

        • Working with the data you have is why the left wing leaning Tony Blair approved of invading Iraq. So why criticize him?

          Watcher, please don’t mix apples and oranges. We are not talking politics here we are talking about modeling peaks. It could be peak oil or peak people. We are talking about taking the data you have and trying to ascertain whether the trend is up, down or sideways.

          Don’t defend a “model” that makes no effort to explore all factors. “We have no data on that” is never an excuse to glorify squiggly lines of data you do have, or worse, merely think you have.

          “Makes no effort” is something you just made up. You actually have no idea whether the person producing the graph has “made no effort” or not. We must work with the data we have. Peak oil folks, in developing their model likely uses all the data they have access to. Please don’t make up crap like “makes no effort” when you have absolutely no way of knowing whether they made no effort or explored every possible avenue to get all the data they could.

          Keep in mind economists get paid by banks to prepare and present models not guide anything at all, but to impress clients with visuals and encourage them to remain clients. The clients might never use them. Does anyone really think Congress acts on the basis of CBO econometric models rather than pressure from lobbyists.

          I don’t give a rat’s ass about Congress or what economists get paid. I am concerned only with modeling world oil production and the effect rapidly declining world oil production will have on the population of the world. And other related subjects of course, like the destruction of the biosphere.

          My models are not silliness, Dennis’ models are not silliness, Jean’s models are not silliness. What is silliness is you calling them silliness.

          • Watcher says:

            Wait, Ron, do you have any models? You report data. If there are models from you I must have missed them. You have extrapolation formulae?

    • Dennis Coyne says:


      Every model that attempts to predict the future is likely to be wrong and I suppose could be considered
      “silly”. There are indeed many times where we do not have data for everything in the world, so we do the best we can using the data that we have.

      I have no illusions that the charts I produce will accurately predict the future, I make a set of assumptions that I try to lay out clearly, use the data I have available and show where the model leads. If the assumptions or underlying data are incorrect, the model will be as well.

      All of the unpredictable events that you suggest could happen, we do not know when or if they will happen and there are an infinite number of possibilities.

      Take production curtailment, that will clearly lower output, but it will also leave more output to be produced in the future, in fact if you had a single scenario it could easily be modelled with specific assumptions (production is reduced by 50% for 12 months for example) or no new wells are brought on line for 6 months.

      You are correct that nobody knows what will happen in the future (in any kind of detail), anyone who thinks so is kidding themselves.

      I do not think Mr Laherrere thinks he can predict the future, he uses his extensive knowledge to suggest to us the general direction that things are headed, I attempt to do the same (but do not do it as well, obviously.)

      • Watcher says:

        “There are indeed many times where we do not have data for everything in the world, so we do the best we can using the data that we have.”


        The best data Shell has had them sell their shale holdings. The best data CLR has had them not sell their holdings.

        This contrast should yield zero predictions.

        This should yield hand waving guesses that one company has better rock than the other company, OR a different management philosophy OR maybe a choice to raise cash to invest somewhere even more promising — the point being that offering up guesses in the form of visuals implies underpinning that isn’t there.

        This is Rumsfeld. The known unknowns and unknown unknowns. When you KNOW there are things you do not know, you do not produce voluminous studies projecting this or that and then have someone believe it. When it’s all wrong, the world will then blame the believer for ever providing any weight at all to the study.

        Not really his fault, though.

        I will say this. It is really surprising that we don’t have seismic data on some of these fields. You would think that given the number of people involved, someone would be a disgruntled employee or outright nihilist and post stuff online. With that some pretty big unknowns could be erased.

  2. SRSrocco says:


    Great post. In Jean’s most recent presentation “The End of The Peak Oil Myth”, he included this graph of peak in all liquids including C & C. Jean does state that this graph is according to the data from the various energy intuitions. If you look at the green line which is C & C, it looks like it peaks within the next few years.

    However, the decline in the graph is more symmetrical. Ron, do you think the downside of the graph will behave this way?


    • Well, not being able to see the future I really have no idea what the decline curve will look like. And I think Jean would say the same thing. But just guessing I would guess that it will look even more jagged than the last 50 years of the increasing curve. There will likely be resource wars, hoarding, more civil wars like the ones that are under way right now, and dozen’s of other things that will interrupt both production and shipment of crude oil. No, whatever it looks like it will not be symmetrical.

      • surcouf says:

        thank you for your excellent work.

        Just a question : What if the first half of the curve is, in reality, be best modelled through supply constraints and the second half (after peak) through demand ?

    • Dennis Coyne says:

      Hi Steve,

      I believe that Mr. Laherrere used logistic functions to model future production after using creaming curves to estimate URR, along with Hubbert linearization where appropriate. The Crude-XH curve is added to the XH curve(in black) and the NGL curve (in red) to get the Crude+NGL curve, then refinery gains and other liquids are added to the crude +NGL curve to get the world curve, which is a total liquids supply estimate.

      I agree with Ron that it is unlikely to be so smooth on the downslope and agree with his guess that Mr. Laherrere would not think so either. It is just to give an idea of what the decline might look like under the best of circumstances. The fact that this decline will occur at some point will lead to all manner of shocks to the system along the lines that Ron outlines above. Models are of little use once the stuff hits the fan.

  3. Doug Leighton says:


    I’m absolutely certain you know this but according to the standard definition: Technically Recoverable Resources (TRR) are resources in accumulations producible using current recovery technology but WITHOUT REFERENCE TO ECONOMIC PROFITABILITY. This differs from “proved reserves” in many ways.

    When Jean Laherrere says here: “technically recoverable resources is not what will be produced, [but] which is what is economical!” he is being very generous. Several times in my life I’ve been told: just stuff it in the TRR category, someone might think it’s real. This idea of using TRR for anything (except raising money) is a waste of time as far as I’m concerned. That said, I commend Jean for pointing this out and I hope everyone takes notice.


    • Doug Leighton says:

      Maybe I should add. I’ve also been told by an accountant(s) that I’m not allowed to include TRR “reserves” in a report because the term is potentially misleading (Polite for totally meaningless).

    • Dennis Coyne says:

      Hi Doug,

      You need to start with TRR then add economic assumptions to find ERR (economically recoverable resources). Generally these estimates will not be that good because both the TRR estimate will be incorrect and the economic assumptions will also be incorrect.

      It is for that reason that I attempt to create a range of scenarios to find a reasonable envelope to bound the high and low case with a best guess in the middle.

      The 2.5 Gb estimate for the URR of the North Dakota Bakken/ Three Forks is likely to be too low by a factor of 2. Proven reserves plus C+C production through Dec 2012 is about 4 Gb so we have to assume no proven reserves are added to ND Crude reserves from the ND Bakken/Three Forks just to get our URR to 4 Gb, or the ND proven reserves estimates are high by a factor of 2.

      • Doug Leighton says:


        Its clear (to me) what you’re doing and I have no problem with it: with one caveat. I think you should make it absolutely clear TRR “reserves” in no way equal Proven Reserves. As mentioned above, in my experience, TRR cannot be used in reports used to raise (public) money because they don’t have proven-economic-viability. As a ridiculous example, you could cite methane deposits on Saturn’s moon Titan and call them TRR reserves. Some people probably think they will be “mined” some day: I don’t.


        • Dennis Coyne says:

          Hi Doug,

          I think you meant “no problem” rather than “now problem”. I may be being too optimistic 🙂 I usually spell it out TRR=technically recoverable resources (though sometimes I am on my cell phone and have trouble typing on it so I use the abbreviation in those cases). I assume the resources tips people off, but I agree that not everyone is aware of the difference between resources and reserves, and there is a very big difference, resources are oil that is in the ground, they may not be profitable to produce and in that case will remain in the ground. That is why I go to the trouble of attempting to estimate the economically recoverable resources, I am sure that these estimates will only be a very rough guide to what might eventually be produced.

          Let me know if I am correct about the “no” vs. “now” in your comment above.

          You really don’t think we are going to Titan to get those resources? 🙂

          I agree.

          • Doug Leighton says:

            Hi Dennis,

            Yes no (not now) it is. Bloody typos!

            Too bad its not possible to correct comments on Ron’s Blog after you’ve goofed up: Or maybe I should learn how to proof read.

            Actually, think I’ll be dead before the Titan mining starts. But you never know. 🙂


            • Dennis Coyne says:


              It is a defect of these “free” blogs. Neither Ron or I are software guys so we work within the limitations of the format.

              I think the planet will be toast before mining of methane on Titan occurs, and I am an optimist (or so I am told, I think I am realistic, but pretty much everyone thinks that so it means little.)

              Nice to know that you get what I am doing, even though you don’t agree with it. What do you think of the HL analysis of the Bakken?

              Does the portion of Mr. Laherrere’s non-Bakken HL (from 750 Mb to 1100 Mb) which points to an ultimate of about 1300 Mb, make you wonder if the 2 years of data used for the Bakken HL might also be underestimating the URR?

              What about proven reserves and production being 3.9 Gb at the end of 2012? Does the expectation that no more proven reserves will be added to the North Dakota Bakken beyond 2012 seem reasonable?

  4. Kum Dollison says:

    On Sunday, Germany’s impressive streak of renewable energy milestones continued, with renewable energy generation surging to a record portion — nearly 75 percent — of the country’s overall electricity demand by midday. With wind and solar in particular filling such a huge portion of the country’s power demand, electricity prices actually dipped into the negative for much of the afternoon, according to Renewables International.

    In the first quarter of 2014, renewable energy sources met a record 27 percent of the country’s electricity demand, thanks to . . . . . . . .

    • Kum Dollison says:

      Meanwhile, yesterday, the world’s 8th largest economy (California) obtained approx. 55% of its electricity from non-fossil fuel resources.

      Also, quite often overlooked, is that the U.S. replaced 10% of its gasoline with ethanol in a period of just about 3 years, almost as an afterthought.

      I think youse guys get just a tad bit too doomerish, from time to time. 🙂

      • Also, quite often overlooked, is that the U.S. replaced 10% of its gasoline with ethanol in a period of just about 3 years, almost as an afterthought.

        Ahhh but this wasteful use of agricultural resources is nothing but a boondoggle by the corn lobby. It is on it’s way out.

        Less Ethanol In Gasoline: EPA Reduces Ethanol In Gasoline Mandate; Corn Lobby, Agribusiness Stung By The Decision
        · Anti-hunger groups charged that ethanol production substantially reduces corn inventories, raising global food prices for the world’s poor;

        · Automotive groups warned that, given declining U.S. gasoline demand and engine damage from using gasoline with more than 10 percent ethanol, the scheduled 2014 increase in ethanol levels will mean all gasoline will have more than the safe level (10 percent) of ethanol.

        Ultimately, the weight of the evidence produced by ethanol foes was persuasive. Late last Friday the EPA stunned America’s corn interests by not only refusing to increase the ethanol mix, which is 16.55 billion gallons for this year, but also proposing to actually cut the mix to 15.21 billion gallons for next year. That’s 14 percent lower than Congress originally envisioned.

        And from a 2011 article:
        “A Cornell University research study concludes that ethanol generates a 29 percent energy loss, meaning it takes more than a gallon of gasoline to produce a gallon of ethanol.”

        We chatted with one of the researchers, David Pimentel, an emeritus professor in agriculture and life sciences at Cornell. We read him Gaetz’s claim.

        “Yeah, that’s correct,” Pimentel said. “We have more up-to-date data, though. …

        “It would be 1.5 gallons of gasoline equivalents to produce 1 gallon of ethanol. So this is even worse.

        • Kum Dollison says:

          Pimental, eh? 🙂

          Okie, Dokie

          • Yeah, facts are facts. And to their credit the folks at the EPA are finally coming to their senses. It won’t be too long before there will be no ethanol mandate at all.

            • Kum Dollison says:

              Perhaps, brutha, but I never read anything from Pimental (about ethanol, anyway – I don’t know anything about insects) that ever had the slightest similarity to “facts.”

              And, the situation with the ethanol mandate doesn’t appear to have much in common with how you’re describing it, either.

              • If you haven’t read facts Pimental wrote then you haven’t read Pimental. All he wrote was facts.

                The simple fact is, that if you count all the inputs required to produce ethanol from corn, count the farm equipment, count the land cost or rent, count the labor, count the fertilizer, the insecticides and all fuel and chemicals, count the processing cost, count everything, then it would take 1.5 gallons of gasoline equivalents to produce 1 gallon of ethanol.

                Where the ethanol lobby fools everyone is they only count about half the costs.

                Simple math, simple facts.

                • Kum Dollison says:

                  Nah, Ron, he had (has) them all wrong. I did a thorough study on this back around 2007. I don’t remember much about it, just that he had absolutely Nothing right.

                  It turned out that the EROEI back then (my figures, not someone else’s) was a little better, on average, than 2:1 – basically, nat gas to ethanol (diesel was a very small player.)

                  • I would bet a lot of money that you made the very same mistakes all the other ethanol boosters make, you don’t count all the inputs. Did you count land cost or rent? Did you count the manufacturing of the farm equipment? Labor?

                    You must count everything! Everyone that does count everything comes to the same conclusion as Pimentel. Everyone that don’t count everything comes to the same conclusion as you and the corn lobby.

                  • Caelan MacIntyre (Tribe Of Pangaea- First Member) says:

                    Any EROEI needs to take into account what happens over time and in context anyway of course.
                    Good ratios are only as good as the wisdom behind how they’re taken advantage of.
                    What was the EROEI of low-hanging oil back in the heydays? Now look where we are.

                  • Dennis Coyne says:

                    Agree with all of your analysis. I did not mean to suggest that coal or natural gas could replace liquid fuels. The EROEI does have the short coming that all energy is considered equal. The ethanol might have an EROEI of more than 1, but I agree it is not a very wise energy policy. If the ethanol is in fact as cheap at Kum suggests, the government should get out of the way and let ethanol compete with gasoline, no mandates, no restriction on ethanol imports from Brazil.

            • Doug Leighton says:

              In Western Canada we generally have an option: about 1/3 of the service stations sell gas with ethanol, the rest don’t. Probably 2/3 of people avoid fuel with any ethanol content. Small engine repair mechanics ALWAYS recommend NOT using ethanol “enhanced” fuel. Our local gas distributor, who’s fuel contains ethanol, says he would NEVER use the stuff in any of his vehicles or machines.

              • Kum Dollison says:

                Whatever; But, there are 3,329 Stations in the U.S. selling E-85, and after following this for seven or eight years, I’ve never read, or heard of, the first car engine being “damaged” by ethanol.

                On the other hand, all of the X-Prize winning cars that I’m familiar with have used ethanol-powered engines.

                • Kum Dollison says:

                  Ethanol is wholesaling, today, for $2.16/gallon.

                  Gasoline is wholesaling for $2.98/gallon.

                  $2.98 X 1.5 = $4.47

                  The world’s just full of dumb ol’ people, ain’t it – using $4.47 worth of energy to produce a product that they sell 13 Billion Gallons/Yr of for $2.16.

                  Sounds like a sketchy proposition to me. 🙂

                  • Kum Dollison says:

                    Oh, and Ron, you would lose that bet.

                  • Stephen Hren says:

                    Kum, there might be a subsidy or two you left out of that calculation, methinks. I had read Pimental and seen him speak, he is published in peer-reviewed journals and is highly respected by other scientists. I am a big renewables advocate, but ethanol is a bad joke and we should stop subsidizing it immediately and concentrate on ones with potential like wind, solar, and tidal.

                  • Dennis Coyne says:

                    Hi Kum,

                    The research looks at the energy input into the ethanol production process, if a lot of natural gas is used for processing this would lower energy costs.

                    I am pretty sure the idea is that you need 1.5 units of energy in to get 1 unit of energy out (and I have not read the research it might be 1 to 1, I do not know). My point is that it is not oil in ethanol out its the energy in vs. energy out that is the question.

                  • Old farmer mac says:

                    There’s physics and there’s economics and seldom do the twain meet in such a discussion as this one.

                    I am opposed to ethanol in gasoline. IT is an awesomely foolish way to extend gasoline supplies on many different levels- on all levels except one actually- that one being the one that makes money for the people involved in doing it.

                    But it makes economic sense in a twisted sort of way. It s true that it the energy return is poor but in my estimation by an honest accounting it is positive by a modest margin.

                    It is profitable for a couple of basic reasons but profitably is no the same as efficient. First of all the physics analysis tends to weight coal and natural gas and other non liquid fuel energy neutrally with ethanol. This is sound physics but desperately unsound economics because a the utility of a gallon of ethanol mixed into gasoline is several times higher than the same equivalent amount of energy in lumps of coal which cannot be used in a tractor or truck or car.

                    The other major failing of such analysis from the anti ethanol camp is that there is a huge amount of embedded energy that is not wasted in the distillery byproduct- the leftover is a very high quality and very valuable livestock feed. If it were not coming from a distillery it would be coming directly from the corn which would be fed directly to the livestock.

                    So the amount of the corn going into the distillery must reasonably be discounted by the amount of high value feed that emerges at the output end along with the moonshine.

                    This argument holds as long as we continue to eat beef and pork and chicken which are fed enormous amounts of corn.

                    But it is almost impossible to find any anti ethanol advocates who recognize and properly account for this part of the energy equation.

                    If it is properly acknowledged there is no doubt the entire process does have a positive effective energy return.It is not acknowledged because we don’t burn high protein corn leftovers- we feed that to cows and pigs and chickens.

                    If we did burn it the energy return would probably be negative.IF we allow for the amount of energy we would otherwise expend producing this feed it is positive.

                    I am never the less adamantly opposed to fueling cars with moonshine.

                    It would be a far far better solution to the oil shortage problem to just raise fuel efficiency standards and slap a little more tax on gasoline.

                    Ethanol is effectively paid for in large part by taxes of course but the problem is that the tax is not displayed on the pump- it is collected along with other taxes on income and therefore hidden.

                    Peak soil and peak water are issues potentially just as pressing as peak oil although not yet showing up as brightly on the radar screen.

        • OldTech says:

          “Anti-hunger groups charged that ethanol production substantially reduces corn inventories, raising global food prices for the world’s poor”

          True, but that’s not the whole story. Until recently I would have completely agreed, but there is a lot of evidence that a plant based diet leads to more diabetes, heart disease, cancer, and obesity. So yes, we can feed more people on a plant based diet, but by doing so we will slowly kill many of them.

          The theory that seems to fit best for this is the insulin resistance theory. Basically, the body creates insulin when carbohydrates from plants are consumed. When consumed over a long period in excess the insulin response starts failing. That in turn causes increases in blood glucose and increases inflammation leading to the so called “diseases of civilization.”

          So thinking that “Diet for a small planet” is a solution for world hunger is not based on sound science. Fundamentally, it seems that we are meat eaters and need meat and especially fat, to lead healthful lives.

          Of course, this may just be the natural result of Malthus’ theory.

          PS. If you are planning for life on the downside of peak oil, I recommend that you include a lot of fat in your stores.

          • OldTech says:

            When I said fat, I should have said saturated fat including animal fat. Vegetable oils are bad and oxidize quickly. Saturated fats on the other hand are stable and can last a long time (e.g., gee has been known to last centuries).

          • thrig says:

            Meat heavy diets such as those largely favored by a few Americans and Argentines are not common, nor should they be, not without severely reduced population levels. And even with lower population numbers, the Atlantic Salmon has been well nommed through, along with the cod, greak auk, passenger pigeon, and so forth. Meat bias may be a latitudinal thing; Inuits and Eskimos, for example, can hardly subsist on greens, while India has a fine tradition of vegetarian eating, marred only recently by Western apetites for meat and the corresponding high ecological costs. Indeed, not all carbohydates are bad; note the traditional fermentation and sprouting techniques largely lost to modern industrial food services that enhance nutrition, digestability, and feed the simple sugars to the yeast, or balance the amino acids in your corn example. As a point of fact, I will challenge any meat eater to eat only meat while I eat only veggies, and then we see who gets sick first (hint: scurvy kills the meat eater well before B12 lack or whatever takes the vegetarian). A balanced diet? Might have meat in it, perhaps when the cow dies, but otherwise, there is no great need to eat meat, and many reasons not to.

  5. Old farmer mac says:

    I have a lot of respect for Kopits and Nelder. Both of them are a lot better informed than I am but nevertheless I think they both suffer from professional expertise to the extent that they can’t think outside conventional boxes sometimes.

    Maybe I am all wrong but I don’t think peak oil is going to interfere much- in the near to medium term at least- with truly important long distance shipping of truly important freight.Potato chips and cut flowers may not get to market but potatoes and beans will.Wind turbines will get to market.

    Leviathan will see to it so long as there is enough oil to prevent outright collapse due to wasting it.Leviathan will consider hauling potato chips and flying to go skiing and sunbathing wasting it but not delivering potatoes and beans and wind turbines. ENOUGH of what is produced will be parceled out for to important users- important being defined as high value to social stability.

    The real question is how we will be able to support all the unemployed people who currently earn their livings thru economic activities involving the frivolous use of oil.Building 6000 pound beer fetchers is not going to be considered essential.

    Beyond rationing to support critical industries there will be a resurgence of railroads the likes of which only railroad nuts can even envision unless things go to hell to rapidly for it to come about.Trains can be electrified quite economically in comparison to relying on outrageously expensive tightly rationed diesel and if that doesn’t work the engineering drawings for coal fired locomotives can be updated easily enough.

    There is an inverse exponential relationship involving the amount of power ship requires per ton of displacement as it gets larger – the bigger they get the smaller the engines can be in proportion. Ship builders joke that someday they will build some big enough to just hang a couple of big outboards off the stern.Interior space goes up as a square or cube of dimensions depending on the layout of the ship.(They can’t get but so big in any given dimension and still get thru canals and use existing docking facilities and so forth.)

    What this means is that there is plenty of space in todays big commercial ships to install coal bunkers and boilers if it becomes necessary to do so.The cargo space will suffer but not enough to really matter.Things got to market by wind power at one time. Coal will suffice to get things to market again and do it quite effectively once the switch back to coal is necessary.

    MERRY OLDE ENGLAND once had trains running all over the place.

    A single dead automobile has enough steel in it to manufacture a hundred feet of light steel rail and the roads that are no longer clogged with automobiles can be converted to railroad right of ways in enough cases to get the job done.Small short light weight trains especially built for local service will be able to handle the grades and curves well enough that in a lot of cases the track can be laid right on existing pavement.

    Leviathan knows how to handle such problems. The first step is the declaration of a national emergency sufficient to justify the imposition of a wartime style economic management.

    The roughed out contingency plans have doubtless been gathering dust for a long time already in filing cabinets in the depths of the Pentagon.

    My friends and relatives in the military for the long haul are absolutely convinced that if a problem can be imagined there is a plan to deal with it in at least rough form filed away in case of need.

    Homeland Security headquarters probably has paper copies of such documents too. Just in case.

    • So you think things will turn out just fine despite the coming rapid decline of liquid transportation fuel? And by “Leviathan” I am assuming you mean big government. Most folks who post here see big government as at least half of the problem. But you see big government as our salvation. Big government will not let anything really bad happen to us.

      Many of my friends say that about God. I don’t believe them either.

      • Jeju-islander says:

        I don’t think the post by Old farmer mac sees big government as our salvation. The imposition of a wartime style economic management in face of collapse is just more likely than any Mad Max scenario.

        • Hey, I remember ration stamps. I was just a tot but I can tell you it was no Mad Max scenario. I would gladly accept rationing rather than collapse. I don’t think supply will be the problem. That is I think there will be fuel for those with jobs. There will just be no jobs.

          That is what is happening right now in many places in Europe and to a lesser extent in the United States. Shadowstats says the real unemployment rate in the US is 23%. In many places in Europe and Asia it is close to 50%. It can only go higher.

          • Old farmer mac says:

            At one time I thought collapse was inevitable.I still do but the parameters have changed in my estimates. We aren’t going to be feeding ten billion people living first world life styles on post peak natural resources on a fried planet in 2100.

            But time frames matter to the nth degree when discussing such matters . So do national borders, military capabilities, and well established government with near dictatorial powers.

            I am not a big government fan-I am one of only a very very few self professed conservatives in any forum of the same sort as this one.

            BUT it is bedrock principle of true conservatism that when the markets can’t or won’t take care of a critical problem it is the responsibility of government to do so.

            Any body who thinks big government in rich powerful western countries under the right ( wrong ) circumstances is not at least potentially capable of managing such a problem as peak oil for at least a couple of decades is not thinking in broad enough terms.

            People will be out of work by the tens of millions without a doubt.

            BUT under martial law they won’t riot much in the US- they will take their ration of beans and cabbage and potatoes and maybe a chicken leg once in a while and like it.

            In places like Egypt and Somalia they will try to migrate and be met at the borders with machine guns.Most of the people in that sort of country will starve in place.

            People HERE will be put to work doing things that matter. In the thirties they built parks. This time they will be adding insulation to old houses and building street cars and buses and maybe planting community gardens. Building solar domestic hot water systems.

            Will it work? I can’t really say but there is a good possibility that it will- for a while at least- if somebody doesn’t bomb us back to the stone age.

            We could come thru the next century mostly whole in terms of living decent dignified lives in this country – without all the frivolous trimmings we have gotten used to over the last century of course.

            A good third of the people in this country live in houses at least twice as big as they can really make use of.When the shit really and truly hits the fan they ones who still have some money will take in servants on an informal basis and nothing will be done about these servants working for room and skimpy board.

            Consider my own situation as a general example.

            I am old and fat and hard of hearing but there is plenty to eat at my house. A younger highly intelligent woman in excellent health with a young son in need of learning a couple of trades would in principle be welcome to discuss becoming part of my household if she would consider A an old fashioned marriage based on respect and necessity rather than romantic love.

            I am actually too crochety to get along with and don’t actually want a woman any more.

            A tough intelligent young man with a wife and kid of his own would be just as welcome to plenty to eat and a safe warm place for them to sleep in exchange for help – and plenty of training. Plus an opportunity to buy me out later on.

            The Nazis are always a poor example because they were just about the ultimate worst examples of humanity but they took a country flat broke and extremely short of resources and built the most powerful war machine in history in less than a decade.

            Leviathan ain’t a joke when ALL the chips are on the table.

            I am most emphatically scared shitless of Leviathan. Snowden is the greatest patriot of my lifetime so far as I am concerned.

            But in the end the domestic turkey – if it had brains enough to appreciate its situation- would find it necessary to make the decision to trust the farmer.Life for a domestic turkey is short on the farm but it is infinitely longer and easier than it is for a domestic turkey that escapes. The life expectancy of one that gets loose around here is less than a week.

            None of the industrial infrastructure that keeps us alive these days would be possible without big government to make sure it is kept in running order. If that sounds strange coming from a conservative then think harder and deeper.

            Who thinks the phone and electrical companies would have run lines into areas without enough customers to turn a profit?

            Would a privately owned water company really give a shit if the water supply fails for a week or two unless forced to give a shit by government?

            I know farmers personally who would gladly kill every fish between here and the ocean with runoff pesticides if they could turn a little bigger profit. A few dead people downstream wouldn’t bother them much either so long as the deaths could not be traced directly to their operations.

            Would Exon still sell gasoline in small towns or divert it all to places with more money able to pay higher prices ?

            Would you find it necessary to lock your good looking daughters up in the house to protect them from kidnappers and rapists?

            We get all wound up and to thinking it terms of absolutes and that is not a realistic thing to do.

            Most of the people who are opposed to renewable energy for instance offer up an argument to the effect that renewables will cannot ever generate enough energy to run an industrial economy and have enough surplus to build the necessary new renewables as the old ones wear out.

            This might very well be true.

            BUT it is an utterly irrelevant argument except in academic terms because we have plenty of fossil fuel to waste for some time to come yet and if we don’t ” waste” it building renewable infrastructure we will waste it any way building something else worth a lot less in the long run or just burn it up commuting and vacationing and shopping.

            There may never be a fully functional renewably powered economy any where on this planet. That just doesn’t matter except in academic terms.

            What matters is what we can do now and over the next few decades. The people who haven ‘t been born yet will have to solve their own problems when they get here.They may or may not have enough sense to appreciate whatever renewables infrastructure we get built while building it is still unquestionably possible.

            I hope to fly to Hawaii some day to visit an old friend who lives there.My youngest relatives won’t be flying on vacations when they are gray haired and they won’t be driving cars that have four hundred horsepower.But they may be driving fully electric cars with hundred mile ranges ( or three hundred miles ?) recharged with nuclear or wind or solar or coal power. There may even be some natural gas fired electricity in some places.

            They will hardly even remember that old Uncle Mac used to have a pickup truck that would go four hundred miles on (dual ) tank full or that it cost the equivalent of a weeks groceries for a family of four to fill it up.

            They won’t even remember Uncle Mac unless they happen to see his picture in an inherited family album and think of the goodies he used to provide at Christmas and birthday parties or the antiques he willed to the ones who came once a year to see him in the nursing home.

            • RalphW says:

              The US is still blessed (?) with massive fossil fuel reserves, vast swathes of productive land, more than enough food for 300 million people, a minority of highly educated people, some of whom can see the wood for the trees. It has a lot of built infrastructure, and a military industrial complex second to none.

              In a rational world it could sustain a European level of opulence for most of its population for at least another century, more than enough time to build out renewable infrastructure, reform agriculture, and re-educate society to be happy with its lot and re-learn what working for a living means.

              It won’t happen.

          • Dennis Coyne says:

            Hi Ron,

            Shadow stats numbers are pretty sketchy.
            Government numbers are not perfect. Sometimes people choose to leave the labor force, for example a 30 year old who is working has a baby and either she or her husband decides to stay at home to raise their children.

            Shadow stats would call such a person a discouraged worker who has left the labor force, and count them as part of the “unemployed”.

            I do not think such a person is unemployed, they have just made a personal choice. There are many other examples one could think of, people retiring early would be another case. The BLS (Bureau of Labor Statistics) data are much better than shadowstats.

            If we look at US employment it tops out around 80%, lets call this a natural unemployment rate of 5% (with 15 % of the 25-54 population out of the labor force by choice). Currently the employed population is 76% so we might have unemployment as high as 9%, if we assume preferences for work have not changed, before 1980 the employment rate was much lower (below 72%).

            • Watcher says:

              haha Wait.

              What husband?

              • Dennis Coyne says:

                In that case it is welfare or work. If the single parent can’t find a job that pay’s more than day care cost plus the welfare benefit that might be received, they may chose to stay at home until the child goes to school.

                • Watcher says:

                  That’s not a personal choice.

                  That’s compelled.

                  Well, hmmm, they could suicide for some life insurance for the kid, I guess. That would be a personal choice available.

                  Most life policies do have suicide exclusions, so that’s not available either. Nevermind. No personal choice available.

                  • Dennis Coyne says:

                    Hi Watcher,

                    What is compelled? Taking care of one’s child? We are compelled to eat as well.

                    There is a choice by the single parent to work or not work. In the case of two parents both can work or one can stay home.

                    I suppose we are all compelled to work as we have to eat. So I think I do not follow you. There are always choices and I suppose we are compelled to make them.

                  • Watcher says:

                    The issue was this:

                    “Sometimes people choose to leave the labor force, for example a 30 year old who is working has a baby and either she or her husband decides to stay at home to raise their children.”

                    The reply was “what husband”.

                    And then:

                    “In that case it is welfare or work. If the single parent can’t find a job that pay’s more than day care cost plus the welfare benefit that might be received, they may chose to stay at home until the child goes to school.”

                    The reply . . . that’s not a personal choice. That’s compelled. They can’t make enough money to cover daycare. They are compelled to stay home and live on benefits out of the workforce by mathematics, not choice.

            • TechGuy says:


              Sorry but I find it hard, or rather impossible to believe all these people just suddenly decided to leave for personal reasons. The also appeared to leave in mass when the economy fell into recession or when oil prices increased.

              Many of non-professional workers and even recent college grads have been forced to work part-time or work multiple part time jobs.

              Average Annual Hours Worked:

              Close to a dozen people I know have been long term unemployed or being forced to work at jobs at half of their previous salary. They are getting by, by moving in with family or relying on family to meet ends. Its extremely tough to find jobs.

              • Dennis Coyne says:

                Hi Techguy,

                Did I say there was no unemployment? No, I said it is not as high as 22%. The labor force participation rate changes over time as your chart shows and it was headed lower before the recession. No doubt the recession caused unemployment, my point is that on top of this there was an underlying drop in participation rate. A big part may be baby boomers choosing to retire early or being laid off, finding it difficult to find work and then deciding to retire early (they stop trying to find employment). I use the 25 to 54 employment rate to focus on the prime working age group to avoid some of the new college grads and the age group most likely to retire early (55 to 64). The chart you posted includes everyone from age 16 to 64 in the denominator.

                • TechGuy says:

                  DC wrote:
                  “A big part may be baby boomers choosing to retire early or being laid off, finding it difficult to find work and then deciding to retire early”

                  No, just the opposite. They are finding work and holding on to it. The 55+ are the only age group that has an increasing participation rate (see chart below)

                  The 55+ group can’t afford to retire as they have ZIRP on their savings and rising food and energy prices. But Tthey can afford to take lower paying jobs because they likely have lower cost of living (lower mortgage payments or paid off, no student loans, no kids, etc).

                  • Dennis Coyne says:

                    Hi Techguy,

                    A very nice chart that shows a pretty small change for the overall labor participation rate. Most of the rise in labor participation of the 55+ group was over the 1993 to 2008, and has leveled off since then. The problem seems to be fewer 16-24 year olds are working and this may just be a change in the number of young people (many of them are in school full time) that are willing to work or able to find part time employment. As I argued before some of the decrease in the employment rate of the 25 to 54 group is due to actual unemployment(about 5% for that group) and some may be a choice by some people to leave the labor force.

                    On the ZIRP, not everyone invests in bonds, lots (probably most people in the 55 to 65 age group have a fair portion of their retirement savings in stock mutual funds) those over 65 probably should still have a healthy chunk of their portfolio in stock mutual funds as well.

        • Old farmer mac says:

          Thank you. Exactly. Things will get to be very bad but not as bad as mad max unless and after Leviathan hits the dust.

  6. Re: It has become increasingly clear that the world market cannot rely on non-OPEC supply growth given geopolitical events outside OPEC.


    10 years after peak oil in Vietnam: Asian Century sails into troubled waters in the South China Sea

  7. Coolreit says:

    Jean Laherrere:

    You are one of the most well respected geologists/peak oil experts in the world. Thank you for gracing the pages of Ron’s peak oil site with your wisdom!


    Your site continues to improve with world renown experts like Jean Laherrere, Jeffrey Brown and Art Berman.

    Your site is my go to site for peak oil news and analysis and it should be everyone’s.

    • Thanks Coolreit, that is deeply appreciated.


    • Doug Leighton says:


      Agree totally. Your comments are spot on, as per usual. I might have added Rune Likvern to your list. That’s another I keep hoping will emerge from the woodwork.


    • robert wilson says:

      I agree, this has become my favorite oily site. I also follow Our Finite World and second rate but occasionally interesting Peak Oil and LENR sites on Facebook

  8. Techsan says:

    Front page news in the New York Times:

    In Taking Crimea, Putin Gains a Sea of Fuel Reserves”

    Put this together with China’s aggressive moves to drill in Vietnamese waters, and we can already see great powers engaging in aggression to gain energy resources. It would seem that they know that oil is about to get scarce.

    • Old farmer mac says:

      The great powers aggressive moves to control sources of energy can be very easily traced back as far as Winston Churchills decision to switch the Royal Navy from coal to oil.

      We Yankees haven’t been spending treasure and blood in the Middle East for the last few decades because we are big consumers of either camels or sand.

      A real historian could no doubt offer up some deeper roots in respect to this particular source of aggressive behavior but history is only an armchair hobby for me.

      I would bet a large sum, if I had it to bet, that there will be hot major power wars within the next two decades, and that they will basically be about natural resources .

      I haven’t ever gotten around to actually building it but I have the necessary materials stockpiled to build myself a bomb shelter that would enable me to stay under ground for several months.The odds of needing it are considerably higher than zero. If it never gets built the materials will come in handy for some other project.

      If things get really tense for an extended period of time- think a modern day Cuban missile crisis- it will get built. Otherwise I am not sufficiently motivated.

      • wadosy says:

        psychopathic behavior in defense of the tribe must have had some survival value in the old days…

        but mow that we’ve developed the ability to destroy ourselves, maybe it’s not so useful any more

        the irony comes when you consider that grand accomplishment –we can now exterminate ourselves

        how did we achieve that grand accomplisment?

        by cooperating with each other

        if humanity is too stupid and crazy to extend that idea of cooperation to a global scale, then it will get what it deserves as a failed species

        meanwhile, the neocon press brays for more wars… on the theory, i suppose, that wars can be controlled and limited and guided so the usual bunch of fatcats profit

        the warmongers are self-fulfilling prophecies, but i guess they dont knwo any better

        • wadosy says:

          these supposedly “darwinian” arguements dont cut any ice, either

          “survival of the fittest”?

          what if the fittest humans are the ones that can cooperate best with other people?

          • All Darwinian argument are important. “What if” scenarios are what don’t cut any ice. If you have a hypothesis that states that cooperation will be a better survival guide during times of extreme scarcity then make that argument. Don’t simply give a “what if” scenario. Those are a dime a dozen.

            • wadosy says:

              well, yes

              it’s obvious that our best solution is nuke first strikes on russia, china and india… get rid of those useless eaters before they insist on … what the hell could they insist on? …they cant insist on anthing, not in the face of our supposed “nuclear primacy”…

              besides, we’ve apparently overshot the planet’s post-oil carrying capacity by a few billion, so those people will die, one way or another…

              and maybe it would be more merciful to nuke them rather than letting them starve to death

              god forbid anyone tell the truth about peak oil and global warming, though… on the off chance that people would make up their own minds and do the right thing

            • wadosy says:

              …and god forbid anyone point out that the philosophies and theories guiding what-passes-for-western-civilization are obsolete

              • it’s obvious that our best solution is nuke first strikes on russia, china and india… get rid of those useless eaters before they insist on … what the hell could they insist on? …they cant insist on anthing, not in the face of our supposed “nuclear primacy”…

                All right, cut the crap. This is a serious site, not a place for you to post your silly snarkey remarks.

              • wadosy says:

                facts are facts: nuclear primacy is intended to establish nuke weapons dominance so overwhelming that we can do nuke first strikes on china and russia, and they’d be unable to retaliate

                another fact: the neocons intend to establish global hegemony and full pectrum dominance… they’ve published those ambitions, and the primary means os establishing their hegemony and dominance is the US military

                those are facts

                • Watcher says:

                  While there is considerable merit in pre-emptive removal of competing oil consumption, deterrent retaliatory capability still does exist.

                  In the context of winning, and there can only be one or two winners in oil scarcity, Russia’s draining $500 billion from its enemies every year in return for stuff that has to be bought again next year is not encouraging, unless you’re Russian.

                  It is this bleeding that would lead to trying to win no the battlefield where one is strongest, i.e., nuclear weapons.

                  Remember this next time cuts to DoD are urged. Nuclear weapons and their maintenance is very inexpensive compared to the salary expense of large conventional forces. So when you cut you’re removing non-nuclear options from a President that faces a crisis.

                  • wadosy says:

                    “… considerable merit in pre-emptive removal of competing oil consumption,,,”

                    so you approve of nuke first strikes on russia and china

                    is there some clause in your contract as a human that gives you the right to eliminate competition with nuke weapons?

                    or would russia, china, india or el salvador have that right, too, if they had the weapons?

                  • wadosy says:

                    we seem to be edging towards defining some kind of racial supremacist psychosis, here… with delusions of grandeur

                  • wadosy says:

                    i guess the think that irks me most is, nobody in government –asside from a maverick congressman or two– has the slightest inclination to tell us the truth

                    has anybody ever tried telling the truth?

                    i mean, if we told the truth, it might work… people might voluntarily change their habits… and we’d still have our nukes, too, just in case, wouldnt we?

                    i guess the problem is, we’ve already decided on the course of action we’ll take in dealing with peak oil, and that course of action was a crime against humanity

                  • Watcher says:

                    Odds look pretty high that the American future is one of subservience and demeaning menial labor to longer term oil producers if America does not make use of its advantages, which are military and nuclear. That’s just the way it is.

                    If Russia or China or anyone else had a nuclear edge and a likely future of demeaning menial labor serving the overlord country for generations to come, then of course you would expect them to throw their best nuclear weapon punch. Why would they not?

                    It would be immoral for them not to. Failure to do so condemns their heirs to that horrible future. It would be a betrayal of their offspring. The worst in all history.

          • Old farmer mac says:

            what if the fittest humans are the ones that can cooperate best with other people?

            In that case in terms of Darwinian theory those cooperators will be the survivors. LOL.

            Barring bad luck on their part of course. Survival is always a crapshoot.But individuals (or species at the species level) who are possess better genes are also possessed of a pair of dice loaded in their favor.

            But even the best adapted species will perish when thing change too much.Crabgrass won’t be a problem in my lawn if the climate gets dry enough.But if it gets hot and dry enough scorpions may become a problem.

            If you understand survival of the fittest this is a trivial observation.

            Please provide be with a link or two to some well known neocon who is braying for more wars.

            I read lot of news left and right but I must have missed that altogether.

        • how did we achieve that grand accomplisment?

          by cooperating with each other

          Sure we did. History is nothing but a record of mankind cooperating with cooperating with mankind, nations cooperating with other nations, tribes cooperating with other tribes..

          Errr… wait… I think “constant battling” would be a better term.

          if humanity is too stupid and crazy to extend that idea of cooperation to a global scale, then it will get what it deserves as a failed species

          Humanity is not one person or one country. Humanity is not stupid or smart, humanity is just what it is, a mixture of every race and culture simply trying to survive the best way they know how.

          And no one “deserves” their fate. Every person must play the hand that was dealt them as best they can. The idea that people cannot see what they are doing to the earth is simply a flaw of human nature, one of many. The fact that humanity possesses that flaw does not mean they “deserve” to die.

          • wadosy says:

            if the humanity guiding western civilization does not abandon its belief that might makes right, all bets are off on the survival of humanity

            the logic in russia, for example, might go like this: we’ve been through it all, for centuries… we currentlyt are being aggessed on by people who’ve published their intent to run the world, then spent the last doze years proving they mean business

            our problem is, they need our oil and gas if they’re to establish their global government, but judging them by their actions, we do not think they’re worthy of running the world

            so we will resist them, on the off-chance that they’ll come to their senses before they wreck everythin

  9. B says:

    No end in sight for NM’s oil boom

    Oil production [in New Mexico] jumped by another 17 percent in 2013, according to the latest statistics from the state Oil Conservation Division. That puts New Mexico production back to 1973 levels.

    And, this year, experts project another 18 to 20 percent increase.

    “Déjà vu,” said Daniel Fine, associate director of the Center for Energy Policy at the New Mexico Institute for Mining and Technology in Socorro. “We’re now back in the early 1970s, which was a period of energy self-sufficiency and independence. It’s a remarkable energy revolution.”

    “We’re at about 270,000 barrels per day now, but we project that to reach between 320,000 and 325,000 per day in 2014,” Fine said. “That would give us the equivalent of about two-thirds of all the oil production in Alaska. In just a few years, we’ll be back at our all-time peak of 129 million barrels, which was achieved in 1969.”

    The industry’s newfound fortune comes from modern drilling techniques, including three-dimensional imaging to pinpoint pools of oil and natural gas that producers ignored in the past, hydraulic fracturing to bust open extremely tough shale rock formations and horizontal drilling to push sideways into hydrocarbon deposits.

    Those techniques have opened up vast new oil and gas plays around the country, while giving new life to aging basins, such as the Permian in West Texas and Southeast New Mexico, where production originally dates back to the 1920s.

    Horizontal drilling in particular has allowed producers to slice into layers of shale bed, where huge pockets of liquids and dry gas are trapped.

    “That’s made a huge difference,” said New Mexico Tech geologist Ron Broadhead. “More than half the active wells in New Mexico have been drilled horizontally. About 40 percent of the state’s production is due to that.”

    Thanks to the new technologies, the Permian Basin is now estimated to contain some of the largest underground deposits of oil in the world, Fine said.

    • Calhoun says:

      Still, sustaining industry momentum depends on a number of things, especially adequate infrastructure. Road repair, construction of new pipelines and refineries, and more housing for workers are all critical.

      “Oil production in New Mexico is no longer a drilling issue;it’s a matter of infrastructure development,” Fine said. “We need to work on that or it will begin to affect production.”

      Oil prices are also a wildcard. They remain high – at about $99 per barrel for benchmark West Texas Intermediate.

      As so often has been said, the drilling revolution is the result of high prices, not technology. But the comment above is truly revealing because it considers the all-in costs of new drilling — such as housing and roads. Tight oil is more capital intensive AND labor intensive on a per barrel basis, and those costs extend beyond the drilling site into the surrounding communities that must support the activity. But, I have high hopes for New Mexico — I fully expect them to get us all back to the 1970s. I’ve already got the Doobie Brothers on.

    • SRSrocco says:

      And this doesn’t even include the fact that the U.S. public can’t really afford its high cost oil without the FEDs foot pressed all the way down on the QE liquidity pedal.

      The U.S. exported 128 metric tons of gold during the first two months of 2014. 82% of that total went to Hong Kong (65 mt) and Switzerland (40 mt). The majorty of Swiss gold is refined to kilo bars and shipped East.

      United States suffered a 40.5 mt gold supply deficit during JAN-FEB.


    • Watcher says:

      What’s USGS’s assessment unit for NM? Funny you should ask:

      In 2012 they combined Eastern NM with Western Texas and offered up 4 billion barrels. The map says most in Texas.

      Cool drilling map:

  10. Luís says:

    Good to known that Jean found a new place to share his insight. Thank you Ron.

  11. Student says:

    Excellent analysis and comments but just questioning where the comment on Russia is in decline?. Post back on May 10th for non-OPEC producers does not show Russia having peaked?

    • From what I have read in press releases and observed on Russia’s energy production web page, CDU TEK Russia appears to have peaked, so far anyway, in December 2012. The charts of previous data would not show that. Their production was down four months in a row. There is a slight uptick in May but the trend still seems to be down.

      I only started plotting their daily production on the last day of production last year. Their average 2014 production is still likely higher than 2013 because they were still lower than the present level in the early months of 2013.

      Of course they could still turn things around. But we shall see.

  12. Doug Leighton says:


    Esa’s Cryosat mission sees Antarctic ice losses double

    “Antarctica is now losing about 160 billion tonnes of ice a year to the ocean – twice as much as when the continent was last surveyed. The new assessment comes from Europe’s Cryosat spacecraft, which has a radar instrument specifically designed to measure the shape of the ice sheet. The melt loss from the White Continent is sufficient to push up global sea levels by around 0.43mm per year.”


    • SRSrocco says:


      Yeah… things are starting to get out-of-control in the climate-weather arena. I just read that average temperatures in Moscow, Russia are normally 62F High/ 42F Low for May 19th of the year. However, the high today was 92F and the low 58F. Siberia is on fire so to speak.

      As heat in the Arctic increases (from the exponential increase of methane emissions), it destroys the normal function of the Jet Stream. Today, we are witnessing a slowing Jet Stream with huge blocking patterns where record heat-drought and torrential rain events become more extreme.

      For example, Bosnia & Serbia experienced what could be categorized as an INLAND HURRICANE dropping 4 months worth of rain in a 40 hour period. From the article:

      “According to reports from Serbia Independent News, rainfall rates were the highest ever measured in all of the 120 year record. Records in Bosnia also hit their highest levels since measurements began in 1894.”

      This is the kind of WEATHER ANOMALIES that we are going to experience on an increasing basis.

      People forget that it takes a LOT OF HEAT to melt ice. When the Arctic Ocean becomes free of Ice in September by 2016 or 2-3 years later on the outset, a great deal more heat will be absorbed by the Oceans. Furthermore, as the Arctic becomes totally free of ice, then we get warming in spades.

      I gather by then, we won’t be bickering about PEAK OIL or GOLD any longer.


  13. Dennis Coyne says:

    Hello Mr. Laherrere,

    I am honored that you have taken the time to correct any errors that I have made.

    I would note that I do not think that the Bakken/Three Forks TRR (technically recoverable resources) would be the same as the ultimately recoverable resources(URR) as the ultimate depends on economic, political, and other social factors along with the underlying geophysics and what is possible with current and future technology. In general I would expect the URR would be less than the TRR.

    Also note that I said I expect the TRR will be at least 6 Gb, that is 6 Gb or more.

    My reasoning is as follows(all estimates for North Dakota Bakken/Three Forks):

    USGS TRR estimates (including produced oil, proven reserves, and undiscovered TRR[UTRR]), where

    proven reserves(EIA 2012)=3.3 Gb
    produced oil(NDIC)=0.6 Gb
    UTRR(F95)=3.5 Gb
    UTRR(F50)=5.8 Gb
    UTRR(F5)=9.0 Gb

    TRR(F95)= 7.4Gb =3.5+3.3+0.6
    TRR(F50)= 9.7Gb =5.8+3.3+0.6
    TRR(F5) = 13 Gb =9.0+3.3+0.6

    My estimate of the F99 case is based on the assumption that the probability distribution is log-normal.

    Generally when we take the natural logarithm of the F95 and F5 cases and find the difference, this will be the natural log of 4 standard deviations, we divide by 4 to find the natural log of the standard deviation.

    To find the natural log of the F99 case we subtract the natural log of the standard deviation from the natural log of the F95 case. Finally we take the antilog to find the UTRR(F99)=2.7 Gb and then add the proven reserves and produced oil (3.9 Gb) to find a TRR(F99) of 6.6 Gb.

    Perhaps my TRR estimate of 6 Gb was a little on the low side, but I believe that you think it was too high rather than too low.

    As before this is not an estimate of URR, which would depend on a number of factors that are quite difficult to estimate, but generally the URR is less than the TRR for economic reasons (along with political, and other social factors).

    As you suggested, the Hubbert Linearization is a pretty unreliable method, in this case it suggests 2.5 Gb for an ultimate for the North Dakota Bakken/Three Forks. Through Dec 2013 about 0.8 Gb of C+C has been produced, which would leave 1.7 Gb to be produced, suggesting (if correct) that almost half of the 3.3 Gb of ND Bakken/Three Forks proven reserves (48%) will not be produced.

    I would suggest that at minimum 3.9 Gb will be produced from the North Dakota Bakken/Three Forks.

    The URR would only be that low if we assume that no more proved reserves are added to North Dakota Crude reserves from the Bakken/Three Forks after December 2012. The conservative nature of proved reserve estimates in the United States makes this assumption somewhat questionable.

    One further estimate that I performed was to assume that no oil is produced from the Three Forks formation in North Dakota.

    The USGS estimate for the North Dakota Three Forks did not look very reliable with F95=1.3 Gb and F5=5.3 Gb, so let’s assume this is just wishful thinking and we will assume no output from the North Dakota Three Forks.

    For North Dakota Bakken only, USGS estimates:

    TRR(F95)= 6.1 Gb
    TRR(F50)=6.8 Gb
    TRR(F5) =7.5 Gb

    Produced oil and proven reserves of 3.9 Gb are added to UTRR estimates to find TRR above.

    Using the same method outlined above (assuming log-normal probability distribution),
    TRR(F99)=5.9 Gb
    TRR(F1) =8.0 Gb

    Note that the USGS estimated that as of April 2013 that 0.046 Gb of oil had been produced from the Three Forks, but I do not have data on output from the North Dakota Three Forks since that date.

    • Dennis Coyne says:

      For a low estimate I created a scenario with TRR=6 Gb and used my usual economic assumptions (see my next comment below) for the Bakken, with the US EIA’s AEO 2014 reference oil prices to find an ERR=5.3 Gb.

      I think it is highly likely that the North Dakota Bakken/Three Forks URR will be at least 5 Gb.

      Scenario assumes new well EUR decrease begins in Dec 2014 and reaches its maximum rate of EUR decrease(26%) in June 2016. New wells are added at a rate of 150 new wells per month until Jan 2018 when they decrease by 10 each month until reaching a level of 10 wells per month in 2019. Maximum number of producing wells is 16,800 wells in the North Dakota Bakken/Three Forks.

      • Dennis Coyne says:

        For scenario above (ERR= 5.3 Gb),economic assumptions and Oil price, well cost, net present value(NPV) of oil well output, and profit over the life of the well (30 years). All prices, costs, profits and NPV are calculated in real (2013) dollars. See chart below.

        • Dennis Coyne says:

          I forgot to mention the Gulf of Mexico.

          The Bureau of Ocean Energy Management (BOEM) estimated in 2012 that cumulative C+C output from the Gulf of Mexico was 16 Gb and reserves (proven and unproven)were 9 Gb, EIA has proven reserves for the Gulf of Mexico (Federal offshore Texas, Alabama, and Lousiana) at 5 Gb at the end of 2012. So produced oil plus proven reserves is about 21 Gb.

          This suggests that a 25 Gb URR estimate for the Gulf of Mexico will lead to 4Gb of probable plus possible reserves eventually becoming proven reserves.

          It also suggests that no new discoveries will be made, in contrast to the BOEM estimate which even as far back as 2001 estimated a 95% probability that 23 Gb of oil would be discovered with the most recent F95 estimate at 38 Gb for undiscovered TRR.

          The estimate of UTRR=0 seems a little on the low side, even at $20/barrel the BOEM estimates ERR= 27 Gb in the Gulf of Mexico out of the 48 Gb of UTRR (mean estimate).


          Appendix A

  14. I didn’t comment on the Magnum Opus because I agreed with it. I don’t see anything wrong with it at all. What I wonder is: Can the energy costs of production in a shale play like Eagle Ford be estimated, including the energy budgets of the employees and other stakeholders – both full-time and partial (as per – so as to plot net energy production rather than just total energy produced?

    • Dennis Coyne says:

      Hi Thomas,

      It is not clear what the Magnum Opus is.

    • Tom, thanks for the post. I am not able to answer your question because that is a bit above my expertise. I hope someone else can. But your link don’t work. I get:
      Sorry, the blog you were looking for does not exist. However, the name eroeistar is available to register!

    • Watcher says:

      Energy input calculations always seem to be hand waving.

      Oh! This truck hauls pipe to the well to attach to each other and and become longer and drill. So let’s compute the truck fuel, but wait, let’s also compute the energy heating up the iron to make the pipe, but wait, let’s also include the energy used to make the gizmo that heated up and made the pipe. And what about the work making the truck? Let’s include all that.

      How about the workers driving to work at the well? We’ll include their fuel. How about the energy that made their cars? The fuel that hauled the food that fed the workers?

      It doesn’t take long for the calculations to become arbitrary hand waving.

      • Kum Dollison says:

        Agreed; at some point you just have to look at the final price of the product, and assume a semi-rational marketplace.

        • Watcher says:

          Nope. QE has destroyed that forever. What used to be a meaningful parameter was exposed to the light of day which revealed that it is arbitrarily created.

          Study up on what was done in Greece the last 4 years. Their bonds were swapped to kingdom come. If the bonds defaulted, it would make Lehman look benign. So . . . the EU declared that the bonds would not pay, but no default declaration by bondholders would be permitted. The bonds were redefined out to 30 years or so. This is how Cyprus was wiped out. They were Greek bondholders. The EU destroyed them and then waved hands in the air about the IMF needing to supervise . . . altogether now . . . reform.

  15. Kum Dollison says:

    “Normally, I would have deleted the e-mail without a second thought. But several things about it warranted further notice.

    The first were aerial photos of thousands of cars. Wow, this really was a lot of cars.

    The second was the phrase “Timestamp: Friday, May 16th, 2014,” which suggests that these photos were brand new.

    What struck me was how familiar it all looked. Maybe that was because I posted those same photos on The Big Picture blog and Business Insider in February 2009.

    The origin of the photos was a Jan. 16, 2009, article in the Guardian by Nick Mead. Note that this was smack in the middle of the financial crisis, when anything purchased on credit simply froze. At the time, other sites also picked up the photos from the Guardian, such as car blogs like Jalopnik, and market sites like Mish’s Global Economic Analysis.

    The truth about these photos didn’t stop the usual doom and gloomers from immediately running with them. Zero Hedge, Silver Bear, Daily Paul, and too many others to list here posted them.

    Which raises the following question: How . . . . . .”

    • RalphW says:


      I’m not sure what your point is here, beyond “check your sources”. For example, at least in the UK official car sales figures are questionable. Dealers sell cars to themselves, in order to meet sales targets and trigger bonuses. The cars are then sold as second hand at big discounts. Usually you first spot a down turn in the market by following trade prices for second hand cars.

      There has been a big pick-up in car sales figures in the UK in the last year or too, but this is in line with general economic activity triggered by near zero interest rates, and substantial government stimulus, in preparation for the general election next year. It is debt fueled. UK fuel prices have fallen the last couple of years, because Sterling is strong against the dollar, and real fuel taxes are lower than they were 5 years ago. (Very high fuel taxes actually made Europe less sensitive to oil price rises than the US – we are used to $8 a gallon).

    • I am not sure this data is final. A couple of times they have updated their database and then a couple of hours later updated it further. Anyway I will keep checking. I will have a new post out either tonight or early tomorrow on this data.

  16. Doug Leighton says:

    China pivot fuels Eurasian century

    “You remember “Pipelineistan,” all those crucial oil and gas pipelines crisscrossing Eurasia that make up the true circulatory system for the life of the region. Now, it looks like the ultimate Pipelineistan deal, worth US$1 trillion and 10 years in the making, will be signed off on as well. In it, the giant, state-controlled Russian energy giant Gazprom will agree to supply the giant state-controlled China National Petroleum Corporation (CNPC) with 3.75 billion cubic feet of liquefied natural gas a day for no less than 30 years, starting in 2018. That’s the equivalent of a quarter of Russia’s gas exports to all of Europe. China’s present daily gas demand is around 16 billion cubic feet a day, and imports account for 31.6% of total consumption.”

    “One can hardly imagine a more tectonic shift, with Pipelineistan intersecting with a growing Sino-Russian political-economic-energy partnership. Along with it goes the future possibility of a push, led again by China and Russia, toward a new international reserve currency – actually a basket of currencies – that would supersede the dollar (at least in the optimistic dreams of BRICS members).”

    “Of course, the US dollar remains the top global reserve currency, involving 33% of global foreign exchange holdings at the end of 2013, according to the IMF. It was, however, at 55% in 2000. Nobody knows the percentage in yuan (and Beijing isn’t talking), but the IMF notes that reserves in “other currencies” in emerging markets have been up 400% since 2003.”

    “The Federal Reserve is arguably monetizing 70% of the US government debt in an attempt to keep interest rates from heading skywards. Pentagon adviser Jim Rickards, as well as every Hong Kong-based banker, tends to believe that the Fed is bust (though they won’t say it on the record). No one can even imagine the extent of the possible future deluge the US dollar might experience amid a $1.4 quadrillion Mount Ararat of financial derivatives.”

    • Woody says:

      This pipeline won’t be good for the LNG exporters sinking billions into new facilities in Australia or who are trying to build new facilities on the west coast of the US and Canada.

    • Watcher says:

      Head scratch.

      I don’t think (???) one transports LNG in pipelines? You’d have to insulate the length?

      I thought this is a deal to just provide nat gas, in pressurized pipelines, in gaseous form?

      • Woody says:

        It should just be compressed gas. 3.75 bCF/d isn’t a game changer but will make a difference at the margin in terms of international gas flows.

  17. Enno says:


    In the latest NDIC report, I only see 245 wells that are confidential. I think that Confidential Well list is not correctly updated, or includes many wells that never lead to production.
    I checked the performance since 2010 of confidential wells versus public wells, using a method I belief to be quite reliable, but want to keep confidential (how appropriate). Dennis knows it. Indeed it is funny to notice that confidential wells somewhat underperform public wells. Nonetheless, I could not find any well that still had the confidential status after 5 months of production.

    • Wes453 says:

      Completed wells in North Dakota can be confidential for up to six months. Depending on how the operator wishes to proceed as far as paperwork is concerned, the clock on the six month period begins on the date that drilling begins, the date the well is completed, or the date a request for confidential status for an uncompleted well is received, if the date is before the completion date. These days, most requests for confidential status are made in conjunction with the application to drill a well, in which case the six month period begins on the date drilling begins.

      The confidential well list would probably more accurately be called the confidential permit list because all wells permitted for confidential status immediately go on the list. However, since there may be a lag of several months, to even several years, from when a permit to drill is issued and drilling actually begins, or the permit is cancelled, the list always includes many wells whose six month clock has not yet begun. This is why there are so many wells on the list without a date indicating when they will no longer have confidential status.

      When wells are reported in the daily activity reports as coming off the confidential list but have no reported production information, that usually means the well has not yet been completed or the well has not yet been tested to ascertain the 24-hour initial production. In either case, production will eventually be reported and associated with the individual well in the NDIC database, but you may need to buy a subscription to see that information, or at least wait until the monthly production report ( comes out.

      Speaking of the monthly production reports, Ron, the state summary on page 2 (or sometimes page 3) of those are preferable to use for county-by-county production data for the most recent 5-6 months, since the summary in those reports includes confidential wells.

      • Enno says:

        Thanks for the great info Wes

        • Dennis Coyne says:


          Wes are you either from North Dakota or working there, or do you just follow this closely? Your input is much appreciated.

          • Wes453 says:

            I’m from northern Minnesota, but I graduated from the University of North Dakota and worked for a while in Bismarck, with occasional-to-routine visits to western North Dakota, where oil, wheat, and cattle have long been topics of discussion. I am not in the oil and gas industry, and I am back to living in Minnesota now, but I grew quite fond of North Dakota in general, and the western part in particular. I guess the main reason for my interest in the Bakken boom is the sometimes incomprehensible transformation, good and bad, that has been brought to the region.

    • Dennis Coyne says:

      Hi Enno,
      Your secret is safe. And thank you for sharing your data.

      Very interesting Chart. Thanks

      • Watcher says:

        Anybody else have just a general feeling that NoDak does all this public communication stuff better than Texas?

  18. Andy Hamilton says:

    This is nearly a week old and apologies if it has already been posted, but it is a ripper of an article which backs up much of what has been said here about shale gas/oil exploration in the US:

    “Who can, or will want to, fund the drilling of millions of acres and hundreds of thousands of wells at an ongoing loss?” Ivan Sandrea, a research associate at the Oxford Institute for Energy Studies in England, wrote in a report last month. “The benevolence of the U.S. capital markets cannot last forever.”

    The spending never stops, said Virendra Chauhan, an oil analyst with Energy Aspects in London. Since output from shale wells drops sharply in the first year, producers have to keep drilling more and more wells to maintain production. That means selling off assets and borrowing more money.

    “The whole boom in shale is really a treadmill of capital spending and debt,” Chauhan said.

    Access to the high-yield bond market has enabled shale drillers to spend more money than they bring in. Junk-rated exploration and production companies spent $2.11 for every $1 earned last year, according to a Barclays analysis of 37 firms

    • Dennis Coyne says:

      Only the shale gas is losing money. At some point they will stop drilling for natural gas (unless prices start to rise), then supplies will be short, which will lead to natural gas prices rising to the point where drilling is again profitable and then the drilling will resume.

      This is not something new in the US oil and gas industry.

  19. wadosy says:

    …reporting from the banks of the great grey-green, greasy Limpopo River….

    the Great Nuke War was started by the US, in belief that their nuclear primacy would make retaliation impoosible… but the ability to retaliate had survived and the war escalated

    the battle lines had been drawn long before by western media, and the UK, canada, australia and parts of western europe supported the US

    the was was a disaster… such a disaster that white people became pariahs

    the global anti-whitism became so pronounced that white females started seeking colored mates so their offspring would have a chance of escaping the stigma…

    …the stigma of being white

    and that, Best Beloved, is how white people got their brown skin

    • The Wet One says:



      • wadosy says:

        in 51,1212 (Old Christian Calendar), rudyard kipling was granted a limited-stay, one-time reincarnation to update his “just so” stories

        “how white people got their brown skin” is one of his new stories

  20. Letters received from companies that purchase mineral rights tell me there is oil.

    Up to 2005 there had been over 30,000 holes drilled in ND, Montana, Saskatchewan, and Alberta, all in search of oil, not all holes drilled produced oil, it was a search to find out where the oil is and a data gathering exercise. The amount of drilling since ca. 1950 has provided plenty of data from the lithofacies.

    Leigh Price’s estimates are more in line with reality than a TRR of 2.5 gb. 2.5 gb x 100 dollars per barrel is 250 billion dollars. Why would oil companies drill for oil and spend more money that what is projected in returns? It just is not going to be that way.

    There is more oil than just 2.5 gb.

    With an estimated 750 – 900 billion barrels in the Bakken, a 3 percent extraction would yield anywhere from 22.5 billion to 27 billion barrels of oil. Ten percent extraction would yield 75 to 90 billion barrels.

    If 2.5 gb is the end and a peak occurs, a lot of money is going to be lost, a tremendous amount of effort will be for naught. It is doubtful that the investment would continue if only 2.5 gb can be produced.

    The numbers are far too low. It would be futile to continue.

    That is not what is happening.

  21. wadosy says:

    i dont know how much the oil companies spent on exploration in the arctic islands… must have been a bundle… right after US production peaked

    at theat time, there was no way to get the oil or gas out if they found anything…

    why were theyspending all that money?

    • wadosy says:

      they apparently found some gas, a little oil up there… and thank goodness we’re making headway on getting access to that gas and oil…

      may take a couple more decades until the ice has melted enough to let us get at the stuff… but we’re making progress

      • Watcher says:

        seismic imagery 1974-1984 dicey.

        Raw seismic data from which to do more modern processing more meaningful.

        It’s possible. There were 8 bit A/D’s in those days and reasonable sample rates. If they just saved the data, they don’t have to reprofile.

        But I would not presume anything concluded then means anything until the data is re-examined.

  22. Dennis Coyne says:

    Hi Ronald,

    Price’s estimates are disputed. His mean estimate was 413 Gb oil in place, at 3% recovery that would be 12 Gb of oil recovered. More recent estimates put the oil in place at 200 to 300 Gb which at 3% recovery would be 6 to 9 Gb of technically recoverable resources. How much of that oil is economic (that is profitable) to recover depends on oil prices. If the EIA’s 2014 Annual Energy Outlook(AEO) reference oil price scenario is roughly correct, the oil eventually produced is more likely to be 6 Gb rather than 9 Gb, I think 7 Gb may be a good guess.


    for information on the oil in place estimates by Price and others.

    • koso says:


      How much oil has been produced thus far?


      • Dennis Coyne says:

        In the North Dakota Bakken/Three Forks about 831 million barrels through Feb 2014 based on data gathered by Enno Peters.

        If the USGS mean estimate of undiscovered technically recoverable resources(UTRR) in the North Dakota Bakken/Three Forks is correct(UTRR=5.8 billion barrels these are not reserves, those would be smaller.) We would add produced oil plus proven reserves (about 3.9 billion barrels at the end of 2012) for a total technically recoverable resource(TRR) of 9.7 Gb.

        When reasonable economic assumptions are used to find the resources that might be profitable to recover (using the EIA’s annual energy outlook reference scenario (best guess) oil prices) the Economically recoverable resources (ERR) will be between 8 and 9 Gb, so another 7 to 8 Gb might be produced if the USGS is correct.

        Note that Jean Laherrere (who knows much more than me) doubts the accuracy of the USGS estimates.

        Even if the USGS UTRR estimate is assumed to be zero, output is still likely to be at least 3.9 Gb, my minimum ERR estimate is 4.3 Gb with a low oil price scenario ($80/ barrel in 2013$) when a TRR of 6 Gb is assumed.

        Let’s say there turns out to be 7.5 Gb of oil produced from the Bakken/Three Forks over the 1953 to 2073 time frame. This sounds like a lot of oil, but the US crude oil input to refineries is currently about 15 million b/d or 5.5 billion barrels per year, so that if all the oil could be produced very quickly (15 times faster than present output levels in the Bakken), it would last for only 17 months at 15 million b/d.

        • In the North Dakota Bakken/Three Forks about 831 million barrels through Feb 2014 based on data gathered by Enno Peters….

          Even if the USGS UTRR estimate is assumed to be zero, output is still likely to be at least 3.9 Gb, my minimum ERR estimate is 4.3 Gb with a low oil price scenario ($80/ barrel in 2013$) when a TRR of 6 Gb is assumed.

          That means only 21% of the oil has been recovered and we still have over 3 Gb to go. I don’t believe a damn word of it.

          • Dennis Coyne says:

            Hi Ron,

            You do not believe the proven reserve data from the EIA?

            • What I do not believe is that another 3 billion barrels will be recovered from the North Dakota Bakken! That much oil is not economically recoverable.

              • Watcher says:

                Uneconomic? That’s probably true. Certainly a rational claim.

                But if you have to have it, money won’t matter.

                • Nonsense, money always matters. If the price is too high the economy collapses. When the price of oil gets higher than the general economy can support, everything comes crashing down.

                  In fact we are pushing that limit right now.

                  • Dennis Coyne says:

                    Do you think it likely we will see an economic collapse before Jan 2015?

                    Let’s say the Bakken gets to 10,000 producing wells in 2015. If on average those 10,000 wells produce 300 kb that is 3 Gb. Note that so far using an average well profile of 350 kb (EUR) actually underestimates output slightly, so 300 kb is a pretty conservative EUR.

                • Dennis Coyne says:

                  Hi Watcher,

                  No these proven reserves are economic.

                  “Proved oil and gas reserves are those quantities of oil and gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible–from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations.”

                  One key term is “reasonable certainty,” which is generally taken as 90% probability. It implies estimates are only for areas with solid data from existing wells and production history from which highly certain and reasonably precise estimates can be made. The term “economically producible…under existing economic conditions, operating methods, and government regulations” excludes any projection of future technology improvements, and implies that producing this resource must be economic with current market prices and other economic conditions.



              • Dennis Coyne says:

                Proven reserves are economically recoverable with at least a 90% probability. At 900 kb/d, that would be 9 years, it won’t stay at that level for 9 years, but the 7000 wells that are currently producing, if they are all average wells (EUR=350 kb) will produce 2.5 Gb. Another 1500 wells if they produce 350 kb over their lives gets us to 3 Gb.

                I am confident that at about 150 wells per month we will get to 8500 wells by Jan 2015. EUR may start to decrease by that time, it is hard to predict.

                • Dennis Coyne says:

                  I thought of another way to think about this.

                  Lets say the 7000 wells producing all have an EUR=350 kb =2.5 Gb output. Then 6000 more wells are brought online with an average EUR=250 kb which is 1.5 Gb more, getting us to 4 Gb, we could get to 13,000 wells pretty easily in 40 months at 150 wells per month (average of the past two years). Even at $80 per barrel the economics works for 4.3 Gb.

                  • Dennis Coyne says:

                    Continental Resources net income in 2013 was 764 million dollars (GAAP).
                    net income per share $4.13(diluted)

                    EOG’s (GAAP) net income was over 2 billion in 2013, they are in both the Bakken and Eagle Ford.
                    Net Income per share=$8.04 (diluted)

                    These proven reserves are economically recoverable (they are economic by definition) and the companies in the LTO plays are doing fine financially.

                  • Woody says:

                    Dennis, unless you have matched debt duration to depletion you have no idea if these companies are solvent or not. They are like banks in that the debt duration may be longer term than the short term cash flow that supports and should, hopefully, pay off the debt.

  23. Doug Leighton says:

    Greenland will be far greater contributor to sea rise than expected: Work reveals long, deep valleys connecting ice cap to ocean

    Greenland’s icy reaches are far more vulnerable to warm ocean waters from climate change than had been thought, according to new research by glaciologists. The work shows previously uncharted deep valleys stretching for dozens of miles under the Greenland Ice Sheet.

  24. Dennis Coyne says:

    Hi All,

    I did a Hubbert Linearization for the North Dakota Bakken using annual data from 2009 to 2013.

    URR is 7.5 Gb.

    • Are you serious? This has to be a joke!

      • Enno says:

        Based on the data & analyses presented here, so far I belief a wide range of outcomes are all possible. Could you lay out your reasoning why you keep telling Dennis that those outcomes are not even possible?

        • Dennis Coyne says:

          Hi Enno,

          I am not sure how closely you follow all this stuff.

          I agree a wide range of outcomes are possible.

          I think it highly unlikely that proved reserves (3.7 Gb in North Dakota according to the EIA) will not be produced. The Hubbert Linearization often gives an underestimate of eventual output, it may at times give an overestimate as well. After only 5 years using the horizontal wells with fracking, it really tells us very little and should be ignored.

          For those who have great faith in this method, I wanted to show that maybe 2.5 Gb is not necessarily correct.

          The produced oil and proved reserves total of 3.9 Gb at year end 2012 also suggests that maybe the URR will be higher than 2.5 Gb.

          I am done at this point people will believe what they wish.

          • No, no, no, the joke is that you think you can develop a trend line from five scattered points. That has to be a joke!

            The Bakken is not like any conventional fields. The wells in sweet spots produce a lot of oil but decline extremely fast. The wells outside the sweet spots produce very little oil and still decline just as fast.

            The Bakken sweet spots are very fast being filled with wells. Production will likely peak out at about 1.2 mb/d for all North Dakota. If they could produce like that for another seven years then they could produce another 3 Gb. But they cannot produce at 1.2 mb/d for seven years. The Bakken will start to decline next year.

            • Dennis Coyne says:

              Hi Ron,

              Should I just use two points for 2012 and 2013? Then I would get about 2.5 Gb.

              They do not have to produce 1.2 Gb for 7 years, I have shown what production would look like after the decline. Plenty of profits out to 2018, even with a TRR of 6 Gb and $80/ barrel, economically recoverable reserves will be 4.3 Gb.

            • Dennis Coyne says:

              There are already 7000 wells drilled in the sweet spots that will produce 2.5 Gb. Do you expect all drilling to stop soon?

              7000 times 0.35 Gb per well=2450 million barrels

              • There are already 7000 wells drilled in the sweet spots that will produce 2.5 Gb.

                Well no they will not. Those 7,000 wells will produce a little over 900,000 barrels per day this month. Next month they will produce about 6% less. And the next month about 6% less than that. Those 7,000 wells will never produce anywhere near 2.5 billion barrels. Not by a long shot. Are you completely forgetting the Bakken decline rate?

                7000 times 0.35 Gb per well

                Did you mistype. 7,000 times 350,000,000 per well? Giga is a billion you know? No well is going to produce anywhere close to that number.

                • Woody says:

                  Might want to check your math.

                  • No, you tell me where my math is wrong.

                    7,000 wells are producing just over 900,000 barrels per day. You can check the North Dakota Bakken stats.

                    The Bakken wells are declining by 6% per month.

                    And .35 Gb does = 350,000,000 barrels.

                    Don’t you tell me to check my math, you check it and tell me where I am wrong.

                    gigabarrel (plural gigabarrels)

                    A unit of volume equal to a thousand million barrels.

                  • Woody says:

                    Ron, up thread the well total had been listed as 350K which at 7,000 wells would give you 2.5 Gb. The 0.35 Gb is obviously incorrect but the total production would be correct. If you dispute the 350 Kb/well just say so .

                  • Okay, upthread? You were replying to a post upthread? Well it would have been better to reply to that post upthread instead of the one you did reply to. I just naturally assumed you were replying to the correct post.

                    Do I dispute that each well will average 350 thousand barrels? Well hell, I don’t know. What is the source of that number? What is the first months production of that well? How fast does it decline?

                    I can just pull any number out of the air and say “Okay, each well will produce XXX barrels over the life of that well”. No, you just cannot do that. I may not question your or Dennis’ numbers if you give me the source of that number? But until you do, then I say, “You had better verify your numbers before you do any math at all.”

                  • Woody says:

                    Fair enough. I have no idea if 350K is a reasonable number and understand what you are saying as far as looking at the sweet spots and their extent. Seems like a bit of a spacial analysis is in order.

                • Dennis Coyne says:

                  Hi Ron,

                  An individual well declines at 4% per month over the first year, if all 7000 wells had been brought online in a single month you would be almost correct.

                  I have used the standard oil industry practice of using a hyperbolic to model the average well with existing NDIC data. (b=1.0 in this case)
                  Well profile below with decline rates (annual and monthly on the right axis), also thanks to Enno Peters I have Bakken well data for over 7000 wells. This well profile is based on wells which started producing between Jan 2010 and Dec 2013 (about 5500 wells).

            • Enno says:


              “The Bakken sweet spots are very fast being filled with wells.”

              I find that an interesting statement. So far I could not see that in a declining average peak month production or declining number of wells being brought online, which I would expect to happen in that case. Do you have any data to back that up? How many wells do you still expect, and why?

              • Enno, Dennis appears to be completely ignoring the Bakken decline rate. Even wells in the sweet spots still decline at about 6% per month. And the sweet spots will be drilled up in a couple of years.

              • Enno, since November, producing wells in the Bakken have increased by 454, production has increased by 2,301 barrels per day. In all North Dakota, producing wells have increased by 352 and production had dropped by 538 barrels per day. (A lot of non producing wells outside the Bakken were shut down is why the increase in ND producing wells is less than the increase in Bakken wells.)

                And therein lies the problem. The Red Queen barely kept up in the Bakken but lost ground when the rest of North Dakota was thrown in. And that was over a period of 4 months, one third of a year. That just don’t bode well for the future of the Bakken.

                Guys! This is Light Tight Oil, not a conventional field.

                352 -538

                • Dennis Coyne says:

                  Hi Ron,

                  The average well is based on modelling Bakken output over the 2008-2013 period and the data provided by Enno Peters.

                  Average well profile below. And yes I mistakenly wrote 0.35 Gb and it should have been EUR=0.35 million barrels. Decline rate is not being ignored.

                • Dennis Coyne says:

                  I am focusing on only the Bakken/Three Forks in North Dakota.

                  I am well aware of the Red Queen and my analysis is essentially the same as Rune Likvern’s with a lower well profile for my analysis (his EUR is about 100 kb higher than the well profile that I am using).

                  Also the USGS estimates an EUR of 350 kb, this estimate is 200 kb lower than the NDIC’s “typical well”.

                  I present a chart below showing how this well profile, when combined with the number of producing wells added each month (from the NDIC), compares with actual output.

                  The match is pretty good until about the middle of 2013, then the model underestimates actual output through March. The “average well profile” fluctuates up and down a little over time or there may be a seasonal effect that my model does not account for (besides the change in number of producing wells added, which it does include).

                  • Enno says:

                    Thanks Dennis, I thought about doing the same chart. Two additional charts would be interesting:
                    – the one you showed, but adding the estimated future production of all existing wells. This will show that even if no additional wells will be drilled, the existing ones already should come close to 2.5 Gb.
                    – A graph that shows the decline % of the Bakken as a whole. This will show that although decline rates are huge in the beginning, the decline rate of the overall field is actually going down rather rapidly also, relative to the starting decline rates.

                  • Dennis Coyne says:

                    Hi Enno,

                    Great idea! Too narrow here for chart so check the chart at the bottom of the page.

                    Economically recoverable resources (ERR) are 2.7 Gb if no wells are added to the ND Bakken/Three Forks after March 2014, assuming recent wells behave like the average well for the 2010 to 2013 period.

                  • Anonymous says:

                    Exactly. I meant a cumulative curve, but this is also OK.
                    One piece of advice : I think you can improve the readability of your chart(s) by removing some text (e.g. thousands, just add the “000”), and by abbreviating less. Especially if you start using more than 1 Y-axis, things become difficult to understand quickly. Half of your legend items seem not to be used. Better also not post nice charts here in the margins of deep threads.
                    Keep it simple 🙂

                  • Enno says:

                    that was me.

                  • Dennis Coyne says:

                    All good advice Enno.

                    Thanks for the suggestions.

      • Dennis Coyne says:

        Hi Ron,

        No, I am not joking. You can do it yourself if you would like. I used North Dakota Bakken data from the NDIC. Instead of using monthly data for 2012 and 2013 like Mr. Laherrere (note that his vertical axis is labelled incorrectly it should be monthly production divided by cumulative production (he labels it annual production divided by cumulative production). An HL based on only 5 years will not be very reliable, an HL based on two years of data will be even less reliable.

        Typically a Hubbert Linearization is done using annual data rather than monthly data, as I have done. When you use the annual data from 2009 to 2013, you get the chart above.

        • Dennis Coyne says:

          And yes Ron 5 data points for an HL analysis is not very good. This is why the HL should not be used at all.

          • Doug Leighton says:


            And here we totally agree.


          • And yes Ron 5 data points for an HL analysis is not very good.


            This is why the HL should not be used at all.

            A non-sequitur. It does not follow that because a HL analysis with only 5 data poings is lousy that an HL analysis with 50 data points would be equally as lousy. Indeed HL analysis may or may not be very good but you cannot use one with only 5 data points as an example for them all.

            • Dennis Coyne says:


              Yes that was badly phrased. I mean that HL should not be used to estimate URR for the North Dakota Bakken at the present time because there is insufficient data to give a reliable result. Two years or five years is not enough time. When you look back at the US lower 48 data, the result is not reliable until the 1950’s after 90 years of output.

              So 90 years would be better than 5, but it would still not be very reliable. Jean Laherrere’s creaming curve method is good. Hubbert Linearization, not so much.

              The classic post on this subject is by Robert Rapier


  25. Dennis Coyne says:

    Excellent idea, Enno!

    No new wells after March 2014, assuming the wells online behave like the 2010 to 2013 average wells. ERR=2.7 Gb, chart below

Comments are closed.